In a strategic move amidst shifting fortunes across the African continent, dLocal, the Uruguayan fintech company, has announced a significant partnership with Kenya Commercial Bank (KCB) to expand its remittance services in Kenya. This development comes on the heels of dLocal reporting substantial losses in Nigeria, previously its leading African market, due to economic headwinds and regulatory challenges.

dLocal’s partnership with KCB, one of Kenya’s largest banks, marks a pivotal point in its African strategy. By integrating its services with KCB’s extensive network, dLocal aims to streamline cross-border payments and remittances for Kenyan customers, capitalizing on the country’s growing demand for digital financial solutions.

“Securing licensing in Kenya is an exciting step for us,” stated John O’Brien, Chief Revenue Officer at dLocal. “As Africa’s fifth-largest inbound remittance market, Kenya serves as a benchmark for regulatory frameworks and offerings. This approval will provide Kenyan consumers with a fast, reliable option and paves the way for further growth of dLocal’s payment solutions.”

While dLocal’s Kenyan endeavors gain momentum, the company has faced significant setbacks in Nigeria. dLocal’s first-quarter 2024 financial report revealed a staggering 73% year-over-year decline in revenue from Nigeria, attributed to a trifecta of challenges:

• Currency Devaluation: The devaluation of the Nigerian Naira in February 2024 significantly impacted dLocal’s profitability, affecting exchange rates and transaction volumes.
• Shifting Transaction Patterns: A notable increase in local currency transactions and a decrease in total payment volume indicated a reduced demand for foreign exchange transactions on dLocal’s platform.
• Regulatory Hurdles: A directive from the Central Bank of Nigeria (CBN) restricting non-bank entities from collecting customer deposits further hampered dLocal’s operations in the country.

In a surprising turn of events, Egypt has emerged as dLocal’s new leading revenue contributor in Africa. The company’s revenue from Egypt experienced an astonishing 11-fold increase year-over-year, driven by favorable market conditions and strategic expansion efforts. This growth has helped offset the losses incurred in Nigeria, underscoring the dynamic nature of Africa’s fintech landscape.

Founded in 2016, dLocal has established itself as a key player in the global payments industry, connecting businesses to emerging markets through its user-friendly single-API platform. The company’s extensive network spans over 450 global companies, including giants like Amazon, Booking.com, Uber, and Zara.

Despite the challenges encountered in Nigeria, dLocal remains committed to its African expansion. The company’s strategic focus on Kenya and other promising markets, coupled with its ongoing investments in technology and infrastructure, demonstrates its resilience and determination to navigate the complexities of the African fintech landscape.

dLocal’s foray into Kenya, while navigating the turbulent waters of Nigeria, exemplifies the dynamism and challenges inherent in Africa’s evolving fintech sector. As the company continues to adapt and innovate, its journey underscores the immense potential and the significant risks that lie ahead for fintech players operating in this rapidly growing market.