Tanzania’s Nala nabs $40 million in double down on its new payments infrastructure

Nala, a fintech startup that started out with affordable money transfers in Tanzania, just raised $40 million in a Series A led by San Francisco-based Acrew Capital, with contributions from investors like DST Global, Norrsken22, and notable angels: Ryan King and Vlad Tenev. The round, oversubscribed, denotes the confidence investors have in the company’s vision and potential. 

Nala now has footprints in the fintech space focused on remittance services, a sector with immense demand in Africa due to the huge diaspora populations in the EU, UK, and US. Its consumer app lets users send money across 249 banks and 26 mobile money services in 11 African markets. 

An integration with Kenya's fintech heavyweight M-Pesa lets remitters pay local bills directly into mobile wallets, a show of commitment to leveraging legacy mobile money infrastructure.

In March 2024, the startup began foraying into the B2B payments sector via launching Rafiki, integrating directly with banks and mobile money providers to address well-documented hamstrings that have plagued remittances. 

“With Rafiki, we’re not just solving our [own] reliability issues; we’re also empowering global businesses to trade more effectively with Africa. By offering direct integration with banks and mobile money providers, Rafiki facilitates seamless cross-border payments, benefiting both senders and recipients,” the business said when launching the platform. 

The expansion is timely, given World Bank projections. Remittance flows to sub-Saharan Africa are expected to grow by 1.5% in 2024, reaching $54 billion. Regions like East Asia, the Pacific, South Asia, Latin America, and the Caribbean are also to see similar growth. Nala's plans to spread Rafiki to these emerging markets align with these trends, potentially reeling a lump of the growing demand.

Moreover, the cost of sending money across borders remains high. The global average price of sending $200 is 6.4%. Digital remittances are comparatively cheaper, at 5%. Focusing on reducing transaction costs and jacking up sureness, Nala is strategically placed to attract a larger user base and garner a competitive edge over traditional remittance platforms. 

The new funding, as per Nala’s Founder and CEO Benjamin Fernandes, will be instrumental in scaling ops. “We’re reinvesting this money to enhance our infrastructure, ensuring reliable, low-cost payments for all. With the launch of our [own] payment rails and the expansion of our B2B platform Rafiki, we’re not just talking about change, we’re building it,” he says. 

To enter new markets in Asia and LatAm, it unarguably needs robust infrastructure. But this ambition just as well needs a capable team. Recent hires, including ex-Wise staffer Andrei Klevtsov and ex-Currency Cloud executives Will Staples and Jan Philippaerts, bring valuable experience and expertise, which will be crucial to scale and establish itself as a reliable partner for global businesses.

Nala's success is a testament to the potential of African fintech companies to innovate and address unique market challenges. Its ability to raise one of Africa’s largest Series A rounds reflects the continued interest of international investors in African fintech. 

Its emphasis on reliability and cost reduction sets a new standard for the industry. Building its payment rails and integrating directly with financial institutions, it addresses the core issues of reliability and cost that have hindered the growth of digital payments. The approach could inspire other fintechs’ adoption of similar strategies, ultimately benefiting consumers and businesses across the board. 

Developing Rafiki has not only fueled its growth but also positioned it as a frontliner. With over 90% of its revenues currently coming from its consumer arm, and having become profitable, it is on the verge of crossing the 500,000 customer mark. This financial health, coupled with the new funding, would bolster ambitions for a robust payments ecosystem.