Remittances to sub-Saharan Africa have been on the rise over the past decade since 2020; last year, it rose by more than 6 percent to $45 billion. However, the steady rise in remittances flowing into the region has not lowered the cost of this activity.according to World BankSub-Saharan Africa remains the most expensive region to send and receive; sending $200 costs an average of 8%, compared with a global average of around 6%.
World Bank Analyst Global remittance prices Said one factor that affects these rates is transparency among remittance providers. According to the initiative, the lack of transparency in rates and fees reduces competition as consumers continue to use existing remittances because “they do not know and cannot compare the services, fees and speeds of existing remittance services with other offerings.” One way to solve this problem is to build an aggregator of cross-border and remittance platforms. zazua UK-based, Africa-focused fintech company that does this by offering customers a variety of remittance options, announced that it has raised $2 million in a new round of venture funding.
The US and UK financial systems are not conducive to immigrants, especially African immigrants. Conducting certain financial activities, such as building a credit history or sending money home, can be difficult for many people.
With an immigrant base of 800,000 people (most of whom live in the US and the UK) sending money home each year, Nigeria is the largest recipient of remittances in sub-Saharan Africa at over $17 billion. The Zazuu founders are of Nigerian ancestry; therefore, they are a good solution to this problem. Zazuu CEO in an interview with TechCrunch Kay Akinwenmi Said he and his co-founders started the company in 2018 after experiencing institutional biases such as the African diaspora.
“We’ve been through 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 founded the company Cored Fanilola, tora allard and Tosin Eccoli“Africans in the diaspora, whether sending money to the other side of the world or trying to get a loan in the UK, are at a disadvantage.”
In addition, the remittance space has become fragmented.Over the past few years, with the entry of digital upstarts, there has been an increase in remittance products such as NaraLemonade Finance and Chip Cash Join traditional platforms such as WorldRemit, Remitly, and Western Union, which Africans mainly use to carry out remittance activities.
To help users search for these different remittance options in their area and compare rates and fees, Zazuu initially launched in 2020 as a chatbot, informing users of daily remittance rates for various platforms via Facebook and Telegram groups.
“We looked at typical African customers to understand their behavior, and we noticed a fascinating trend,” Akinwunmi said. “We realised that Africans have this pathological behaviour that we like to shop around, compare our options and try different options before we finally make a decision.”
The CEO said the initial offering helped dispel the preconceived notions that customers had about which services were best priced when they were introduced to a new provider. The product has now grown into a full-fledged aggregator, listing over 17 service providers (remittance companies serving multiple channels). It offers the option to send money from Canada, the United States and seven European countries, including the United Kingdom, allowing customers to use its “search and compare” service and find providers who can transfer money from these countries to Africa.
“Zazuu is at its core about seizing power from financial institutions and remittance companies, which are inherently biased. We want to provide customers with this bird’s-eye and transparent view so that, for the first time, they can see all options in one place, including Rates, speed and reviews. The onboarding experience will be smoother and better for them,” he said when comparing Zazuu’s process to traditional market players.
Zazuu’s proposition is clear to customers; however, it’s hard to see what vendors on the platform have. But Akinwunmi believes his platform addresses the vendor’s most important pain points: churn and high customer acquisition costs. “Zazuu is a marketplace and the reality is that customers go around looking for multiple entities to send money to. But for suppliers, it’s an opportunity to reinforce their brand message or advertise other parts of their business, in addition to great prices. And just Instead of getting referrals, we bring them real deal value,” he said.
While Zazuu did not provide exact user figures, it said that the user base in the first quarter of 2022 increased by 2.3 times compared to the full year of 2021. The company will use the new investment to maintain those numbers, hire more talent and expand its scale. Pay with Zazuu A feature that allows users to complete transactions within the app. While the service is only available for senders in the UK and recipients in Nigeria and Ghana, Zazuu said it plans to expand access to other sender and recipient countries. In addition, there are products that address the financial challenges faced by African migrants, such as access to credit.
“Our goal is to build a completely unbiased financial profile for African immigrants around the world,” the CEO said.
Zazuu’s funding round welcomed pan-African investors Launch Africa and Founders Factory Africa, Hoaq Club, British rapper Tinie Tempah, iROKOtv founder and CEO Jason Njoku and Kuda CEO Babs Ogundeyi. Commenting on why Launch Africa invested in the four-year-old company, Zach George, managing partner of the firm, said: “Zazuu is building a true financial services marketplace, starting with remittances and payments. We believe their business will serve the entire The continent brings fairer, more transparent pricing and better liquidity across borders.”