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Africa & Middle East Market Perspective / Vol. 7, Issue 1, January Edition
Pyramid Research, Inc, Jan 2007
IN THIS ISSUE:
MOBILE COMMUNICATIONS
MENA: Mobile Remittances, Revisiting Money Transfer Options
The mobile remittance business is big business, to say the least. The Philippines’ case has been the ever-told success story since 2004. Analyst Dearbhla McHenry reviews the potential of mobile remittances in the wealthier and larger region of the Middle East and North Africa (MENA).
Uganda: Banking on Infrastructure
The government of Uganda has decided to liberalize the infrastructure sector in Uganda in order to spur additional growth in the market. Already competitive with three operators, Uganda has been fully competitive since 3Q06 with the introduction of a new licensing regime based on two broad categories (infrastructure and service provider, as opposed to fixed and mobile licenses). Join Senior Analyst Bigué Sagna as she reviews this opportunity which regional operators such as MTN and Telkom SA have been eyeing.
Extract:
Mobile Remittances In The Middle East
The mobile remittance services introduced by the Philippines’ operators in recent years have proven highly successful for all parties concerned: the operators are taking commissions on cash transfers upwards of US$100m per day, while expatriate Filipino workers are sending money home to their families faster, more cheaply, and more securely than previously possible. In the Middle East, however, millions of expatriate workers must still decide between sending money home using international wire transfers or remittance companies (which are usually both slow and very expensive), or trust their hard-earned cash to a homeward-bound friend or relative. It is Pyramid Research’s view that mobile remittance services are likely to be one of the most important new trends in the Middle East’s mobile market during 2007 and 2008, as regional operators take advantage of the opportunity to enter the multi-billion-dollar Middle Eastern remittance business.
Why Mobile Remittances Would Work in the Middle East
The economics of remittances in the Middle East makes mobile remittance services at least as attractive an opportunity as it is in the Philippines, with the added bonus that several of the large regional operators have subsidiaries in both the “sending” and “receiving” countries. The Economist Intelligence Unit (EIU) estimates that overseas earnings sent back to Egypt amounted to US$5.1bn in 2005, approximately 3/4 of which came from the Gulf States. In the same year, Morocco received about US$4.6bn, mostly from Moroccan workers in Europe, while Lebanon, Jordan, Yemen, Tunisia, and Algeria all received over US$1bn each. On the sending end of these transactions, the Gulf Research Center reported that the 13m foreign workers in the GCC states in 2006 sent a total of US$27bn to their home countries, primarily to India, Pakistan, Egypt, and Yemen. The current options available to expatriate workers who want to send money home are highly unsatisfactory: the cost and inconvenience of banks and remittance services is so great that over half of the 1.1bn Euro sent home to Egypt from Europe every year is carried in people’s pockets rather than sent through formal channels, according to the Central Bank of Egypt.
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