Nairobi-headquartered digital bank, Umba, with operations in Kenya and Nigeria, has secured a $5 million debt facility to grow its secured lending portfolio in Kenya, focusing on vehicle financing and loans to small and medium enterprises (SMEs).
The financing comes amid a strategic shift by Kenyan neobanks away from short-term, high-interest digital loans to sustainable asset-backed lending. The debt facility, provided solely by US-based Star Strong Capital with Gahigiro Capital as transaction advisor, increases Umba’s total funding to $20 million.
The new facility will enable Umba to scale its revenue-generating products in Kenya, especially vehicle financing, which now forms the bulk of its loan book in the country. Kenya’s auto loan market is experiencing rapid growth, with over 5 million registered vehicles as of 2024, up from 3.9 million in 2021. Umba CEO Tiernan Kennedy disclosed that the company’s revenue grew sixfold in 2024, and it expects to turn a profit in Kenya this year.
Founded in 2018, Umba entered the Kenyan market in 2023 following its 66.6% acquisition of Daraja Microfinance, a move that granted it a microfinance licence from the Central Bank of Kenya. Despite holding less than 1% of the market share, Daraja has provided Umba a launchpad for scaling its secured lending offerings.
Unlike traditional banks, Umba leverages digital onboarding and real-time verification for quicker loan disbursements. It is also investing in long-term customer relationships via asset-backed loans rather than the unsecured, short-term credit that has defined much of Africa’s fintech space.
While some fintechs like Nigeria’s Moniepoint are pursuing commercial banking licences, Umba says it has no plans to do so in 2025, preferring to expand under its existing microfinance framework. The company has completed senior leadership recruitment in both Kenya and Nigeria, although it withheld the identity of its incoming Kenya CEO. With its fresh capital and sharpened focus on secured lending, Umba is positioning itself as a key player in Africa’s evolving digital banking landscape