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How Lemonade Finance serves Africa’s diaspora’s remittance needs — Quartz Africa – Quartz Africa

When young Africans leave home to chase better lives in developed countries, they don’t cut home ties. Instead, these migrants retain relationships some of which are with people who regularly send them money from hom…….

When young Africans leave home to chase better lives in developed countries, they don’t cut home ties. Instead, these migrants retain relationships some of which are with people who regularly send them money from home. Think students without scholarships who need school fees and upkeep money from parents, or those living abroad but working remotely for companies in Africa.

Given their global scale, one expects money transfer companies like Western Union, WorldRemit, Wise, and PayPal to attend to these remittance needs since inter-bank transfers between Africa and many countries are next to impossible. But they do not.

They are either too risk averse to deal with Africans, maybe because of viral accounts of fraud, or impelled by regulators. For example, Nigeria’s central bank says Western Union cannot be used to send money out of the country, and barred Wise from operating in either direction.

Nigeria is home to some of Africa’s most valuable fintech companies, like Flutterwave and Paystack. But while they enable people receive payments across borders, instant personal remittances is not their focus.

And so to receive money from the continent, Africa’s diaspora need to find each other on social media (especially WhatsApp – there is one group for Nigerians in Edmonton, Canada, for instance), exchange account numbers (at least one African and, say, Canadian one) and negotiate rates. This informal method has existed for years and works well enough to be a thriving business for some individuals – well enough to be the concept behind at least one Nigerian startup’s ambition to fill the gap left by PayPal and others.

How the Lemonade Finance app works

Founded in 2020, Lemonade Finance set off to enable people living in Africa send or receive money. But after a few months, the company realized its app was mostly used by Africans abroad. “So today only Nigerians, Ghanaians, and Kenyans in the UK, and Canada can use the product,” CEO and co-founder Ridwan Olalere tells Quartz.

While those users use the app to send money to Africa, the reverse is more interesting.

After a user signs up, they get a bank account number from a Nigerian naira or Ghanaian cedi or Kenyan shilling wallet to which a benefactor in Africa can send money. The user can then convert the money received from whatever African currency to Canadian dollars or British pounds within the Lemonade app, and move it to their Canadian or British bank. Or, the user could leave the money on the app in African currency if they want to make subsequent transfers.

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Source: https://qz.com/africa/2084190/how-lemonade-finance-serves-africas-diasporas-remittance-needs/

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