Imagine you need to import machinery from China or India. Normally, you would need to take your shillings and exchange them for dollars prior to paying the supplier. A similar process would occur on the receiving end, with the dollars exchanged for the supplier’s currency.
These multiple foreign exchange conversions, and the costs associated with this, have direct bottom-line implications for both the buyer and seller.
To address this challenge, a new online foreign exchange and payments platform has launched in Kenya.
Two weeks ago, UK-based Kwanji said it is setting up in the country to help importing businesses transfer money to overseas destinations directly and in under two days.
With Kwanji, the person buying machinery in our scenario would only be required to present shillings that would then be exchanged for either Chinese or Indian currency and sent directly to the seller, removing double charges and making payment faster.
“Kwanji removes the double, or even at times triple, dip cost borne by buyers and sellers across the trade cycle,” said Amit Khosla, Kwanji’s principal business consultant for East and Central Africa.
“Kwanji provides businesses with fast, secure and unrestricted access to the very best foreign exchange for all their payment and cash management needs.”
Importers in Kenya, for instance, can send money to 200 countries in over 165 currencies.
The system says it can save clients up to 95 per cent on forex charges against mainstream banks by linking them to brokers offering the best rates. This enables businesses across a variety of sectors access and compare multiple quotes, and conduct international transactions with minimal paperwork.
Headquartered in the UK, Kwanji’s goal is to level the playing field in international trade and payments by bridging the gap between emerging and traditional markets.
It is working in partnership with leading UK foreign currency specialists, including VFX, and Kenyan banks, including Equity Bank. The company is regulated by the UK’s Financial Services Authority as an authorised payment institution, and is licensed to operate across Europe and East Africa.
Dr Khosla said the platform is using Kenya as a launching pad for Africa due to the country’s high level of mobile and Internet penetration — which, per head of population, is almost three times higher than the region’s average.
In addition, Kenya has wide acceptance of new and non-traditional technology across the growing SME business sector, and the need for payment and cash management services tailored to regional small businesses.
Kwanji currently offers accounting, payment and treasury solutions, and as the firm expands, Khosla said it is looking to introduce micro-trade finance solutions to help SMEs access cheaper working capital.