Providing better remittance services to rural Africa

General Principle 4: market structure and competition

As a national network for delivery of postal and financial services, the Post should be mindful of the potentially negative impact of exclusivity agreements on competition in the market for remittance services. In fact, by signing a contract that prevents it from offering competing services indefinitely, the Post may be restricting the range of options that the population have access to. This is especially true for rural and remote areas, where the Post may be the only access point within reach.

In negotiating a contract, the value brought in by the Post should be fairly recognized. While the MTOs would generally provide technology, training, and an international network of agents, the Post would likely be making available to the MTO one of the largest distribution networks within the country. From this position of strength, the Post should demand that the partnership is equal and the MTO contributes to it including by providing: (i) adequate support to meet specific technology requirements imposed by the MTO, (ii) training for the Post’s staff, (iii) funding for any investment and warrant of a fair return within a reasonable amount of time, (iv) fair compensation on the basis of market practices for any marketing or advertising the Post may be required to implement within the contract terms.

General Principle 5: governance and risk management

The Post should implement appropriate governance and risk management practices and, by the same token, take the necessary partner due diligence measure to ensure appropriate practices are adopted by the MTO it intends to partner with. This can significantly improve the safety and soundness of remittance services provided by the population and reduce the risk of incidents, whose occurrence would also undermine customer trust.

As is the case for the payments industry generally, the remittance industry faces legal, financial, operational, fraud and reputational risks. In establishing risk control measures, RSPs should conduct risk level assessments to ensure that proposed risk control measures are appropriate to the level of the risks and the size of the business generally. In doing so, they should as far as possible take appropriate steps to protect themselves and their customers against risks arising from their operations in different jurisdictions, in particular in those with shortcomings in their legal and regulatory framework.