US-based fintech Umba buys majority stake in Kenya’s Daraja microfinance bank – TechCrunch

Umba, a US-based digital bank with a focus on emerging markets, has acquired a majority stake in Daraja, a Kenyan deposit-taking microfinance bank, for an undisclosed amount.

Kenya’s monetary authority, the Central Bank of Kenya (CBK), said Umba had taken up a 66.6% stake, an acquisition expected to accelerate Daraja’s digitisation.

This comes after Umba announced to raise $15 million in pre-series A round in April this year, when they also announced their plans to expand outside of Nigeria, into Kenya, Ghana and Egypt. Umba has so far raised $17.5 million from investors such as Monzo co-founder Tom Blomfield, Lachy Groom and ACT Ventures, Lux Capital, Palm Drive Capital, Banana Capital and Streamlined Ventures participated, and Costanoa Ventures.

The fintech, which was founded by Tiernan Kennedy and Barry O’Mahony, offers a wide range of financial products, including free accounts, interbank transfers, peer-to-peer transfers, bill payments and loans at a monthly interest rate of 10%.

“The investment from UMBA will strengthen Daraja MFB’s business model. In particular, it will support the digitization of Daraja MFB as it moves to offer ‘anytime anywhere’ services to its customers. This is in line with CBK’s vision of a microfinance banking sector that works for and with Kenya, CBK said in a statement.

CBK said Daraja, licensed in 2015 and whose main clients are SMEs, has a market share of less than 1% of the microfinance banking sector in Kenya.

Daraja will give Umba a stronger presence in the country’s competitive financial sector, and an opportunity to offer more targeted services, while providing a lifeline to microfinance — in an industry that has been heavily disrupted by digital lenders.

The deal with Daraja comes months after Branch International, another Silicon Valley-based fintech with operations across Africa, bought a majority stake in Century microfinance bank. Such acquisitions give fintechs access to existing financial services clientele and allow them to offer additional banking services that they would otherwise be restricted from supporting.

Umba told TechCrunch in an earlier interview that, in addition to geographic expansion, it plans to issue debit cards, support savings accounts and enable stock trading in the coming months.