TANZANIA has been named as the most expensive destination in Africa to send remittance form United Kingdom.
The report, by Financial Sector Deepening Africa, showed that senders spent 14 per cent compared to 10 per cent of Africa and about 7.5 per cent of global average of face value to transmit nonbusiness payment to Tanzania from UK.
On average, the cost of sending money from the UK to Africa varies between 11.0 per cent for ‘cash-to-cash’ transfers, 8.0 per cent for online services and 6 per cent for those terminating into a mobile wallet 3.0 per cent.
In East Africa, a cost of sending money from UK to Kenya on average is 7.0 per cent of face value, Uganda 9.0 per cent and Tanzania 14 per cent. Kenya has the lowest cost in Africa.
Developments in technology mean that new digital remittance services could be used to send money, but most people transfer money from the UK to Africa using traditional methods.
“If these senders shopped around, and switched to use the digital services available in the market, then over a 100 million pounds a year could be saved in total fees,” the report indicated.
The report shows that 38,691 people sent 44 million pound to Tanzania from UK in 2015, in Kenya 151,073 people sent 334 million pounds, and in Uganda 65,447 people remitted 181 million pounds.
The report showed some sending costs are higher than other countries due to low levels of formal financial inclusion and financial literacy, weak digital payment infrastructures and no formal identification. “….Currencies can collapse through inflation and currency depreciation.
Without a supportive infrastructure, people are often forced to rely on alternative informal methods of transfer,” the report said. However, Tanzania was set for increased financial inclusion thanks to mobile phone money transaction and interoperability.
The inclusion was hovering around 75 per cent. “Evidence suggests that senders of remittances [where there is both a fee and a margin on the foreign exchange] may be unaware of the actual cost of sending money and consistently underestimate it,” the report said.
The UN Sustainable Development Goals state “by 2030 the global average price for remittances should not exceed 3.0 per cent of face value, with even the most expensive corridors not being more than 5.0 per cent”.
Commenting, The Executive Director of Financial Sector Deepening Trust (FSDT) in Tanzania, Sosthenes Kewe said the costs could be kept at minimum but transaction transparency was a real challenge.