Stanbic Bank Uganda (SBU), the United Nation’s International Fund for Agricultural Development (IFAD) and TerraPay have entered a partnership that will significantly cut the cost incurred by Ugandan migrants abroad to send money home through FlexiPay.
The partnership will also provide remittance recipients, especially in rural areas, with digital and financial training to promote the savings culture and foster digital finance uptake among these communities.
The average cost of sending money back home for Uganda’s migrant workers is 11.3%, higher than the global average of 6.25% and African standards at 8.35%, more than triple the Sustainable Development Goal (SDG) target of 3%(SDG 10).
Under the European Union-funded PRIME Africa initiative, IFAD and SBU join forces to make the most of digital remittances in rural Uganda. They will work together to integrate remittance service providers and payment hubs into SBU’s FlexiPay, an electronic wallet that enables access to financial services for unbanked Ugandan people.
“With FlexiPay, you can send money home with less than 3% transaction fee, initially Kenya-to-Uganda and Sweden-to-Uganda Money remittances are more than transactions; they are a lifeline,” said Sam Mwogeza, Stanbic Bank Uganda’s Executive Head for Personal and Private Banking (PPB).
He added: “FlexiPay is our commitment to make financial services accessible. We are thrilled to make international remittances affordable and reach the most remote parts of Uganda. We are excited about our collaboration with TerraPay. This partnership aligns with our commitment to providing innovative solutions that meet the evolving needs of our customers.”
According to Mwogeza, FlexiPay has a simplified onboarding process that facilitates un(der)banked clients’ uptake.
“The wallet allows its users to store and transfer money, pay bills, top-up airtime and transact through a feature phone as well as a smartphone. We are delighted to extend affordable international remittances in partnership with IFAD through Flexipay and reach rural remittance recipients.”
Most remittances (75%) are used to fight poverty and improve access to nutrition, health, housing, and education. The remaining quarters are used to support entrepreneurial activities and facilitate access to financial products such as savings and credit, leading to financial inclusion.
IFAD’s new partnership with Stanbic Bank means that Ugandans abroad will pay a transaction fee within the SDG target (less than 3%) when sending money to the recipients’ FlexiPay wallet. Initially, two of the most relevant remittance corridors are targeted, from Kenya to Uganda, and from Sweden to Uganda.
“Thanks to IFAD’s financial support, Stanbic Bank Uganda is now able to overcome market barriers and play a crucial role in meeting the needs of remittance families through its FlexiPay e-wallet. This digital financial service offers a safe, fast, and easy way for families to make electronic payments, which is a popular alternative to traditional bank transfers,” said Mohamed El-Ghazaly, IFAD Representative and Country Director in Uganda.
“The European Union is delighted to support this initiative because it is going to help migrants in the EU and their families and friends at home to make the most of their remittances by saving in transactional fees due to lower costs for sending money. Our support is geared towards promoting digitalization and financial inclusion for the benefit of millions of people at home and abroad,” said Jan Sadek, European Union Ambassador to Uganda.
From the United Kingdom (UK) to the United Arab Emirates (UAE) to the United States of America (USA), one can now send and receive money with ease.
According to Samuel Mayingo, TerraPay Country Representative, Stanbic Uganda’s partnership with TerraPay “is all about connecting you to your loved ones, faster and affordably! Simply register for #FlexiPay to enjoy this”.
“By combining TerraPay’s global payments infrastructure with Stanbic Bank’s strong presence, we aim to provide individuals and businesses in Uganda with a more seamless experience,” he noted.
According to Stanbic Bank, the partnership with TerraPay and IFAD will revolutionize cross-border payments through FlexiPay because it is “faster, convenient, cost-effective solutions are now at your fingertips”.
Promoting financial literacy in rural Uganda
In addition to developing FlexiPay’s capability to support remittances, IFAD’s partnership will also support the Stanbic Business Incubator, a sister company of Stanbic Bank. The company will design and implement digital and financial literacy trainings for Savings and Credit Cooperative Societies (SACCOs), aimed at empowering and fostering rural people to adopt the FlexiPay wallet as a solution to receive remittances.
Despite its competitive price, the uptake of digital methods for sending and receiving money is still hindered by the lack of financial and digital literacy and the lack of trust in digital payment methods, as well as by the limited number of access points in rural areas, and the high percentage of informal remittances coming from the neighbouring countries.
Uganda ranks in the top 10 sub-Saharan Africa remittance recipient countries. In 2022, international remittance flows to Uganda reached US$1.2 billion, close to the pre-COVID values (US$ 1.4 in 2019), mostly coming from Europe, the Middle East, and the USA. These flows represent around 3% of the country’s yearly gross domestic product (GDP) for the past decade.
