Nigerian neobank Kuda eyes global reach with new licenses

Kuda Microfinance Bank, the Target Global-backed neobank, has secured payment licences in Tanzania and Canada as part of an expansion drive across Africa and the global market. One of those licences will allow it to offer remittance and multi-currency wallet services to Africans living in Canada. The second, a Tanzanian Payment Service Provider (PSSP) licence will offer similar services to Kuda’s Tanzanian customers.

The new licences will put Kuda in direct competition with startups like LemFi and Nala, which style themselves as global neobanks for Africans in the diaspora.

This is not Kuda’s first crack at the remittance market. In 2022, it secured a payment licence in the United Kingdom and rolled out a subscription remittance offering with a flat fee of £3 and a transfer limit of £10,000. One person with knowledge of the company’s business told TechCabal that the product has now been discontinued, theorising that the market was not ready for a subscription-based remittance offering.

It makes it likely that when the neobank rolls out its offerings in Canada and Tanzania, it will not go the way of subscriptions.

The remittance market has become more attractive to investors as more Nigerians and Africans seek greener pastures abroad. In 2022, Nigeria was Canada’s fourth largest immigration source country, welcoming 22,085 Nigerian immigrants, making 5.06% of Canada’s total number of permanent residents. At the same time, over 100,000 Canadians of Nigerian descent call Canada home. In 2022, remittance inflows into Africa totaled an estimated $100.1 billion, accounting for 3.4% of Africa’s GDP.

By focusing on markets like Canada and the UK where the number of Nigerian migrants continues to grow, Kuda has an opportunity to grow its foreign exchange revenue at a time when the FX rates are decimating the profits of startups.