This Cenfri research project conducted for the Finmark Trust Zambia, provides an overview of the remittances landscape in Zambia considering the trends, opportunities and challenges. The purpose of this document is to provide a basis for debate amongst industry, regulators and other interested parties and identify areas for future research.

The findings are based on desktop research, consultations with industry and government representatives as well as informal street-level interviews conducted in Lusaka in September 2008.

Remittances are regarded internationally as nonreciprocal transfers between people rather than businesses, most often stemming from migrant workers abroad. This may, however, be too narrow a definition for Zambia. Though migrant remittances are one driver of the market, international migration is low in Zambia and domestic migration follows a unique pattern whereby whole families tend to   migrate. Therefore migrant workers send money to their extended families but not necessarily their immediate family, and not regularly. This makes it more appropriate to consider the transacting needs of the low-income market in Zambia, be that sending a person-to-person transfer, paying for agricultural inputs, or being paid for services. In this context, remittances or money transfers are small value payments that are replacing former cash transactions. The research shows a very clear demand for such transacting services.

The aim of the study was to sketch the realities of remittances in Zambia so as to scope the market potential, challenges and opportunities. It was found that a number of interesting non-account based models are emerging and that the space for such models is accommodated by regulation. At the same time, significant challenges are still faced on both the demand and supply-side. On the demand-side, a lack of awareness and trust and a general sense of preferring informal channels prevail. On the supply side, distribution stands out as core among the challenges faced. As long as the formal sector footprint does not reach remote and low-income areas, the potential for breaking open the mass market remains constrained. In this way, the question of making the remittance market work for the poor extends into the issue of branchless banking more broadly.