I had a good
debate today with Citibank who, as we know, are heavily focusing upon
taking a slice of workers’ remittances following their February
announcement when they teamed up with Vodafone to offer mobile payments for migrant workers.
economic migrants do not trust banks as banks do not cater for the
low-wage worker who may not be able to write, may have no proof of
identity and who is often fearful of the very formal processes in
banks. This is why most economic migrants use money transfer networks
such as Western Union or, more informally, Hawala where they deal with
cousins of cousins to move money around the world.
The reason why
this has come to the fore though is that there are almost 200 million
migrants worldwide shifting around corridors of work between India and
the Middle East, Philippines and the USA, China and Africa … in fact,
you name anywhere in the world and I’m sure someone will want to
migrate to there or emigrate from there. It’s all about getting up the
economic ladder, improving one’s lot and getting to earn more than
crust, e.g. let’s get the whole loaf.
These migrants actually
have quite a large loaf with the World Bank and others estimating that
somewhere between $250 and $300 billion is moved around every year
between the migrant and their families and friends at home. And that’s
just the official numbers as there’s another $250 to $300 billion moved
around outside the banking networks through Hawala and other informal
Around $600 billion or more is therefore being sent
around the world between 200 million migrants, growing at 8 percent per
Who’s sending stuff where?
Accoding to Western Union, six countries represent half of all the worldwide remittance receipts:
- India 15%
- Mexico 8%
- Philippines 8%
- China 8%
- Turkey 6%
- Egypt 5%
other words, by just enabling these six countries to receive high
volume distribution and processing of worker’s remittances, a bank or
money transfer network can facilitate half of the global market for
wiring money home, worth at least $100 billion, and probably $300
billion a year.
Take a commission of 1% off that and you’ve got a $1 to $3 billion business.
No wonder Citi teamed up with Vodafone to roll out the m-pesa mobile remittance programme worldwide.