The news:
- Onafriq, a digital payments service, and M-PESA, the Vodacom and Safaricom-owned mobile phone-based banking services, have signed an International Money Transfer Agreement.
- The partnership will see both fintechs collaborate to streamline remittance flows into Ethiopia.
- According to the agreement, Safaricom, which obtained the Payment Instrument Issuer Licence from the National Bank of Ethiopia in 2023, can now assist Ethiopians in receiving remittances via M-PESA, a mobile money transfer service.
In a briefing at the first-ever International Day of Family Remittances in the East African nation in 2023, Mohammed Endris, the Director General of the Ethiopian Diaspora, stated that remittances make up to 50% of the GDP in some countries.
According to the World Bank, remittance flows into sub-Saharan Africa stood at $53 billion in 2022, indicating the immense contribution of African immigrants to their home countries.
However, Endris also stated that the diaspora sent home to Ethiopia accounts for only 5% of the country’s GDP and that they are working to double it in the next five to seven years.
The new collaboration between Onafriq and M-PESA is expected to improve the remittance rate in the country. Ethiopians living abroad sent $4.2 billion in remittance to their country in 2022.
Paul Kavavu, General Manager at Safaricom Ethiopia, noted the signed agreement would offer Ethiopians in the diaspora a seamless channel to send money to their loved ones at home in Ethiopia, giving a significant boost to the $5 billion the country generates in remittances annually.
Kavavu explained that the company’s goal remains to simplify payments, and integrating International Money Transfer capabilities into M-PESA precisely aligns with that purpose.
A report released in 2022 by GSMA based on data collected between 2013 and 2022 revealed that in countries with mobile money services — otherwise known as mobile money countries — the total Gross Domestic Product (GDP) was about 1.5% ($600 billion) higher than it would have been without mobile money.
Founded in 2009 by Dare Okoujou (CEO), Onafriq (formerly MFS Africa) is an African-focused payments company enabling interoperable cross-border and domestic digital payments.
The company boasts a network connecting over 500 million mobile money wallets and 200 million bank accounts in 40 African markets.
In January 2024, Onafriq selected Alviere, an embedded finance platform provider, to enhance payments and remittances from the US into Africa.
