Watu's Tanzanian Success Buoys BNPL Sector Amidst Regional Challenges
Fintech companies in the region are facing significant challenges, particularly in the buy-now-pay-later (BNPL) sector. Watu Holdings, a Kenyan BNPL startup, has seen its profits decline, while another Kenyan startup, Lipa Later, was placed under administration. Meanwhile, Watu's Tanzanian arm, Watu, has reported impressive growth.
Watu, operating in Tanzania, nearly doubled its profits to $5 million in 2024, marking a 93% year-on-year increase. This success comes despite the challenges faced by the broader fintech industry. Watu has raised over $20 million across five funding rounds from investors including FMO, Gateway Partners, Verdant Capital, and AHL Venture Partners. Its unique lending model targets informal transport operators and low-income earners, but this exposes it to income volatility and currency risk.
Watu operates five major product verticals, with its flagship motorcycle financing arm, Watu Boda, at the core. However, the company's Kenyan operations, under Watu Holdings, have faced financial difficulties. In 2024, Watu Holdings reported an 84% decline in profit to $1.2 million. This decline was due to increasing loan defaults and weakening repayment patterns across its key markets: Kenya, Uganda, and Sierra Leone. Rising interest rates and increasing repayment strain have also tested the sustainability of Watu's model. In March 2025, Lipa Later, another Kenyan BNPL startup, was placed under administration after failing to secure funding.
Despite the challenges, Watu remains one of the few consistently profitable tech startups in Kenya. Its Tanzanian operations have shown impressive growth, but the company's financial problems in Kenya, Uganda, and Sierra Leone highlight the broader issues facing the BNPL sector in the region. Watu Holdings had planned to raise funds in 2025 to address these problems, underscoring the need for sustainable financing solutions in the sector.
