The ambition was clear: to carve a space in the lucrative market for remittances to Morocco and West Africa, challenging established giants like Western Union and MoneyGram. Yet, barely seven years after its founding, Montreal-based fintech YallaXash Finance filed for bankruptcy last year, leaving a trail of unpaid debts and dozens of creditors facing significant losses.
Preliminary documents filed with Canada’s Office of the Superintendent of Bankruptcy (OSB) reveal that YallaXash, spearheaded by president Emir Lallouche, was grappling with nearly $1.2m in unpaid debts as of April 30, 2024. The company, which specialized in facilitating money transfers between Canada and Morocco, as well as select West African nations, ceased operations without fanfare, a stark contrast to the initial optimism that surrounded its launch.
YallaXash sought to tap into the significant demand for cross-border payments from Canada’s immigrant communities, primarily through a dedicated mobile application. The app promised faster, more secure, and potentially cheaper transfers, a proposition that resonated with investors and users alike in the years leading up to its demise.
However, the dream turned sour for approximately 50 unsecured creditors who were summoned by the trustee on May 24, 2024. According to the documents prepared by Groupe Leblanc Syndic, none of these creditors are expected to recover the amounts owed.
The largest single loss was incurred by YallaXash Morocco, facing a shortfall of $858,484. Notably, Luminous Group, an American entity operating in the cryptocurrency and blockchain sector, stood to lose $115,000 following the collapse of the fintech company. The list of creditors extends beyond these major players, including traditional financial institutions such as the Bank of Montreal ($20,153) and professional services firm Raymond Chabot Grant Thornton ($10,715). Dozens of other partners, suppliers, and smaller investors, predominantly based in Quebec, are also among those left with outstanding dues.
YallaXash was co-founded in 2018 by Lallouche and Cédric Tamavond, based in Luxembourg. The company’s mobile app on Google Play has since been removed.
The fintech garnered early support, including backing from the Maghreb Congress of Quebec. More significantly, YallaXash secured substantial funding from the Maroc Numéric Fund II (MNF II), a venture capital fund dedicated to high-growth Moroccan startups. MNF II injected an initial six million Moroccan dirhams (approximately USD 951,000) in June 2021, followed by a further four million dirhams (approximately USD $634,000).
Dounia Boumehdi, the Casablanca-based managing director of MITC Capital, which manages the Maroc Numeric Fund, served as a director of YallaXash alongside Lallouche and Mustapha Alouadi, based in France.
In 2022, YallaXash announced ambitious expansion plans into West Africa, establishing new transfer corridors in Côte d’Ivoire and Senegal in collaboration with ATPS, a subsidiary of M2T operating under the Proximo and Atlantique Cash brands with an extensive network of over 10,000 distribution points. This move aimed to complement its existing operations in the Morocco-Canada corridor, which had been active since 2019.
The company’s business model focused on a user-friendly mobile application, offering various transfer options including app-to-cash, app-to-prepaid card, and app-to-bank account. While the software was free to download, withdrawal costs started at $0.99 USD. YallaXash also boasted an extensive network of over 12,000 physical payout locations in Morocco through partnerships with local financial institutions and cash transfer services.
The decision by Maroc Numeric Fund II to invest in YallaXash was underpinned by the perceived quality of its service, its customer focus, and the significant potential within the global remittance market, estimated at over $700 billion annually. Boumehdi, in a statement made prior to the company’s collapse, highlighted the societal impact of the service, enabling the Moroccan diaspora to maintain connections with their families and support them financially.
The collapse of YallaXash serves as an exemplary tale in the competitive fintech landscape. While the Moroccan remittance market was and remains substantial, with remittances from Moroccans living abroad reaching a record MAD 115.3 billion (approximately $11.5 billion) in 2023 and $12 billion in 2024, the sector is also fiercely contested.
The failure of YallaXash highlights the considerable challenges faced by even promising startups in traversing the complexities of international finance, regulatory hurdles, and the substantial capital typically required for expansion in this sector.
While YallaXash secured approximately $1.5 million USD in funding from Maroc Numeric Fund II, this amount appears modest when compared to the scale of the international transfer operations it aimed to undertake. For instance, Tanzania’s NALA, also operating in international transfers, recently raised $40 million in a Series A funding round, and Nigeria’s Lemfi secured a $53 million Series B round. This context is further compounded by the fact that revenue data for YallaXash remains elusive, making a comprehensive assessment of its financial viability difficult.
For the 50 creditors now facing losses, the demise of YallaXash is a stark reminder of the inherent risks associated with investing in and partnering with early-stage ventures, even those with seemingly strong foundations and ambitious goals. The startup’s once-bright prospect of disrupting Morocco’s remittance market has ended, leaving creditors to count the cost in a fintech dream that ultimately failed to materialize.