What is the Current Potential of South Africa Remittance Market?
South Africa Remittance Market has played an imperative role in the overall GDP. The market is currently in its growth stage after witnessing the entry of ADLAs in the market in 2015. During the last 5 years, the remittance market has been maturing towards digitalization, low fees and diversified services. The domestic transaction volume of remittances increased from ~ million in 2013 to ~ million in 2018. The CAGR recorded for the review period was ~%. The transaction value for the domestic market during the year 2013 was ZAR ~ million and increased to ZAR ~ million recording a CAGR of ~%. The international transaction volume of remittances declined from ~ million in 2013 to ~ million in 2018 with a CAGR of ~%.
The South Africa market for domestic as well as international remittance is highly active. The market includes both formal and informal payment services providers. The international remittance comprised of two segments including inbound and outbound. Remittances sent by cross border migrant workers are a traditional means of financial support to family members back home. The major stakeholders in the market have been banks, money transfer operators, ADLAs, retailers and mobile wallets. Prominent business strategies adopted by major players include forming an extensive network, new service launches, service innovation and improved reach.
How Did South Africa Remittance Market Evolve in the Past 70 years?
Traditional Means for Money Transfers
Although since the late nineteenth century some companies began to present money transfer services, in many cases the use of the mail, through wire transfers, remained as the primary means in different regions for money transfers until the late 1980’s and early 1990’s. International money orders were taking on greater weight age than wire transfers and in the first half of the 1990s they were the foremost way in which many households worldwide received remittances. Eventually it led to the emergence of a large number of foreign exchange bureaus in the 1980s and 1990s in places with significant nomadic flows.
New Technologies in Remittances
The technological advances have allowed for reforming the transfer of remittances and altering the ways in which it is done. The utmost changes have been moderately recent, and have occurred since the late 1990s and the beginning of the 2000s. Thus, electronic transfers have gradually matured in significance across as they have increased the speed of conveying money and extended the supply of these services. It is also likely to transfer the cash into a bank account in the target country. This option began to take on magnitude in the second half of the 1990s as a manner of sending remittances. The use of payment system card, especially debit cards, has been progressively more significant as a mechanism for receiving remittances in recent years.
What is the General Overview of the Remittance Sector in the country?
The market for domestic remittance is highly dynamic in South Africa. Over ~ million people, ~ of the adult population, send, receive, or both send and receive domestic remittances. This is driven by large numbers of internal migrants transferring money with family and friends. The market incorporates tremendous innovation in offerings from financial services companies and retailers, as well as remaining challenges to be addressed. Over the past several years, as the number of migrant workers have increased, remittance flows have also showcased an upward trend. For the majority of developing economies in Asia & the Pacific and globally, remittances have been observed as the single-largest financial inflows. They have a significant impact on the economic well-being of recipient families as well as the growth and stability of recipient economies. Approximately, ~ million people, constituting around ~% of the global population, reside outside their home countries whereas more than ~ million migrate within their countries for economic, social, environmental and political reasons as of 2017. Majority of the cross border migration is in search of better economic and social opportunities. International money remittances have played a vital role in sustaining households in the South Africa whose members have migrated within or outside the country in order to seek better employment opportunities.
What is the value chain in South Africa Remittance Market?
The value chain in the South Africa remittance market includes a vast number & type of entities including government entities, Banks, remittance service providers and end users. The role of the government is to license the entities to conduct remittance services in the country. They lay down the regulations and rules to be followed in conducting business. Banks are the authorized dealers for money transfers that cater to the remitting services of the banked population through accounts of their customers. The average fees charged by the banks are ~% of the transaction amount. Money transfer operators facilitate domestic as well as international payments and offer services to a segment of the market that is often not served by banks. The average fees charged by the MTOs are ~% of the transaction amount. ADLAs are the remittance service providers that exclusively deal with remittances and focus on a low fee strategy. The average fees charged by the ADLAs are ~% of the transaction amount. Retailers offer an array of services to the customers out of which one of them is money transfer service. Retailers provide a cheap and readily available portal for transferring money to loved ones within South Africa. Retailers charge a flat fee of ~ Rand per transaction. The customers availing remittance services include South African citizens, migrants to the SADC countries including Zimbabwe, Lesotho, Mozambique, & others and immigrants from neighboring African countries sending money to their native land.
What are the important market segmentations in South Africa Domestic Remittance Market?
By Channels Used for Remittance: In the domestic, Banks recorded the highest share accounting to ~% owing to their high trust value and their affiliations with other remittance service providers. This was followed by retailers registering a share of ~% which in turn was followed by the mobile/digital channel which includes the ADLAs which have experienced the highest growth rate in the market of ~% and a share of ~% by value of transactions.
By Corridors: The domestic market is split into rural to urban corridor occupying the highest share of ~% owing to the high internal migration from regions like Eastern Cape to Gauteng for higher levels of employment and to reside in a secure environment. This is followed by the urban to urban corridor occupying a share of ~%. The rural to rural corridor occupies the lowest share of ~% owing to the minimal opportunities in jobs.
By Income Level: The domestic market is dominated by the low income people accounting to a share of ~%. This followed by middle income people occupying a share of ~% and lastly, the upper income people with a share close to ~% of the market by value share.
South Africa International Remittance Market Segments
By Channels Used for Remittance: In the international market, Banks recorded the highest share accounting to ~% owing to their high trust value and their affiliations with other remittance eservice providers. This was followed by retailers which registered a share of ~%. This was followed by the mobile/digital channel which includes the ADLAs which have experienced the highest growth rate in the market of ~% and a share of ~% by value of transactions.
By Corridors: In terms of international market, the market is split into inbound corridors and outbound corridors. Inbound corridors are dominated by United Kingdom with a share of ~% followed by New Zealand Australia and Angola. Outbound Corridors, on the other hand, are dominated by Zimbabwe with the highest share of ~% followed by Lesotho at ~% share and Mozambique with lowest share of ~%.
By Income Level: The international market is dominated by the low income people accounting to a share of ~% respectively. This followed by middle income people occupying a share of ~% lastly, the upper income people with a share close to ~% of the market by value share.
Key Segments Covered in South Africa International Remittance Market
By Channels used (Value of Transactions)
Banking channels
ADLAs & MTOs
Retailers
Others
By International Inbound Remittance Flow Corridor (Value of Transactions)
United Kingdom
New Zealand
Australia
Angola
Others
By International Outbound Remittance Flow Corridor (Value of Transactions)
Zimbabwe
Lesotho
Mozambique
Others
By Work Profile (Value of Transactions)
Key Segments Covered in South Africa Domestic Remittance Market
By Channels used (Value of Transactions)
Banking channels
ADLAs & MTOs
Retailers
Others
By Domestic Remittance Flow Corridor (Value of Transactions)
Urban to Rural
Urban to Urban
Rural to Urban
By Work Profile (Value of Transactions)
Key Target Audience:-
Banks
Money Transfer Operators
ADLAs
M-Wallet Companies
Hawalas
Convenience and Retail Stores
Supermarket Chains
South Africa Reserve Bank
Bills and Payments Companies
Investors & Venture Capital Firms
Time Period Captured in the Report:-
2013-2018 – Historical Period
2019-2023 – Future Forecast
Companies Covered: ABSA Bank Limited, Albaraka Bank Limited, Bidvest Bank Limited, BNP Paribas SA – South Africa Branch, Capitec Bank Limited, China Construction Bank-Johannesburg Branch, Citibank-South Africa, Deutsche Bank AG-Johannesburg Branch, FirstRand Bank Limited, Habib Overseas Bank Limited, HBZ Bank Limited, HSBC Bank PLC–Johannesburg Branch, Investec Bank Limited, JPMorgan Chase Bank-Johannesburg Branch, Mercantile Bank Limited, Nedbank Limited, Sasfin Bank Limited, Société Générale, Standard Chartered Bank–Johannesburg Branch, State Bank of India, The South African Bank of Athens Limited, The Standard Bank of South Africa Limited, First National Bank, Bank of Baroda, Bank of India, Bank of China, Bank of Taiwan, Western Union , Money Gram, Hello Paisa, Mama Money, Mukuru, Exchange4Free, Imali Express (Pty), Ace Currency Exchange (Pty), Forex World (Pty) Limited, Global Foreign Exchange (Pty) Limited, Inter Africa Bureau de Change (Pty) Limited, Interchange RSA (Pty) Limited, Master Currency (Pty) Limited, Sikhona Forex (Pty) Limited, Tourvest Financial Services (Pty) Limited, American Express Foreign Exchange Services, Tower Bureau de Change (Pty) Limited, Travelex Africa Foreign Exchange (Pty) Limited, Southeast Exchange Company (South Africa), Terra Payment Services South Africa (RF) (Pty), WorldRemit South Africa (Pty) Limited, Shoprite, Pep Stores, Pick n Pay, Checkers, Spar, Ackermans and Boxers.
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