Generation Start-up: how Purpl is transforming Lebanon’s remittance industry

The company plans to scale up operations and expand to other Mena countries

Karl Naim, co-founder and chief executive of Purpl, left, with team members. Photo: Purpl

When the founders of Purpl launched their remittance start-up in Lebanon last year, their aim was to solve an increasingly difficult — and expensive — challenge for millions of Lebanese people living abroad: sending money home to friends and family after the collapse of the country’s banking sector.

Founded by banker turned entrepreneur Karl Naim, Wissam Ghorra and Jean-Marie Khoueir in 2021, the trio are well on their way to disrupting the country’s remittance sector by focusing on financial inclusion, lower fees and allowing beneficiaries to withdraw money from ATMs owned by its banking partner Banque Libano-Francaise.

“I was based [in] Paris until October of 2021,” says Mr Naim.

“Every time I would travel to Lebanon, I had friends in Paris who were asking me to take money with me to give to their families. Obviously, the maximum you can take is €10,000 [$9,979], so people will give me thousands of euros and say, 'Please, once you get to Beirut, distribute them to my uncle, my parents and my cousins'.

“Eventually, I was [asking myself], why is it so hard to send money to Lebanon?”

Lebanon remittances — in pictures

• 

  People gather at a shop that provides money transfer services in the Lebanese capital Beirut. AFP

• 

  A man fills out a form to wire money at a Western Union outlet in San Diego, California. Getty Images

• 

  An exchange dealer counts money at a currency exchange office as the value of the Lebanese lira continues to drop. Getty Images

• 

  A pedestrian walks past a Western Union and check cashing store in the Brooklyn borough of New York City. Getty Images

• 

  For two decades, the Lebanese pound has been pegged to the US dollar, but banks have been reducing access to dollars following fears of a shortage in central bank reserves. AFP

People no longer trust banks “because they're worried that [if] you send it to their bank account, they're not able to cash it out”, Mr Naim says.

By sending money home with a trusted friend, people were also trying to avoid the high fees charged by a few money transfer companies, which enjoy a near-monopoly status through a large network of branches, he adds.

“So that's how we came up with the idea of building an aggregator, where we are the technology piece that integrates with new digital remittance players to open the corridor to Lebanon, which will eventually bring fees lower for the sender, and at the same time bring an app that permits the beneficiary to cash out in a much more seamless and efficient way.

Lebanon is facing its worst economic crisis since the country's independence in 1943. Its economy contracted about 58 per cent between 2019 and 2021, with gross domestic product plummeting to $21.8 billion in 2021 from about $52bn in 2019, according to the World Bank. That is the largest contraction on a list of 193 countries.

Lebanon's economy collapsed after it defaulted on about $31bn of Eurobonds in March 2020, with its currency sinking more than 90 per cent against the dollar on the black market and inflation rising to triple digits.

Banks have imposed informal capital controls, barring depositors from accessing their savings, which created huge difficulties for people to withdraw money from their accounts.

Last month, a local man gained the admiration of many in Lebanon when he held up a bank branch in Beirut, demanding access to his blocked savings, so he could pay for his father’s medical treatment.

__________________

Watch: Beirut bank hostage situation comes to end

The company's mission is to “democratise remittances, cross-border transfer flows and enable financial inclusion in a country where 80 per cent of the population is unbanked. It's very important to promote financial inclusion”, Mr Naim says.

“So we've built a technology that allows us to use ATMs of banks, that are supposedly only used by banked people or people that have a card, by unbanked people. With our prepaid app, you can even cash out from an ATM without having an account or a card.”

Remittances are important for Lebanon’s economy and account for 54 per cent of the country’s GDP, which is the highest among the Mena countries, according to the World Bank.

Lebanon received $6.6bn in remittances in 2021 and is the third highest remittance receiver in the Mena region after Egypt and Morocco, the World Bank data shows.

“Today, our users are people residing in Lebanon. For now, we are focusing on the inward remittances. Once we get a digital wallet licence, which we expect very soon, we will be able to also focus on the outward remittances allowing foreign workers in Lebanon to send money home.”

Purpl office in Lebanon. Photo: Purpl

The digital wallet licence will also allow “users to store value on their app, and spend digitally at merchants instead of just cashing out that money all the time”, he says.

The company, which is part of the Hub71 ecosystem in Abu Dhabi, has plans to expand to other countries including Iraq, Syria, Jordan and Egypt as part of its future growth plans.

It has already signed an agreement with a partner in Iraq to replicate the same model of cardless ATM withdrawals for remittances, Mr Naim says.

Purpl has raised $2 million in funding so far from international investors, venture capital funds and family offices and is looking at doing another funding round at the end of 2023 to expand its operations across the region.

Being part of the Hub71 ecosystem in Abu Dhabi will help the company to secure more funding as well as build partnerships with remittance companies, Mr Naim adds.

“Today, for example, we are in talks with a few remittance companies in the UAE, thanks to help from Hub71.”

Q&A with Karl Naim, co-founder and chief executive of Purpl

What successful start-up do you wish you had started?

For me, a start-up success is a measure of disruption, empowerment and community building. In 2014 I launched my first start-up in FoodTech, called ChefXchange, a marketplace for private chefs. I was then inspired by Deliveroo. A second start-up I wish I had started would be Revolut, which reinvented banking in Europe.

What is your vision for the company?

We started Purpl to provide a new alternative to a banking sector that collapsed in Lebanon and lost the trust of the Lebanese population. Our vision is to connect, empower and enable financial access to all in Lebanon and eventually in the Mena region.

What new skills have you learnt in the process of launching your start-up?

Life in a start-up is all about continuous learning. When launching my first start-up in 2014, I learnt all about resilience and perseverance, but, most importantly, I learnt the hard way to never fall in love with your original idea and accept change. Being agile and accepting to pivot based on what your market and customers tell you is the key to success.

If you could start all over again, what would you do differently?

I wouldn't change anything. Everything that I did shaped me into who I am today and it came with its fair share of failures, successes and, most importantly, learning. I cherish and am thankful for everything I went through and the people who shared these adventures with me.

Who is your role model?

Every entrepreneur I meet and every person I get a chance to work with are role models one way or another. If I were to pick people who inspired me to start my entrepreneurial journey, it would be the founders I invested in as an angel investor.

Where do you see yourself after 10 years?

Hopefully, in a position of giving back, mentoring and investing in ambitious and disruptive founders. I do not believe, 10 years from now, that I would still have the energy required to start new ventures myself.

How would you describe the current state of Lebanon’s economy?

A state that is hard to comprehend. So much value destruction in so little time. In numbers, a currency that lost 94 per cent of its value, 75 per cent of the population living under the poverty line, 80 per cent of the population that is unbanked, triple-digit month-on-month inflation, and a GDP cut by more than 50 per cent in three years. That being said, adversity breeds opportunity and it is our duty to not stand idle and to try to make a difference. This is the mission we set ourselves at Purpl.