Kenyan-Based Kwara Acquires IRNET Coop as Part of its Partnership with KUSCCO

Kenyan-Based Kwara Acquires IRNET Coop as Part of its Partnership with KUSCCO

Exit is still a very rare occurrence among African startups, as the ecosystem maintains a record low year after year. An exit strategy, according to Investopedia, is a contingency plan implemented by an investor, trader, venture capitalist, or business owner to liquidate a position in a financial asset or dispose of tangible business assets once predetermined criteria for either have been met or exceeded. According to Disrupt Africa’s Kenyan Tech Ecosystem report 2022, Africa’s big 4 tech ecosystems, Nigeria (16), South Africa (38), Kenya(10), and Egypt(27), have only been able to boost a total of 91 acquisition deals since 2016. Kenya lags far behind South Africa, Egypt, and Nigeria in terms of startup acquisitions, with only 10 such transactions. Only five Kenyan startup acquisitions had occurred since 2016. Two deals were completed in 2021, and three more were completed in 2022, indicating some momentum in this area.

Kenyan startups in fintech, e-commerce, retail-tech, AI, entertainment, ed-tech, and healthtech have undergone some form of acquisitions over the years.

What is clear is that the vast majority of these transactions, seven out of ten, have been “intra-ecosystem,” with one Kenyan startup buying out another. Indeed, Kenyan startups have proven to be active acquirers, whether of domestic or international counterparts, with Ajua, MarketForce, AZA Finance, BRCK, Elloe, and Lami being active in this regard in the last couple of years alone.

Kwara, a Kenyan fintech startup, announced yesterday the acquisition of IRNET Coop, a subsidiary of Kenya Union of Savings and Credit Cooperatives (KUSCCO LTD), as part of an exclusive digital solutions partnership agreement.

What you should Know About Kwara Acquisition of IRNET Coop

Through this acquisition agreement, Kwara, which converts traditional savings cooperatives into modern digital banks, will provide its software solutions and mobile banking channels to help increase the growth and profitability of more than 4,000 SACCOs across the East African country, as well as a managing solution for cooperative workers to improve effectiveness and automation, as well as a neo bank-style mobile banking app for end clients.

Speaking on the acquisition, Cynthia Wandia, Founder and CEO of Kwara says “We have spent the last four years working closely with KUSCCO LTD to uplift the SACCO sector in Kenya. Our clients have grown their deposits and loan books twice as fast as they did before switching to Kwara. We are now grateful for the opportunity to avail those benefits to SACCOs across the entire country. This partnership through acquisition enables us to place fully digital and secure technology in the hands of all SACCO members in the fastest possible time, backed by the most established SACCO partner in Kenya.”

The entire IRNET team will collaborate closely with Kwara to ensure a smooth transition and the integration of the entire KUSCCO regional network and marketing expertise into fintech. In the next six months, both parties plan to quickly onboard the entire SACCO fraternity onto the Kwara platform.

According to George Ototo, Group Managing Director of KUSCCO LTD “This development marks a game changer in the management of SACCOs going forward. The acquisition of IRNET and the KUSCCO-Kwara partnership will deliver to our thousands of SACCO members a tested and proven, secure and efficient cloud-based core banking platform as well as modern mobile banking channels.”

Founded in 2018 by Cynthia Wandia and David Hwan, the fintech startup raised $4 million in 2021 in a seed round to build a neobank app that enables individuals to sign up with their preferred credit unions to access various financial services.

Again, Kwara has announced raising $3 million in seed extension rounds with existing investors, DOB Equity, Globivest, and Willard Ahdritz, the founder of Kobalt Music participating. Other participants include new backers One Day Yes, Base Capital as well as fintech executives including Mikko Salovaara, the CFO of Revolut.