Money Markets
By GEOFFREY IRUNGU
In Summary
- The researchers said expansion of the money transfer business in East Africa should be backed by improved safety.
- Central Bank of Kenya data shows that the number of mobile cash transfer agents have over the last three years more than doubled to 115,015 as at February this year.
Fraud and armed robbery are the biggest threats
facing mobile cash transfers, according to a survey of agents in Kenya,
Uganda and Tanzania.
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The survey of 2,000 agents by Nairobi-based Helix Institute
of Digital Finance, however, did not reveal the amounts lost. “Agents
are reporting serious issues with fraud and robbery. This is driving up
the cost of doing business as they take preventive measures,” said the
report of the survey.
The institute was founded last September by the
Bill & Melinda Gates Foundation, International Finance Corporation,
UN Capital Development Fund and India-based financial consulting firm
MicroSave.
The researchers said expansion of the money transfer business in East Africa should be backed by improved safety.
Rapidly expanded
“Though providers have rapidly expanded business
across the country, they have done very little in providing safety
against theft or armed robbery,” says the survey.
Mike McCaffrey, head of digital finance at
Microsave Africa, said fraud had become a critical issue because of the
cost involved. More than 40 per cent of the agents said they knew
someone who had experienced some theft, leading them to hire security
for the business premises.
Central Bank of Kenya data shows that the number of
mobile cash transfer agents have over the last three years more than
doubled to 115,015 as at February this year compared the same month in
2011.
During the three years, the value transacted has
also more than doubled to Sh172.8 billion from Sh76.3 billion. On
average, this amounts to a value of Sh1.5 million per agent this year
compared to Sh2.2 million in 2011, which shows a 47 per cent decline in
revenue.
The report shows that each agent had failed to fulfill a median of three transactions per day due to lack of float.
Other challenges facing money transfer agents
include the time spent teaching customers about the applications and
float management.
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