Published: • Author: Sarah Hugo

Digital Informality - How informal remittances are meeting customer needs in East Africa

Digitisation Financial Inclusion Mobile Money Remittances

DMA Global recently collaborated with FSD Kenya to develop an in-depth report into Kenyan informal cross-border remittances.

The objective of the study was to use demand-side research to shed light on how cross-border payments are being made in the region and to understand the scale and prevalence of informal channels. This falls under a broader goal to improve access to formal remittances and low-value trade payments across the region, especially through digital channels, and to aid policy makers, donors and businesses to make more informed decisions. The research focuses on four of the main remittance corridors in the region: Kenya-Uganda and Kenya-Tanzania in both directions.

⁠Some key findings from the study include:

  • ⁠The Central Bank of Kenya is taking a leading role on remittance data.
  • ⁠Most people are using formal channels.
  • ⁠The fluidity of payments was prevelant with people using multiple SIMs.
  • ⁠There was a clear widespread use of unregistered / unlicenced mobile money "agents" who provide cross-border money transfer services for them.
  • Informal services are meeting the needs of customers in ways that formal services were not.

The clearest takeaway from the study was that customers enjoy the convenience of being able to send money cross-border using their mobile wallet and want to be able to top-up their wallets from any country in the region. There is a clear demand for better interoperability between banks and mobile wallets across the region. With free movement of goods and people within the East Africa Community comes people wanting free movement of their money too.

Read the full blog post summarising the report here: Informal remittance is still common in East Africa and is moving with the times - Financial Sector Deepening Kenya (