Over the past decade, the amount of money flowing into sub-Saharan Africa has been on an upward trajectory. The activity has not been made cheaper by the rise in the amount of money coming in. The World Bank says that sub-Saharan Africa is the most expensive region to send and receive money due to the high fees.
According to analysts from the World Bank, a factor that affects these rates is transparency. Consumers are not aware of and cannot compare services, fees, and speed of their existing remittance service against other products because of a lack of transparency around rates and fees. A way to solve this would be to make an aggregation of platforms. Zazuu, a U.K.-based and Africa-focused fintech, has raised $2 million in a new venture round.
African migrants do not fare well in the U.S. and the U.K. It can be difficult to build a credit history or send money home.
Nigeria is the largest recipient of money sent home by migrants from the U.S. and the U.K. The Zazuu founders could relate to this problem because they have Nigerian heritage. Kay Akinwunmi, the CEO of Zazuu, said in an interview that he and his co-founders started the company because of institutional biases.
This is something we have experienced. There is a story of millions of Africans and migrants sending money, according to the founder who started the company with his friends. Africans in the diaspora, whether they are sending money to another side of the world or trying to get a loan in the UK, are at a disadvantage.
Remittance space has become fragmented Digital upstarts such as NALA and Lemonade Finance have entered the market over the past couple of years, joining legacy platforms like WorldRemit and Western Union.
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Zazuu was launched as a chatbot in 2020 to help users find and compare various money transfer options in their region.
Akinwunmi said that they looked at the typical African customer to understand their behavior. Africans love to shop around and try different options before making a final decision.
As customers got introduced to new providers, the initial product helped them understand which service had the best prices. Money transfer companies that serve multiple corridors have been listed in the product. Money can be moved from Canada, the U.S., and seven European countries to Africa.
Money transfer companies are inherently biased and the core of Zazuu is to remove power from them. For the first time, customers will be able to see all of the options in a single place, including rates, speed and reviews. He said that the Zazuu process was going to be a lot better for them.
It can be difficult to see what Zazuu has to offer for providers on the platform. Provider pain points include high customer acquisition costs and Churn. Zazuu is a marketplace and customers are shopping around to send money. Providers can use it to reinforce their brand message or advertise other parts of their business. He said that they are bringing real transactional value to them.
Zazuu didn't give hard user numbers, but it did say that the base has grown 2.3x in the first quarter of the year. The company will use the new investment to hire more talent, scale its Pay with Zazuu feature, and keep its numbers up. Zazuu plans to expand the service to other senders and receiver countries. Access to credit is one of the financial challenges African Immigrants face.
The aim is to build a non-biased financial wellbeing for African immigrants.
Tinie Tempah, iROKOtv founder and CEO, and Kuda chief executive Babs Ogundeyi were among those who participated in the financing round. Zazuu is building a true marketplace for financial services, starting with payments, and that is why Launch Africa invested in it. We believe that their business will bring better pricing and cross-border mobility of money.
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