The Anglophone strategy focuses on freeing up the remittance market by encouraging competition, relaxing regulatory constraints for non-bank operators, offering financial incentives, encouraging technical and financial innovation and stimulating collaboration among market players. This approach, also adopted by Italy, contributes to reducing costs and increasing the overall volume of funds for beneficiaries.
The Hispanic approach emphasizes migrants’ involvement in banking by offering a range of banking services in both the country of origin and the host country, products of specific interest to migrants and low commissions on foreign transfers. This approach, widely developed by Morocco and the Portuguese-speaking world, is epitomized by the zero-commission policy initiated by the Spanish bank Santander and its Moroccan counterpart, Attijariwafa Bank.
Finally, the Francophone approach relies on two types of monopoly. The first is enjoyed by Western Union, which controls up to 90 percent of the total formal transfer volume within Africa’s 16-member Franc Zone. Western Union charges fees as high as 25 percent on transfers to these countries, compared to an average global benchmark of 5 percent, and has required that Franc Zone countries sign exclusivity agreements, thereby preventing foreign-exchange bureaus, post offices and micro-finance institutions from carrying out money transfers.
The second monopoly is exercised in the banking sector. France has a veto within the boards of directors of the Franc Zone’s two central banks, while two French commercial banks, BNP-Paribas and Societe Generale, exercise a quasi-monopoly on lending programs, mainly centered on short-term trade financing and the needs of governments, public and private companies as well as the elite. All other local banks have adopted the same approach, severely restricting access to financial services for households and entrepreneurs.
Despite the increasing importance of remittances from Italy, Spain and the US, the largest share in absolute terms still originates from France. There is thus a real need in the Franc Zone for a financing institution that would convert migrant remittances into productive investments, thereby generating jobs and wealth, and that would broaden access to banking services, mortgages, insurance products, pension plans and technical assistance.
Sanou Mbaye, a former member of the senior management team of the African Development Bank, is a Senegalese banker and author.
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