Payments company Nara pivoted to providing remittance services in 2021, tapping Africa's growing remittance market and demand for reliable and affordable services. Nala founder Benjamin Fernandez said he intended to build the product on this premise from the beginning.
Over the past two years, Tanzanian fintechs have enabled consumers in the diaspora, including the EU, UK and US, to send money to their loved ones through 249 banks and 26 mobile money services across 11 African markets through consumer fintech apps. I've been doing this. In markets like Kenya, it has been integrated with mobile money service M-Pesa, allowing users in the diaspora to pay their local bills directly.
However, by building a service on top of another provider's payment rails, fintechs can no longer guarantee reliability. This led to the decision to develop our own platform that integrates directly with banks and mobile His Money His providers. Fernandes said his B2B payments platform, called Rafiki, is a solution to curb payment generation, minimize user charges and ensure reliability as the fintech seeks to expand. I am.
“We built Rafiki’s infrastructure according to the nature of the market, not by choice. When we started, as we started to scale, the failure rate from our partners reached 15%, which increased our operational costs. “The only way to solve this problem was to license it from the ground up and make sure we built the payment and financial infrastructure,” Fernandez said in his first public appearance. talked about. This product is currently accessible to a select few.
“We believe that authenticity is very important in the market and this is an opportunity to enable global companies to trade more effectively with Africa. We have split the team internally and made Rafiki and Nala independent. We have several large contracts with global payments and remittance companies that we plan to announce in the coming months.”
As Nala's Rafiki powers its consumer fintech apps, the cross-border payments platform is also targeting global companies making payments to and from Africa. This means that global money transfer and payroll companies that integrate with Rafiki can, for example, deposit money directly into a recipient's mobile money wallet or bank account.
Now that its infrastructure is in place, NALA will also take on the challenge of processing payments for businesses as part of its efforts to solve “massive reliability issues for global companies wanting to trade with Africa.”
Nala scales and achieves profitability
Looking to scale in new markets, Nara recently hired former Wise staffer Andrei Krevtsov as head of finance, and former Currency Cloud executives Will Staples and Jan Philippaerts for risk and compliance, respectively. Hired as a manager and operations manager.
The company's expansion plans come on the back of Nara's revenue growth, which Fernandes said has grown 10x in the past 12 months due to the growing user base of its consumer products. The growth in the remittance business is in line with reports that remittance flows to sub-Saharan Africa will continue on a growth trajectory. Remittances to sub-Saharan Africa are expected to rise 1.9% to $54 billion in 2023, driven by key markets such as Nigeria and increased remittances in Mozambique, Rwanda and Ethiopia, according to the World Bank. has been done.
“For the past two years, our team has worked hard on unit economics and focused on the fundamentals of our business. We didn't have a large budget to spend on scaling, so we We decided it was best to focus on maintaining our business and growing our revenue. Over the past 12 months, our revenue has grown 10x. It hasn't been easy, but our team has We worked hard. As a company, we are finally starting to make a profit,” said Fernandes, a Tanzanian.
Nala is backed by Accel, Amplo and Bessemer Partners and is one of the leading fintech companies in Africa's digital payments space, which includes leading players such as Flutterwave, Cellulant and Onafriq. These payment companies allow users to bypass restrictive traditional banking infrastructure by allowing them to process payments online and offline using USSD or STK commands, via apps, or using NFC technology. We support.
But 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 specializing in fintech. In a previous review of the sector, the company said Africa remains fertile ground for ideas and innovation, adding: “Around 90% of payments are still made in cash, and more than half of Africans are unbanked or unbanked. “They don't have bank accounts, and only a small number of them do.” Debit card or credit card. ”
“Africa has a large, young, unbanked and unbanked, tech-savvy population, traditionally high cash use, rapid transition from the informal to formal sector, and mobile penetration. All the ingredients necessary to develop a robust fintech ecosystem are in place, including an increase in financial inclusion and a generally favorable environment. With governments pushing for greater financial inclusion and digitalisation, the regulatory environment is also coming into play. “