The transfer of money, from or to another place, both local and foreign, has two prongs to it. It is both convenient and inconvenient, depending on several factors.
The details on sending and receiving money in Uganda, for example, are not readily available. All that those intending to transfer, if they have not been in the business before, ever get to know is the rates. Those rates are oscillating between figures that are also never stable, also because of several other reasons.
When making the most of the now extensively distributed mobile money opportunities, which would be the most convenient, it is apparent that the fees incurred in effecting the transaction are costly as they increase with every increment in the fees being transferred. For example, mobie technology service providers like Safaricom’s MPESA, the best available service between Kampala and Uganda, is increasingly costly especially as compared to what are now cheaper alternatives like those provided by some banks.
The banking services are not that reliable. Some banks, like Barclays and Stanbic, are present in several countries. However, they exist on different banking platforms. Their existence on different platforms inevitably increases the rates for, for example, VISA enabled transfers. In essence, money that could have been spent on tourism, hotels, shopping, or other money making ventures for the hosting country is limited as a great portion of it is spent on the transfer.
In addition to the above, there are not that many people who have embraced banking yet. In Uganda, for example, there are only about 20% of people who have active bank accounts. As a result, those few pay a lot for the many, when they could have paid less if the many were banked. The dearth of numbers implies that banks will not have many options other than to impose high rates in order to keep the banking sector progressing. The better option would be to encourage more people to embrace banking. It would convince banks to reconsider and lower their rate.
Where banks do not become helpful, new innovate solutions that help people to transfer money are available. Uganda’s remit.ug, which is a convenient and necessary opportunity, is available. Unfortunately, it is, but only for transactions happening between Uganda and the Diaspora, and not in East Africa. Tailored services like MoneyGram, Ecobank’s Rapid Transfer, and ABSA service come handy where remit.ug is not helpful enough.
Different currencies influence the inconvenience of money transfer as well. Countries with a weaker currency, like Uganda, are of an advantage to those buying local currencies as they would afford more of it. Countries with stronger currencies, like South Africa and Kenya, are not advantageous to and for those obtaining foreign (or their) currencies or transferring money there as they are limiting.
Some countries, like Liberia, use two currencies; the Liberian Dollar and the American Dollar. Zimbabwe uses three; the Zimbabwe Dollar, the South African Rand, and the British Pound Sterling. South Sudan uses the South Sudanese Pound and the US Dollar. Apparently, there is an inevitable confusion that develops from the existence of these numerous currencies. Without a uniform currency, even for trading blocs that should have one, it becomes more than just a mere transfer, but a decision they have to make, one that informs the convenience they desire.
The informal sector is a different ball game altogether. There is no known regulation of those who have offered themselves as money changers, or rather individual and independent forex bureaus at our border points. They, and unfairly so, change the rates on every one of their new customer.
The informal sector also posses the possible risk of obtaining fake money from these money changers. Worse, they dictate the rates as they wish. For example, for a Ugandan to buy Kenyan shillings, they would do so at about 1 for 30 at Busia – the border, at 1 for 36 in Nairobi, and at 1 for 50 in Mombasa. Not only does it illustrate the irrelevancy of the Ugandan currency as you move further away from Uganda, but, importantly, the lack of a necessary uniformity across the money markets.
The transfer of money from a place, with a particular currency, to another, is still an unexploited cosmos which bears both opportunities and challenges for the service providers and their clients. One take away is, definitely, that we can do much better.