The Influence of Online Money Transfers on the African Continent’s Economy

money transfers and the african continent economy

The Influence of Online Money Transfers on the African Continent’s Economy

When it comes to the movement of money on the African continent, the immense distances, the lack of infrastructure and the overall expenses needed to transfer money, has left this service desperately in need of an overhaul, one that would make money transfers a lot more accessible and simplified, and which would at the same time not cost a fortune.

And with the arrival of app technology, and the fact that just about everyone in Africa now has access to a smartphone and an internet connection, transferring money on the African continent has never been so easy or so life changing.

Online money transfers have undoubtedly made life so much better for so many people, and since this sort of technology is only getting better and better with each passing year, those who rely on an online money transfer service can look forward to many more years of exciting developments.

We take a look at how money transfers impact the African continent’s economy.

Money Transfers of the Past

Africa takes up a huge space. Most countries on the continent are quite large and even those that are not so big still have big spaces between the towns and the cities. The distances as well as the fact that most of Africa still lacks basic infrastructure like functioning, safe roads and effective, reliable transport, has made moving anything quite difficult. While money might seem like the easiest thing to move, walking for miles to send or receive money is not only incredibly risky, but it is also something that takes up a lot of time.

The other problem with money transfers of the past is that they would require quite a lot of paperwork to be done. The complex paperwork required of communities with limited education as well as the fact that people would also be forced to stand in long, time consuming queues and face the possibility of returning home well after dark, were (and for some people continue to be) a reality.

But the way in which money was transferred in the past was not just an inconvenience to the people. It was also one of the many factors that has directly influenced the economy of the continent.

Africa’s workforce is largely a migrant workforce. People are often forced to leave their homes and travel far to find the kind of work worth having. In poor nations jobs are not just scarce, they are also known for offering very little monetary reward.

This has meant that people across the continent are forced to migrate from their homes and travel to new countries in search of a better life, not just for themselves but for those they leave behind.

And with the option of money transfers, those who migrate are able to send money back home, and as such contribute to the growth of their local economy. With money transfers going digital, the local economic growth is set to become even more noticeable, as more money will be able to enter the economy and be used to improve the nation.

The Impact of COVID-19 on Money Transfers

In Africa, the impact of COVID-19, mainly the response to the pandemic, has seen a slow-down in the amount of money that has been transferred around Africa. This was largely due to the fact that many migrant workers either lost their jobs completely, or they were forced to take a pay cut, as businesses saw their profits decline.

While this has been a massive upset for those whose lives have been turned upside down due to recent events, there is one or two things that we can take from the impact that the pandemic has had on the money transfer world.

For starters, the slowdown of remittances to various African nations has proved the importance of having easily accessible money transfer systems. The moment money stopped being sent, or the amount of money being sent was greatly reduced, there was a noticeable effect on the economy, and naturally those who relied on the money being sent without a doubt suffered from the effects.

A decline in the amount of money transfers being done and the amount of money being sent, has without a doubt had an effect on the extreme poverty that so many Africans are forced to deal with. Poverty is one of Africa’s biggest problems, and in many ways, money transfers have helped to start to alleviate the issue. But with the slowdown of money being sent, the issue has once again been put back in to the spotlight.

Traditional money transfers require people to physically go and withdraw their money. And the moment they were unable to do that, the problems became a whole lot worse for them.

When it came to the pandemic, not only were people unable to send money, but for those living in out of reach villages, receiving the money also became quite difficult. For those not yet using online money transfer systems, the pandemic meant that the prevention of travelling left people financially vulnerable.

Millions in Africa rely on money transfers to stay alive, to put food on their tables and to educate their children. While the pandemic response has certainly changed a lot about how money moved around the African continent, now that the worst of the pandemic is over, one of the biggest changes we are likely to see, is how the money transfer world is going to again influence the continent.

Looking to the Future

Now that we know what can happen when money transfers are made impossible, or when people are unable to reach a place to withdraw the money that they are being sent, a solution needs to be sought out, and the most logical solution is to move over to an online money transfer system.

Although the infrastructure is limited in parts of Africa, money sent via a money transfer app is a great way to safely and easily send and receive money. Along with being able to receive money via the app, something which is definitely going to make life easier for those living in out of reach destinations, payments can also be made via certain apps, which is again helpful because it can ensure that bills are paid and items bought, without actually having to go anywhere.

The influence of online money transfers is something that has already been felt by many, because such a method for transferring money is by no means something new. For years, South Africans as well as those who are migrating to South Africa for work have been using online money transfers to send money back home. Sikhona Money Transfers is one of the biggest money transfer companies operating in South African and in recent years, even before the pandemic, we have been expanding our services to more African nations.

With our services, we are able to provide those using it with a fast and safe way to transfer money and it is the ideal option for those who are looking to save money. Often many money transfer options are actually quite expensive, what with the high admin charges, but these days and especially when money is being transferred, the admin fees can be so high that they actually make doing a transfer more expensive than it would need to be.

For Africans, many of whom are relying on money transfers to survive, the idea of having to pay out extra for the transfer, can end up resulting in them getting far less money out than they had hoped for. In this instance, it is better to go with the more affordable money transfer option.

The influence of money transfers on the African continent will go well beyond those who benefit from the service and will also include those who are looking to become more involved in the development of such a service. From the service offered to the apps that make online money transfers possible, there are plenty of investment opportunities to become involved with along the way.

Since migration is expected to increase in the coming years, as the world goes more or less back to normal, online money transfers are going will grow in popularity. It is estimated that the growth in online money transfers is set to just about completely replace the cash options, which is certainly going to impact the economies of Africa. A society that works with less cash will open doors to those who might have in the past had limited access to physical cash. Going the digital route can help businesses to grow and it can also minimise the risk of theft.

Online money transfers can have a hugely beneficial influence on Africa as a whole, helping families lift themselves out of poverty, while also helping governments by reducing the need for social grants. If you are looking for online international money transfer services to make your life easier, you can give Sikhona Money Transfers a try. We offer a safe and secure app, with affordable money transfer rates. When using our app, your money will quickly be transferred to where you need it to be.

Browse our website today for more information.

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