Payment company Nala focused on offering a remittance service in 2021, capitalizing on the growing money transfer market in Africa and the demand for reliable and affordable services. Founder of Nala Benjamin Fernandez said they intended to manufacture their products in this facility from the start.
Over the past two years, Tanzanian fintech, through its consumer fintech app, has enabled users in the diaspora, including the EU, UK and US, to send money to loved ones at 249 banks and 26 mobile services in 11 African markets. For markets like Kenya, they have been integrated into the M-Pesa mobile money service, enabling users living in the diaspora to pay local bills directly.
However, building the service on the payment rails of other providers meant that the fintech could not guarantee reliability. This led to the decision to develop its own platform that directly integrates with banks and mobile money providers. A compiled B2B payment platform Rafikisays Fernandes, is their solution to limit payment incidents, minimize user fees and ensure reliability as fintech looks 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 greatly impacted our cost of operations. The only way to solve this problem was at the source, get licenses and build reliable payment and checkout infrastructure,” said Fernandes, while talking about the product publicly for the first time. The product is currently accessible to a select few.
“We believe that reliability is a premium in the market and an opportunity to allow global businesses to do business more effectively with Africa. We have split our teams in the company to operate Rafiki and Nala independently. We have signed some major contracts with global payment and remittance companies, which we will announce in the coming months.”
As Nala’s Rafiki powers the consumer fintech app, the cross-border payments platform also targets global businesses making payments to and from Africa. This means that global remittance and payroll companies that integrate with Rafiki can, for example, make direct deposits to their recipients’ money wallets or bank accounts.
With the infrastructure in place, Nala also plans to attempt to process payments for businesses as part of its effort to solve a “reliability problem at scale for global businesses looking to do business with Africa.”
Nala scales up and reaches profitability
As it expands into new markets, Nala recently hired a former Wise executive Andrei Klevtsov as its head of finance and former Currency Cloud executives Will Staples and Jan Philippaerts as head of Risk & Compliance and Operations, respectively.
The company’s scaling plans come amid growth in Nala’s revenue, which Fernandes said grew 10-fold in the past 12 months as its consumer product grew in user base. The growth of the remittance business coincides with reports that remittance flows to sub-Saharan Africa will continue on a growth trajectory. According to The World Bank the amount of remittance flows to sub-Saharan Africa is expected to increase to $54 billion in 2023, an increase of 1.9%, due to key markets such as Nigeria and increasing flows to Mozambique, Rwanda and Ethiopia. Notably, the number of inputs is much higher when historical data by RemitSCOPE and transfers made through informal markets such as This the report states, are taken into account.
“For the past two years, our team has been dealing with the unit’s finances, focusing on our fundamentals for our business. We didn’t have large budgets to spend on scaling and decided it would be best to focus on customer retention and revenue growth before building for scale. In the last 12 months, we have grown revenue by 10x. It was not easy and our team has worked very hard. As a company, we are finally profitable,” said Fernandes, a Tanzanian.
Nala is backed by Accel, Amplo and Bessemer Partners and is among the fintechs in the digital payments space in Africa, where heavyweights such as Flutterwave, Cellulant and Onafriq are active. These fintechs help users bypass the sometimes restrictive traditional banking infrastructure by enabling online and offline payment processing via USSD or STK commands, via apps or using NFC technology.
However, while there are more than a dozen payment solutions in Africa, there is plenty of room for innovation, according to Financial Technology Partners, an investment banking firm focused exclusively on fintech. In an earlier industry review, the firm said Africa remains fertile ground for ideas and innovation, as “about 90% of payments are still made in cash, more than half of Africans are unbanked or underbanked, and only a a small minority own a debit or credit card’.
“Africa has all the ingredients needed to develop a strong fintech ecosystem, including a huge, young, unbanked and underbanked, tech-savvy population, traditionally high use of cash, rapid transition from informal to formal sectors, growing mobile penetration and a generally favorable regulatory environment. along with governments pushing for greater financial inclusion and digitization,” he said.
