Over the past years, one of the major concerns of African migrant workers in the diaspora has been remittance. It is estimated that there are more than 30 million Africans living in the diaspora.
And they send home more than US$40 billion per year-an amount which is steadily increasing year-by-year. This amounts to an average of US$1,200 per migrant worker.
Total annual fees charged by money wire services amount to US$1.4 billion. Western Union and MoneyGram dominate the money transfer services in Africa. It is Western Union and MoneyGram have more 50 percent market share across Africa and charge an average of 12.3 percent to send just US$200.
To even worsen the situation, acceptance of payments by merchants is also an issue. Less than three percent of Africans have Credit Card . Bank transfers are also expensive other services such as PayPal or Skrill are not yet widespread on the continent. Therefore, the costs of these transactions hurt those sending and receiving money.
But these problems faced by those sending and receiving money to and on African soil have just gotten help from Bitcoin. According to a BBC Business News Report in 2014, Bitcoin is getting a negative press in the western world, especially after the collapse of the Mt.Gox exchange and the cryptocurrency’s fluctuating value.
Business analysts have said that the negative press is due to the fact that Bitcoin has now brought a stiffer competition to remittance services such as Western Union and MoneyGram who were enjoying total monopoly in the money transfer industry in Africa.
The Next Web reported that most Bitcoin remittance firms charge fees of around three percent on transactions, significantly undercutting the more traditional players such as Western Union and MoneyGram. And African migrant workers are increasingly patronizing Bitcoin services.
Timothy Stranex- chief executive officer of African Bitcoin exchange BitX was quoted as saying “One of the difficulties in remittances is the ‘last mile’ problem: getting money to the final recipient. Because recipients often don’t have bank accounts, the money is typically paid out in cash, which is expensive and inefficient to handle. In the case of Bitcoin, it’s almost effortless for the recipient to setup a Bitcoin wallet on their phone even if they don’t have a bank account. The final leg of the remittance can then be handled electronically.”
In East African countries such as Kenya, Somalia, Uganda and Tanzania, they depend heavily on remittance and Bitcoin services are said to be making a major impact on the lives of people in these areas.
More entrepreneurs are also said to be joining the Bitcoin service on daily basis to increase the digital money system in Africa. For now, the likes of Igot, Beam, BitPesa, Safaricom and BitX are the leading Bitcoin businesses in Africa.
Bitcoin is a payment system invented by Satoshi Nakamoto. He published his invention in 2008 and released it as open-source software in 2009. The system is peer-to-peer. Users can transact directly without needing an intermediary.
Transactions are verified by network nodes and recorded in a public distributed ledger called the block chain. Bitcoin is more correctly described as the first decentralized digital currency. It is the largest of its kind in terms of total market value. Bitcoin is an instrument of alternative finance, which has emerged outside of the traditional financial system.
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