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FinTech

Tanzanian fintech Nala pledges $1M investment after securing license

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Tanzanian payments company Nala has been granted a Payment Service Provider (PSP) license to operate in the East African country.

Nala is a fintech startup that allows its users to make money transfers from the UK, US, and EU to Kenya, Uganda, Tanzania, Rwanda and Ghana.

The Tanzanian operating license comes after talks between the company and Central Bank of Tanzania. Furthermore, the approval as a PSP will enable direct integration with banks and mobile money operators in the nation.

The fintech company added that it will also invest US$1 million to create new jobs in Tanzania as well as to support product innovation.

The Central Bank of Tanzania granting the fintech a PSP operating license will give it the opportunity for new offerings such as business payments, merchants services and outbound payments from Tanzania, as well as direct integration with local banks and telecommunication companies.

It joins a list of more than 60 financial institutions to have an operating PSP licenses in the East African country.

Government support

Nala was awarded the license as part of Tanzanian President Samia Suluhu Hassan's ongoing efforts, to empower young people and foster an environment that makes it simple for businesses to invest in the nation.

"Two of Nala's biggest goals in the last year have been enabling direct integration to banks and telcos and tackling the challenges that businesses face in moving money across borders," said Nala Founder and CEO Benjamin Fernandes during a media briefing.

"We have worked closely alongside the Bank of Tanzania to complete the appropriate steps to receive our license as a Payment Service Provider. With this new license in hand, Nala is making a major commitment to invest US$1 million to build our most ambitious projects ever in our home market of Tanzania," he added.

Lowering transaction costs

According to the World Bank, Africa remains the most expensive region to send money to, with a recorded 8.46% total average cost in the third quarter of 2022.

Many existing options also include hidden fees, making it hard for consumers to discern the true cost of sending money on the continent.

Nala's PSP license  will enable direct integration with banks and mobile money operators in Tanzania. (Source: drobotdean on Freepik)
Nala's PSP license will enable direct integration with banks and mobile money operators in Tanzania. (Source: drobotdean on Freepik)

To remedy the situation, Fernandes said that Nala is working towards changing the paradigm of financial tools for Africans by providing fair and transparent services to empower people with control over their finances.

Fernandes founded the company in 2018 to enable cross-border payments from the United Kingdom, the United States, and the European Union to Africa.

Fintech in Tanzania

According to a United Nations Capital Development Fund (UNCDF) study, Tanzania's fintech landscape has grown and changed positively due to regulatory reforms in the payment sector launched by the government through policies and initiatives focusing on information and communication technology (ICT).

Moreover, McKinsey and Company has predicted that fintech revenue in Africa could reach US$30 billion by 2025.

With the above statistics in mind, it will be interesting to see how Nala's PSP license will impact the fintech ecosystem in the East African country.

Bearing in mind that there are a few mobile network operators (MNOs) in Tanzania that enable peer-to-peer (P2P) payments via mobile wallets and digital banking services. Some of these players include Safaricom's M-Pesa, Tigo's Pesa and Airtel Money.

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*Top image by Image by pressfoto on Freepik.

— Matshepo Sehloho, Associate Editor, Connecting Africa

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