Thanks to the improved equipment of the post offices, Burundian migrants can now easily send money to their families, even those living in remote areas. To implement the project, the International Organisation for Migration (IOM) in Burundi received support from the Belgian Development Cooperation.
The Central African country Burundi, which ranks 185th among 189 countries in the Human Development Index (2018), is a thoroughly poor country that desperately needs its 29.6 million euros in remittances (2017). Remittances refer to the money that Burundian migrants abroad - the so-called Burundi diaspora – send to their country of origin (see box). If we add to this the informal money transfers, the amount can easily be two or three times higher. In addition, internal migrants also send money.
Expensive and unsafe
Unfortunately, it is not easy to get that money to the right person. ‘In 2015 - before we started the project - it was quite expensive for the Burundi diaspora to send remittances’, Odette Bolly of IOM-Burundi explains. ‘That is why many had recourse to informal means - such as asking a person to take cash money with them - but that is not without risks either. Moreover, most people in the countryside do not have access to a bank, which makes them extra vulnerable, for example if they need money due to unforeseen circumstances.’
Remittances, the money migrants send to their country of origin, can be destined for their family, friends or social organisations. In 2013, 180 million migrants from poor countries worldwide sent around 364 billion euros in remittances, more than three times total development aid that same year, which amounted to 119 billion euros.
These figures do not take into account 'informal' transfers, such as cash money that migrants bring to their country of origin. Moreover, many people who migrate in their own country, looking for work, also send money.
Remittances could thus be a genuine gold mine for developing countries, but these financial flows are still insufficiently used. The high cost for remittance transfers is one of the obstacles. That is why Sustainable Development Goal 10 states that these costs must be reduced to less than 3 percent of the amount sent.
Today, the costs for money transfers to Africa amount to around 12 percent, and within Africa to as much as 20 percent. That is why people often prefer informal means, which are less safe so that a lot of money is lost.
Tablets for post offices
IOM-Burundi tried to find a solution for this problem. The Belgian Development Cooperation provided 1 million euros for the project Rungika, which aims to ensure that Burundians in the most remote areas can receive the money sent in an easy and affordable way. To this end, the IOM collaborated with the Universal Postal Union (UPU) and the Burundi National Postal Service (RNP).
‘In order to be able to reach every Burundian, we made use of the post offices, which are well spread across all 18 provinces', Bolly explains. ‘The only problem is that they were not sufficiently equipped. That is why we donated 145 tablets to 139 post offices, in addition to providing high-speed internet connection (4G). Domestic money transfers are now much easier, provided that both the sender and the receiver have a mobile phone.’
‘For transfers from abroad, we worked together with the RIA platform, one of the largest money transfer services in the world. We integrated this RIA platform with the IFS system, a technical platform developed by the Universal Postal Union to enable money transfers within Burundi. The postal workers received training on international payments.’
The new transfer system was given the name Rungika (= sending). It grew into the cheapest national system for remittances, despite the competition from a growing number of companies offering 'mobile money transfers'. Bolly: ‘The price for international money transfers is also acceptable. We agreed with RIA on a cost of 4 percent. We will take great care to ensure that RIA does not change the rate. At the same time, we are investigating how we can achieve SDG10c - reducing transfer costs to less than 3 percent.’
The new transfer system was given the name Rungika (= sending). It grew into the cheapest national system for remittances, despite the competition from a growing number of companies offering 'mobile money transfers'.
The users are already enthusiastic. Lyse Kanyana is a civil servant in the Burundian municipality of Kiteha. She says she used to have great difficulty in sending money to her family. ‘I want to help my brothers and sisters to pay their school fees, among other things. But they often received only part of the money I sent them. And I had to keep asking if the money had already arrived. My sister often had to stay away from school for two days to wait for the money.‘
Thanks to Rungika everything goes much smoother. Kanyana: 'Rungika works faster, easier, cheaper and also much safer. Once the money has arrived, I get a message on my phone. So I am already informed before the receiver informs me. I have a secret code and the transaction is carried out immediately.’
A similar reaction from Renilde Fitina, who lives in the same province. ‘If a family member was taken ill and you wanted to send money for medicines, it always took a long time before that money arrived. So the only possibility was to have cash taken to the family or deposit it into the account of an acquaintance. With Rungika, sending money is a matter of seconds and super safe.’
Rungika works faster, easier, cheaper and also much safer. Once the money has arrived, I get a message on my phone.
But the project wanted to achieve more than just facilitate money transfers, as Bolly explains. ‘It was also essential to give rural people more financial insight, so we organised training courses in various municipalities for 212 people, 136 of whom were women. They learned about money management, bank accounts, saving, investments and credits.’ Moreover, small loans are available for small cooperatives. Finally, the Burundian postal service would like to develop insurance and other financial products, specifically for the rural population.
According to Bolly, Rungika is a success. ‘In 20 months’ time, 19,000 domestic transactions were carried out, worth approximately 618,000 euros. In December 2018, we counted 500 international transactions. Interesting fact: a number of companies offering mobile money transfers have contacted us to join forces.’
A drawback is that some residents still live quite far from a post office. 'To remedy this, we are currently setting up a partnership with a company that offers mobile money transfers and also has kiosks in the more remote areas', Bolly explains. The idea is that people can withdraw money in these kiosks. We are also exploring other partnerships so as to allow literally every Burundian to withdraw money very quickly.’
For international transfers, the exchange rate remains a problem. On the black market, you get 45 to 50 percent more Burundian francs for your foreign currency, compared to the official value. This can discourage people from using an official transfer system. Bolly: 'Unfortunately we cannot address this problem for the time being, but at the launch in Brussels, a number of people from the Burundian diaspora could approach the Burundian diaspora director on this issue. They urged him to plead with the Minister of Finance for a special exchange rate for diaspora members who want to send money by formal means.’
The IOM wants to start a similar project in Ivory Coast and Mali.
Getting more out of the diaspora
Because of this success, the IOM wants to start a similar project in Ivory Coast and Mali. IOM-Burundi also carries out other activities to make better use of the Burundi diaspora. For example, in 2017 and 2018, the organisation brought some experts from the Burundi diaspora to Burundi to train neurology and psychology students in mental health care.
The IOM also wants to better protect the rights of Burundian labour migrants at home and abroad. In addition, the organisation supports the Burundian government to develop a national policy on labour migration. Finally, the Burundi diaspora directorate organises an annual 'Burundi diaspora week', with the support of the IOM.