- Zazuu, a London-based fintech building a marketplace for remittance companies, has announced a $2 million raise. The fundraising round saw participation from Launch Africa, Founders Factory Africa, HoaQ, Tinie Tempah, Jason Njoku, Babs Ogundeyi, and other angel investors.
The remittance inflows to sub-Saharan Africa over the past decade have been on an upward trajectory since 2020; last year, it increased by more than 6% to $45 billion. However, the steady rise of remittance inflows to the region hasn’t made this activity cheaper. According to the World Bank, sub-Saharan Africa remains the most expensive region to send and receive money; sending $200 costs an average of 8% in fees compared to a global average of about 6%.
Analysts from the World Bank’s Remittance Prices Worldwide say a factor that affects these rates is transparency among remittance providers. According to the initiative, a lack of transparency around rates and fees reduces competition as consumers continue to use incumbents because “they are not aware of and cannot compare services, fees, and speed of their existing remittance service against other products.” One way to solve this would be to make an aggregator of cross-border and remittance platforms. Zazuu, a U.K.-based and Africa-focused fintech that does precisely this by offering customers various remittance options, is announcing that it has raised $2 million in a new venture round.
Financial systems in the U.S. and the U.K. do not favour migrants, particularly African ones. For many, performing certain financial activities like building one’s credit history or sending money back home can be difficult.
With a migrant base of 800,000 people (most of whom are based in the U.S. and the U.K.) sending money home yearly, Nigeria is sub-Saharan Africa’s largest recipient of remittance inflows at over $17 billion. Zazuu founders have Nigerian heritage; thus, they could relate very well to this problem. In an interview with TechCrunch, Zazuu CEO Kay Akinwunmi said he and his co-founders started the company in 2018 after experiencing such institutional biases as Africans living in the diaspora.
“We’ve experienced this. Seeing my mom send money and the friction there is pretty much the story of millions of Africans and migrants sending money,” said the founder who launched the company with Korede Fanilola, Tola Alade and Tosin Ekolie. “Africans in the diaspora, whether you’re sending money to another side of the world or trying to get a loan here in the U.K., are at a disadvantage.”
Also, the remittance space has become fragmented. There’s been an increase in remittance products over the past couple of years, with the entrance of digital upstarts such as NALA, Lemonade Finance and Chipper Cash joining the likes of WorldRemit, Remitly and Western Union, legacy platforms Africans primarily used to carry out remittance activities.