People use risky informal channels, such as WhatsApp groups, to transfer money due to expensive, inaccessible and unreliable remittance services, which is well known by Founders of Weight, a remittance fintech.
After settling in Canada in 2017, they were inspired by their first-hand experience using informal channels and realizing how common their use was among Africans living in the diaspora. All of them Nigerians, Tolulope Osho, Yusuf Yakubu and Adewale Afolabi, aim to innovate inbound remittance products by the end of 2021, with an initial focus on the Canada to Africa remittance market, but now turning their attention to global activity.
Remittances to low- and middle-income countries (LMICs) have increased by 38% in the past six years according to the published reports, reaching $656.000 billion by the end of 2023, when it makes its decision.
According to the World Bank, a further increase increase The need for affordable, reliable and fast cross-border remittance services will increase between 2024 and 2025. By lowering transaction costs and increasing access to formal money transfer channels, digital remittance tools will continue to accelerate remittance activities, according to the World Bank.
Users would be able to send money in the “safest and fastest way possible” and “eliminate borders around money,” said Osho, Pesa’s chief executive.
The channel's multi-currency wallet allows users to send, receive and hold multiple currencies (currently six).
“When one moves to a new country, one should continue to transact; if I move from Nigeria to Canada, there should be no interruption in the transmission as far as my outlook on financial services is concerned. Osho said, “I should be able to transact at home as if I had never left.”
“When travelling between these countries (Nigeria, Canada, EU, US, UK and Ghana), you can carry your money with you as if it were in your wallet with our multi-currency wallet,” he added.
Pesa seeks to expand globally
After having launched its operations in 27 European countries, the fintech is in the final stages of obtaining the necessary licenses to establish itself in the United States. Through a partnership, Pesa is also present in the United Kingdom. It is working on obtaining an Electronic Money Institution (EMI) license, which, according to Osho, will give it all the functions of a bank. The license will allow it to produce more items for its customers, issue and hold electronic money on their behalf, and provide cheaper services.
Its customers in these areas will be able to send money to its five African markets: Nigeria, Ghana and India, where it was established last March, as part of its efforts to expand coverage. The launch in India was a chess move that would allow it to penetrate the most important markets in the world. The country is the principal recipient of remittances: last year it received $120 billion, and this is expected to increase to $129 billion in 2025. India is also the place most important for migrants around the world. Meanwhile, driven by major recipients such as Nigeria and Kenya, Pesa is increasing its service in sub-Saharan Africa, recently reaching $54 billion.
For other companies in the digital remittance sector, such as Tanzania's Nala, which recently secured $40 million in a venture capital funding, Serie A, Leatherback, Send by Flutterwave, LemFi, Eversend and established entities such as Wise and Zepz, their current push for expansion will increase competition.
Pesa, which has been developed primarily with its own resources and is part of the current Fast Forward Venture Studio cohort, has made notable progress towards its goal of global expansion, including achieving profitability in less than two years of operation. It has acquired 60.000 users, of which 30% are active, and has processed more than one million transactions worth $380 million so far.
Its impact on new markets and on products such as the planned multi-currency cards is very optimistic.
Yakubu said: “We are betting on growth, the completion of our expansion and integrations across all the continents we are expanding to. At that point, we will be generating more revenue than we are currently generating.”
