• Sending remittances home

Sending remittances home

This study examines how low income people and micro entrepreneurs send and receive money in Tanzania and Uganda, where financial services and their outreach are very limited. It looks at the ways in which businesses and people send and receive money, looking at what reasons, what costs, and with what risks people transfer money. What formal or informal services exist and how do people use them? The study analyses service gaps in the formal financial sector, looks at pointers for product development, suggests opportunities and criteria for microfinance services.

Main findings include:

• people transfer money for a variety of reasons: business; sending money home, maybe for a family emergency; to pay school fees or to send their children money for a bus ticket to come home
• both countries feature very limited financial services outside the capitals and major centres. The postal corporations have the largest network of branches but some of the worst reputation regarding the quality of their services and some of the worst track record regarding efficiency and timely service. Banks are not accessible in large parts of both countries
• there is an underserviced market for money transfer services in both Tanzania and Uganda. The emergence of new services, such as by bus companies in Tanzania and by courier companies in Uganda, as well as the introduction and expansion of services such as Western Union and MoneyGram, clearly underline existing demand
• among the key attributes for a good money transfer products are: accessibility, efficiency and timeliness, reliability, a sizeable service network including outside major urban centres, and affordability
• there is potential for products by microfinance institutions and other providers, such as bus and courier companies, who have service networks covering areas not touched by most money transfer service providers. Profitability seems to be relatively easily attained, even on a relatively small scale, as a product pilot in Uganda shows
• a careful consideration of the potential market and one's capacity to offer a good product is key. There should be a consideration of alternatives such as: an agency agreement for existing products; development of a proprietary product; collaboration with other services, such as an agreement between a MFI and a bus operator

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