Nala, a remittance startup based in Africa, has recently secured $40 million in a Series A funding round, making it one of the largest transactions of its kind on the continent. The oversubscribed round was led by Acrew Capital, with participation from other notable investors including DST Global and Norrsken22. This funding will fuel Nala’s plans for global expansion, particularly in the Asian and Latin American markets.
Currently, Nala’s consumer app allows people in the EU, UK, and US to send money to various banks and mobile money services across Africa. The company has integrated with mobile money services like Kenya’s M-Pesa, enabling users to pay bills directly into local mobile wallets. The decision to add payment capabilities was driven by user demand for greater control over their money. Nala intends to scale these offerings to new markets, starting with Asia.
In addition to its consumer app, Nala has also launched a B2B payments platform called Rafiki. This platform powers the consumer app and provides reliable payment services to global businesses operating in and out of Africa. By directly integrating with banks and mobile money providers, Nala can ensure service availability for its customers. The use of its own payment infrastructure also leads to lower charges for users of the consumer app, making it more competitive in the market.
Nala’s consumer business currently accounts for over 90% of its revenues and is on track to exceed 500,000 customers. The startup has already achieved profitability. The Rafiki platform has attracted early clients such as UK-based fintech TransferGo, which uses it for Africa payouts. Nala aims to enable financial institutions and services to make cross-border payments through Rafiki.
The expansion of Nala’s remittance services to other emerging markets aligns with the World Bank’s prediction of strong growth in the sector this year. Remittance flows to sub-Saharan Africa are expected to increase by 1.5% after a slight drop in 2023. The same growth is expected in regions like East Asia and the Pacific, South Asia, and Latin America. This indicates a persistent demand for remittance services.
Despite the demand, sending money across borders remains costly, with the global average cost of sending $200 standing at 6.4% of the amount sent. However, digital remittances are cheaper, with a cost of 5% compared to non-digital options at 7%. Nala aims to bring down the cost of sending money, making its services more appealing to customers. Other players in the market, such as Flutterwave, also contribute to reducing costs through digital remittances.
Acrew Capital believes that Nala has the potential to become a leader in remittances for the next generation of Africans. With Africa’s youth expected to account for 35% of the world’s youth by 2050, Nala’s deep local knowledge, fintech expertise, and community building capabilities position it well to build cross-border payment rails for the next billion.