Moses Ikiara, a development economist and former Kenyan government official, warned that capping fees could have unintended consequences. “If you cap fees, you could see some players exit the market because they can’t operate at those margins,” he said. “You could also see a decrease in service quality. It’s a delicate balance.”
Despite the challenges, fintech companies are making significant strides in the remittance space. NALA, for example, has seen rapid growth since its launch in 2020, now serving over 500,000 customers across Tanzania, Kenya, and Uganda. The company recently raised $10 million in funding to expand its operations.
LemFi, another African fintech startup, has developed a platform that allows users to send money to family and friends in Africa using cryptocurrencies. This enables instant, low-cost transactions without the need for traditional banking infrastructure.
Chipper Cash, founded in 2018, has become one of the fastest-growing fintech startups in Africa, with over 10 million users in seven countries. The company offers a range of services, including cross-border payments, peer-to-peer transfers, and cryptocurrency trading.
With the support of venture capital funding and strategic partnerships, African fintech companies are well-positioned to drive down remittance costs and increase financial inclusion on the continent. As digital payments become more widespread and regulations become more streamlined, the future looks promising for the remittance industry in sub-Saharan Africa.
Overall, the emergence of fintech companies in Africa represents a significant opportunity to address the high costs of remittances and improve financial access for millions of people. By leveraging technology and innovative business models, these companies have the potential to transform the remittance landscape and unlock new economic opportunities for individuals and countries across the region.
As the industry continues to evolve, it will be essential for policymakers, regulators, and industry stakeholders to work together to create an enabling environment for fintech innovation and ensure that the benefits of lower remittance costs are passed on to consumers. With the right support and collaboration, African fintech companies can play a crucial role in driving economic growth and prosperity on the continent.
