How resilient is the remittance market to the COVID-19 shock?

Amsterdam based online remittance service provider Azimo is making waves in the remittance market with its recent partnership with China's Alipay. Despite the World Bank's projection of a 23% decline in remittances in 2020, Azimo's operations in Nigeria have shown a surprising 20% increase, with the number of transfers to bank accounts doubling during the COVID-19 lockdown period. This unexpected resilience in the midst of a global crisis has caught the attention of experts and market watchers. Azimo's new CEO, Richard Ambrose, and Egie Akpata, Director at UCML Capital, recently discussed the impact of this partnership in an interview with CNBC Africa. The conversation shed light on how this collaboration could transform the remittance landscape in Africa and beyond. The key theme revolved around the potential benefits of the partnership for Africa and the fintech sector. Richard Ambrose highlighted that the partnership with Alipay opens up opportunities for trade between Africa and China, which was valued at around $200 billion last year. This alliance allows African fintech companies to tap into this significant flow of funds, with Azimo being just one of the many players leveraging Alipay's network. For instance, Richard mentioned that firms like Flutter Wave are now connecting Nigerian merchants directly to Chinese consumers, while Azimo focuses on facilitating remittances from the African diaspora in Europe back to their home countries. The impact of this partnership extends beyond facilitating transactions—it serves as a catalyst for economic activity and financial inclusion across different regions. The key points discussed during the interview emphasized the strategic significance of the partnership and the evolving trends in the remittance market. Firstly, the collaboration between Azimo and Alipay acts as a bridge for seamless fund transfers between Africa and China, enhancing trade and commerce in both regions. Secondly, the partnership underscores a shift towards digital remittance services, which have gained traction during the COVID-19 pandemic due to the closure of physical money transfer offices. This digital shift benefits customers by offering more cost-effective and efficient solutions compared to traditional remittance methods. Richard Ambrose noted that Azimo's fees range from 2 to 3%, significantly lower than the global average of 7 to 9% charged by traditional remittance providers. Lastly, the interview addressed concerns about Chinese domination in the fintech space. Richard Ambrose expressed confidence that Chinese systems are unlikely to dominate the remittance market in the short term, especially for diaspora flows originating from Europe and the US. The regulatory environment and geopolitical dynamics suggest that Chinese creators may not become the leading force in remittance services in the near future. In conclusion, Azimo's partnership with Alipay symbolizes a potential turning point in the remittance industry, showcasing resilience and innovation amidst global challenges. The collaboration not only facilitates cross-border transactions but also paves the way for greater financial inclusion and economic opportunities for individuals and businesses across different continents.