African technology The ecosystem, plagued by enormous potential but also plenty of economic, political and social instability, is no stranger to high drama affecting even its most promising startups. But recently, LemFi, the Nigerian-based fintech that provides money transfer services to African migrants, is shaping up to be an example of a turnaround — and a growth story. After being shut down by regulators in Ghana in November for what was described as “illegalactivities, LemFi is back home and now preparing for a major expansion into Asia.
These events highlight the company’s growing influence in Africa’s remittance market, powered by a $33 million Series A funding round and the start of service on the US corridor, both announced last August.
Backed by Left Lane Capital and Y Combinator (where it was part of the Summer ’21 cohort as Lemonade Finance), LemFi initially targeted Nigerian immigrants in Canada, offering multi-currency accounts that allowed them to send money back home.
LemFi later expanded to serve other African diaspora communities in the country before entering the UK market in 2021 by acquiring RightCard for $2.5 million. By the end of 2023, migrants in these three countries could send money to 10 African destinations, including Nigeria, Kenya, Ghana, Senegal, Ivory Coast, Benin Republic, Cameroon, Tanzania , Rwanda and Uganda.
Serving migrants from Africa to Asia
In a further expansion move last month, the money transfer service expanded its options and customer base to include immigrants from Asian countries residing in the US, UK and Canada.
“Since starting the company three years ago, we’ve realized that remittances in so many regions are more similar than people think,” LemFi Co-Founder and CEO Ridwan Olalere he told TechCrunch in an interview. “The problems Africans face in terms of difficulty sending money and compliance issues are very similar to what people from different emerging markets also face.”
Although developing economies are doing what their name says—developing—money transfers continue to be an important cornerstone of how residents in these countries survive financially. Global remittance inflows exceeded $669 billion in 2023, according to World Bank research, and many low- and middle-income countries rely heavily on these funds to address fiscal shortfalls. For some countries, these inputs still represent significant parts of gross domestic product (GDP).
Despite concerns about migrants’ incomes falling due to global economic challenges, remittances to their countries of origin, particularly across Africa and Asia, are expected to continue to grow. According to the World Bank, remittances to these regions increased by 3.8% last year.
All this has long been a prime opportunity for newer fintech players. Navigating unfamiliar banking systems in their new countries, dealing with the complexity, cost and unreliability of sending money home using traditional options such as established banks, Moneygram and informal operators are common challenges for migrants. This has created an opportunity for more modern remittance startups, which have gained traction by offering better fees and more convenient shipping options, backed by mobile phone technology and other innovations.
LemFi said that since its inception, it has acquired over one million customers. But its latest expansion into the US, the world’s largest source of remittances, positions it to attract significantly more customers and revenue. And its expansion into serving Asian communities is likely to be the other main driver: While Nigeria, one of LemFi’s main “take” markets, is among the top 10 receiving countries worldwide, India and China receive two to five times more remittances. (India received $125 billion in remittances in 2023, while Nigeria received only $20 billion.)
Recruits to promote product localization
Such data clearly influenced LemFi’s expansion strategy in Asia, which will initially focus on transfers from the US to India, China and Pakistan, which will also open the door to other challenges, the founders say.
“The most difficult aspect for a remittance company is not just adding new corridors, but managing compliance and fraud. Once addressed, particularly on the shipping side, expansion into multiple regions on the receiving side becomes possible,” explained Olalere, who co-founded the company with Ryan Cochran. Both founders were former colleagues at China-backed African fintech unicorn OPay.
Olalere notes that while it is vital to address compliance issues on the “sending” side (US, UK and Canada), it is equally important not to overlook compliance challenges on the “receiving” side. These issues revolve around different countries’ regulatory requirements regarding inbound remittances, often requiring specific permits and local partnerships.
To expand money transfer services in India, LemFi has mobilized its expertise Philip Daniel, former director of TerraPay, one of the world’s well-known remittance infrastructure companies. Additionally, Daiyaan Alam, formerly leading partnerships at Delivery Hero’s subsidiary Foodpanda in Pakistan, is spearheading LemFi’s expansion efforts in Pakistan and South Asia. They join Allen Quformer COO at Chinese-backed African fintech OPay, leading fintech development among the Chinese diaspora.
LemFi will rely on its local recruitment and local expertise to attract users as it enters the Asian diaspora market, competing with established players such as Zepz, Wise, Remitly and Sendwave. Executives, speaking to TechCrunch, argued that LemFi has a strong chance of capturing a significant market share, despite this fact. They believe LemFi better understands local customers and their preferences, and the larger addressable market remains largely untouched by any of them: many migrants still turn to established banks and private agents to send money.
Still a long way to go
In addition to building dedicated teams in each Asian market, LemFi, with more than 250 employees in 10+ countries, has localized its apps and website in different languages, including Chinese, Hindi and Urdu. Similarly, LemFi has opened new corridors in parts of Europe so that its expat users in the US, UK and Canada can send money to relatives and friends located in France, Belgium, Spain, the Netherlands, Italy and Belgium. “We are ready to make a second acquisition soon in the region, and this will allow us to expand even further and give us operational efficiencies,” noted Olalere.
LemFi users can now transfer money to more than 20 countries, although its reach still falls short of some competitors whose users have access to more than 80 countries. However, LemFi has made significant strides in providing its services to sub-Saharan Africans in the diaspora. Last year, LemFi, which makes money from trading fees and foreign exchange margins, recorded more than $2 billion in annual trading volume. Olalere also claims that the startup is profitable and that 60% of its users are active every month.
“The markets we serve will continue to need millions of immigrants annually, so we want to be one of the first products introduced to the African, Indian, Chinese or Pakistani community,” observed Daniel, the company’s head of global expansion. “There are still many opportunities for us to grow.”
