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

Forbes

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.  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

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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