What is the Current Potential of South
Africa Remittance Market?
South
Africa Remittance Market has played an imperative role in the overall
GDP. The market is currently in its growth stage after witnessing the entry of
ADLAs in the market in 2015. During the last 5 years, the remittance market has
been maturing towards digitalization, low fees and diversified services.
The domestic transaction volume of remittances
increased from ~ million in 2013 to ~ million in 2018. The CAGR recorded for
the review period was ~%. The
transaction value for the domestic market during the year 2013 was ZAR ~
million and increased to ZAR ~ million recording a CAGR of ~%.
The international transaction volume of remittances
declined from ~ million in 2013 to ~ million in 2018 with a CAGR of ~%.
The South Africa market for domestic as well as
international remittance is highly active. The market includes both formal and informal
payment services providers. The international remittance comprised of two
segments including inbound and outbound. Remittances sent by cross border
migrant workers are a traditional means of financial support to family members
back home. The major stakeholders in the market have been banks, money transfer
operators, ADLAs, retailers and mobile wallets. Prominent business strategies
adopted by major players include forming an extensive network, new service
launches, service innovation and improved reach.
How Did South Africa Remittance Market Evolve in the Past 70 years?
Although since the late
nineteenth century some companies began to present money transfer services, in
many cases the use of the mail, through wire transfers, remained as the primary
means in different regions for money transfers until the late 1980’s and early
1990’s. International money orders were taking on greater weight age than wire
transfers and in the first half of the 1990s they were the foremost way in
which many households worldwide received remittances. Eventually it led to the
emergence of a large number of foreign exchange bureaus in the 1980s and 1990s
in places with significant nomadic flows.
The technological advances have
allowed for reforming the transfer of remittances and altering the ways in
which it is done. The utmost changes have been moderately recent, and have
occurred since the late 1990s and the beginning of the 2000s. Thus, electronic
transfers have gradually matured in significance across as they have increased
the speed of conveying money and extended the supply of these services. It is
also likely to transfer the cash into a bank account in the target country.
This option began to take on magnitude in the second half of the 1990s as a
manner of sending remittances. The use of payment system card, especially debit
cards, has been progressively more significant as a mechanism for receiving
remittances in recent years.
What is the General Overview of the Remittance Sector in the country?
The market for domestic
remittance is highly dynamic in South Africa. Over ~ million people, ~ of the adult
population, send, receive, or both send and receive domestic remittances. This
is driven by large numbers of internal migrants transferring money with family
and friends. The market incorporates tremendous innovation in offerings from
financial services companies and retailers, as well as remaining challenges to
be addressed. Over the past several years, as the number of migrant workers
have increased, remittance flows have also showcased an upward trend. For the
majority of developing economies in Asia & the Pacific and globally,
remittances have been observed as the single-largest financial inflows. They
have a significant impact on the economic well-being of recipient families as
well as the growth and stability of recipient economies. Approximately, ~
million people, constituting around ~% of the global population, reside outside
their home countries whereas more than ~ million migrate within their countries
for economic, social, environmental and political reasons as of 2017. Majority
of the cross border migration is in search of better economic and social
opportunities. International money remittances have played a vital role in
sustaining households in the South Africa whose members have migrated within or
outside the country in order to seek better employment opportunities.
What is the value chain in South Africa Remittance Market?
The value chain in the South
Africa remittance market includes a vast number & type of entities
including government entities, Banks, remittance service providers and end
users. The role of the government is to license the entities to conduct
remittance services in the country. They lay down the regulations and rules to
be followed in conducting business. Banks are the authorized dealers for money
transfers that cater to the remitting services of the banked population through
accounts of their customers. The average fees charged by the banks are ~% of
the transaction amount. Money transfer operators facilitate domestic as well as
international payments and offer services to a segment of the market that is
often not served by banks. The average fees charged by the MTOs are ~% of the
transaction amount. ADLAs are the remittance service providers that exclusively
deal with remittances and focus on a low fee strategy. The average fees charged
by the ADLAs are ~% of the transaction amount. Retailers offer an array of
services to the customers out of which one of them is money transfer service.
Retailers provide a cheap and readily available portal for transferring money to
loved ones within South Africa. Retailers
charge a flat fee of ~ Rand per transaction. The customers availing remittance
services include South African citizens, migrants to the SADC countries
including Zimbabwe, Lesotho, Mozambique, & others and immigrants from
neighboring African countries sending money to their native land.
What are the important market
segmentations in South Africa Domestic
Remittance Market?
By Channels Used for Remittance: In the
domestic, Banks recorded the highest
share accounting to ~% owing to their high trust value and their affiliations
with other remittance service providers. This was followed by retailers
registering a share of ~% which in turn was followed by the mobile/digital channel
which includes the ADLAs which have experienced the highest growth rate in the
market of ~% and a share of ~% by value of transactions.
By Corridors: The domestic market is
split into rural to urban corridor occupying the highest share of ~% owing to the
high internal migration from regions like Eastern Cape to Gauteng for higher
levels of employment and to reside in a secure environment. This is followed by
the urban to urban corridor occupying a share of ~%. The rural to rural
corridor occupies the lowest share of ~% owing to the minimal opportunities in
jobs.
By Income Level: The domestic market is dominated by the low income
people accounting to a share of ~%. This followed by middle income people
occupying a share of ~% and lastly, the upper income people with a share close
to ~% of the market by value share.
South Africa International Remittance
Market Segments
By Channels Used for Remittance: In the
international market, Banks recorded
the highest share accounting to ~% owing to their high trust value and their
affiliations with other remittance eservice providers. This was followed by
retailers which registered a share of ~%. This was followed by the
mobile/digital channel which includes the ADLAs which have experienced the
highest growth rate in the market of ~% and a share of ~% by value of
transactions.
By Corridors: In terms of international
market, the market is split into inbound corridors and outbound corridors.
Inbound corridors are dominated by United Kingdom with a share of ~% followed by
New Zealand Australia and Angola. Outbound Corridors, on the other hand, are
dominated by Zimbabwe with the highest share of ~% followed by Lesotho at ~%
share and Mozambique with lowest share of ~%.
By Income Level: The international market is dominated by the low
income people accounting to a share of ~% respectively. This followed by middle
income people occupying a share of ~% lastly, the upper income people with a
share close to ~% of the market by value share.
Key Segments Covered in South Africa International Remittance
Market
By Channels used (Value of Transactions)
Banking channels
ADLAs & MTOs
Retailers
Others
By International Inbound Remittance Flow Corridor (Value of
Transactions)
United Kingdom
New Zealand
Australia
Angola
Others
By International Outbound Remittance Flow Corridor (Value of
Transactions)
Zimbabwe
Lesotho
Mozambique
Others
By Work Profile (Value
of Transactions)
Key Segments Covered in South Africa Domestic Remittance
Market
By Channels used
(Value of Transactions)
Banking channels
ADLAs & MTOs
Retailers
Others
By Domestic Remittance Flow Corridor (Value of Transactions)
Urban to Rural
Urban to Urban
Rural to Urban
By Work Profile (Value
of Transactions)
Key Target Audience:-
Banks
Money Transfer
Operators
ADLAs
M-Wallet Companies
Hawalas
Convenience and Retail
Stores
Supermarket Chains
South Africa Reserve
Bank
Bills and Payments
Companies
Investors &
Venture Capital Firms
Time Period Captured in the Report:-
2013-2018 – Historical Period
2019-2023 – Future Forecast
Companies Covered: ABSA Bank Limited, Albaraka Bank Limited, Bidvest Bank
Limited, BNP Paribas SA – South Africa Branch, Capitec Bank Limited, China
Construction Bank-Johannesburg Branch, Citibank-South Africa, Deutsche Bank
AG-Johannesburg Branch, FirstRand Bank Limited, Habib Overseas Bank Limited,
HBZ Bank Limited, HSBC Bank PLC–Johannesburg Branch, Investec Bank Limited,
JPMorgan Chase Bank-Johannesburg Branch, Mercantile Bank Limited, Nedbank
Limited, Sasfin Bank Limited, Société Générale, Standard Chartered
Bank–Johannesburg Branch, State Bank of India, The South African Bank of Athens
Limited, The Standard Bank of South Africa Limited, First National Bank, Bank
of Baroda, Bank of India, Bank of China, Bank of Taiwan, Western Union , Money
Gram, Hello Paisa, Mama Money, Mukuru, Exchange4Free, Imali Express (Pty), Ace
Currency Exchange (Pty), Forex World (Pty) Limited, Global Foreign Exchange
(Pty) Limited, Inter Africa Bureau de Change (Pty) Limited, Interchange RSA
(Pty) Limited, Master Currency (Pty) Limited, Sikhona Forex (Pty) Limited,
Tourvest Financial Services (Pty) Limited, American Express Foreign Exchange
Services, Tower Bureau de Change (Pty) Limited, Travelex Africa Foreign
Exchange (Pty) Limited, Southeast Exchange Company (South Africa), Terra Payment
Services South Africa (RF) (Pty), WorldRemit South Africa (Pty) Limited,
Shoprite, Pep Stores, Pick n Pay, Checkers, Spar, Ackermans and Boxers.
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