M-KOPA raises $250m to expand financial services to underbanked consumers across Africa  

By Cynthia Ezekwe

M-KOPA, an asset financing platform that offers financial services to underbanked consumers, has successfully  closed over $250 million  in new debt and equity funding to expand its financial services offering to underbanked consumers across sub-Saharan Africa.

This marks one of the largest combined debt and equity raises in the African tech sector, enabling M-KOPA to continue its rapid growth.

According to a statement from the  fintech platform, over $200 million  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.

Also, $55 million  in equity investment was backed by existing strategic investor Sumitomo Corporation, which is contributing $36.5 million 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.

The statement disclosed that with the new funding,  the business aims to grow its smartphone services, expand its model to new markets and extend its financed product set. In line with M-KOPA and its partners’ longstanding commitment to creating a positive impact, the debt financing is structured to support sustainability-linked goals with pricing that is linked to the achievement of environmental and social targets,

It further noted that M-KOPA will also use the financing to drive women’s financial inclusion and reduce greenhouse gas emissions in its East African markets by increasing smartphone ownership among women and further developing its electric mobility solutions offering, respectively.

Lendable a technology enabled investment and alternatives platform that focuses on global impact alternatives,  was appointed as the borrowing base and sustainability verification agent for the debt transaction.

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 $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.

Moore stressed that the company  remains  committed to building a sustainable business and closing economic and digital gender gaps.

“Supporting M-KOPA is in line with our purpose of driving sustainable growth for Africa and her people. Financial inclusion not only enables economic growth, it also accelerates it. M-KOPA has, in a short time, managed to positively impact so many lives by enabling access to power and smartphone connectivity, which are a vital part of enabling the economic empowerment of all.” added Nick Riley, corporate financing solutions at Standard Bank.

Also, Masaki Nakajima, senior managing executive officer, general manager, media & digital business unit at Sumitomo Corporation, affirmed that by leveraging each expertise and resource, he believes the partnership will have a positive impact on both the financial and telecommunications sectors, ultimately enriching the lives of people across the continent

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.