He meticulously calculates the required procedures to transfer money to his elderly mother in the Democratic Republic of the Congo.
After 16 years of living in Kampala, Uganda, the man wants to send some money.
He estimated it would cost around $3 to convert $100 (£80) worth of Ugandan shillings. To further guarantee that the recipient incurs no expenses upon receiving the funds, he incorporates a $7 withdrawal charge.
Instead, He would use mobile money, which entails digital transfers over the phone, to transmit these payments rather than visit a bank, post office, or money transfer provider like Western Union. Legal expenses could eat up a large chunk of the budget.
The United Nations Sustainable Development Goals include bringing down remittance costs to below 3% by 2030 and keeping the overall costs for international money transfers below 5%. Some academics argue that a target of less than 3% is necessary to achieve genuine affordability.
In addition to immediate cost savings, the International Monetary Fund estimates that reaching this target may generate a substantial income of $32 billion (£26 billion).
Remittances substantially affect the economy since more individuals are likely to transfer money via this route when costs are cheaper. Nevertheless, this objective remains a long way off. According to the World Bank, the world average is 6.2%, which is almost double the aim.
An average transaction charge of 7.4% makes sending money to sub-Saharan Africa costly. For certain country combinations, the fee proportion may approach the high double digits.
One of the reasons for the high fees is the inconsistent regulation.
A payment processor cannot operate under a single license in more than one African country. Onafriq, a digital payment network, is active in over 40 African nations.
The free flow of capital is not always guaranteed, especially among close trading partners and nations where people travel around often. The fact that some countries use the same currency makes international money transfers convenient and frequent.
