After raising a $3 million seed extension and signing an exclusive digital solutions distribution agreement with the Kenya Union of Savings & Credit Cooperatives (Kuscco), the national umbrella body representing saccos, Kwara, a Kenyan fintech that digitises credit unions (saccos), more than doubled its client base last year and is eyeing enormous growth in the coming years.

Kwara claims that as a result of its agreement with Kuscco, it now has access to a network of over 4,000 saccos for its banking-as-a-service product. Kwara also plans to purchase Kuscco’s subsidiary IRNET, a software provider for saccos, as part of the exclusivity agreement for an unknown sum.

“We think we’ve barely scratched the surface in the Kenyan market. And so, we are just going to be really investing in products and services that deepen our relationship here,” Kwara co-founder and CEO, Cynthia Wandia, said. “The rationale (of the deal) is clear, first it is an opportunity to generate leads and distribute our core product as fast, and to deepen our competitive moat. We’re entering an exclusive partnership, which also means no other tech company will be able to market with Kuscco. They are stacking their bets on us but we have been able to prove that we can do it as we continue to grow.”

Existing investors DOB Equity, Globivest, and Kobalt Music founder Willard Ahdritz took part in the seed extension round. One Day Yes, Base Capital, and other new investors joined the round along with fintech executives like Mikko Salovaara, CFO of Revolut. The firm has now raised $7 million in initial capital overall thanks to the latest funding. Several investors, including Breega, SoftBank Vision Fund Emerge, Finca Ventures, and New General Market Partners, participated in the initial round.

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Kwara, which also has operations in South Africa and the Philippines, increased its clientele base from 50 at the end of 2021 to 120 at the end of 2022 while maintaining a 100% customer retention rate. This growth is evidence of the value the company provides to its customers. According to the startup, the automated onboarding process has guaranteed customer success and growth.

A Look At What The Startup Does

Founded in 2018, Kwara’s solution improves credit union back-office operations, allowing them to move away from time-consuming paper-based processes and physical branches, allowing them to join up new members and generate unique products.

Additionally, the company offers a next-generation neobank app that provides members of partner credit unions with access to additional services such as fast loans and third-party services such as insurance. The user base of the neobank app, which also allows users to deposit money directly into their sacco accounts and track their finances and payments, has increased 35-fold since its inception last year, according to the company.

The fintech intends to develop more capabilities to appeal to saccos, as well as other goods for neobank app customers.

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“We continue to ship more or less enterprise grade features for the large saccos that are well capitalized, the ones who are at the same size and level as some of the banks. There are specific features they need and specific ways they need to be taken care of so we will continue investing in that,” said Wandia adding that Kwara is also investing on improving the neo-banking experience. They are set to add more features that will help members build “a personalized view of their own goals and really start working towards achieving them.” 

They will also sign additional third-party collaborations in order to provide greater value to app users.

“We believe that every time a sacco member leaves their sacco to get another service just because the sacco doesn’t provide it is a missed opportunity for that member to actually profit from the returns of that product. All income earned on those products actually flows back to the members as dividends,” she added.

Credit unions are created by people who share a common interest or members of an industry, such as farmers or teachers, who purchase stock in the institution, save money, and make loans. They are popular, particularly in developing countries, due to their low-interest-rate loans and ease of credit access as compared to traditional banks. Only 175 deposit-taking saccos are licenced in Kenya, with the vast rest remaining uncontrolled.

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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