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SSA sees decline in remittances as COVID-19 bites
The World Bank estimates that the economic crisis brought about by the Covid-19 pandemic and resulting lock-downs across the world could lead to a 19.7 per cent drop in remittances. Michael Kent, Founder and CEO of Azimo joins CNBC Africa for more.
Wed, 17 Jun 2020 14:42:15 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The COVID-19 pandemic and resulting lockdowns have led to a predicted 19.7% drop in remittances, impacting migrant workers and their ability to send money back home.
- The remittance market is showing signs of recovery as lockdowns ease in major sending regions, with an increase in the number of transactions through digital platforms like Azimo.
- The rise of digital remittance solutions is reshaping the industry, with traditional providers under pressure to adapt to digital technologies to meet changing consumer preferences and remain competitive.
The World Bank has warned of a significant 19.7% drop in remittances due to the economic crisis brought about by the COVID-19 pandemic and resulting lockdowns. Michael Kent, the founder and CEO of Azimo, shared insights on the impact of the pandemic on remittance markets and the trends that are emerging in the industry. As lockdowns are being eased in major remittance-sending regions like the USA, the United Kingdom, Germany, France, Spain, and Italy, there is an uptick in the number of remittances being sent. Kent noted that although consumer demand remains low and several sectors are still shut down, people are gradually returning to work, leading to a rise in remittance transactions. While the amounts being sent initially decreased, there are signs of recovery as people adapt to using digital platforms like Azimo for remittance services. Despite the challenges posed by the pandemic, Kent remains optimistic about the resilience of migrant workers in finding ways to continue sending money back home. He acknowledged the impact of job losses on migrants but emphasized their determination to support their families by sending remittances even in times of economic hardship. Kent highlighted the entrepreneurial spirit of migrants and their ability to adapt to changing circumstances, suggesting that the predicted 20% decline in remittances by the World Bank may be overstated. He expressed confidence in the resourcefulness of remittance customers, particularly those from Nigeria, in navigating challenges and finding innovative solutions to maintain financial support for their loved ones. Kent identified digitization as a key trend in the remittance market, emphasizing the shift towards mobile-based transactions. He pointed out that traditional offline remittance providers are facing pressure to adapt to digital platforms to remain competitive and meet changing consumer preferences. Companies that invest in technology and offer digital services are poised to gain a significant market advantage, as the demand for cost-effective and efficient remittance solutions continues to grow. Kent highlighted the potential for digital innovation to drive down costs and improve the accessibility of remittance services, particularly in regions like Africa. He urged businesses in the financial sector to prioritize digital transformation to stay ahead in an increasingly digital landscape. Kent emphasized the importance of investing in technology and building a strong development team to drive the digital transition successfully. Amidst the challenges posed by the pandemic, the remittance industry is witnessing a shift towards digital remittance solutions, signaling a new era of innovation and efficiency in cross-border transactions.
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