Future of money remittance business and why Africa is at the epicentre

The global money remittance business is poised to grow in Africa as fintech becomes more entrenched, bringing both opportunities and challenges. CNBC Africa recently discussed key trends and threats around money laundering, terrorism financing, and the use of Artificial Intelligence (AI) in the industry with experts Phillip Ssali and Eghosa Nehikhare. The future of AI in the sector lies in studying patterns and making predictions to aid decision-making for payments institutions, liquidity providers, and regulators. For example, AI can help liquidity providers pre-fund transactions based on historical patterns, enhancing decision-making processes. Additionally, AI can be used to detect money laundering activities and provide valuable insights for regulators to combat financial crimes effectively. Blockchain technology also plays a crucial role in revolutionizing the remittance industry, particularly in promoting decentralization and transparency. By decentralizing information and utilizing distributed ledger systems, blockchain can empower market participants with real-time data on market rates, promoting fair competition and informed decision-making. This technology has the potential to address the issue of information asymmetry in markets, enabling better liquidity provisioning and trading practices. The speakers highlighted the importance of leveraging these technologies to enhance efficiency, reduce costs, and promote financial inclusion in the region. Phillip Ssali provided valuable insights into the current trends in remittances across East Africa, noting a recent increase in remittances post-pandemic. Countries like Uganda, Kenya, and Rwanda have seen significant inflows of remittances, showcasing a vital source of hard currency for their economies. The United States, United Arab Emirates, and Saudi Arabia emerged as key sources of remittances for these countries, highlighting the importance of these global partnerships in driving economic growth. Despite the growth in remittances, challenges persist in the regulatory framework surrounding the industry. Issues such as anti-money laundering and terrorist financing pose significant risks that regulators need to address effectively. Collaboration between regulators, financial institutions, remittance companies, and fintech operators is essential to develop a robust regulatory framework that safeguards against financial crimes while supporting the growth of the remittance market. Eghosa Nehikhare emphasized the importance of regulators being approachable and transparent in their requirements to facilitate the entry of remittance companies into new markets. He highlighted the need for access to liquidity and discussed the challenges of cross-border remittances, emphasizing the importance of bridging gaps between different currencies and banking systems. Collaboration with regulators and financial institutions is crucial to overcoming these challenges and unlocking the full potential of the remittance market. As Africa emerges as a key player in the global remittance business, the industry must navigate evolving trends, embrace innovative technologies, and establish a cohesive regulatory framework to ensure sustainable growth and financial stability. By leveraging AI, blockchain, and seamless partnerships with regulators, the remittance sector in Africa can unlock new opportunities, drive economic prosperity, and promote financial inclusion for millions of people across the continent.