MoneyGram Expands in Nigeria – Analyst Blog

Expanding its presence in Nigeria, on Tuesday, MoneyGram International Inc. (MGI) announced its partnership with First Bank of Nigeria plc. This extends its money transfer service business to the bank’s more than 500 domestic branches across the country. With this alliance, MoneyGram now has transactions with eight banks in Nigeria, a country it has been associated with since 1998. Further, through this alliance, MoneyGram has grown its network to more than 200,000 agent locations in 190 countries and territories.

 

MoneyGram is also offering discounts to the Nigerian immigrants in the U.S. From June 1 to July 31, 2010, these clients can send up to $50 for the cost of $5 from the U.S. to Nigeria through the company’s 33,400 locations across the U.S.

 

Money transfer business remains the driving force for MoneyGram. The company has been expanding its money transfer business across the globe through various recognized financial institutions. While Nigeria is ranked among the world’s top 10 receiving countries for money transfers, management projects a strong remittance market in the country. In 2009, Nigeria received an estimated $10 billion in remittance according to the World Bank, primarily from the U.S., Canada, Germany, Israel, Italy, Liberia, Libya, Malaysia, Spain, South Africa and the U.K.

 

Hence, the company is in the process of evolving advanced ways of consolidating in the region. The alliance with First Bank will facilitate MoneyGram to operate not only in the prime cities but also in the rural areas of Nigeria since First Bank has a wide footprint across the country. Besides, the bank operates 24×7 in some locations, which provides even more scope of accessibility and convenience.

 

However, Nigeria is famous for e-mail scams and financial fraud operations that largely involve money transfers. Hence, MoneyGram needs to assure that the transactions made through its medium are secure and free from any third-party fraud.

 

Besides, MoneyGram continues to explore new growth avenues by incorporating the latest and flexible technology such as transfers through mobile phones, prepaid cards or ATMs, in order to speed up its money transfer services and enhance remittance volumes.

 

Although the current economic turmoil has weakened both the revenue growth and the operating leverage of MoneyGram, we believe that the company has the potential to overcome the impact of the volatile U.S. dollar against other currencies and additional losses in its investment portfolio, once the global economy rebounds to its historical highs.