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South African remittances startup Mama Money is now rapidly expanding across Africa and Asia after years of groundwork to ensure it has the right answers to serious problems.

Founded in 2013 before being publicly launched in January 2015, Mama Money was the first purely homegrown South African company to be licensed by the South African Reserve Bank as an Authorised Dealer with Limited Authority (ADLA), and aims to cut the cost of sending money between countries.

The startup expanded into Nigeria, Ghana and Tanzania earlier this year, and also currently sends to Zimbabwe, Kenya, Malawi, and India. Co-founders Raphael Grojnowski and Mathieu Coquillon told Disrupt Africa there are also plans to expand to Ethiopia, Uganda, the Democratic Republic of Congo (DRC), Mozambique, Bangladesh and Pakistan in the near future.

Mama Money has also onboarded 100,000 customers, and will shortly be launching a mobile banking solution specifically be aimed at the migrant community. Grojnowski said the response has been “great”.

“We rolled out our product slowly, and improved the product where necessary with regards to client on-boarding, user experience, communication strategies with customers and agents, and customer support,” he said. “Low fees coupled with convenient and reliable technology has been very well received by the market.”

At the time of its launch, Mama Money claimed to be the world’s first social business money transfer operator. Coquillon said this is still the case, with the startup operating as a social enterprise. Instead of being driven by profit maximisation, the startup’s motivation is effective service delivery and African community development.

“Unlike other operations of its kind, Mama Money did not emerge out of an opportunity to exploit a market, but rather, it emerged out of a strong vision to better the lives of one of the most vulnerable demographics within South Africa and throughout the world – migrants,” he said.

“Whether fleeing from famine, political instability, or economic hardship, migrants arrive in their destination countries in search of better lives – not only for themselves but, most importantly, for the families and communities they leave behind. While many are educated and have valuable skills to contribute to their host countries, opportunities for migrants remain limited, due to a range of barriers that they may face.”

Yet they face a number of challenges in attaining work, from xenophobia and social marginalisation, to exclusion from public services and protections afforded to “legitimate” citizens.

“Given these barriers, the value of money earned for migrants extends beyond just the monetary kind. Every rand, or dollar, or pound earned represents the overcoming of significant hardship, as well as the promise of a better future for themselves and their families,” said Coquillon.

In light of this reality, the high price point of money transfer services, therefore, poses a significant social problem.

“Money spent on fees is money that can’t be sent home,” Grojnowski said. “And money sent home is often the backbone of households, providing everything from daily subsistence and education, to medical expenses and funeral support. In trying to meet the needs of those they support, migrants often fall into cycles of debt and poverty.”

The vision of Mama Money, therefore, is not limited to addressing the needs of families back home, but the need that migrants themselves have to build and sustain the better lives they came in search of.

The co-founders said the heart of Mama Money’s business is its agent network. Agents are low-income individuals who live among the target market, who are both sales agents and brand ambassadors. Last year, meanwhile, the startup launched the first round of its Mama Money Kiosks.

“Twenty fully-branded kiosks went up in Cape Town, Johannesburg, Pretoria and Durban. Each kiosk is staffed with a super-agent who is responsible for a team of agents in his or her area,” Coquillon said.

“Each kiosk super-agent is given special training to foster an entrepreneurial spirit. Based on proposals and pilots performed by kiosk super-agents, customers can now also purchase airtime, buy electricity, and pay for DStv.”

Grojnowski said trust is the most important factor within the market.

“Our agents’ most important job is to build this trust, and their role is a dual one of both sales agents and community influencers. Due to the fact that our agents are also our target market, their input and engagement is invaluable in developing our products and services,” he said.

Mama Money found South Africa the ideal place to initially launch its product, given the country is home to Africa’s largest migrant community.

“Most individuals arrive seeking employment, the profits of which are used to support family back home. However, sending money cross-border is expensive,” Coquillon said.

“South Africa has the highest money transfer fees in the world, and current infrastructure is antiquated, making the process not only pricey, but also complicated and slow. This high price point poses a significant social problem.”

The company believes remittances are a key driver in fostering development in Africa, yet despite this necessity, migrants typically lack access to the basic financial services – such as bank accounts – that make safe, fast transfers possible.

“There is a huge demand throughout Africa – as well as a growing demand within Europe – for a cross-border money transfer system into and within Africa that is affordable, reliable and secure. The competitive landscape for such is barren at this point due to a number of factors, namely the high barrier of entry for regulatory licensing,” said Grojnowski.

Mama Money thinks it has the answer, and its rapid expansion suggests this may be the case. The average fee for sending money is five per cent, while the platform does not require a bank account. It has also proven especially reliable, with a refund rate – the amount of times a transaction cannot be delivered for some reason – of only 0.252 per cent.

It is also simple, secure, regulated, and utilises bank-grade infrastructure. Again, all of this is focused on building trust.

“Trust is a key factor for the target market. We facilitate this with easy to understand pricing, where all costs are highlighted and explained. Exchange rates and commission fees are shown clearly, and customers are shown how much their recipient will receive before confirming their quote,” Coquillon said.

Could even quicker expansion be on the cards in the future, potentially as the self-funded Mama Money hits the investment trail? It seems so.

“We are looking to do a potential raise. We’re in discussion with various interested parties,” said Grojnowski.

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