Sasai joins mobile money trek into Lesotho

Competition continues to grow in the money remittance market with Sasai Money Transfer, a unit of Zimbabwean billionaire Strive Masiyiwa’s Cassava Technologies, announcing a mobile money transfer service from SA and the UK into Lesotho.

Sasai Money Transfer said the service is a partnership with Econet Telecom Lesotho’s EcoCash Spache Fono, a mobile money wallet service.

The movement of people and goods on the African continent, as well as a push for greater regional trade, is creating the need for simpler and more affordable forms of payment.

MoneyGram, WorldRemit and Mukuru are some of fintech companies that have been capitalising on the opportunity for years. 

Telecommunications groups such as Masiyiwa’s Econet, Vodacom and MTN have taken advantage of their large subscriber bases to offer mobile money, adding services including lending and insurance to people who had previously been ignored by the formal banking sector. 

Remittances offer telcos a way to grow beyond borders, as well increasing their potential customer bases.

According to the World Bank, remittances to Lesotho account for as much as 22.5% of GDP. Inflows from SA reached $477m (R9bn) per year while $3m arrived from the UK. More than 50% or remittances to Lesotho are to rural areas

The bank estimates that about 75% of remittances are used for food and medical expenses, school fees or housing expenses and in times of crisis are also used to cover crop losses or family emergencies. 

“With over a million Basotho living and working in various sectors of the SA economy including mining, agriculture and construction, as a cross border money transfer operator, we particularly considered it as a key mandate to offer them a safe, secure, affordable and convenient way to send money back home,” said Lee Ann Lancaster, executive head for Sasai Money Transfer SA. 

The group was “humbled to be one of the first operators to be formally granted the ADLA in SA to launch cross border money transfer to Lesotho through our strategic partnership with Econet and Ecocash in Lesotho”.

According to the SA Reserve Bank ADLAs are “authorised dealers in foreign exchange with limited authority.” They include bureaux de change, independent money transfer operators and value transfer service providers. 

Sasai’s service comes after MTN in September announced its MoMo app offers money transactions in 10 countries. The operator charges a 4% fee for such transactions compared with the industry average of about 10%. 

At the moment, a person in SA looking to send R10,000 in cash to, say, Malawi may instead decide to pay a bus driver making the trip R500 to physically transport the money. For many that risk is justified by formal channels charging much as 15% for such a transaction.

For now MTN’s service is only for outgoing payments from SA. But Africa’s largest mobile provider is hoping to capture the billions of rand that leave SA’s shores each year, together with the cash entering Nigeria. Those cash flows specifically would help MTN gain a strong position in the continent’s remittance market, said Bradwin Roper, CEO of MTN SA’s financial services business. 

An estimated $1.2bn leaves SA each year in remittances, while Nigeria is thought to receive $18.6bn from its diaspora. 

gavazam@businesslive.co.za