M-KOPA to hit $400m revenue by year-end, now disbursed over $1.5 billion in credit

M-KOPA, a pay-as-you-go asset financing platform is approaching an annual revenue rate (ARR) of $400 million by year-end, this has been tagged as a major milestone. Amidst the harsh African economic condition, the Kenyan digital financial services company ended last year with 4 million customers and $248 million in ARR. 

In its recently released 2024 Impact Report, the company announced has now crossed 5 million customers in Kenya alone. According to the report, the fintech company has provided more than 16,000 jobs of various kinds to workers in Kenya, thus helping to reduce unemployment. M-KOPA currently serves over 5 million underbanked Africans.

The company’s chief commercial officer (CCO), Mayur Patel explained that the fintech company has kept a low loss profile during the inflationary macro stunts. 

“Our loss rates have been remarkably stable over the last 4 years as the company has rapidly scaled, regardless of changes in the macro environment. This is a testament to the fact that financed phones are a productive asset in people’s lives and a key part of how everyday earners generate their income and participate in the digital economy,” Patel said.

The 13-year-old company offers smartphones and other “productive assets” through flexible digital micropayments, where users pay daily based on the whole cost of the item divided up by 365 days. 

M-KOPA has been recording profitability in its major markets such as Kenya, Uganda, Nigeria, and Ghana. The latest is South Africa, which the company has described as its fastest-growing market. Its services have reached over 5 million customers across the African markets as the company says it has disbursed over $1.5 billion in credit.  

Founded in 2011 by Jesse Moore, Chad Larson, and Nick Hughes, M-KOPA is a UK-headquartered fintech that provides affordable smartphones and digital financial services to its users. Using an innovative financing model based on daily repayments, the fintech provides affordable smartphones embedded with financial services that fit with the cash flow of millions of underserved individuals who earn their income on a daily basis.

Also Read: M-KOPA surpasses 5 million customers, with 2 million coming in the last 15 months.

M-KOPA’s increasing growth formula

Mayur Patel said that M-KOPA’s revenue growth and profitability are down to several factors. First is the improved pricing and expansion into higher-value markets with stronger local currencies such as South Africa. Second, the company has reached more underbanked individuals with the addition of 1 million users in the last six months and 2 million over the past 15 months.

Moreover, the digital financial services company has been able to offer customers consistently meeting payment plans (12 repayments per second). The operation involves upselling or cross-selling higher-value products, such as microloans, electric bikes, data bundles, and health insurance, based on consumer repayments. 

“We’re proud of the kind of continuity of the business. The first million customers we acquired were done in eight years. The fifth million we’ve just onboarded came in just over six months. So, the business is now on a very strong scale-up trajectory,” the CCO explained.

M-KOPA’s recent venture into smartphone assembly has significantly boosted its smartphone sales in recent years. With over 30,000 active agents who go door-to-door selling financed phones in their local communities, its extensive agent network provides access to products that people might otherwise struggle to reach.

Since the launch of its Kenya-based assembly plant, the company has sold over 1.5 million of its M-KOPA X-Series branded smartphones.

The company’s innovative model makes affordable smartphones embedded with financial services available to ‘Every Day Earners’: the wide majority of African adults who earn their income daily but struggle to afford smartphones and typically fail to qualify for conventional financial services.

According to the World Bank, 75 per cent of adults in sub-Saharan Africa remain financially excluded. To date, the startup has supported its customer base with more than US $1.5 billion in financing.

With 90 per cent of adults across Africa’s emerging markets earning daily incomes rather than regular salaries, M-KOPA’s financial inclusion system in Africa has proved that startups can build profitable models.

Expanding Africa’s credit market

Following a deployment of $1.5 billion cumulative credit, M-KOPA’s financial approach depicts its role in expanding Africa’s credit market.

Through various financial institutions such as Sumitomo, Standard Bank, and others, the company raised $250 million last year. This includes $200 million in debt financing. Earlier this year, it secured an additional $15 million in debt. Its $400 million run rate places it among the largest fintechs in Africa by revenue.

“Part of our history over that 10-year revolution is a company that’s trying to find ways to better serve customers, to squeeze out additional costs and provide value. 

The other kind of broader story is about emerging markets and everyday earners where successful companies in our markets are those who’ve really figured out how you play a sophisticated game, both through an incredible online world-class technology stack but also with amazing offline distribution and capabilities,” Patel highlighted.

Key highlights from its 2024 Impact Report read that 92 per cent of its customers confirm that the fintech’s financing has made technology more affordable. 80 per cent of customers report an improved quality of life thanks to its products. 70 per cent credit the company with helping them achieve their financial goals, demonstrating its contribution to financial empowerment. 62 per cent say they use their M-KOPA products to generate income

The company also said it is having a major impact in improving digital access in Africa as nearly 2 million customers are first-time mobile internet users and 40 per cent are women. The company said it also built the first and largest smartphone assembly factory in Kenya. This factory has produced more than 1 million phones locally and further reduced the cost of access.

Also Read: M-Kopa hits 3 million customers in Kenya and produces 1.5 million phones locally.