Mobile Money Growth and NALA's Expansion

A report by McKinsey indicated that the global count of mobile money services reached 282 in 2017, with a majority – over half – functioning within sub-Saharan Africa.

By 2020, this figure experienced substantial growth, though the proportional distribution remained consistent. A GSMA study revealed 310 active mobile money services across 96 nations. Specifically, 171 of these services operate in Africa, with 157 concentrated in sub-Saharan Africa.

Challenges and the Genesis of NALA

Utilizing mobile money services in Tanzania can present difficulties, often due to unreliable internet connectivity and elevated service charges. Benjamin Fernandes observed these challenges while working as a national television presenter and concurrently developing a mobile money solution for TV subscription payments in East Africa in 2011.

Six years later, Fernandes founded NALA, a mobile money and wallet aggregator, designed to address these existing issues. The initial mobile application enabled users to conduct mobile money transactions and access mobile banking functionalities even without an internet connection. Within a year of its launch, the platform attracted a user base of 250,000.

Remittance Trends and Unexpected Growth

The World Bank previously forecasted a significant decrease in international remittances to Africa last year. However, contrary to predictions, remittance activity on the continent actually increased, despite Africa remaining the most expensive region for sending money, averaging 10.6% in transaction fees.

Kenya, for example, recorded its highest-ever inbound remittance amount, reaching $3 billion. Furthermore, WorldRemit acquired Sendwave in August 2020 for $500 million, and Mama Money reported a 500% growth rate within the same year.

NALA also observed a rise in international remittance requests, with one in seven users expressing a desire to receive funds from abroad, even though the company wasn't initially focused on this service.

This demand stemmed from the fact that over 70% of money sent to Sub-Saharan Africa is currently handled through physical locations. When many in-person services were suspended or limited due to the coronavirus pandemic, individuals faced costly, unreliable, or inaccessible alternatives.

NALA's Entry into International Transfers

Driven by these trends and user feedback, NALA began testing international money transfers in August 2020, initially facilitating payments from the U.K. to Kenya, Uganda, and Tanzania.

By constructing a multi-currency ledger, Fernandes believes NALA can replicate the success of Wise within the African market. He stated, “International payments are only 1% built today. Our work isn’t complete until money can be sent both ways seamlessly.”

Fernandes emphasized the need for African markets to also function as ‘sender’ markets, highlighting the substantial trade occurring with other nations and the current reliance on expensive bank wires or physical stores for money transfers. He believes a better solution is attainable.

Competitive Advantage and Regional Focus

While several platforms are pursuing similar goals, NALA distinguishes itself by specifically targeting the East African region, according to its CEO.

“We possess a significant advantage in this area. We are locally based, possess a deep understanding of mobile money, and previously developed bill payment solutions, making this a natural extension of our existing capabilities,” he explained.

Investment and Team Expansion

Since becoming the first East African company accepted into Y Combinator in 2019, NALA has secured investment from prominent firms to support its objectives.

Notably, Accel, a venture capital firm that rarely invests on the continent, has backed NALA alongside Egypt’s Instabug. Additional investors include NYCA Partners, and angel investors such as Shamir Karkal (Simple co-founder), Peeyush Ranjan (former Flipkart CTO and current Google Payments head), and Thomas Stafford (DST Global).

NALA also recruited Nicolas Esteves, formerly VP of engineering at Osper and with experience at Monzo, as its CTO. Fernandes believes Esteves’s expertise will significantly enhance the company’s ability to achieve its goals.

“Bringing someone of his caliber onto our team has broadened the scope of what we can accomplish, as he has previously built multi-currency ledgers for large organizations,” he stated.

Upcoming Beta Launch

Currently, NALA is preparing to launch a beta product next month for customers in the U.K. sending money to Kenya and Uganda, with Tanzania to follow. The company asserts that the service will enable instant payments to all major mobile money accounts and is finalizing banking partnerships to facilitate money transfers from East Africa to the U.K.