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UN to partner with Africa to lower cost of remittances

UN to partner with Africa to lower cost of remittances
Photo credit: World Bank

13 Jun 2018

The UN specialized agency for the postal sector on Monday said it will partner with African governments to lower the cost of remittances flowing into the continent.

Bishar Hussein, Director General of the International Bureau of the Universal Postal Union (UPU), told Xinhua in Nairobi that the Regional Project on Electronic Postal Payment Services in Africa will make the national postal sector play a key role in facilitating financial remittance for international migrants.

“We are going partner with the International Organization for Migration (IOM) to leverage on the expansive network of government owned postal sector to bring down the cost of remittances in Africa to about 5 percent in order to promote financial inclusion,” Hussein said during the 25th East African Communications Organization (EACO) meeting of assemblies.

The event that runs from June 11-15 will involve delegates comprising policy makers, legislators, academia, regulators, service providers in the Information and Communication Technology sectors (ICT) in the East African region.

The theme for this year’s EACO Assemblies is “Sustainable and Resilient Infrastructure for Inclusive Social and Economic Development” which will see discussions on technology trends and key issues in the communications sector.

Hussein said that some commercial firms charge above 10 percent for African migrants to remit money back home.

He said that in order to tackle the high remittance fees, the UN have made a decision to collaborate with African governments to reduce the costs of transferring money to the continent.

He said that state owned postal firms are ideal partners because they are mostly nonprofit making entities and have branches in even the remotes villages of Africa.

The first beneficiary of the Regional Project on Electronic Postal Payment Services in Africa will be Burundi.

Hussein said that 150 post offices in Burundi have been equipped to facilitate affordable remittances of money from the country’s migrants living in Europe.

He noted that experiences and lessons learnt from Burundi will enable the UPU to roll out affordable remittances to the rest of Africa.

During the 2017-2020 cycle, UPU is running a minimum of eight technical assistance projects with the East Africa Community bloc. Some are national programs targeted at specific countries while others are of regional nature.

Hussein said that for many decades, the post was the most visible form of communication in Africa largely due to the affordability and accessibility of its services to the public.

He added that the situation has since changed owing to the dynamics in technology advancement as well as customer needs.

“In particular, both the mobile and the internet have had a big impact in the way people communicate and has eroded the post business especially in the delivery of letters,” he said.

Hussein added that on the positive side, technology has brought many opportunities for the postal sector.

“The new services, coupled with the large physical network and experience with customer service has made it possible for the post to be competitive in the market,” he said.

According to UPU official, the biggest impact of technology in the post has been felt in the field of electronic commerce and financial services, noting that there is big potential for e-commerce especially in African countries with relatively good internet connectivity.

He observed that with a huge young population and a steady growing middle class, Africa holds the promise to success in e-commerce business.

The UPU official said that unfortunately, Africa only accounts for less than two percent of the global e-commerce.

He noted that UPU’s focus on e-commerce is based on the fact that growth in online business results in increased volume of parcels that need to be delivered.

“The post should, therefore, not just position itself to take advantage of this growing business opportunity but should actually participate in growing it,” he added.