Digital Banking Startup Buys Daraja Microfinance Bank

Umba Inc. has acquired 66.06% shareholding in Daraja Microfinance Bank, the Central Bank of Kenya (CBK) has disclosed.

Headquartered in San Francisco, California, Umba is an African digital bank founded in 2018. It aims to displace traditional banks and promises lower fees, income-based lending, and full banking services accessible digitally.

The company has so far raised $17 million (Ksh2.01 Billion). Most recently, in April, the firm founded by Tiernan Kennedy and Barry O’Mahony raised $15m (Ksh1.78 billion) in funding from the Dublin-based venture capital firm ACT among other investors.

Umba primarily operates in Nigeria. In the West African nation, it operates in partnership with a licensed bank to offer digital banking services.

Daraja is categorised as a small microfinance bank with a market share of below 1 percent of the microfinance banking sector as at March 31, 2022.

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“This investment by UMBA will strengthen Daraja MFB’s business model. In particular, it will support the digitalization of Daraja MFB as it moves to providing ‘anytime anywhere’ services to its customers. This is aligned to CBK’s vision of microfinance banking sector that works for and with Kenyans,” a statement from CBK read in part.

“CBK welcomes this transaction that is a critical component of Daraja MFB’s
transformation plan. It will strengthen Daraja MFB and support the stability of
Kenya’s microfinance banking sector,” it added.

Daraja MFB was granted a license by the CBK on January 12, 2015, to carry out community microfinance bank business. The microfinance bank targeted Micro and Small Enterprises.

The deal is expected to enable Umba’s expansion to Kenya. It will also prop up Daraja as the microfinance bank looks to capture greater market share.

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