Nala Raises $40 Million to Expand Beyond Remittances, Become Africa’s Cross-Border Payments Leader

Nala, a remittance startup rapidly evolving into a comprehensive payments platform, has secured a massive $40 million equity investment in a Series A funding round. This marks one of the largest Series A transactions ever recorded in Africa.The oversubscribed round was led by San Francisco venture capital firm Acrew Capital, with participation from prominent investors including DST Global, Norrsken22, HOF Capital, Amplo, NYCA Partners, and angel investors Ryan King (Chime founder) and Vlad Tenev (Robinhood founder).

This significant investment fuels Nala’s ambitious growth plans, which include scaling its remittance business to serve the booming Asian and Latin American markets. Currently, Nala’s user-friendly app empowers individuals living in the E.U., U.K., and U.S. to send money seamlessly across 249 banks and 26 mobile money services in 11 African nations. Notably, Nala integrates with mobile money platforms like Kenya’s M-Pesa, allowing users to directly pay bills into local mobile wallets.

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Driven by user demand for a holistic money management experience, Nala strategically added B2B payment capabilities. The company plans to replicate this success in its targeted new markets, with Asia taking center stage. Nala is further solidifying its position by doubling down on Rafiki, its B2B payments platform launched in March. Rafiki caters to global businesses navigating payments into and out of Africa.

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“This $40 million funding round signifies a pivotal moment for Nala,” declared Nala founder and CEO Benjamin Fernandes. “We are poised to transcend remittances and extend our reach beyond Africa, constructing a robust payments ecosystem. This investment empowers us to refine our infrastructure, guaranteeing reliable and affordable payments for everyone. With the launch of our own payment rails and the ongoing expansion of Rafiki, we’re not just discussing change, we’re actively building it. We have some groundbreaking plans in store – stay tuned for the next chapter in a couple of years.”

Nala’s journey began in 2017 with a focus on facilitating local money transfers within Tanzania. In 2021, the company strategically pivoted to address the growing need for foreign remittances. Rafiki, Nala’s innovative B2B platform, also underpins the company’s consumer app. In a previous interview, Fernandes explained the decision to develop a proprietary payment platform: to ensure remittance service reliability and cater to global businesses seeking dependable solutions. Through Rafiki’s direct integration with banks and mobile money providers, Nala guarantees service availability for its consumer app. Additionally, its own payment infrastructure translates to lower fees for app users, enhancing its competitive edge.

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Fernandes emphasized that guaranteed service delivery has been the driving force behind Nala’s thriving consumer business, currently accounting for over 90% of its revenue. Nala is on track to surpass 500,000 customers and has already achieved profitability. The payments platform is also attracting a loyal clientele, with U.K.-based fintech TransferGo leveraging Rafiki for payouts across Africa. “Rafiki’s live customers on Nala range from global payroll providers like Cadana to global remittance companies like TransferGo, and even global banks engaged in cross-border payments,” Fernandes elaborated. “Our core focus is empowering financial institutions and services to execute seamless cross-border payments.”

Capitalizing on the Booming Remittance Market

Nala’s expansion into Asia and Latin America aligns perfectly with the World Bank’s forecast of robust growth in the remittance sector this year. According to the World Bank’s Migration and Development Brief, remittance flows to sub-Saharan Africa are anticipated to grow by 1.5% following a minor dip in 2023. Positive growth projections are also expected in East Asia and the Pacific (excluding China), South Asia, Latin America, and the Caribbean, signifying sustained demand for remittance services.

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“In India alone, migrants send over $125 billion annually, and this market is continuously expanding as more people migrate,” said Fernandes. “This creates substantial opportunities to serve these customers and facilitate increased global trade between regions.”

He continued, “Trade between Asia and Africa is flourishing, and ensuring reliable money movement is crucial for this growth to continue.”

The World Bank highlights that sending money across borders remains a costly endeavor. The global average cost for sending $200 sits at 6.4% of the transfer amount. However, digital remittances offer a more affordable alternative, averaging 5% compared to non-digital options at 7%. This emphasizes the significant role played by Nala and its competitors like Flutterwave in making international money transfers more accessible and cost-effective.