This African Fintech Is Giving Workers A Better Way To Send Money Home

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Now Nala has raised $40 million to build its own payment rails allowing global businesses to move money to and from Africa.

Read the full story on Forbes: https://www.forbes.com/sites/segunolakoyenikan/2024/08/21/this-african-fintech-is-giving-workers-a-better-way-to-send-money-home/#:~:text=F%20intech%20companies%20such%20as,the%20cross%2Dborder%20payment%20market.

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Transcript
00:00Today on Forbes, this African fintech is giving workers a better way to send money home.
00:08Benjamin Fernandez launched his fintech startup Nala in 2018 with the aim of speeding up money
00:14transfers within his native Tanzania.
00:17Over the next two years, the now 31-year-old former television host and Stanford MBA hit
00:22one daunting setback after another.
00:25First, Tanzania's largest telecommunications provider issued Nala a cease-and-desist letter
00:31cutting off Fernandez's access to one of the primary pieces of infrastructure he had
00:35been using to transfer money.
00:37Then his co-founder quit just a week before demo day at Y Combinator, the startup accelerator
00:43Nala had gained entry to in 2019, after five previous unsuccessful attempts.
00:49Finally, in 2020, the COVID pandemic hit, reducing the already lackluster demand for
00:55Nala's domestic payment service.
00:57Fernandez, Nala's CEO, says, quote,
01:08Instead of walking away, over the next two years, Fernandez recast and rebuilt Nala into
01:13a cross-border remittance service that now enables African migrants working in the U.S.
01:18and 20 European nations to send money back home to 11 African countries, including Kenya,
01:24Nigeria, Uganda, Tanzania, and Rwanda.
01:28In all, it now has more than 500,000 registered customers, though none live in Africa.
01:34Most of Nala's employees are based in Kenya and the U.K., and Fernandez spends most of
01:39his time at the London office.
01:42While Nala isn't the only one in this business, or always the cheapest service, it's adding
01:46extras built with an understanding of its target market.
01:49In Kenya, for example, Nala directly integrates with dominant mobile money service M-PESA,
01:55allowing those working abroad to pay their families' utility bills back home directly
01:59from their account.
02:01Fernandez says, quote,
02:08This is a growth business.
02:09The United Nations projects that Africa's population will nearly double to 2.5 billion
02:14by 2050, making the continent the birthplace of nearly one in four working-age people on
02:20Earth.
02:21Roughly a million Africans leave each year seeking work.
02:25But Fernandez has even bigger plans.
02:27In July, despite a depressed fintech market, his 100-person startup raised $40 million
02:34at an estimated valuation of more than $200 million, according to a shareholder with direct
02:39knowledge of the transaction.
02:41Only five other African fintechs have raised $40 million or more in a Series A fundraising
02:46since 2015, according to PitchBook.
02:49San Francisco-based venture capital firm Accru Capital led the round, and Texas-based VC
02:55firm Amplo and DST Global, which manages $5 billion in assets, also invested.
03:02The money raised isn't money needed to sustain current operations.
03:06In 2023, Nala's revenue exceeded $15 million, and this past February it became profitable
03:12on a generally accepted accounting principles basis, Fernandez says.
03:17Nala's chief financial officer, Andrei Klepsov, who was formerly head of accounting at WISE,
03:22says, quote,
03:36Instead, Fernandez aims to use the new cash to grow in two ways.
03:41First, Nala plans to expand its consumer remittance business to South Asian markets, including
03:47India, Pakistan, and the Philippines, followed by Latin America.
03:51Second, a share of the new capital will go into securing more licenses and funding the
03:56development of Rafiki, a cross-border payment infrastructure designed for global businesses.
04:02Rafiki means friend in Swahili, a language spoken predominantly in Tanzania and neighboring
04:07Kenya.
04:09As Fernandez tells it, the payments infrastructure in Africa is today only 1% of what it could
04:14and should ultimately be.
04:17Africa remains the most expensive continent to send money to due to regulatory issues,
04:22currency fluctuations, limited competition, and a lack of payment infrastructure specifically
04:26built for global businesses.
04:29For full coverage, check out Sagan Alakoyanikon's piece on Forbes.com.
04:35This is Kieran Meadows from Forbes.
04:37Thanks for tuning in.

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