According to the African Development Bank (AFDB), more than 30 million Africans (about 3% of Africa’s total population) are living outside their home countries. This figure includes those living within other African countries. These African migrants send money to their families in Africa. Remittances by African migrants play an important role as a source of financing and foreign exchange for African households and countries. For Africa as a whole, remittance inflows have more than quadrupled since 1990, reaching US $40 billion in 2011. This represents about 3% of Africa’s total GDP. Globally, the amount of remittances reached US $300 billion in 2010, surpassing foreign direct investments (FDI) and official development assistance (ODA) combined.
The estimate for the Africa figure is widely believed to be conservative, given the evidence of underreporting as some remittance transfers are sent through informal channels. Accounting for informal flows could raise the total amount of remittances to Africa by about 50 per cent.
In Rwanda, the central bank’s remittance statistics highlights that over US $46 million was sent by the Rwandan diaspora from July 2012 to June 2013 to support various households’ activities. It’s in this perspective that some of the Rwandan youth diaspora have come on board to start grabbing those opportunities. In my last post I highlighted how Money Transfer Operators are accelerating the financial transactions in Rwanda. Today new IT startups are growing very fast and coming up with innovative solutions to help the Rwandan community. Recently a new mobile application was launched to enable African migrants to directly pay for services of their relatives and friends, which is different from the usual money transfer operators (MTOs) that are about sending cash only.
In November 2014, Muhire Louis-Antoine (CEO & Founder) created a mobile application called MERGIMS, which stands for “markets merger”, linking African migrants and traders in their countries of origin, thus enabling them to pay tuition fees, airtime and electricity for their relatives living in Africa. After living in Canada for more than 20 years, Muhire has faced challenges sending his relatives money, and sometimes there were misuses of the sent money for unplanned activities; from this experience he came up with an idea to create an innovative, cost-effective solution, a mobile application to solve such issues.
MERGIMS provides an option to migrants to help their families to pay for airtime, electricity, and tuition with a 5% commission on amounts less than $ 1000 and the charges are lowered for a person paying more than $1000, as little as a1% commission; the cost effectiveness of the MERGIMS service is helping it to grow fast, to the extent that currently it has 300 active users, yet MERGIMS was officially launched in January 2015. It only requires a user registration and a linked PayPal account.
“We guaranty you that the money will be used for the planned activities at the cheapest cost, efficient and reliable,” said Muhire
MERGIMS' available services include airtime, electricity and tuition fees, currently they have a partnership with Kigali Independent University and soon users will be able to purchase houses through the Rwanda Development Bank mortgage program.
As Rwanda is the fastest growing economy in East Africa, this Cleanleap will lower transaction costs using a simple, efficient mobile application, and ensure a continuous flow of remittances, the latter will surely contribute to the social development of a good number of households in Rwanda, more importantly solve the money misusage issue.