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Kenya’s fintech platform M-Kopa raises $65 million to expand its financial services to under-banked consumers

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Kenya’s fintech platform M-Kopa Holdings has received $65 million from the International Finance Corporation (IFC) to expand its financial services to under-banked consumers in Africa in an effort to make capital assets more accessible to customers.

IFC gave Kenya, Tanzania and the Democratic Republic of Congo (DRC) businesses $2.9 billion in long-term and short-term financing to help the businesses increase access to finance for SMEs, boost energy access and drive gender inclusion.

Mary Porter Peschka, IFC Regional Director for Eastern Africa, “IFC increased its investments in Eastern Africa by 61 percent in the last financial year and this financing is supporting our partners to increase lending to small businesses, expand access to green and sustainable electricity, and drive greater gender inclusion. IFC aims to grow its work across Eastern Africa even further this year to support the region’s development agenda and the private sector’s role in building the foundation for a more inclusive and green future.”

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Apart from M-KOPA, IFC provided a $150 million loan to KCB Group Kenya to support local businesses tackle the effects of climate change by developing energy efficiency projects, renewable energy, climate smart projects, and green buildings. M-KOPA will use the funds to increase access to capital assets such as solar home systems, smart phones and e-bikes, making them more accessible to customers.

In March 2022, M-KOPA raised $75 million in a growth equity round from Generation Investment Management and Broadscale Group with new investors such as LocalGlobe’s Latitude Fund and HEPCO Capital Management joining in. CDC Group and LGT Lightrock, two of M-current KOPA’s investors, also participated in the round.

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In May 2023, M-KOPA successfully closed over $250 million in new debt and equity funding to expand its financial services offering to underbanked consumers across Sub-Saharan Africa, one of the largest combined debt and equity raises in the African tech sector, enabling M-KOPA to continue its rapid growth.

Over $200m in sustainability-linked debt financing was led and arranged by Standard Bank Group, Africa’s largest bank and long-term strategic partner to M-KOPA. Other participating lenders include The International Finance Corporation (IFC), funds managed by Lion’s Head Global Partners, FMO: Dutch Entrepreneurial Development Bank, British International Investment, Mirova SunFunder and Nithio.

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A further $55m in equity investment was backed by existing strategic investor Sumitomo Corporation, which is contributing $36.5m to the total raise and will engage closely with M-KOPA on new growth markets and products. Blue Haven Initiative, Lightrock, Broadscale Group and Latitude, the sister fund to Local Globe, also participated in the transaction.

M-KOPA’s fintech platform combines the power of digital micropayments with the Internet-of-Things (IoT) to provide customers with access to productive assets. In markets where individuals have limited pre-existing financial identities and conventional collateral, M-KOPA’s flexible credit model allows individuals to pay a small deposit and get instant access to everyday essentials, including smartphones, electric motorcycles
and solar power systems, and then graduate to digital financial services such as loans and health insurance.

M-KOPA’s solution embeds credit into the product through a smart digital connection, giving customers ownership instantly, which they can pay off through micro-instalments over time. The company has sold over 3 million of these products through a unique direct sales model that includes more than 10,000 agents.

M-KOPA’s operations started in East Africa and successfully expanded to Nigeria in 2021 and, more recently, Ghana. From 2020 to 2022, M-KOPA recorded a compound annual growth rate of 85% in new customer acquisition, and was recently recognised as one of Africa’s Fastest-Growing Top 100 companies by the Financial Times for two consecutive years, in 2022 and 2023. Today’s news coincides with the
business reaching over 3 million customers and providing over $1 billion in cumulative credit for underbanked customers in Africa. The company continues to scale rapidly and is on track to acquire an additional million customers over the course of 2023.

Speaking on the round, Jesse Moore, M-KOPA CEO and Co-founder said, “At M-KOPA, we are working hard to create a positive environmental and social impact by systematically addressing the barriers to digital financial services. We have already unlocked $1bn in cumulative credit to over 3 million customers, and are proud of the thousands of local jobs we’ve created during tough economic times. As we continue to scale, we remain committed to building a sustainable business and closing economic and digital gender gaps. We are delighted to have the support of new and existing investors who share our vision and mission”.

In November last year, M-KOPA received $65 million from the IFC to fund its business in Kenya and Uganda as part of its five-year facility of Sh21.97 billion arranged by Standard Bank Group of South Africa to be distributed among its Kenya and Uganda subsidiaries. The proposed investment was a senior secured loan of up to Sh6.1 billion ($50 million) to M-Kopa Kenya Limited and senior secured loan of up to Sh1.8 billion ($15 million) to M-Kopa Uganda Limited as part of IFC’s $180 million financing facility arranged by Standard Bank of South Africa in the form of 5-year local currency loan facilities.

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James Musoba
James Musoba
Studying Africa's startup and technology scene. I always look forward to discovering new exciting inventions and vibrant entrepreneurs.

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