Sub-Saharan Africa Senegal

Transcription

1 Sub-Saharan Africa Senegal The Chaka Group and Money Express: African Leadership in Money Transfers and Remittances Prepared by Mamadou Gaye & Ousmane Moreau (Senegal) Sector Financial Services & ICT Enterprise Class Local SME

2 Background Context Senegal is a country located in West Africa. It is bordered in the north by Mauritania, in the east by Mali and Guinea, in the west by the Atlantic Ocean, and in the south by Guinea- Bissau. In 1960, the country became independent from France. There is little industrial development in Senegal; instead, the country s economy is based on agriculture and services. Senegal has a population of nine million, of which 60 percent are illiterate. Senegal has one of the lowest GDPs per capita on the African continent with 70 percent of the population living on less than US$2 per day according to national statistics. Senegal s government has developed a Poverty Reduction Strategy Paper and is a signatory to the Millennium Development Goals. The country is politically stable and has just elected Abdoulaye Wade for a second term as President. President Wade is a cofounder of the New Partnership for African Development. Senegal is an active member of the African Union and the West African Monetary and Economic Union, and Senegal s strategic geographic position favours multilateral relations with the United States and the European Union. Through the 1980s there was limited democracy in Africa, but when the Berlin Wall was brought down in 1989 and Francois Mitterrand gave his famous speech of La Baule in 1991 where he encouraged greater democracy in Africa, a note of optimism was in the air. The long overdue quest for freedom and liberty by many Africans seemed, at last, to be nearing fruition. The development of the information highways under the Clinton era further accelerated the movement towards the continent s democratization. It is against that background that the Chaka Group was launched, in 1994, in Dakar, Senegal. Chaka Group The Chaka Group was founded by Meissa Deguene Ngom, a young Senegalese engineer. Chaka is comprised of three business units: Call Me, Chaka Computer and Money Express. The focus in this case will be on Chaka s Money Express money transfer service and how it helps the poor. Following his studies in France, Mr. Ngom, secured a position as a professor at the prestigious Sorbonne University. He also acquired solid experience with Steria, a French company specializing in IT. Strongly committed to making a contribution to his home country of Senegal, Mr. Ngom decided to leave his position at the Sorbonne to start the Chaka Group, in 1994, in Senegal s capital city Dakar. With just one assistant and using his own minimal funds, Mr. Ngom began by developing accounting software. With the subsequent development of telecommunications systems in Senegal and the urgent need for money transfers and remittances, Mr. Ngom created the Call Me and Money Express business units in In 2007, the Chaka Group employed almost 500 people, including many young engineers and had subsidiaries in Mali, the Ivory Coast, Mauritania and Cameroon. Together, the Chaka group s businesses include a number of computer and IT-related businesses and a Case Study Money Express: African Leadership in Money Transfers and Remittances 2

3 wide range of products and services. Call Me and Chaka Computer are described briefly below, and Money Express is described in further detail in a following section. CALL ME In 2002, when Chaka s Call Me business was first launched, it was the first call centre in Africa. Describing itself as a specialist in the management of remote client relationships, Call Me offers telephonebased customer service, telephone reception, telemarketing and technical assistance (i.e. hotlines) to Multimedia Contact Center commercial business clients. Call Me employs the latest technology in its operations including automatic systems to distribute calls, integration with company databases and performance measurement tools. Clients of Call Me include Tigo (the second largest telecom operator in Senegal) as well as many other telecom companies including SENTEL GSM and IKATEL Mali. Call Me has clients in Mali, Mauritania, Burkina Faso, Benin, Central African Republic and Cameroon, as well as in Senegal. Following the local self-reliance philosophy of the Chaka Group as a whole, the managers of Call Me decided from its inception that they would focus on hiring and training local experts as much as possible. In contrast to other call centres that have been established subsequently, Call Me does not rely on staff from France or the United States to import hardware and software solutions. Instead, Call Me develops its own software and trains its managers and employees to adapt local knowledge for the purpose of developing solutions for the needs of the company. Call Me, like other Chaka Group companies, employs universitytrained young people (although many come originally from poor rural and urban areas) and promotes gender equity in hiring and promotions. Most of the employees of Call Me are women. Employees are paid salaries that are more attractive than other companies in the IT sector (e.g. around 200, ,000 CFA [US$ ] per month) to attract the most qualified people. Employees also receive benefits, including the possibility of support for tuition payments. Like all businesses, customer satisfaction is a strong focus and employees are trained to make this their top priority. Call Me became an autonomous entity in 2005, within the Chaka Group. CHAKA COMPUTER In its early days, before the establishment of Call Me and Money Express, Chaka Computer specialized in developing software for small businesses, including accounting software for micro-finance organizations. One of Chaka s first clients was the African Association of Savings, and it was through Chaka s relationship with this client that Mr. Ngom began to learn more about the money transfer sector and potential business opportunities there. Money transfer agencies primarily need two things: a hardware/software platform to ensure secure money transactions and approval from the government financial regulatory authorities. Case Study Money Express: African Leadership in Money Transfers and Remittances 3

4 Initially, money transfer was done by the postal services in Senegal. In order for Chaka to develop their money transfer business, they had to get authorization from the Senegalese Ministry of Finance, which issues the permits for such businesses. Chaka s partners in Africa and globally also had to acquire money transfer licences. Before the establishment of Money Express, Senegalese immigrants living in France and elsewhere in Europe, Africa, North America and the Middle East had to rely on Western Union (which operated in partnership with the African Association of Savings) or the Senegalese Postal Service or informal money transfer mechanisms. The postal service was notoriously unreliable and informal institutions were not always reliable. In 2002, the African Association of Savings (which includes countries belonging to the West African Monetary and Economic Union) and Western Union ended their partnership, and Mr. Ngom seized that opportunity to develop his money transfer system. Money Transfers and Remittances Demand for money transfers and remittances to West Africa have grown throughout the 1990s and 2000s, with emigration from Senegal and other West African countries to Europe, North America and elsewhere. Six out of every ten families in Senegal have an immigrant family member or relative who has to take care of the food, housing, education and health care needs for the rest of the family living at home. Mr. Malick Seck, CEO of Money Express, estimates that there is an average of $200 sent monthly by each Senegalese immigrant to their families. Remittances from the so-called Modu Modu (Senegalese immigrants hustling in the streets of Paris, Milan and Harlem) support families, as well as community infrastructure projects in water supply, housing, health infrastructure, education and electrification in Senegal and other West African countries. Other emigrants who own larger businesses abroad send thousands of dollars on a monthly basis. According to Mr. Senghor, the marketing manager at Call Me, 50 percent of small businesses located between 116 th and 135 th streets in New York City are West African owned. Eighty percent of the money transferred through Money Express is sent for basic daily needs, ten percent goes towards savings and the remaining ten percent goes towards investments such as housing or small businesses according to Mr. Seck CEO of Money Express. Money Express Poverty in many places in West Africa has driven hundreds of thousands of its people overseas to try to make a better life for themselves and their families. Between 2002 and 2006, 26,000 young Senegalese tried to reach European shores; 3,000 of them were not able to make it, and 1,500 were sent to jail in Europe based on the Ministry of Interior of Senegal declaration. Those who succeed in reaching the Western world are seen as heroes within their communities, because they have overcome great obstacles to make a better life for themselves, their families and their communities. Immigrants who make it to Europe, Case Study Money Express: African Leadership in Money Transfers and Remittances 4

5 North America and the Middle East, either legally or illegally, want to send money back to their families once they have found work. If someone is working illegally, they do not have identification and are not able to use the formal money transfer or banking system to do so. Instead, they rely on Money Express, through the Housing Development Bank of Senegal (BHS). Through this partnership, there is no legal issue in the Senegalese perspective. According to Mr. Seck, twenty billion CFA (US$40 million) is remitted though Money Express annually, which contributes to the socio-economic development of their countries. Money Express Advertisement According to Mr. Seck, US$150 billion is transferred by the money transfer system globally each year. Of that total, US$250 million per year is transferred by the informal money transfer sector around the world. This is a huge potential market for Money Express to tap into. The informal money transfer system is used because of a number of factors. First, it is used by people who do not have the necessary identification or documentation to use the formal channels. Second, there is a lack of adequate financial institutions, such as banks or Western Union offices in many regions of West Africa for people to receive money sent from abroad (for example, the regional capital city of Kayes, Senegal, has a population of approximately 90,000 people but no bank at all). Third, even in areas where there are banks or offices of money transfer agencies, the local populations are often reluctant to trust them with their money. Fourth, the fees for bank or Western Union money transfers are often prohibitive to the senders. The lack of offices and social barriers combined with the notion that transfer rates are high with formal institutions (and low with the informal money transfer system) prompted Money Express to enter into the market in Senegal and West Africa. Money Express Business Model Money Express is the flagship of the Chaka Group s portfolio of businesses. The money transfer service provides assistance in channelling much needed money into Senegal and other West African countries, including to poor families. Thanks to Money Express modern and efficient business model, considerable segments of poor areas in the West African region have been able to benefit, in a prompt, reliable and friendly way, from the revenues of their immigrant family members overseas. Case Study Money Express: African Leadership in Money Transfers and Remittances 5

6 Money transfer systems targeting immigrants wishing to remit money to their countries of origin have been well established in North and South America for some time, targeting mainly Latin Americans working in the United States. Money Express was established with the aspiration to be the market leader in money transfer and remittance services tailored to West African immigrants in Europe and the United States. In terms of branding, Money Express appeals to its clients need for flexibility. Its advertisements also communicate that immigration is something positive, both for the host countries and for the African countries of origin. Money Express portrays an image of enthusiasm and solidarity for African human and economic development. Money Express enables its customers to make different types of domestic or international money transfers using foreign currency. The operations can be from cash to cash, from account to cash, from cash to account and from account to account, which is not the case at Western Union and MoneyGram. Through the BHS Money Express partnership, this is possible because most Senegalese immigrants have accounts in BHS. Money Express has deployed a fast money transfer solution encompassing accounts in Africa and throughout the world. To send money from abroad, Money Express clients need only a Senegalese or West African passport. Money Express is spread out in rural and urban areas in West Africa and works in partnership with networks of smaller banks in villages in West African Countries. Money Express helps the recipients of the money transfers receive their money with agents sometimes going door to door to give remittances to elderly people who cannot easily leave their houses. The giving of money can be a culturally sensitive issue in these cases, and Money Express has the knowledge of the local customers and African traditions to allow them to be trusted and appreciated. PARTNERSHIPS Money Express is represented in all West African Monetary and Economic Union countries, as well as in Ghana and South Africa. Through partners (such as Money Trans, Money Exchange, ChequePoint, Omnex, TMT and Ria), Money Express network also embraces Europe, the United States and the Middle East. Whereas Western Union tends to work in cooperation with large banks, Money Express has partnered with smaller local partners that are more knowledgeable about lower income customers and markets. Money Express system even reaches out the small saving accounts in small villages. Money Express partners include: The Housing Development Bank of Senegal (BHS) and the National Union of Traders and Industry Workers in Senegal (UNACOIS) that operates 46 agencies Savings and Postal Cheque Bank (CESCP) in the Ivory Coast, which runs 100 agencies Telecommunications and Post Office (OPT) in Benin, which has 21 agencies Savings Bank of Togo (CET) with nine agencies Housing Development Bank of Mali (BHM) Housing Development Bank of Senegal (BHS) in New York, Atlanta and Washington, DC Case Study Money Express: African Leadership in Money Transfers and Remittances 6

7 The Senegalese Housing Bank has been an especially valuable partner, because it is present in all of the countries that have significant populations of Senegalese immigrants. The Senegalese Housing Bank has been operating for more than 35 years and has experience in banking for the poor in Senegal and West Africa. If someone has a West African identification, they can open an account and transfer money to Africa. The BHS also provides opportunities for emigrants to build houses while they are away from home for years. LOW COST AND FLEXIBILITY Money transfer by Money Express is less costly than the major formal sector competitors. Money Express sending fee is three percent from the amount sent, compared to MoneyGram s four to seven percent and Western Union s ten to fifteen percent. According to Mr. Seck, Western Union and MoneyGram are not only costly, there are also limits placed in terms of the amount of money that can be sent, often a maximum of US$1,000, whereas Money Express does not have these restrictions. CUSTOMER FOCUS With its partnerships with local banks and financial institutions, Money Express is closely connected to the communities and cultures of its clients. Money Express also places a high premium on customer service and after-sales service. EARLY WORK WITH THE GOVERNMENT OF IVORY COAST Money Express received an initial early boost in 2002 when officials from the Ivory Coast felt the need to enhance their money transfer system, which had been diminished as a result of the civil war in the country. Mr. Seck, the CEO of Money Express, went to the capital Abidjan with 100 computer scientists and set up a platform to meet the money transfer requirements of the Ivory Coast Postal Services. Money Express worked in partnership with the Ivorians and trained 100 local cashier managers, forwarders, controllers and system administrators on the Money Express model. At both national and regional levels, Money Express and the Chaka Group have acquired a reputation for quality service and innovation in their businesses. They have done this despite the challenges with information and communication networks in neighbouring countries that are still being developed and the challenges of needing to educate immigrants and their families in how money transfer services work. Development Impact FACILITATING REMITTANCES AND MONEY TRANSFER Money Express is improving livelihoods and enhancing family ties by facilitating lower cost money remittances. This is visible during expensive traditional holidays such as Korité, Tabaski, Christmas, Easter and Assumption when people celebrate together in their communities. The economies of many rural villages rely on remittances from immigrants around the world. The business model is tailored for the poor and Money Express is Case Study Money Express: African Leadership in Money Transfers and Remittances 7

8 affordable compared to its competitors. The money sent by immigrants abroad goes mostly to basic needs such as food, health, sanitation, children s education, housing, and small business start-ups. COMMUNITY INVESTMENT Money Express has created the Money Express Foundation to reach out to poor communities in Senegal to help fund education and health projects. For example, the Money Express Foundation offered to build a children s nursery in Guediawaye, in the suburbs of Dakar, for the care of infant children as an investment in the poor urban areas of Dakar. In addition to community investment activities by Money Express, the Chaka Group as a whole helps create jobs for low-income youth living 300 to 400 kilometres from Dakar and has also donated computers to schools. IMPACT ON THE ECONOMY Money Express impact on the Senegalese economy is diverse. In 2006, Money Express handled 191,584 transactions equalling 25 billion CFA (US$50 million) within the African continent and nine billion CFA (US$18 million) with parties outside of Africa (i.e. Europe, the United States, etc). These financial flows into Africa have had a significant impact on job creation, mostly for women. HOPE FOR THE FUTURE AND SELF-RELIANCE Money Express and the Chaka Group, as a whole, is also serving as a role model of innovation and success for young engineers and other African companies in the high-tech and ICT industries. The younger generation, who are computer literate, can experience hope that local Senegalese companies can compete successfully internationally. Conclusion and Opportunities for Replication & Scaling Up Money Express rapidly expanded itself across the African continent because of its low costs, intimate knowledge of the African market, reliance on developing local talent and partnerships with the Housing Development Bank of Senegal and others. The Chaka Group is growing and is contributing to the establishment of the Diamniadio Millennium Platform, a major new industrial and commercial park, which is being funded with US$320 million by the United States Government s Millennium Challenge Account. This project is aiming to create a new centre of business development and incubate a wide range of companies, with the goal of generating 250,000 jobs in the longer term. Mr. Ngom, the founder of Money Express and the Chaka Group was awarded Manager of the Year in both 2002 and 2007 for the success of his companies. Money Express, Call Me and Chaka Computer have become true success stories for future African entrepreneurs to imitate. Case Study Money Express: African Leadership in Money Transfers and Remittances 8

9 References Chaka official web site. Available at Economia Issue 30. April Nouvel Horizon Issue 359, 31 January - 6 February Nouvel Horizon Issue 364, 7-13 March Nouvel Horizon Issue 366, March Le Journal de l Economie, Dakar. 14 June Money Express official web site. Available at Publi News, Banking Technologies Issue April Interviews Kane, Ousseynou. Commercial Manager, Call Me. 13 February Ngom, Meissa Deguene. CEO, Chaka Holding. 13 March Samb, Mariétou Gningue. Marketing Manager, Money Express. 13 March Seck, Malick. CEO, Money Express. 13 February and 13 March Senghor, Pape. Marketing Manager, Call Me. 13 February Sy, Ahmed. CEO, Chaka Unit. 13 February Case Study Money Express: African Leadership in Money Transfers and Remittances 9

10 September 2007 The information presented in this case study has been reviewed and signed-off by the company to ensure its accuracy. The views expressed in the case study are the ones of the author and do not necessarily reflect those of the UN, UNDP or their Member States United Nations Development Programme All rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted, in any form by any means, electronic, mechanical, photocopying or otherwise, without prior permission of UNDP. Design: Suazion, Inc. (N, USA) For more information on Growing Inclusive Markets: or gim@undp.org United Nations Development Programme Private Sector Division, Partnerships Bureau One United Nations Plaza, 23 rd floor New York, NY 10017, USA Case Study Money Express: African Leadership in Money Transfers and Remittances 10