He orders groceries online for his family, such as sugar, flour and sunflower oil. In addition, he transfers 35 euros every month. This especially helps because his family receives the money in foreign currency. Zimbabwe is struggling with an inflation rate of over 800 percent, which makes American dollars or South African Rand much more valuable there.
Cut off lifeline
Akwa first sent the money to Zimbabwe in cash, he says. He also bought groceries in South Africa and sent them home. This is done through a large network of informal traders and bus drivers who drive up and down between South Africa and Zimbabwe. People give them goods and money in exchange for a commission. Zimbabweans choose this because they often know and trust the drivers.
But the corona pandemic brought this informal network to a standstill and the lifeline was cut. Zimbabwe has closed its border with South Africa since March. That led to an explosion of digital transactions. Over the past six months, more than $ 466 million was transferred to Zimbabwe, 30 percent more than last year. The migrants often use apps built by start-ups for this.
In recent years, numerous companies in Africa have focused on the poorer bottom of the population, who want to transfer small amounts quickly. They respond cleverly to the growing number of Africans with a mobile phone and access to the internet.
The services are attractive, also because they require less paperwork than, for example, banks. They often ask for salary slips and proof of residence: documents that not everyone can submit. For most customers, apps only ask customers for proof of identity.
Lightning-fast growth
Akwa also uses various apps. To transfer money he uses the service Mukuru or Hello Paisa, depending on who gives the best exchange rate and asks the lowest commission. And then there is another service, Malaicha, with which the migrant worker can shop for his family at home. He scrolls through the app and puts food in his digital basket. Akwa then pays by linking his bank account to the order, or by going to a supermarket with an order code and giving the money to the cashier. His mother collects the cash in Zimbabwe in US dollars.
Andy Jury, CEO of Mukuru, says he has seen his business grow 75 percent this year. The service now has over two million customers who can also send money to other countries in southern Africa. Another money transfer service for migrants, WorldRemit, says the number of transactions to Zimbabwe doubled during the pandemic.
A success story for these tech companies during this pandemic. This says little about the total amount of money that is now going to Zimbabwe. The expectation is that this year, in total, much less will be managed by labor migrants, because they have often lost their jobs.
‘More like a loan’
Digitization still has a positive effect. This is especially true for customers who have never been formally part of the financial system before, says Nikki Kettles. She is an expert at FinMarkTrust, an organization that looks at how financial services can help the poor. “This is how people build up a financial history, sometimes for the first time, and that is important. As a result, they can, for example, receive a loan earlier. We also see that once they start with one digital product, they are more open to other services, such as for example saving. That can also help. “
Akwa is happy with the digitization. “Groceries sometimes only arrived half way. Then the bag of rice would have been damaged and emptied on the way. Or the driver had suddenly used my money for an emergency on the way, then we had to wait until he could pay us back.”
The question is whether the customers will return to the drivers when the borders open again. Akwa doesn’t want to go back. And neither does his mother, she says from Zimbabwe. She spent hours at bus stations waiting for drivers to arrive late. Now she goes to a collection point of the transfer companies and is assured of her bag of groceries and cash.
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