In sub-Saharan Africa, millions of people depend on financial support from relatives abroad. However, sending money to this region remains the most expensive globally. According to the World Bank, remittances to sub-Saharan Africa cost an average of 8.37% of the transaction value. This high cost has spurred the rise of numerous African-founded fintech companies aiming to reduce fees and challenge traditional players like Western Union. The benefits of lowering remittance costs are substantial, potentially increasing the flow of foreign currency, which acts as a lifeline for both individuals and national economies. In 2023, remittances amounted to $54 billion in sub-Saharan Africa, exceeding foreign direct investment and official development assistance combined.
The high cost of sending money to sub-Saharan Africa can be attributed to several factors, including the reliance on cash transactions. Cash-based remittances are more expensive due to the physical infrastructure required, such as booths and tellers. Digital payments offer a solution but face challenges like limited internet access and user reluctance to shift from familiar cash systems. Andy Jury, CEO of Mukuru, explains that transitioning to digital services requires overcoming the psychological barrier of moving from tangible cash to intangible online transactions. Younger generations are leading this shift, while older adults remain loyal to traditional methods.
Beyond transitioning users to digital platforms, fintech companies are also tackling the complex network of intermediaries involved in international money transfers. Historically, these middlemen have driven up costs and caused delays. New fintechs like NALA, Flutterwave, and Chipper Cash are streamlining the process by cutting out intermediaries and enabling instant payments. These companies often hold liquidity in each country they operate in, allowing them to deposit funds directly into local accounts or digital wallets. Despite these advancements, navigating the regulatory landscape remains a significant challenge, with varying requirements across different African countries.
To further reduce costs, fintechs advocate for government intervention. Nicolai Eddy, COO of NALA, suggests capping fees charged by banks and digital wallets for local deposits. Dr. Joseph Antwi Baafi, a senior lecturer at Akentien Appiah-Menka University, emphasizes the need for governments to support infrastructure and provide tax incentives to help fintechs operate more efficiently. Tailoring products to meet local needs is crucial for success in this market. By understanding and addressing regional idiosyncrasies, fintechs can unlock vast opportunities for growth and innovation.
The future of remittances in sub-Saharan Africa looks promising, driven by innovative fintech solutions. As digital adoption increases and regulatory hurdles diminish, the cost of sending money home will likely decrease, benefiting millions of families and contributing significantly to economic development. The potential impact of lower remittance fees cannot be overstated, offering a brighter future for the region's financial landscape.
In a surprising turn of events, recent data reveals that nearly 40% of the federal contracts canceled by the current administration as part of its cost-cutting initiative are not expected to result in any financial savings. The Department of Government Efficiency (DOGE), led by Elon Musk, has published a list of over 1,125 terminated contracts across various federal agencies. However, more than one-third of these cancellations, totaling 417 contracts, will reportedly yield no monetary benefits. This revelation raises concerns about the effectiveness and rationale behind the administration's approach to reducing government spending.
A Closer Look at the Cancellation Details
In the heart of this fiscal scrutiny, DOGE recently unveiled an initial list of contract terminations spanning numerous government departments. Among the 417 contracts that will not save money, many involve already-obligated funds for goods and services that have either been fully paid for or are legally required to be fulfilled. For instance, subscriptions to media outlets like The Associated Press and Politico, which had already been paid for, were among those canceled. Other examples include completed research studies, concluded training sessions, purchased software, and internships that have ended.
One notable case involves the Department of Housing and Urban Development, which had committed to spending $567,809 on office furniture installations. Similarly, the U.S. Agency for International Development had obligated $145,549 for carpet cleaning services at its headquarters, with the full amount already allocated to a Native American-owned firm in Michigan. Another example is a $249,600 contract with a Washington, D.C.-based firm that assisted the Department of Transportation during a recent administrative transition.
Perhaps most concerning is the cancellation of contracts aimed at modernizing government operations. A significant contract worth up to $13.6 million was awarded to Deloitte Consulting LLP to assist the Centers for Disease Control and Prevention in restructuring its National Center for Immunization and Respiratory Diseases. This move seems counterproductive to the administration's stated goal of improving governmental efficiency.
An administration official defended the cancellations, arguing that terminating contracts perceived as unnecessary makes sense, even if no immediate savings are realized. However, experts like Charles Tiefer, a former law professor and government contracting expert, criticize this "slash and burn" approach, warning that it could undermine agency performance without achieving meaningful cost reductions.
The total value of the 417 contracts in question amounts to $478 million, while DOGE claims overall savings from all cancellations exceed $7 billion. Independent observers have questioned the validity of this figure, suggesting it may be overstated.
From a broader perspective, this situation highlights the need for more strategic and thoughtful approaches to government spending. Rather than indiscriminately canceling contracts, working closely with agency officials to identify genuine efficiencies might yield better results. The current approach risks damaging essential government functions without delivering the promised financial benefits.
In a recent controversy, the Iowa State Auditor's office has raised significant concerns about the transparency and oversight of the state's Education Savings Accounts (ESA), commonly referred to as school vouchers. As the program expands, questions arise regarding the proper use of taxpayer funds. This issue highlights the ongoing debate over government accountability and the need for rigorous financial scrutiny in public spending.
Audit Dispute Over Iowa's School Voucher Program
In the heart of the Midwest, a longstanding tradition of governmental transparency is facing new challenges. For nearly 170 years, the Iowa State Auditor's office has served as a watchdog for taxpayer dollars. However, tensions have escalated following a report by State Auditor Rob Sand, which criticized the lack of internal controls within the ESA program. Established in 1857, the auditor's office has historically scrutinized various state departments, ensuring that public funds are used appropriately.
Currently, the ESA program, which provides parents with funds to send their children to private schools, costs taxpayers approximately $104 million annually. This figure is projected to rise sharply to $294 million this year and could reach $344 million by 2025-2026 as eligibility requirements are relaxed. Despite these substantial expenditures, Governor Kim Reynolds and her administration have resisted providing requested documentation to the auditor's office, citing procedural issues. Sand argues that this resistance undermines the constitutional mandate for transparency.
The governor has accused Sand of political bias, suggesting his opposition to the ESA program influences his audits. However, supporters of the auditor emphasize that the issue transcends party lines. Whether or not the eligibility criteria and administrative processes are being properly followed should be evaluated impartially, they argue. The contract with Odyssey, a New York-based company managing the ESA applications, must also be scrutinized to ensure compliance with state regulations.
From a broader perspective, this dispute underscores the importance of maintaining nonpartisan oversight in government programs. Just as federal initiatives are subject to rigorous examination, state-level programs like ESAs should be held to the same standards. Transparency and accountability are foundational principles that should unite all political parties in their pursuit of effective governance.
This controversy serves as a reminder that the integrity of public spending must always be safeguarded. Regardless of political affiliations, ensuring that taxpayer dollars are used efficiently and responsibly is a shared responsibility. The debate over the ESA program highlights the need for continuous vigilance and open dialogue between government officials and the public they serve.