Nala, a fintech startup founded in 2018 by Benjamin Fernandes, has recently secured $40 million in funding to create its own payment rails, facilitating global money transfers to and from Africa. Initially launched to enhance domestic money transfers in Tanzania, Nala faced significant setbacks, including legal challenges from a major telecommunications provider and the COVID-19 pandemic’s impact on demand. Rather than give up, Fernandes adapted Nala into a cross-border remittance service, enabling African migrants in the U.S. and Europe to send money back home to 11 African countries, leveraging a growing catchment of over 500,000 registered users based outside Africa.
Despite competition in the remittance space, Nala differentiates itself by catering specifically to its audience’s needs. For instance, in Kenya, it integrates directly with M-Pesa, allowing users to pay household bills for their families back home. Fernandes has identified a burgeoning market—with Africa’s population projected to climb to 2.5 billion by 2050—highlighting a significant opportunity as nearly a million Africans seek employment abroad each year. While Nala’s side services might not always be the cheapest on the market, they serve a distinct purpose that resonates with its target demographic, emphasizing the control and practicality valued by the diasporic community.
Nala’s latest funding round, despite a broader downturn in the fintech sector, highlights its potential for growth. The venture, led by Acrew Capital alongside other notable investors, values Nala at over $200 million. This influx of capital aims not only at expanding Nala’s remittance operations into South Asian markets, such as India and Pakistan, but also at developing Rafiki, a cross-border payment infrastructure tailored for global businesses. Fernandes notes that Africa currently lacks a robust payment landscape, constituting merely one percent of its potential, which drives the high costs associated with money transfers to the continent due to regulatory challenges, fluctuating currencies, and limited competition.
Fernandes, who grew up in Tanzania, has been inspired by his parents’ entrepreneurial spirit and has worked hard to fill the void left by a lack of local tech role models. With degrees from Northwestern-St. Paul and Stanford, he pivoted Nala in 2021 into a remittance service using social media to build a user base. Notably, Nala earns revenue through foreign-exchange markups, capitalizing on the demand for hard currencies in Africa. The creation of the Rafiki infrastructure is a strategic move to streamline payment processes for businesses operating or looking to invest in Africa, establishing a direct payment funnel that makes international transactions significantly more efficient.
In a landscape filled with similar fintech players like Remitly and Taptap Send, Nala has crafted a niche by focusing on user experience, rate transparency, and incorporating local service nuances. By providing direct banking and telecommunication connections, they circumvent traditional payment bottlenecks, thus ensuring speedy transactions directly to beneficiary accounts. Their approach leads to enhanced service offerings, allowing users in certain regions to directly pay bills for services back home, a feature that has been warmly received by their customers.
Fernandes also places high importance on building trust through transparency, openly sharing exchange rates and fees with customers, even when competitors might offer more favorable options. This strategy has fostered loyalty, as many users favor Nala for its honesty over lower costs from rival platforms. Customer service tailored to the users’ languages and preferences further differentiates Nala in the market, as seen by users like Hamad Kasoga, who appreciates the familiarity and efficiency of Swahili-speaking support explained to him during transactions. By managing costs effectively—most notably by maintaining a lean presence in the U.S.—Nala is positioned to sustain and amplify its growth while continuing to innovate within the fintech space.