In a move that’s making waves across the fintech landscape, Moniepoint Inc., a company with roots in Nigeria, is expanding its horizons to Kenya through the acquisition of 100% shares in Kopo Kopo Inc. This groundbreaking decision has received the unconditional green light from the Competition Authority of Kenya (CAK), marking a significant shift in the financial technology sector in both countries.
Understanding the Acquisition
Moniepoint Inc., hailing from the United States, has been a major player in the Nigerian fintech scene. The company boasts subsidiaries like Teamapt Limited and Moniepoint Microfinance Bank in Nigeria and has even established a foothold in the United Kingdom. However, prior to this acquisition, Moniepoint had yet to set foot in Kenya, with no operational presence or financial activity recorded in the East African nation.
On the other side of the equation, Kopo Kopo Inc., also originating from the United States, has been actively operating in Kenya under its distinct brand, offering digital financial services including short-term loan facilities tailored for small and medium-sized enterprises (SMEs). The proposed acquisition represents a merger, as defined by the Competition Act, and thus required the approval of the CAK.
CAK’s Approval and Key Considerations
The CAK’s decision to approve this acquisition came after careful examination of two critical factors: the potential impact on competition in the digital credit market and any possible negative effects on public interest. Delving into the competition aspect, the CAK focused on identifying the relevant product market and the geographical market.
In terms of the relevant product market, the transaction’s impact was assessed in the context of the digital credit market. This market has undergone substantial growth in Kenya due to the proliferation of mobile-based banking and lending platforms. In fact, according to Geopoll, digital lending has boosted financial inclusion in Kenya by over 50%. The Central Bank of Kenya (CBK) has granted licenses to 32 Digital Credit Providers (DCPs) since 2021, driving increased access to loans for a broader spectrum of the population.
The CAK’s Digital Credit Market Inquiry in 2021 revealed that the sector is characterized by a variety of providers, with a few dominant players like M-Shwari, Fuliza, and KCB-MPESA. Notably, the target entity of the acquisition, Kopo Kopo Inc., holds a mere 4% market share within this landscape.
Implications of the Acquisition
One of the most significant implications of this acquisition is the potential for increased competition within Kenya’s digital credit market. Moniepoint’s entry into the market as a new player, coupled with Kopo Kopo’s existing presence, is anticipated to foster a more competitive environment, thus potentially benefitting consumers by offering a wider array of options and better services.
From a public interest standpoint, the CAK’s evaluation found no negative concerns stemming from the acquisition. Employment prospects remain secure for Kopo Kopo’s existing staff, and Moniepoint’s plans to establish a network of distribution associates could even lead to job creation.
As the ink dries on this landmark deal, all eyes are on the evolving fintech landscape in Kenya. With Moniepoint’s entry into the market, alongside its acquisition of Kopo Kopo, the digital credit space is poised for increased dynamism, competition, and innovation, ultimately shaping the future of financial technology in the country.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard