M-Kopa Raises Fresh $255m for Expansion
By Adedapo Adesanya
M-Kopa, a financial technology firm based in Kenya, has raised $255 million of debt and equity to fund its expansion in sub-Saharan Africa.
The capital injection includes $55 million in equity and over $200 million in debt, an unprecedented amount since venture capitals are scaling back due to global headwinds.
This follows the $75 million in equity the Kenyan-based fintech announced last March, indicating that M-Kopa has raised $245 million in equity funding since its inception in 2011.
The funding will enable hundreds of thousands of women, lower-income customers, those in rural communities, and others in the SSA region, to purchase productive assets such as smartphones and home solar systems.
The Chief Executive Officer of the company, Mr Jesse Moore, said, “We are working hard to create a positive environment and social impact by systematically addressing the barriers to digital financial services. We have already unlocked $1 billion 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,” he added.
The debt funding was led by Standard Bank Group, the continent’s largest lender, with participation from the International Finance Corp., British International Investment, Mirova SunFunder and Nithio, the company said in a statement on Monday. Some $55 million came in as equity from investors, including Summit Corp., which put in $36.5 million. Blue Haven Initiative and Lightrock Broadscale Group also participated.
Smartphones or internet-enabled devices remain the primary form of internet access for many people in sub-Saharan Africa and are, therefore, important in narrowing the digital divide.
However, their affordability is a key barrier. While the price of smartphones has decreased in sub-Saharan Africa from 39 per cent of monthly GDP per capita in 2018 to 26 per cent in 2020, it remains the highest amongst emerging economies.
M-Kopa’s business revolves around using debt to finance customers’ purchase of products and services it sells, such as smartphones and solar power systems, as well as loans and health insurance across four markets: Kenya, Uganda, Ghana and Nigeria.
With its flexible credit model, the business allows individuals to pay a small deposit for the two products above and pay off through micro-instalments, helping build their credit history over time. Default rates are a little above 10 per cent.
The loan will also support M-Kopa to increase financing to customers who want to purchase solar home products in Kenya, where about two-thirds of the population in rural areas is connected to electricity.