Africa focused mobile transfer company Mukuru says an increase in mobile penetration and agent networks is reshaping the remittance sector throughout Sub-Saharan Africa.

According to the company traditionally financially under-serviced migrants living in South Africa resorted to using informal channels to send money home to family and friends.

These mostly include the bus and taxi system, where people travelling from South Africa to other African countries would physically carry the funds with them on behalf of migrants working in South Africa.

This picture has changed in recent years, with mobile penetration making even bigger strides into Sub-Saharan Africa, according to Mukuru.

The company claims that in early 2018, data showed that nearly 70% of cross-border remittances were via informal channels with this figure expected to have decreased since.

"The increase in migrants using formal channels to send money home is not attributed to the growth in mobile penetration alone. By establishing strategic relationships with banks, mobile network operators (MNOs) and other pay-out partners through Southern African countries which disburse remittances," the company states.

Mukuru says research by the World Bank supports this notion, with the organisation recently reporting that remittances to African countries will grow to US$47-billion in 2019.

In African markets, FinTech has disrupted the payments ecosystem, resulting in more consumers choosing digital and mobile transfers over cash, for several reasons including safety and convenience, the company added.

Andy Jury, chief executive officer of Mukuru, said: "Cash is still king within Africa, mainly due to a reliance on cash for payments and transactions coupled with low levels of financial inclusion. What is needed is enhanced financial inclusion and the building of consumer trust and awareness of new digital and mobile channels. This will encourage access and usage of transaction accounts and e-wallets, to broaden digital and mobile payment use cases beyond person to person money transfers."