Nala, a Tanzanian fintech, has recently made a big move in the ever-growing money transfer market in Africa. The company, originally focused on consumer fintech, has now pivoted to offer remittance services to tap into the increasing demand for reliable and affordable money transfer services in the region. According to Nala founder Benjamin Fernandes, this was always part of their plan and they intended to build their products with this in mind from the beginning.
With their consumer fintech app, Nala has already enabled users in the diaspora (including the EU, UK, and US) to send money to loved ones across 249 banks and 26 mobile money services in 11 African markets. They have even integrated with popular mobile money service M-Pesa in Kenya, allowing users in the diaspora to pay local bills directly.
However, relying on the payment rails of other providers meant that Nala could not guarantee dependability. This led to their decision to develop their own platform, Rafiki, which directly integrates with banks and mobile money providers. This B2B payment platform aims to reduce payout incidences, minimize user charges, and ensure reliability as Nala continues to scale.
“We built the Rafiki infrastructure, not by choice, but by the nature of the market. When we started, we were experiencing 15% failure rates from partners as we started to scale, and this affected our cost of operations massively. The only way to solve this problem was at the source, to get licenses and build payment and treasury infrastructure reliably,” said Fernandes when speaking about Rafiki publicly for the first time.
The product is currently accessible to a select few, but plans are in place to expand it to more users and businesses.
Nala is not only focused on providing convenient and reliable remittance services for individual users, but also has its sights set on global businesses making payments into and out of Africa. By integrating with Rafiki, companies specializing in remittances and payroll can make direct deposits into their recipients’ mobile money wallets or bank accounts.
The success of this venture is being aided by Nala’s recent hires, including former Wise staffer Andrei Klevtsov as head of finance, and ex-Currency Cloud executives Will Staples and Jan Philippaerts as heads of risk and compliance, and operations, respectively. With their team in place and the infrastructure in place, Nala is now looking to scale and expand into new markets.
This expansion comes at a time when Nala has already seen significant growth and reached profitability. According to Fernandes, their revenue has grown 10 times in the past 12 months as the user base for their consumer product continues to increase. This growth aligns with reports that remittance flows to sub-Saharan Africa are expected to reach $54 billion by 2023, driven by key markets like Nigeria and growth in countries like Mozambique, Rwanda, and Ethiopia.
Despite the success and potential for fintech in Africa, there is still plenty of room for innovation and growth. As Financial Technology Partners, an investment banking firm focused on fintech, notes, “Africa has all the ingredients needed to develop a robust fintech ecosystem” including a large, young, and tech-savvy population, rapidly increasing mobile penetration, and a favorable regulatory environment.
In this thriving market, Nala is determined to continue its mission of providing reliable and affordable remittance services while also pursuing opportunities to solve payment and reliability issues for global businesses operating in Africa.
