Only 1% of Moroccans Use Digital Remittances Tools Despite Low Cost

Rabat – The latest MobileRemit Africa index, issued by International Fund for Agricultural Development (IFAD) on June 16, has established that the emergence of new mobile wallets in Morocco, the shift of consumer behavior in favor of digital payments during the pandemic, and the government’s digitization efforts have not necessarily improved Moroccans’ attitude to digital transactions.

In 2021, global remittances to Morocco were valued at $10.4 billion, contributing to 7.9% of the country’s GDP. Despite the availability of mobile wallets for digital remittances, only 1% of Moroccans made use of these low-cost tools last year to complete their transactions, according to the IFAD’s index.

The remittances came notably from the Moroccan diaspora in France, representing 35% of global remittance flows to Morocco. Italy and Spain were the second sources of remittances for the North African country as they each contributed 9% to the overall money flow.

With Morocco providing four mobile wallets, Orange Money, Inwi Money, Barid Bank Money, and MT Cash, some created during the pandemic, the cost of mobile wallets in the country in late 2021 dropped to 2.64% (lower than the SDG 10 goal of 3%), while the regular cost of non-digital remittances transactions stood at 5.56%.

Still, Moroccans preferred the non-digital transactions which had an impact on the Moroccan score in the latest MobileRemit Africa index.

The North African country received a score of 75 out of 100 in the MobileRemit Africa index, ranking 28th in Africa and just slightly above the continent’s average of 74.

While Morocco was placed ahead of Egypt, Tunisia, and Mauritania, the Kingdom came way behind Kenya, Rwanda, and Tanzania. The three countries excelled in the African index, with Kenya receiving a nearly perfect score of 97 out of 100.

According to the IFAD report, Morocco “should see the prevalence of mobile remittances increase over the coming years” if it continues to lower bank account penetration, boost mobile phone penetration, and develop its regulatory environment for e-transactions.

Morocco currently has a perfect score of 100 in the indicators related to regulatory permission to process international mobile transfers and the presence of mobile services to complete such transactions (mobile wallets), said the IFDA report.

Yet the mobile money regulatory framework is still lacking in the country as it restricts the use of non-bank agents.

The low penetration of mobile money presents an additional burden to the implementation of an inclusive financial environment, which explains Morocco’s low score (39 out of 100) in the financial inclusion environment index.

According to the report, Morocco should also develop consumer protection regulations through the advancement of mobile money deposit insurance. The country scored 70 on the consumer protection indicator.

Besides the low cost of money wallet services, “the digitalization of remittances, particularly through mobile channels reduces fees and other transaction costs like travel time, making the process more convenient and safer while promoting digital and financial inclusion,” said Gilbert Houngbo, President of IFAD.

Houngbo added that the digitization of remittances “is a great opportunity to boost rural development” since it helps reduce poverty, allows families to benefit from education and health care services, and provides support communities with the opportunity to integrate the formal financial sector by creating income-generating projects for the benefit of local communities.

Last year alone, global remittance flows went to more than 200 million families of migrant workers and were estimated at $605 billion, up by 8.6% from the 2020 value. 48% of the transactions were completed through mobile channels.

Considering that remittances to low and middle-income countries are expected to reach $5.4 trillion by 2030, double of Africa’s GDP in 2021, there is a pressing need for the digitization of such services due to the high cost, above set goal of 3%, of non-digital transactions.

Some regional initiatives were launched to support countries in their digitization efforts, such as the € 15 million initiative called PRIME Africa. Launched by IFAD and the EU, the initiative seeks to reduce remittance costs in Ghana, Kenya, Morocco, Senegal, South Africa, Gambia, and Uganda.