African Digital Bank Umba Acquires Majority Stake In Kenya’s Daraja Microfinance Bank

Umba, a digital banking platform focused on the underbanked and unbanked population, has acquired a majority share in Kenyan deposit-taking microfinance bank Daraja. The terms and price of the deal were not disclosed. Kenyan authorities believe that the acquisition will help to fast-track Daraja’s digitalization.

The Central Bank of Kenya (CBK) revealed that Umba acquired and now owns 66.6 percent of Daraja. The latest acquisition follows after the company raised $15 million in Series A funding back in April. The company announced plans to expand into more African territories as there was a rise in the demand for digital services. Founded by Tiernan Kennedy and Barry O’ Mahony in 2018, the digital bank has raised a total of $17.5 million and counts Tom Blomfield, the co-founder of Monzo, Lachy Groom, ACT Ventures, Lux Capital, Palm Drive Capital, Banana Capital, Streamlined Ventures, etc., as investors. Umba offers a range of financial products such as free accounts, interbank transfers, peer-to-peer transfers, bill payments, and affordable loans.

In a statement, the Central Bank of Kenya said that “The investment by UMBA will strengthen Daraja MFB’s business model. In particular, it will support the digitization of Daraja MFB as it moves to provide ‘anytime anywhere’ services to its customers. This is aligned to CBK’s vision of a microfinance banking sector that works for and with Kenya.”

According to the apex bank, microfinance bank Daraja which acquired its license in 2015 serves small and medium enterprises and currently has a share of 1 percent of the whole microfinance banking sector in the country.

The acquisition will benefit both Daraja and Umba. While giving the microfinance bank a lifeline in an industry taken over by digital lenders, Umba will strengthen its presence in Kenya’s very competitive financial sector. UUmba will also have the opportunity to offer more targeted services.