Watu Holdings, a Kenyan buy-now-pay-later startup, reported a pointy 85% drop in revenue to $1.2 million (KES157 million) in 2024, based on disclosures by Automotive & Normal, which holds a 29% stake within the enterprise. The decline from $7.6 million (KES985 million) a 12 months earlier factors to rising mortgage defaults and deteriorating compensation behaviour in Watu’s core markets of Kenya, Uganda, and Sierra Leone.
Watu has constructed its mannequin round lending to casual transport operators and different low-income earners, primarily boda boda riders, who lack entry to formal credit score. Whereas that has helped it scale shortly, the enterprise has grow to be uncovered to earnings shocks, forex swings, and competitors from rivals like M-KOPA, Aspira, and Ampersand.
Watu has 5 major product traces, anchored by its core bike lending unit, Watu Boda, which funds two- and three-wheelers. It additionally provides cell phone loans underneath Watu Simu, automotive financing via Watu Gari, and college charge loans through Watu Shule. Extra just lately, the corporate entered the electrical car area, a small however rising section to seize early demand for clear transport.
Nevertheless, the downturn was not uniform throughout markets. In Tanzania, the place Watu operates via a separate subsidiary, Watu Tuu Restricted, income practically doubled to $5 million (KSh650 million)—up 93% from the earlier 12 months. The corporate didn’t break down efficiency by market, but it surely alerts beneficial situations in Tanzania.
The startup is one among a number of non-bank lenders which have moved aggressively into asset-backed microcredit throughout East Africa lately. However as borrowing prices rise and compensation stress grows, the bounds of the mannequin are beginning to present, significantly in Kenya, the place casual sector incomes stay underneath stress.
Automotive & Normal, a Nairobi Securities Trade-listed firm that assembles and distributes bikes within the area, is a serious beneficiary of Watu’s demand, and the lender’s efficiency has more and more featured in its earnings experiences. Watu stays privately held and doesn’t publish standalone monetary statements.
Based in 2015 by Andris Kaneps, a Latvian nationwide, Watu has raised over $20 million throughout 5 rounds led by FMO, Gateway Companions, Verdant Capital, and AHL Enterprise Companions. Its newest funding spherical was a Sequence B spherical in February 2024. It’s among the many few startups in Kenya which have achieved constant profitability.