HARARE - Global money transfer company Western Union (WU) has begun handling local transactions as competition to tap the unbanked funds intensifies.

WU — a leading provider of money transfer services in the world with one of the largest distribution networks in Africa — initially offered international transfer services only in Zimbabwe.

This comes on the back of an influx of various money transfer platforms being launched mainly by mobile network companies such as Econet Zimbabwe’s Ecocash and NetOne’s One Wallet.

Zimbabwe Stock Exchange-listed supermarket chain OK Zimbabwe Limited also recently acquired a mobile money transfer license.

Similar to other transfer platforms on the market, WU enables locals to send and receive money within Zimbabwe without the need of a bank account.

“The requirements to send money are a sender’s name, the sending city/town of origin, money transfer control number and the amount sent. A receiver is able to access money within minutes of sending and is subject to agent locations,” said a local WU agent.

People sending between $25 and $50 pay a $2 commission, while $3 will be charged for sending $51-$100.
Amounts above $150 attract a four percent charge. WU local agents include Kingdom Bank’s Microking, Easy Link and POSB among others.

Following a crisis in the country’s banking sector and subsequent dollarisation of the economy, Zimbabweans have avoided formal financial services with over $2 billion estimated to be unbanked.

Gideon Gono, Reserve Bank of Zimbabwe governor, has said Zimbabwe’s level of financial inclusion — the proportion of the population using financial products and services, both formal and informal — is very low.

According to a survey in 2011, 40 percent of adults are financially excluded while only 24 percent are banked. 38 percent of the adults are formally served through banks and other formal bank products and services.

In recent months, banks, retail shops and mobile network operators have partnered EcoCash and other money transfer services providers as part of efforts to exploit the seemingly lucrative business.

Analysts have said the money transfer business is ideal for Zimbabwe currently considering depositors are wary of the formal banking system and the problem of change.

Apart from Econet, the country’s two other mobile networks Telecel and NetOne have also launched mobile money services.

Econet says at least $100 million is being transferred monthly from the country’s urban centres to rural areas through EcoCash.

Sluggish economic development in rural business centres, which once experienced good business before the economic crisis rattled Zimbabwe between 1997 and 2008, discouraged financial institutions from expanding into the country’s remote, unbanked regions.

During the decade-long economic crisis, banks trimmed branch networks in line with extremely depressed business activity outside major cities, resulting in a single bank branch in remote parts of the country servicing an average 170 000 people in 2006, compared to about 12 000 in metropolitan centres. - John Kachembere