Under the Southern African Development Community’s (SADC) Finance and Investment Protocol, Annex 6 provides for cooperation on payment, clearing and settlement systems. The subcommittee responsible for this Annex has successfully implemented a cross-border payments system, and is reportedly working towards addressing regulatory issues and the cost profile with regard to worker remittances.

Despite this (and other) ongoing work, the World Bank still reports that seven of the top twenty most expensive remittance corridors are between countries in the SADC region, and a further two between countries in the region and elsewhere in sub‑Saharan Africa.

Many factors affect cost of remittances – weak infrastructures, a lack of transparency and competition, and financial regulation constraints. This briefing will explore two alternative (to traditional bank transfers and money transfer operators (‘MTOs’) such as Moneygram and Western Union) channels of remittances that rely on existing networks for funds transmittal – mobile money, which uses the mobile phone network, and retailer remittances, which use the networks of retail stores.

These channels not only offer potential competition in the space occupied by banks and traditional MTOs, but potential to reach further – in both a geographical and socio-economic sense – than traditional providers. This trade brief therefore also considers what else SADC could do to play a leadership role in encouraging an environment to better facilitate the cross‑border movement of money through these channels in the region to enhance competition and thereby potentially reduce prices.

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