Frog portfolio company Azimo, a world leader in online and smartphone-based money transfers, were recently featured on the BBC World Service’s World Business Report programme. The report, which was broadcast on the UN’s International Day of Family Remittances, explored the impact of migrant workers sending money to their families back home.
Remittances constitute a huge amount of capital flowing around the world; three times the size of the world’s foreign aid budget combined. According to the World Bank, migrant workers sent $554 billion home in 2019. Around 800 million people usually benefit from these remittances, which are considered one of the most powerful funders of human development in terms of lifting people out of poverty by increasing life expectancy, education standards and living conditions. As the BBC’s report explains, the benefits aren’t simply for migrants and the families they send money to, but also increase spending in the local economy and raise wages, which can lead to further development.
The World Bank said earlier this year that global remittances could fall up to 20% because of COVID-19, which could have a long term impact on families in the developing world. Another factor is the cost of sending money home, since traditional transfer shops charge around 7% on average. On the programme, Azimo’s Chief Operating Officer, Dora Ziambra, explained how they are able to keep their fees much lower than this. She says, “The agency model is quite expensive because it’s not only the small shops that you see, but those need to give a card to the master agent and the master agent to the main company. So there are too many links in the chain. This is actually where a big chunk of the money goes to.”
Where Azimo is different is that they are a digital product. They use technology to not only cut out parts of the traditional chain, but also to automate the process. The customer is not largely impacted by this in their journey of using the product, but they benefit from Azimo’s lower cost base. For this reason, Azimo is one of the founding groups of the International Day of Family Remittances. The UN is working to reduce the rate for remittances down to 3% as part of its sustainable development goals, and digital remittance companies such as Azimo can play a significant role in this.
You can listen to the full programme here.