Access Holdings recently made its biggest play in East Africa with the acquisition of the entire issued share capital of National Bank of Kenya Limited. 

“This partnership encompasses more than a convergence of capabilities; it signifies the fusion of collective expertise, resources, and an unwavering commitment to drive financial inclusion, empowering millions throughout Africa,” Aig-Imoukhuede said.

Nigeria and Kenya are the first and third largest recipients of diaspora remittances in sub-Saharan Africa, data from the World Bank’s Migration and Development Brief report shows. In 2023, remittances to Nigeria accounted for 38% of the total $58 billion remittance flows to the region, growing by 2%, while Ghana and Kenya, posted estimated gains of 5.6% and 3.8%, respectively. 

As the largest consumer bank in Africa with over 60 million customers in 21 countries, Access Bank will significantly boost its remittance business by tackling the challenges customers face in making remittances within and outside the continent.

The collaboration, which is subject to approval from the Kenyan financial authorities, will see the players connect more than 60 million customers and 5 million businesses across 8 countries and process more than $1 billion a day in transaction value. Access Holdings which has a presence in 14 African countries and is the largest consumer banking institution, is expected to provide technology-infused financial services and Coronation Group will bring its technology expertise to the deal. 

M-Pesa, the mobile money platform of Safaricom, currently dominates the mobile money market in Kenya with a 96.5% share of the market. Another report has shown that 32% of remittances in Kenya are through mobile money operators. But M-Pesa is facing a future separate from Safaricom. In December 2023, Kamau Thugge, governor of the Central Bank of Kenya, said plans to split M-Pesa from Safaricom were ongoing to minimize shocks.

“African countries trade more with nations outside the continent than within themselves. Initiatives such as the African Continental Free Trade Area (AfCFTA) seek to address the lack of intra-continental trade. This partnership with Safaricom, Coronation Group and Access Holdings seeks to explore remittance corridors between East and West Africa, bringing alive the AfCFTA spirit,” said Sitoyo Lopokoyit, managing director, M-Pesa Africa. 

The first phase of the collaboration will concentrate on the biggest markets along the East and West African corridor, including Nigeria, Kenya, Ghana, and Tanzania. 

“LemFi users will be unable to send money to banks and mobile money in Ghana,” said LemfFi in a notice to its customers. Lemfi is one of eight remittance companies operating without regulatory approval, Ghana’s Central bank said, warning the public against using the named providers. 

Ghana’s Foreign Exchange Act allows the regulator to fine companies operating without approval and even prescribes the possibility of imprisonment.  

While it is unclear when Lemfi launched in Ghana, it named Efia Odo, an actress and influencer, as brand ambassador in January 2023. The company also hired a country manager and ramped up its marketing in Ghana. 

One source with knowledge of the company’s business said the company will engage Ghanaian regulators, much like it did in Nigeria before it received an International Money Transfer Licence(IMTO). 

According to the notice seen by TechCabal, the Central Bank warned the public, commercial banks, dedicated electronic money issuers (DEMI), and enhanced payments service providers (EPSP) about dealing with the listed companies. 

Section 3.1 of Ghana’s Foreign Exchange Act, 2006 (Act 723) prohibits dealing in foreign exchange without a licence. According to Section 29.1 of the Act, operating without a licence attracts a fine “of not more than seven hundred penalty units or a term of imprisonment of not more than eighteen months or both.” 

“Approved MTOs are hereby reminded to terminate their foreign exchange flows through their partner institutions only and to adhere strictly to all guidelines in respect of their operations,” the notice from Ghana’s Central Bank read. 

For many African countries,  remittances are an important source of foreign exchange. According to World Bank data, remittance inflows to Sub-Saharan Africa, grew an estimated 5.2% to $53 billion in 2022, compared with 16.4% in the previous year. 

In a circular dated July 10, 2023, Nigeria’s Central Bank approved the payment of the Naira to beneficiaries of diaspora remittance. The circular means that banks and International Money Transfer Operators (IMTOs) can now pay their recipients in Naira, ending a three-year ban. Part of the CBN’s circular said, “The Central Bank of Nigeria hereby announces Naira as a payout option for receipts of proceeds of International Money Transfers.”

In December 2020, the CBN banned banks and IMTOs from paying recipients in Naira. The policy also stated that only banks could transfer funds onward to recipients. In theory, the CBN policy ended the business model of many digital remittance companies that allowed Nigerians abroad to send money directly to the Naira accounts of recipients.

Months after the “Naira payment ban,” the CBN introduced the Naira for Dollar Scheme in March 2021. These policies were part of Godwin Emefiele’s attempts to encourage diaspora remittances to move through formal channels and boost FX liquidity. The bank hoped to squeeze unlicensed IMTOs out of business by insisting on paying recipients foreign currency. But given the popularity of digital remittance apps, which allow customers to receive money in Naira, it is doubtful that these policies succeeded.

This recent policy removal is another step towards loosening the strict control the CBN has exercised over FX rates in the last five years. It’s also great for customers who can now choose between receiving their funds in foreign currency, eNaira and the Naira. Customers who choose to receive their funds in Naira will be paid using the Investors & Exporters Window rate on the day of the transaction.

The CBN’s circular also updated the list of registered IMTOs in Nigeria. In February 2021, the CBN listed 47 approved IMTOs, but this week’s circular expanded the list to 62 companies. Some newly approved IMTOs include Comet Trading, CSL Pay Limited, Direkt Wire UK Limited, Fiem Group LLC DBA Ping Express, Lycamoney financial services limited, and SimbaPay Limited.

Despite the international remittance market being over-saturated with players, including traditional financial institutions and other fintechs, the process of sending money to African countries is cumbersome and challenging. According to World Bank data, the average cost of sending money to African countries from European countries like Italy, France, and Germany hovers between 3% and 7% and could take up to 2 days depending on the platform. 

Money sent from these European countries to Africa is a significant contributor to the GDP of African countries. In Kenya, remittances contribute up to 3% of the GDP, while in Nigeria and Egypt, that figure climbs up to 6% and 6.7%, respectively. This demand has led to an increase in the total value of money sent to Africa from overseas despite the global economic downturn. According to the World Bank, remittances to sub-Saharan Africa have increased by 5.2% in 2022.

Regarding the reason behind the expansion, Benjamin Fernandes, the founder and CEO of NALA, said, “The European economy is the third largest in the world and home to more than a quarter of African migrants. At NALA, our mission is to financially empower Africans across the world.” 

On how NALA separates itself from the pack, he added, “Payment companies have traditionally leaned on market expansion as a primary growth lever, causing them to pursue wider geographic reach rather than an added value to their product. At NALA, we are laser-focused on building the payments company that Africans deserve.”

Over 11 million African migrants live in Europe, meaning NALA’s expansion has the potential for significant impact by providing more options to send money from Europe to Africa. This expansion follows several other additions to NALA’s product, as the fintech recently integrated ApplePay and Google Pay into its offerings to allow payments from the US and UK to Africa. NALA’s expansion follows in the footsteps of Nigerian Bluechip Technologies, after the software company expanded into Europe earlier this year.

Wealthy private investors and a tech-savvy middle class in Africa are helping to bridge early-and-growth stage funding gaps for startups as platforms emerge to help funnel diaspora cash into the continent’s rapidly expanding venture capital market.

Remittance flows into Africa are gradually being retooled to foster entrepreneurship and support innovation on the continent, giving multi-stage startups a much-needed lifeline.

Intermediary platforms such as Pangea Trust and Bantaba (a Sweden-based VC matchmaker) are tipped to help unlock and deploy more diaspora remittances across the full spectrum of startup maturity in Africa to accelerate their growth.

Pangea has developed a one-stop shop for members of the African diaspora community interested in becoming investors – including training in dealmaking.

“The diaspora is active today in supporting African-impact entrepreneurs and businesses. The money sent to Africa is mainly used to support the extended family and our mission is to increase support to business development, competence to young entrepreneurs and productive investments,” Pangea says on its site.

It comes at a time when there is growing appetite among African investors to support modest-sized startups on the continent.

“More than half of US$1m+ deals in Africa since 2019 have had at least one Africa-based investor as one of the main investors. And this percentage has grown quite a bit since 2019 (36 per cent then vs. 58 per cent this year so far),” said Africa: the Big Deal, a startup deals database, in a report.

According to the database, a main Africa-based investor is also included in more than 50 percent of deals of US$ 10 million and up, in 2022.

The database reports that Africa-based investors are more active in deals with start-ups in Egypt, South Africa, Nigeria and Kenya.

Key sectors for these investors are Education and Jobs, Healthcare and Fintech. Other sectors are Agriculture and Food, Energy and Water, and Logistics and Transport.

59 percent of deals are with startups with a female CEO and female teams are favoured.

“They are particularly well represented in the deals with start-ups with an all-female founding team (one female founder or an all-female founding team) where they are involved as the main investor in more than two-thirds (68 per cent) of the US$1m+ deals since 2019,” the report shows.

On diaspora remittances, figures show the remittances to Africa (excluding North Africa) grew 14 per cent to US$49 billion in 2021, the strongest gain since 2018.

Including flows into Egypt alone, remittance jumps to more than US$80 billion.

Figures from the Central Bank of Egypt (CBE) show remittances from Egyptian expatriates soared 6.4 per cent or US$1.9 billion during 2021 to US$31.5 billion up from US$ 29.6 billion in 2020.

In 2020, remittances to Africa as a whole withstood an onslaught from COVID-19 shocks, growing more than US$80 billion on the back of fiscal stimulus extended to workers in remitting countries like the United States and Europe, according to the World Bank.

This runs counter to trends that saw remittance inflows into other low-and middle–income states worldwide shrink by US$8 billion in 2020, due to the fallout from coronavirus lockdowns.

Remittance growth was more in Zambia, at 37 per cent, Mozambique at 16 per cent, Kenya at nine per cent and Ghana at five per cent, according to the report. Flows to Egypt soared 11 per cent to a record high of nearly US$30 billion in 2020, while transfers to Morocco jumped 6.5 per cent to US$7.05 billion.

“The resilience of remittance flows is remarkable. Remittances are helping to meet families’ increased need for livelihood support,” said Dilip Ratha, lead author of the report on migration and remittances and head of KNOMAD.

“They can no longer be treated as small change. The World Bank has been monitoring migration and remittance flows for nearly two decades. We are working with governments and partners to produce timely data and make remittance flows even more productive.”

Globally, remittance flows to low-and middle-income nations slid to 540 billion US dollars in 2020, just 1.6 per cent below the 2019 total of 548 billion US dollars, according to the Migration and Development Brief.

Nonetheless, this was a smaller drop than during the 2009 global financial crisis (at 4.8 per cent) and far lower than the fall in foreign direct investment (FDI) flows to low-and middle-income countries, which, excluding flows to China, fell by over 30 per cent.

According to the World Bank, the negative trend resulting from COVID-19 shocks is about to substantially reverse, globally.

“With global growth expected to rebound further in 2021 and 2022, remittance flows to low-and middle-income countries are expected to increase by 2.6 per cent to $553 billion in 2021 and by 2.2 per cent to $565 billion in 2022,” reads a World Bank report.

Remittances to Nigeria are also projected to bounce in 2021 and 2022 after a decline last year. Cash wired to Nigeria by its citizens abroad, including the United States and Europe fell 27.7 per cent in 2020 to 16.8 billion US dollars, from 23.24 billion dollars in 2019, due to COVID-19-induced economic shocks. A global recovery is expected to see that figure soar this year and next.

That’s why Lemonade Finance, a Nigerian startup that wants to ease the payment process for Africans in North America and Europe, was founded. 

To extend its services to more Africans in the diaspora, the startup has just raised $725,000 in pre-seed funding, with participation from Y Combinator and the venture capital firms, Microtraction, Ventures Platform and Acuity Venture Partners, among several other individual investors. 

Founded in October 2020 by Ridwan Olalere, who left his job as Country Head of Uber Nigeria, and Rian Cochran, former Director of Finance at Opera Software AS, Lemonade Finance was built to be “a borderless money app for Africans”.

One of its investors, Dayo Koleowo, Managing Partner at Microtraction, says “Lemonade’s solution is very timely. As a multi-currency financial service provider, they make it easy for the African diaspora to send and receive money from their new country of residence, which is remarkable. We believe Rian and Ridwan have the technical and financial know-how to provide the number one cross-border neobank for Africans in the diaspora.”

Do we need yet another remittance solution?

When Africans want to send or receive money to or from their family, dependents, children studying overseas, or businesses domiciled in Africa, they have few options and encounter problems.

Before Lemonade, Western Union, PayPal and MoneyGram are some of the products Africans already use to process payments. But these options are typically expensive, take weeks to process payments and restrict customers from certain locations from using their services. For example, PayPal allows Africans living in Africa to receive but not send money. 

With Lemonade, users do not have to go to the bank, and within minutes, they can send and receive payment.

Africans need access to more than one currency

To allow Africans to use their money seamlessly, Lemonade Finance has provided them with access to currencies that matter to them, notably the currency of the country they are in and that of their home country.

This is a big deal for Africans in the diaspora who have businesses in Africa but want to move their money in foreign currencies. Currently, if an African wants to change their foreign currency to that of the home currency in order to, for example, pay for their parents’ healthcare, they have to deal with unfavourable rates and the length of time it takes for the exchange to take place. 

Olalere and Cochran say that the flexible solution Lemonade provides is intentional and at the core of the team’s thinking in building the app.

“Before now, when Africans living in Africa moved to the diaspora, they could only create a bank account with the currency of their new country or the US dollar. While some can use their phone numbers to operate an African bank account, like with Guaranty Trust Bank (GTB), others have to travel back home to renew their token,” said Olalere. 

Lemonade Finance wants to ensure that a Nigerian who resides in the UK, for instance, can open a Nigerian account and save money in naira as well as pounds without leaving the UK.

Lemonade Finance faces regulatory and compliance problems. The startup has to go the extra mile to prove they are worthy of licenses in European and North American countries. This is because global banks have put African countries on a restricted list, preventing individuals and payments companies from sending money to Africa. 

But Lemonade Finance is dedicated to letting global banks know that lowering financial barriers into Africa is a beneficial and strategic move.  They have been able to get some of their partner banks to green-light Nigeria, Kenya, Cameroon and some other West African countries. Yet, even as these global banks have enabled this financial access, they charge customers making transactions to African countries a higher fee. They also place restrictions on the number of days or hours it takes for the money to reach Africa. 

“On a daily basis, what we are constantly doing is fighting for everyday Africans to be globally included financially,” Olalere said. 

Olalere revealed that the company’s biggest milestone happened earlier this year when they acquired a license in the UK, approved by the FCA, without stepping foot in the UK.

This is why this funding round, according to Olalere, is important. It will help them upgrade and get new licences like the VMI license that allows them to hold wallets. This funding round will also help them hire for roles in the regulatory and compliance department, which will ultimately increase their customer base and allow them to reduce fees for customers. 

Currently, Lemonade Finance is only live in Canada, where it has gained thousands of customers already. In a few weeks, it will allow users in the UK to send and receive money from Ghana and Kenya; and in December, users in the US will be able to send and receive money from over 10 African countries at once. 

For many, the transaction may appear like any other financial payment on a fintech app. But the Bitcoin Lightning Network connecting Strike and Bitnob is a system that could disrupt and improve how money is transferred across the world.

How does the super-fast technology work? TechCabal caught up with Bitnob CEO, Parah, to find out.

Michael: How did you get involved in Bitcoin and what was your work experience before cryptocurrency? 

Bernard: I first learned about Bitcoin in school. There wasn’t a lot of prior professional work before then. I had dropped out of the University of Abuja sometime in 2011 and in 2013, I moved to Ghana to study computer science. It was during this time, around October in my first year in school, that I got to know about Bitcoin. 

As a student, I got a lot of freelance gigs and contract jobs with companies. So after my first year in school, I spent most of my spare time just coding and building things for companies in Ghana and around the world. I had a professional life that started in school and spent most of my time working than going to lectures. I only read seriously when it was a few weeks before exams.

At the time, I worked for the biggest PR agency in Ghana back then, Global Media Alliance, on a couple of platforms for influencer marketing. I worked for companies in the U.S. and Canada as well. I also ran technical stuff for a number of digital marketing agencies, which gave me a blend of marketing and software engineering.

I got back to Nigeria sometime in 2018 and started some work with my current co-founders while consulting for companies in Nigeria and abroad. It was mostly freelance and consulting before starting Bitnob in 2020.

Michael: So what led to the founding of Bitnob?

Bernard: I have a personal story with Bitcoin. In 2016, there was a CBN ban on the use of naira cards abroad. I had money in my bank account but couldn’t withdraw it in Ghana. The only way was to get someone who sent me Bitcoin and I exchanged that for Cedis. That event was a turning point – I couldn’t believe someone would give an order and my money was gone. Bitcoin made a lot more sense to me. It was money that could easily cross borders and I can always find someone in any country I’m in who’s willing to take my Bitcoin for cash. So it changed my perspective and I decided to dive deeper into Bitcoin.

Sometime in 2017, I quit my full-time job to fully focus on the space and then founded Bitnob with a colleague. We initially did over-the-counter transactions for people who wanted to buy large amounts of Bitcoin – $50,000, $100,000. We were the guys who could get it for you. Such amounts were not easy to come by on online platforms so we had to move around the streets of Accra, find people who had Bitcoin, gather them for sale. Then I realised this was going to be useful for a lot of people in the future and decided to build a career in this space.

Right now, we do more than just broker. Bitnob allows people to save and invest in Bitcoin and the whole process is automated. Instead of wondering when should you buy or sell Bitcoin, the app eliminates takes care of that using the dollar cost averaging technique. You can automate your savings to say, for instance, buy $10 worth of Bitcoin every week. Bitnob will handle the rest. We also offer loan services. If you have Bitcoin, we take that as collateral and give you a loan in naira. We’ve gone into payments across countries as well.

Michael: How many users does Bitnob currently have?

Bernard: We came out of private beta with less than 1,000 users. Today we have more than 11,500 users and that’s from January until now. So it’s been an exciting year. Bitnob is registered as a U.S. company and has no Nigerian office. We target the African market and diaspora, looking to connect both parties. 

Michael: Tell me about the Lightning Network connecting Strike and Bitnob. How does the technology work?

Bernard: When you send Bitcoin on a blockchain, there’s a confirmation time. You have to wait for maybe ten minutes to receive the Bitcoin and probably wait another 10-20 minutes to actually confirm that the Bitcoin has arrived. In some instances when Bitcoin prices go really high, a lot of people complain that their transactions are getting stuck or taking too long. That’s because they pay network fees to miners who process their transactions. That’s what’s called the base layer or layer 1. You can think of it like a road where everyone moves and whenever there’s huge traffic, it gets choked and vehicles move much slower. 

The Lightning Network is another layer, like flyovers that are built over the main road to help ease the traffic and get people moving faster. The network is built on the original layer. Like flyovers that are much faster and with less traffic, the Lightning Network does the same Bitcoin transactions but it is instantly settled, regardless of where you’re sending Bitcoin from. This is because it’s not moving on the Bitcoin blockchain itself. The Lightning Network is what we call the layer 2 technology – like a highway on top of a road for people to move faster.

In addition, the Lightning Network is an open system that anyone can plug into. You can simply set up a Lightning node and immediately have access to a global payments system that offers superior functionality to legacy platforms. So Strike was able to immediately connect to Bitnob’s node after linking with the Lightning Network.

Michael: Won’t there be delayed settlements if there are huge volumes of transactions on the Network?

Bernard: By design, the Lightning Network is supposed to ease transactions from the main Bitcoin blockchain. Transactions can never get too much because what causes traffic on the Bitcoin blockchain is the fact that it uses blocks. In a block, you have a certain number of transactions which take around 19 to 20 minutes for confirmation. Within those minutes when several people are doing a lot of transactions, it piles up and the Bitcoin itself processes around seven transactions per second. But by design, the Lightning Network can process more than one million per second. So it eases the traffic to a significant extent and it never gets crowded because the transactions are settled instantly. There’s no wait time.

Michael: What informed the integration with Strike?

Bernard: Chad and I both share similar visions of a world where you’re not restricted to do your transactions. A system that’s open, unlike traditional networks which only a few people can access, there’s a lot of permissions and fees needed because of the several intermediaries involved. As Africans, we’ve been on the receiving end of it. We’re the ones who haven’t really enjoyed this system.

The interesting thing about Bitcoin and the Lightning Network is that they’re open. If two entities become nodes on the network, they become interoperable with each other. Let’s say you wanted to send money from a Nigerian app to a Cash App account today, there’s no way to do that. But with Bitnob you can do that because Cash App and Bitnob both support Bitcoin. It’s an open network – as long as you follow the rules, you can communicate with one another. It’s similar to the internet; if your device follows the rules, connected as an IP address, then you can talk to anybody anywhere in the world. The Lightning Network is also a protocol where any two nodes can talk to each other. 

Because we’re interoperable with Strike, we’re able to instantly settle transactions via the Lightning Network without the sender or receiver needing to touch Bitcoin or knowing that the transaction was done through the Lightning Network. That’s the beauty of it.

Michael: How many test transfers and how much have you transferred so far?

Bernard: It’s still in beta testing and we’ve done thousands of transactions via Lightning since the video was released. We’re opening it up gradually to a lot of people, giving more testers access to it, and just gauging interest before launch. The testing has been going very well with people moving money back and forth. It will soon be available to everyone, maybe in four or five weeks’ time.

Michael: Everything seems to be going fine. Do you see any possible challenges to this new super light transfer tech?

Bernard: It’s not something I’m worried about. It’s not like we have a bank account or any direct connection with a bank. So there’s really nothing. All we’re doing is Bitcoin transactions. And I’m not sure anyone has banned Bitcoin transactions. Strike is just selling Bitcoin to us and it’s entirely a peer-to-peer transaction with no bank in the middle.

Michael: What else are you working on currently? Are there exciting projects you’d like to share?

Bernard: We’re working on things that are potentially bigger than this and are excited about them. Let’s see where we’ll be in a few months’ time.

The New York-based startup was founded in 2018 by Michael Faye, a development economist and former United Nations official. Currently, it provides a mobile money transfer service from eight countries, some of which host a significant number of migrants, such as the United Kingdom, Belgium, Canada, France, Italy, etc. 

Meanwhile, the 15 receiver countries Taptap Send supports payments into are predominantly African – including Senegal, Mali, Guinea, Ghana, Cameroon, the Ivory Coast, Kenya, Madagascar, Zambia,  DR Congo,  Morocco, and the Republic of Congo. The startup plans to add more countries soon.

The Series A was co-led by Canaan Partners and LinkedIn co-founder, Reid Hoffman, along with participation from other unnamed investors. Taptap Send is also backed by the Omidyar Network and Helios, according to a statement on its website.

“Free” international money transfer

Taptap has raised money to expand the scope of its no-fee international money transfer service.

The company says it does not charge any commission or fees for transfers. Instead, it makes a cut on foreign exchange with the help of a tech stack that lets it pass on lower exchange rates to its customers.

The startup’s business model also relies on the economics of scale. That is, offering better rates will drive more users. Although this might not mean better margins, it would result in a higher volume of transactions and more returns overall.

“Taptap Send is taking advantage of this structural change in mobile money and other distribution networks to offer what we hope is the fastest and best-price service to customers,” TechCrunch quoted Faye as saying in an interview.

The company’s proposition is sure to appeal to many in Africa, where most remittance recipients have to deal with traditional services that are expensive, can take days to arrive, and have limited reach in rural areas. A significant number of fintech startups are helping to solve these problems, lowering cross-border remittance costs in particular.

Last year, officially recorded remittance flows to low- and middle-income countries reached $540 billion, according to the World Bank.

“Taptap Send has a nuanced, yet powerful strategy that Michael has put into place to allow [it] to be the lowest-cost provider in every market they enter,” said Brendan Dickinson, a general partner at Canaan. “The company gives as much cost savings as possible to the customer, and as a result, is almost always the cheapest player in the market.”

According to Dickinson, all of that makes it economically viable to send smaller remittances and in doing so, expands the total market and volume of remittances sent. “This approach is strongly resonating with customers, as Taptap Send’s massive growth has been 90+% organic.”

Taptap is yet to disclose numbers on its size or customers served. On its website, the company says it’s already moved “tens of millions of dollars and reached tens of thousands of customers.” Faye also revealed that the business overall grew five times in the last year and is posting a profit.

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Before becoming Director of Operations at ORide in 2019, Ridwan Olalere had been around Nigeria’s startup scene for a few years, taking note of big problems. 

He was the fourth senior engineer hired during Flutterwave’s very early 2016 days. It was a great perch for gaining insight into Africa’s untapped e-payments landscape.

In October 2020, Olalere took the leap from operator to founder. He left Uber as a Country Manager for Nigeria to start Lemonade Finance, “a borderless money app for Africans.”

When you consider his undergraduate foundations in aeronautical engineering, it appears Olalere has always had a thing for moving valuables over long distances. At Uber he helped people move around Lagos and Abuja. At Lemonade, he wants to move money from Africa to the world.

But why Lemonade and why now? Why does Africa need another ‘borderless’ money app in 2021?

Sweetening a sour taste

I have not had a need to send money to Europe. I have no family or dependents there. But Nigerians with children schooling in the UK and other parts of Europe often need to pay school fees or send upkeep money.

Those with second homes in these countries may also want to fund overseas bank accounts for other purposes. 

Olalere adds one use case: “You have a Piggyvest or Risevest account and want to withdraw the money to use it in Europe. What do you do?”

At the moment, there are not many options for satisfying these needs. If you Google “Nigeria to Europe transfers” and visit this clickbaity result, you’re going to be disappointed: 

‘Unfortunately, we are unable to make transfers from Nigeria to Europe at this time.’ 

But Lemonade says ‘Um… actually we can’. The app was launched in October 2020 and rransfers to Kenya, Ghana, the UK and banks accounts in Europe have been added.

The big promise? The transfer will reflect in two to five minutes, not business days or weeks.

How Lemonade Finance works

It is easy to sign up for a basic Lemonade Finance account. Inputting my house address was about as vulnerable as I felt. No bank verification number or government-issued ID was required.

To fund a Lemonade wallet, the app generates a virtual bank account which the user transfers money to from their naira bank account or fintech app. 

When a user wants to transfer money from their wallet to a foreign account, Lemonade does the currency conversion. In addition to inputting the destination bank account, a sort code is needed. Receiver does not need to download Lemonade; it goes into their bank account.

To be sure, the Lemonade account I describe above is an entry-level one with a ₦50,000 limit on amounts that can be sent. As with most fintech apps, Lemonade invites users to upgrade their account by adding more KYC details. 

But instead of relying on BVN (the go-to KYC tool for startups until recently), Lemonade uses third-party identity verification from companies like Jumio and Onfido. The latter is used by Revolut, the UK digital bank. 

Normally, this verification process requires the user to take a picture and upload a government ID. Olalere says it is as efficient for KYC purposes as using BVN.

What’s the tech in Lemonade?

All of Lemonade’s stack is in golang, the open source programming language developed by Google.

“We built out these parts of the app ourselves, most of it in one AWS container,” Olalere says proudly.

Lemonade’s Android and iOS apps were built in-house by a team of 4 backend engineers, 3 mobile developers and 1 infrastructure engineer.

License and registration

Regulation has been a recurring subject in Nigerian fintech in the first half of 2021. The Central Bank of Nigeria has been especially vigilant against services that move currencies in and out of the country. 

Lemonade is a remittance business squarely within CBN’s purview. But Olalere believes the regulator’s focus is to stop bad actors. “We keep dialoguing to make sure we are compliant.”

He says Lemonade Finance is licensed in Canada as a money service business and has necessary license coverage in the US, UK and Europe to enable Nigerians to send money to bank accounts in those countries.

Lemonade has a license partner for inflows into Nigeria. Why not a direct license from the CBN?

“It’s about time and cost. If you want to get up and running quickly as a startup, you don’t want to wait six to eight months for a license if you can partner with someone who already has it.”

In any case, this licensing partnership does not mean Lemonade depends on the partner for technology. The partner’s technology downtimes will not affect the startup.

Growing Lemonade’s user base

It’ll probably not take long before competitors emerge in Lemonade’s Africa-to-Europe money transfer space (we might hear of ‘Grape Finance’ or something soon). How will Olalere’s team stay top of mind with existing and prospective users? 

“A good cross-border product delivers on time. Our delivery is instant, never next day. We keep working on new rails and we ensure uptime is really high if you want to use it in the middle of the night.” 

It’s a bold promise, premised on the capacity of a team assembled from Flutterwave and OPay. Lemonade’s growth comes down to them bringing all that expertise to bear and perhaps hoping the CBN stays off their backs.