Stanbic Bank Uganda (SBU) in collaboration with UN’s International Fund for Agricultural Development (IFAD) have announced a partnership that will significantly cut the cost incurred by Ugandan migrants abroad to send money home through FlexiPay, a mass digital payments platform.
The average cost of sending money back home for Uganda’s migrant workers is 11.3 per cent, higher than the global average of 6.25 per cent and African standards 8.35 per cent, more than double the Sustainable Development Goals’ (SDG) recommended target of 3 per cent.
IFAD is partnering with Stanbic Bank under the PRIME Africa Initiative (PAI) to promote affordable digital remittances in rural Uganda through the lender’s e-wallet—FlexiPay, which enables simplified onboarding of unbanked Ugandans to access financial services.
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, Middle East, and the USA. These flows represent around 3 per cent of the country’s yearly gross domestic product (GDP) for the past decade.
Most remittances (75 per cent) are used to fight poverty and improve access to nutrition, health, housing, education. The remaining quarter is also used to support entrepreneurial activities, 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 of less than 3 percent when using FlexiPay to send money to their relatives back home, initially, within two of the most relevant remittance corridors: Kenya-to-Uganda and the Sweden-to-Uganda.
Pedro De Vasconcelos, Manager FFR said, “With IFAD’s financial support, FlexiPay wallet positions SBU to overcome the market barriers, having a crucial role in responding to the needs of remittance families whenever digital financial services offer the most affordable solution. Safe and easy electronic payments make mobile money a popular alternative to traditional bank accounts.”
Sam Mwogeza, Stanbic Bank Uganda’s Executive Head for Personal and Private Banking (PPB) said, “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.”
In addition to developing FlexiPay’s capability to support remittances, IFAD’s partnership will also extend to supporting Stanbic Business Incubator, a sister company of Stanbic Bank, to design and implement digital and financial literacy trainings for Savings and Credit Cooperative Societies (SACCOs), aimed at empowering and fostering rural based citizens to adopt the FlexiPay wallet among remittance recipients.
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.
IFAD is an international financial institution and a United Nations specialized agency. Based in Rome – the United Nations food and agriculture hub – IFAD invests in rural people, empowering them to reduce poverty, increase food security, improve nutrition, and strengthen resilience. Since 1978, we have provided more than US$24 billion in grants and low-interest loans to fund projects in developing countries.