Kenyan BNPL Startup Watu Reports 84% Profit Drop Amid Loan Defaults
Kenyan buy-now-pay-later (BNPL) startup Watu Holdings has reported a significant 84% decline in profit, dropping to $1.2 million (KES 157 million) in 2024, according to financial disclosures by Car & General, which holds a 29% stake in the company.
This contrasts sharply with the $7.6 million (KES 985 million) profit recorded in 2023 and reflects mounting loan defaults and weakening repayment trends in Watu’s main markets: Kenya, Uganda, and Sierra Leone.
Watu’s lending model focuses on informal transport operators and low-income earners, particularly boda boda motorcycle riders who generally lack access to traditional credit. This niche has supported rapid growth but has also made the company vulnerable to income fluctuations, currency volatility, and stiff competition from firms such as M-KOPA, Aspira, and Ampersand.
The startup operates five key product lines, led by Watu Boda, which finances motorcycles and three-wheelers. Other offerings include mobile phone loans under Watu Simu, vehicle financing via Watu Gari, education loans through Watu Shule, and a new electric vehicle financing segment aimed at the emerging clean transport market.
Performance varied across regions. In Tanzania, where Watu operates through Watu Tuu Limited, profits nearly doubled to $5 million (KES 650 million), a 93% increase year-on-year, suggesting more favorable lending conditions there. However, no detailed financial breakdowns per market were provided.
Watu is part of a growing group of non-bank lenders expanding asset-backed microcredit across East Africa. Yet rising interest rates and increased repayment challenges, especially in Kenya’s informal sector, are testing the resilience of this business model.
Car & General, a Nairobi Securities Exchange-listed firm that assembles and distributes motorcycles in East Africa, benefits from Watu’s financing demand. Watu’s results have increasingly influenced Car & General’s earnings reports.
The startup, founded in 2015 by Latvian entrepreneur Andris Kaneps, has raised over $20 million in five funding rounds from investors including FMO, Gateway Partners, Verdant Capital, and AHL Venture Partners. Its most recent capital injection was a Series B round in February 2024.