Chipper Cash, one of Africa’s fastest growing fintechs this October launched in the United States of America, one of Africa’s largest sources of remittances, with a promise to make sending money back home easier, affordable and more convenient.
The news should be a relief to millions of African households who rely on these remittances for all sorts of needs — for the case of Uganda, ranging healthcare, education, social function, general household expenses as well as building, financing business, land purchase and even farming.
But for years, an average of about 8.7% of the transaction value has been lost in costs and commissions for sending and receiving these invaluable transactions.
Chipper Cash, was founded by two Afro-techpreneurs― Ham Serunjogi, a Ugandan software developer and Majid Moujaled, a Ghanaian technologist, in 2018 with a mission to “unlock global opportunities and connect Africa, one transaction at a time.”
In a July 2020 interview with the BBC’s Bola Masuro, Ham Serunjogi said that Chipper Cash sought to fill a void left by traditional money remittance firms that were largely focused on the diaspora-Africa remittances, leaving out intra-African transfers insufficiently covered and vulnerable to market vagaries.
“No one really paid attention to the movement of money in Africa within Africa― Nigeria to Uganda; Uganda to Kenya; Tanzania to Rwanda. That piece had been left unsolved for so long,” Serunjogi said.
The gap created a fertile ground for unreasonably high and value-eroding costs.
“Africa has the highest cost of sending money in the world. That means that price is a big barrier to participation by a lot of people who want to send money across borders and into Africa,” noted Mr Serunjogi, in the BBC interview, adding that this is a gap that Chipper Cash seeks to fill, one transaction at a time.
“We believe by providing the most accessible and most affordable way to do this (transfer cash) for Africans, we can not only spur trade and commerce but can accelerate the development of an interconnected African economy,” the company pronounces on its website.
A Global Knowledge Partnership on Migration and Development report prepared for the World Bank noted that while Subsaharan Africa, had the highest cost of remittances in the world, at an average of 8.17 per cent in the fourth quarter of 2020 compared with 4.9 per cent in South Asia, intra-African costs were even much higher.
According to the report, intra Africa the cost of diaspora remittances from Tanzania to Kenya and Uganda was among the highest in Africa, averaging between 17 per cent and 21 per cent per USD200 sent. Remittance costs between Tanzania-Uganda went up from 15.2 per cent in the last quarter of 2019 to just over 21 per cent in the fourth quarter of 2020.
From zilch to four million users in just about three years, Chipper Cash has built a large family of African users— in South Africa, Uganda, Tanzania, Nigeria, Ghana, Rwanda, Kenya and most recently the United Kingdom and now the United States.
Remittances to Uganda in the decade to 2019 rose at a steady Compounded Annual Growth Rate of 6z%, more than doubling from USD771 million in 2010 to USD1.43 billion in 2019. It is estimated that due to Covid-19, in 2020, it dropped to about USD1,051 billion but regardless, it forms a crucial 2.8% of Uganda’s GDP and therefore a major source of income of pre-Covid-19.
A cost of 8.7% means that remittance companies and commission agents take some USD91.5 million (UGX324.2 billion) in fees.
According to the Uganda Inward Personal Transfers 2018 Report by the Bank of Uganda and the Uganda Bureau of Statistics, the major sources of total personal transfers by value were Europe, at USD414 million, led by the United Kingdom; the Middle East at USD304.2 million, majorly from the United Arab Emirates. In the third position, was North/South America, at USD302.6 million, dominated by the United States of America and followed by Africa (US$263.5 million) with the major source country being South Sudan.
While Africa ranks low in the value of transactions, it is the No.1 source, by the number of remitters, accounting for 31.8 per cent of all remitters, with most of them residing in South Sudan, Kenya, South Africa, and Rwanda. The Middle East (30.4 per cent), Europe (19.5 per cent) and North/South America (15.5 per cent) follow in the second, third and fourth positions respectively.
Chipper Cash, chipping away at the cost of sending money, one transaction at a time
With a passion to make moving money across Africa as transparent, instant, and trouble-free as possible the company has built a large family of African users— in South Africa, Uganda, Tanzania, Nigeria, Ghana, Rwanda, and Kenya. The company that recently launched in the United Kingdom this October opened its doors in the United States.
Blogging on the company’s website, Maijid Moujaled, Co-Founder & President said that while “receiving money instantly in most African countries from the family in the diaspora or vice versa can be a life-saving moment,” high charges and complexities and risks involved especially for the informal transfers, we’re still taking away some of this delight.
“As we launch in the United States, we’re particularly excited to support the African diaspora in sending money back home instantly, with no fees, and at the best rates; this is a personal feel-good moment for Ham and me,” he said.
“The United States is a crucial remittance corridor into African countries today. The World Bank estimates that north of $45 billion was sent to Sub-Saharan Africa in 2019, with the United States contributing 27% of this number,” he writes, adding: “The figure above doesn’t capture informal transfers. The expensive, sometimes frustrating, and never-ending chains of go-betweens that Africans sometimes have to go through to send money to their families.”
“We believe that by connecting Africa, one transaction at a time, we can accelerate trade and commerce,” an optimistic Maijid Moujaled says.
TotalEnergies EP Hit With $100,000 Penalty Over Delayed Tax Audit Disclosures in UgandaHasan Luongo, the company’s VP Global Marketing believes that while initially, Chipper Cash was in Africa looking, to “truly serve Africa, you must go beyond the borders of Africa.”
“We’re excited to announce that we’re taking a massive step by launching Chipper Cash in the United States, home to millions of Africans, and the largest remittance corridor into African countries today. Setting up a presence in the United States is part of our mission of increasing access to financial services in Africa,” he blogs.
“Sending money into and across the continent should be affordable, easy, and secure. To that end, the Chipper Cash mobile app will enable instant peer-to-peer (P2P) payments from the US to 8 countries in Africa and the UK,” he reiterates.
Want to start using Chipper Cash? Download the Chipper Cash app today!
Explaining to BBC, how Chipper Cash is able to sustain free transactions, Serunjogi said that there was a monetised premium paid-for business to customers and vice versa version.
“We have a suite of products which is built and geared towards businesses that allow people to essentially buy goods online, using our API. Those businesses to consumer transactions are monetised. so in many ways, we use our consumer product to grow our offering for businesses, so businesses have more people that they can collect money from and that angle we monetise and charge fees from to support our ever-expanding consumer angle, which for the most part can remain free because it gets subsidised by the other aspect,” Serunjogi told BBC’s Bola.
For example, Chipper Cash recently launched the Chipper VISA card in Nigeria and says, it will be expanding the product across the continent.
Unlocking the beauty of an interconnected African economy
Ever-expanding consumer base indeed— from zilch to four million users in just about three years! But it is not just the users that are growing. The company has also attracted the interest of investors alike, including the famous Jeff Bezos. The company in June 2021 reported that it had closed a USD100 million funding in Series C round funding. This pushes investments in the company to just about USD143.8 million, making it Africa’s sixth unicorn.
Chipper Cash is reported to have raised $13.8 million and $30 million respectively in Series A and Series B rounds last year with Bezos Expeditions, Jeff Bezos’s venture capital fund participating in the Series B round.
The different series of funding reflects a business’s performance and the subsequent investor confidence. In Series C rounds, investors inject capital into the meat of a successful venture, to scale and grow it quickly and profitably and therefore earn better returns.
The company has entered into a partnership with out-of-Nigeria international artist, Burna Boy (real name, Damini Ebunoluwa Ogulu ) to spearhead the Chipper Cash gospel of “unlocking the beauty of an interconnected African economy.”
“It truly is an exciting time! It’s the connections between us Africans that power Chipper Cash,” exclaims, Moujaled adding that: “And we’re only just beginning.”
“Our launch in the United States, the global partnership with Burna Boy, and Twitter Tips integration are all steps in our journey to make sending money to, from, and across Africa easy, accessible, and maybe even fun,” he says.
Calling on the world to join Chipper Cash in building a better and more inclusive financial world
On the future of Chipper, Serunjogi is quoted on the website, saying that the company is now hungry to work with other like-minded players to untangle and unleash Chipper Cash’s full potential.
“Real progress is neither easy nor linear. We can’t do it alone; in fact, we don’t want to do it alone. We need other entrepreneurs to also do their part in moving our ecosystem along, we need the support and cooperation of governments and regulators, and arguably most importantly we need resourceful, empathetic, and driven people to join us in building a better and more inclusive financial world for the next billion people,” Serunjogi says.
“If this resonates with you then we need you! We need you to help us chip away at one of the most daunting challenges of our time,” he adds.
Moujaled also joins in to beckon the rest of the world to join in.
“Whether you’re coming to build on top of Chipper Cash (with our robust network API) or with Chipper Cash, join us in trying to fix one of the challenging but rewarding and impactful problems facing billions of people across the continent,” he says, adding: “Come, let’s get on this journey together! Let’s build this together!”
