Kenyan fintech, Umba, set to expand loan services to SMEs with fresh $5M funding
In a fresh move to scale business efforts, Umba secures $5 million in fresh investment to bridge financing gaps for businesses across Africa.
Recently, a growing number of financial technology companies have risen to solve one of the most daunting financing problems across African markets, while making it super easy for the masses to access financial products and services. And one of such innovative fintech companies is Umba. This is a privilege long denied by commercial banks and Umba is positioning itself to level the playing field for genuine businesses in its service markets.
Founded in 2018 by Tiernan Kennedy and Barry O’Mahony, with its presence in Nigeria and Kenya Umba, provides loan facilities to its target audience: emerging businesses within the region.
Umba`s mission was so appealing that it secured its first funding in 2020, a $2 million seed round to bolster its service offerings and expand its network. Two years later, another $15 million in Series A funding was injected into the business to aid the team`s expansion efforts across Egypt, Ghana, and its main domain, Kenya and most recently, a $5 million SME loan fund.
Although the team eventually streamlined to focusing on the Kenyan market, a decision which led to the acquisition of Daraja Microfinance Bank, this caused a major shift in the company’s growth, enabling its performance to surpass revenue expectations. The company claims to have witnessed a six-fold revenue growth. “Our Kenyan launch has exceeded expectations, with excellent lending performance. As the only pure-play digital bank in the market, we’re delivering a better way to bank for Kenyans through speed, accessibility, and tailored financial solutions,” Kennedy once told TechCrunch.
Prior to Umba’s entry in key markets such as Nigeria, a fair number of competitors dominated the lending market. Some were Carbon and Fairmoney. However, in markets as big as Nigeria, it`s unlikely that a handful of players dominate the space and satisfy growing demands daily. Armed with this insight, Umba doubles down on its niche audience, businesses viable enough to scale with injected loans. Today, the team operates in the same league as Moniepoint,, Opay, Palmpay and Fairmoney, all leveraging a similar model of interest-based savings and features like ease-of-withdrawals, instant transfers, and quick access to loans.
Umba`s offerings are wide-ranging. For individuals, the platform enables logbook loans of up to 70% of a car`s value, as well as fixed deposit options with returns as high as 20%. Through Umba Pay, users can receive payments directly into their accounts and enjoy zero charges on all transfers.
For small businesses, Umba offers SME loans with interest rates starting at 10%, aimed at helping entrepreneurs scale sustainably. There is also a car financing option that covers up to 70% of the vehicle`s cost, with a flexible payment window of up to 36 months.
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What to expect after Umba secures $5 million?
As its latest funding round, Umba secures $5 million, as noted by its CEO, Tiernan Kennedy, which serves as a debt facility “crucial for Umba, as the demand for its lending services currently exceeds the company’s capacity,” said Spring Hollis, Founder and CEO of Star Strong Capital, expressing her belief in Umba.
Unlike an initial round of $15 million raised in 2022, which aid in the acquisition of a major stake in Daraja shares, thereby positioning Umba as a licensed microfinance bank, this new debt instrument will expand Umba`s service suite of loan financing to more SMEs, care servicing for individuals and further enhance its high-yield savings products.
In a recent interview with the CEO, he mentioned the new $5 million SME loan fund will be used to further expand products that are already revenue generating particularly in vehicle financing which due to a rising demand in registered vehicles from 3.9 million in 2021 to 5 million in Kenya, the demand for autoloans have soared, and with this new $5 million SME loan fund more people will benefit from it.
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