Diaspora Remittances are Levers for Financial Inclusion in France, Côte d’Ivoire, Mali and Senegal


Study recommendations highlight importance of developing digital financial services that meet the needs of senders and their families

MicroSave Consulting (MSC), in partnership with the Mastercard Foundation, have released  study findings  on remittances in Côte d’Ivoire, France, Mali, and Senegal. The study also provides  recommendations to encourage remittances as levers for financial inclusion.

Migrant remittances are becoming the main source of external finance in West African countries. Yet most of this economic engine is untapped. Moreover, if financial education and the provision of financial services at affordable costs contribute to financial inclusion of populations, money transfer service providers, their networks, and their platforms then they  also have a major role to play, in particular by increasing the usefulness of transfers for the most vulnerable populations in the future.

Unfortunately, this main source of funding, cash transfers, is threatened by the COVID-19 pandemic, which has almost brought the global economy to a standstill.

The barrier measures taken by various governments around the world to fight its spread have disrupted the remittance habits of migrants and their families. In 2019, global remittances were estimated at $ 554 billion. With the coronavirus, these global transfers are expected to decrease by 20% in 2020 and a second wave could significantly impact remittances. It is important to design money transfer services to meet the needs of senders and receivers. Providers could create services to transfer funds to accounts linked to demand-driven value-added services, such as paying bills or building assets through partnerships, especially in rural areas that receive a large portion of remittances.

Three countries representing $ 3.7 billion in international transfers

In the three African countries, the international transfer market represented $ 3.7 billion in 2018 according to the World Bank. The objective of the study was to better understand the needs and constraints of senders and their families and to offer recommendations for developing digital financial services adapted to the needs of senders and receivers of money transfers. Depending on how long the sender is migrating, his/her financial aspirations and priorities for sending money home change and are influenced both by the recipient’s own needs and by his relationship with his/her family or community. People with higher incomes seek to obtain business loans and land loans so that they can eventually consider returning home; permanent migrants are looking for interesting offers in preventive health care, human capital, and entrepreneurship financing for family members who have remained in the country; and recipients are looking for services that add value and save them time, such as recurring invoices.

Recommendations to better meet the needs of diasporas

Digital channels can reduce the cost of sending remittances, but efforts should be made to inform senders of the existence of these channels. Among the migrants surveyed in France, only 15.5% used digital channels, such as the mobile app, mobile money, or bank transfer.

The study provides a multitude of operational and strategic recommendations to better meet the needs of diasporas and their families and to develop financial inclusion. For example, recruiting migrants to raise funds, cross-selling, and educating other migrants for specific payment corridors, or designing regional or market-specific strategies in the context of a broader holistic approach that recognizes needs, and the unique character and evolution of the payments space in each market or segment. The study noted, in particular, the possibility of actively targeting payment flows related to health, insurance, and education.