The African Postal Financial Services Initiative (APFSI)
The African Postal Financial Services initiative is a joint regional programme launched by IFAD and the European Commission in collaboration with the World Bank, the Universal Postal Union (UPU) – a specialized United Nations agency for the postal sector, the World Savings Banks Institute/European Savings Banks Group (WSBI/ESBG) and the United Nations Capital Development Fund (UNCDF).
This uniquely broad-based partnership seeks to enhance competition in the African remittance market by promoting and enabling post offices in Africa to offer remittances and financial services. Post offices are ideally placed to deliver remittances in rural areas, but they often lack the business model, technology and expertise to process real-time payments such as remittances in an efficient and safe manner. The goal of this initiative is to promote, support and scale up key postal networks in Africa in the integration of remittance services.
The objectives of the initiative are to:
- Reduce the cost of remittances to and within the African continent. This is the single highest impact method to keep funds in the hands of remittance senders and their families. For every 1 per cent reduction in the cost of remittances, migrants from Africa and their families will save up to US$500 million.
- Reduce transaction times of remittances to and within Africa. While price is an important determinant in the choice of a particular service, speed and convenience are even more significant. Post offices must be reliable, rapid and convenient, and paper-based processes do not meet this standard of service. Modernization is key to encouraging the use of post offices for money transfers.
- Broaden the network of rural locations through which remittances can be picked up. This reduces travel times and costs and increases recipients' safety. The cost of remittances to rural areas is significantly higher than to urban areas because of the ‘hidden costs' of travel time, travel costs and the security risks associated with the journey to and from a financial service provider. By enabling post offices to provide financial services, financial access is brought closer to rural customers so they have less distance to travel.
- Deepen the range of financial services provided in rural areas. True access to finance is far broader than access to remittances alone. Savings, loans and insurance products help migrant workers and their families protect themselves from adverse shocks and enhance their long-term financial independence. This can only be achieved through a combination of regulatory permission, staff training and proper information technology infrastructure.
How it works
The current initiative represents a unique partnership that combines key players currently working on postal financial services under a
single ‘umbrella' and builds on the experience of the initial postal financial services projects implemented by UPU through IFAD's Financing Facility for Remittances. Together with IFAD, the World Bank and UNCDF, international financial institutions will provide respective experiences and competencies in rural access to finance and regulatory compliance as well as access to country-specific cofinancing possibilities. The UPU and WSBI, which represent the programme's core constituencies (national postal operators and postal savings banks) will build on their expertise in postal financial inclusion to provide technical assistance and function as conduits to share lessons with their respective memberships. Through the initiative, partners will work directly with national postal operators, their regulators and local service providers to create new partnership models, identify and expand opportunities through research and regulatory and policy advocacy. They will provide technical assistance, launch pilot activities and mobilize external resources to modernize postal network infrastructure to offer financial services such as cashless payments, mobile money, savings, loans and insurance.
The African Postal Financial Services initiative does not favour any specific operator and aims to enable postal networks to become a valuable resource for all market players involved. Through the initiative, postal networks will represent an additional source of business for all remittance service providers, in the spirit of fair competition and open access to the financial infrastructure, and in line with international standards and best practices. All partners involved in the initiative will provide their support in guaranteeing maximum transparency and will avoid any possible conflict of interest by taking shared and coordinated decisions.