Some 32 percent of adults in 11 sub-Saharan African countries--about 80 million people--received money from family members or friends living in a different city of their country in the 30 days before being surveyed in 2011, according to a recent Gallup study.
This figure dwarfs the four percent of the total adult population (approximately 10 million people) in the 11 countries who received money from people in other countries in the same time frame. The implication is that money transfers largely are an intra-country activity, not an inter-country activity, for the most part.
Some 20 percent of the total adult population in the countries surveyed (roughly 50 million people) reported having sent domestic remittances to family members or friends living in different parts of the country.
This 20 percent is the total of respondents who only brought money in person (seven percent), only sent money in cash (three percent), only sent money electronically (five percent), and only sent money using informal as well as formal payment channels (six percent).
This compares with one percent (more than two million people) who sent international remittances -- excluding money brought in person -- with the majority of senders transferring money to another African country.
Across the region, only a handful of respondents sent money to another African country or to a country outside of Africa. Residents of Sierra Leone once again stood out with seven percent having sent money to another country in the previous 30 days, while all other countries had two percent or fewer adults sending remittances externally.
The reisk of sending money informally, in cash, is the problem mobile money transfers will solve. It often involves paying a bus driver to carry money in an envelope, or sending money with a friend who happens to be traveling the same direction, methods that can be slow, costly, and unreliable and put money in transit at risk of theft.
Some 53 percent of adults in 11 sub-Saharan countries interviewed in 2011, or about 134.3 million people, made transactions involving distant counterparties in the 30 days before the survey, according to a new Gallup study funded by the Bill & Melinda Gates Foundation.
Despite the large flow of nationwide transactions, few in the countries surveyed used formal payment channels. Some 31 percent of all adults (approximately 79.0 million people) used only informal, cash-based modes such as informal money carriers, sending the money by bus or traveling friends, or simply carrying cash themselves to deliver it in person, to move money across the country.
So the opportunity would seem to be rather significant. Even in South Africa and Kenya, the two countries with the most advanced payment markets, respondents were more likely to report that they only used informal cash payments than to have used only electronic payment methods.
About 31 percent of South Africans and 22 percent of Kenyans used only informal cash payments in the past 30 days, the study found. Those percentages translate into 10.9 million and 5.2 million potential consumers of financial services, respectively.
The best growth potential in sub-Saharan Africa is likely in Nigeria, the biggest potential market, with an adult population of 90.6 million. An estimated 34.8 million Nigerians are using only informal cash payments.
Sub-Saharan Africans do not generally make use of electronic payments of any sort, including bank, mobile phone, or formal money transfer services such as Western Union), with nine percent of all adults (roughly 22.7 million) saying they made their payments this way.
About 47 percent, about 118.4 million adults, made no payments of any kind. But the larger point is that 53 percent of people in the 11 countries already have a need to transfer money on a regular or frequent basis.
These results come from a new study of 11 sub-Saharan African countries, "Payments and Money Transfer Behavior of Sub-Saharan Africans." w
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