Remittance and Foreign Aid
by andrew@JijniMarkets - Mon 08 Dec 2008
I recently watched a documentary on foreign aid by the award-winning Sorious Samura who has made several insightful documentaries on different aspects of life in Africa or Africans abroad. The documentary highlighted something that I believe is obvious to most Africans - that foreign aid doesn't get through to its intended recipients and is instead swallowed up by bureaucracy or corruption.
This really got me thinking. The cause of the problem is a simple one. Foreigners sending aid lack the local knowledge of how to effectively help or how to differentiate the needy from the greedy. They are therefore dependent on aid agencies or government bodies to distribute the aid. The Aid agencies usually have high administrative costs while government departments suffer from corruption and bureaucracy. Between them, the agencies and governments manage to either consume or lose the bulk of the aid money before it reaches the common mwananchi.
Fortunately, something else that is obvious to most Africans (both at home and abroad) is that there is a more direct, efficient and effective channel through which foreign funds move to Africa - remittance.
For sometime we've been running ads for Africashmoney.com, a remittance company for sending money to Kenya using the very popular mPesa system on Safaricom. I'm excited by Africashmoney.com (and other companies like it) for two main reasons: Firstly, as a Safaricom shareholder, I'm happy to see it come up with innovative and cutting edge products like mPesa that not only diversify revenue streams but also serve the local community; secondly, the remittance sent via Africashmoney.com and mPesa bypasses not only aid agencies and government bodies but also the often expensive and time consuming banking system.
Going back the foreign aid theme I see a potential opportunity there for remittance companies like Africashmoney.com using mPesa and similar systems. With a presence in both the developed and developing world, these companies have the unique position of having both local and foreign knowledge as well as the infrastructure to ensure aid from foreign donors goes directly to the people it is intended for. The addition of this ethical theme to the remittance industry will not only help diversify their market (to include, say, Europeans that want to send money as aid) but also help with corporate branding and marketing. Its an idea I'll be pitching to Africashmoney.com…
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