In response to the needs of the people in East Africa, Minneapolis-based businessman Garad Nor has established money transfer companies to help facilitate remittance payments between the United States and Africa. Garad Nor is the CEO and president of the successful remittance firm Banana Pay.
Evidence suggests that digital payments and expanded mobile banking options increase opportunities for entrepreneurs due to facilitated financial transactions, increased access to business loans, and cheaper payroll processes. Entrepreneurship is vital to the economy of developing countries such as Somalia, where years of civil war and government instability have resulted in weak financial institutions and no significant bank presence.
In addition, formal work opportunities can be difficult to find. Youth unemployment hovers just under 70 percent in Somalia.
However, because of mobile banking services, small business owners can safely and conveniently collect payments from their customers, pay their expenses, and raise capital. Today, the fintech (financial technology) sector itself is ripe with opportunity for Somali entrepreneurs.
Entrepreneur Garad Nor launched his first money transfer business in 1993 in Marshall, Minnesota. Ten years later, Garad Nor turned around Tawakal Express, an international remittance firm that handles millions of dollars each month. In addition to providing secure, reliable service, Tawakal Express operations follow all the laws and rules set forth by regulatory bodies such as the Consumer Financial Protection Bureau (CFPB).
Many consumer protections regarding electronically-transferred remittances are enshrined within the 2014 CFPB remittance rules. Before an international transaction is completed, remittance companies are required to clearly state the exchange rate, any additional fees, applicable taxes, and the amount directly wired to the receiver.
Recipients are also notified in writing of their rights and the company’s cancellation and dispute policies. Remittance agencies are also required to provide their clients with their privacy policy and a disclosure that includes the expected transaction date and ways to contact relevant regulators. Many companies translate these policies into the most common languages used by their customers.
Under these rules, consumers are protected against errors such as unequal exchange rates for senders and recipients or transfer delays caused by actions of the agency. Additionally, all errors have a reporting period of 180 days. Agencies can take up to 90 days to investigate any error claims and must resolve the error if the agency is found liable.
Focusing on the money transfer needs of the African diaspora in Minnesota, entrepreneurial senior executive Garad Nor heads two successful international remittance operations, which process millions of dollars in transfers every year. As a reflection of the lucrative remittance market, Garad Nor’s latest venture, Banana Pay, handles over 10 million dollars in international transfers every month.
The earnings of East Africans in Europe, Canada, and the U.S. are often sent back to relatives in their home countries. In Kenya, nearly four percent of the Gross Domestic Product comes from remittances.
The billions of dollars infused into the economy helps boost flailing currencies and drives business growth. Moreover, the increased purchasing power of remittance recipients contributes to increased spending on education, healthcare, and other sectors that support economic development.
Researchers have found that remittances can have ripple effects throughout a community. Recipients often use their extra income to buy more goods, which increases localized production and creates more jobs.
However, remittances may deepen economic inequality and reduce participation in the workforce. In an attempt to democratize the benefits of remittances, the Kenyan government has enacted a series of policies to increase diaspora investment in nationwide projects.
An accomplished executive in the finance industry, Garad Nor serves as the president and CEO of Banana Pay, LLC, and as the CEO of Tawakal Express. In this capacity, Garad Nor is responsible for the overall success of both organizations and has overseen their substantive growth in annual revenue.
Increase average transaction size Through this method of increasing revenue, businesses entice each customer to buy more. In most situations, this is done by upselling, a process that involves educating customers about a higher-end service or product. Since each customer is spending more every time they buy something, companies can increase their revenue.
Increase customer base Regardless of whether the average transaction size increases, companies can still boost their annual revenue by expanding their customer base. More customers mean more revenue because they are generating more transactions.
Boost transaction frequency Companies that struggle with increasing their customer base and are hesitant about increasing transaction size can still improve their revenue by encouraging existing customers to buy from them more often. This increase in frequency means more money is flowing into a business, even if they don’t increase their transaction size or customer base.
Raise prices Revenue can be increased by raising the price of products and services. By doing this, companies can enjoy higher profits while keeping their average transaction size, transaction frequency, and volume the same.
A successful entrepreneur with a background in finance, Garad Nor serves as the chief executive officer of Tawakal Express in Minneapolis, Minnesota. Garad Nor oversees the operations and development of the company’s three significant remittance services including eTawakal, T-Plus, and Banana Pay. The company has been granted full commercial banking license from the Central Bank of Somalia (CBS).
Under the Financial Institution Law No. 130, a bank can be licensed to operate banking transactions either in Somalia or abroad, from within Somalia. The application for a license starts with a consultation with the central bank. An applicant must meet all statutory requirements administered by the bank including financial capability, professional competency, legal compliance, and public service.
In terms of investment capital, CBS requires a minimum principal amount of $5 million. Lastly, an applicant is required to submit a business plan that provides detailed information about the business, services offered, organizational structure, financial projections, capital and solvency, risk management, and legal and regulatory compliance procedures.
Along with the memorandum and articles of incorporation, the application must be submitted to the Central Bank of Somalia in writing by or on behalf of the applicant. More information on the licensing procedure are available at centralbank.gov.so.
