Nairobi, Kenya, May 15, 2023—IFC and fintech platform M-KOPA Holdings Ltd. today announced a partnership to expand its financial services to underbanked consumers in Eastern Africa, which will enable hundreds of thousands of women, lower-income customers, those in rural communities, and others in Kenya and Uganda, to purchase productive assets such as smartphones and home solar systems.
Under the partnership, IFC is providing a $50 million equivalent multicurrency loan to M-KOPA Kenya Ltd. and a $15 million equivalent loan in Ugandan shillings to M-KOPA Uganda Ltd. The funding will support M-KOPA's strategy to expand its flexible credit model, which enables customers to have instant access to everyday essential products, by paying a small deposit followed by digital micropayments.
The funding represents IFC's first sustainability-linked loan to a pay-as-you-go provider in sub-Saharan Africa and will incentivize M-KOPA to achieve environmental, social, and governance targets through pricing incentives. These targets include commitments on the number of smartphone sales to women, value of credit unlocked to women, and greenhouse gas emission reductions achieved through its solar products portfolio.
"At M-KOPA, we are working hard to create a positive environment 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. As we continue to scale, we remain committed to building a sustainable business and closing economic and digital gender gaps," said Jesse Moore, M-KOPA CEO and Co-founder.
"By working with M-KOPA to strengthen digital inclusion and access to sustainable sources of electricity, we can help connect more people in the region to economic opportunities. This innovative flexible credit model will increase access for more people to purchase productive assets such as smartphones, linking them to other financial services, healthcare, and education resources," said Jumoke Jagun-Dokunmu, IFC Regional Director for Eastern Africa.
Smartphones or internet-enabled devices remain the primary form of internet access for many people in sub-Saharan Africa and are therefore important in narrowing the digital divide. However, their affordability is a key barrier. While the price of smartphones has decreased in sub-Saharan Africa from 39 percent of monthly GDP per capita in 2018 to 26 percent in 2020, it remains the highest amongst emerging economies.
Less than half of Kenyans and only a third of Ugandans with a mobile phone have a smartphone, according to data from industry group GSMA and the Ugandan Communications Authority. The gap is even greater for women, where GSMA estimates that women in sub-Saharan Africa overall are 30 percent less likely than men to own a smartphone. Key to the IFC loan will be helping to bridge the smartphone gap in Kenya and Uganda by making affordable finance available to more people.
One in four of M-KOPA customers accessed the internet for the first time according to M-KOPA data for 2021, and over 1 million have used their smartphones to springboard into the digital economy. An independent survey done on M-KOPA customers found that 75 percent reported increased income when using its flexible payment model to obtain assets for businesses. The loan will also support M-KOPA to increase financing to customers who want to purchase solar home products in Kenya, where about two-thirds of the population in rural areas is connected to electricity.
IFC's loan is part of a wider initial $202 million, five-year financing facility for M-KOPA arranged by Standard Bank of South Africa and includes lenders British International Investment, FMO: Dutch Entrepreneurial Development Bank, and private investors Standard Bank, Lion's Head Global Partners, Mirova SunFunder, and Nithio. IFC's loan to M-KOPA's Ugandan subsidiary is supported by the IDA IFC-MIGA Private Sector Window Local Currency Facility, which is enabling the loan in Uganda to be provided in Ugandan shilling.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
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About M-KOPA
Founded in 2011, M-KOPA is a fintech platform that provides digital financial services to underbanked consumers by leveraging data to combine digital micropayments with the Internet of Things [IoT] technology. With operations in Kenya, Uganda, Nigeria and Ghana, M-KOPA's platform has provided over $1 billion in credit and enabled 3 million customers to access smartphones, solar power systems, digital loans and health insurance. The company directly employs nearly 2,000 people across Africa and has created over 10,000 roles for sales agents since the start of 2020.
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