Union54, a Zambian start-up backed by Tiger Global Management, is making a strategic shift by entering the race to develop super apps in Africa. With a growing market of tech-savvy individuals on the continent, the company sees an opportunity to tap into this potential. Union54’s founder and CEO, Perseus Mlambo, reveals their upcoming super app called ChitChat, which is expected to debut in September. This app will provide secure messaging capabilities along with dollar-based virtual cards, developed in collaboration with Mastercard, enabling users to engage in international transactions.
Union54 has ambitious plans for ChitChat beyond messaging. The platform aims to offer a wide range of services, including payments, gaming, dating, and food delivery. Mlambo emphasizes that users will have the convenience of sending money to each other, purchasing airtime, and buying bus tickets directly within the app. The company aims to replicate the success of super apps like Alipay and WeChat, which have thrived in regions with large unbanked populations.
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The decision to develop a super app aligns with Union54’s previous focus as a fintech company. In 2021, they issued over three million virtual dollar cards, but had to suspend the service due to charge-back fraud. The company has since addressed the issue and taken steps to prevent it from recurring. Union54’s clients, who were provided with Mastercard’s virtual cards, experienced difficulties during the charge-back saga. Gabriel Swanepoel, the country manager of Mastercard South Africa, confirms that measures have been implemented to rectify the situation.
Union54 plans to finance the ChitChat project using the $12 million it raised through a Y Combinator seed funding round led by Tiger Global. They intend to retain 40% ownership of ChitChat and involve local companies in the markets they aim to operate initially, including Angola, Tanzania, Uganda, and Zambia. Collaborations have been established with companies like Nala, a money transfer service, in Tanzania and Uganda; PayPay Africa in Angola; and Zazu Africa payments app, founded by Mlambo, in Zambia.
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The future looks promising for fintech companies and their offerings in Africa, including super apps. As cross-border trade within the continent continues to grow, McKinsey & Co has forecasted that African fintech revenues could increase eightfold, reaching $30 billion by 2025. Mlambo believes that the key to success lies in expanding beyond just a few markets, which many fintech companies have failed to do thus far.
In summary, Union54’s entry into the super app race demonstrates their strategic pivot towards capitalizing on Africa’s tech-savvy market. With the upcoming ChitChat app, they aim to provide a comprehensive platform that combines secure messaging, international transactions, and a range of services to cater to the needs of African users.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard