Not All BNPL Models Are Created Equal: Why Some Thrive in Africa While Others Stall
Riderental blogs • July 21, 2025
The African digital lending space is full of contradictions right now.
📈
M-Kopa just sold over
1 million smartphones.
📊
Watu Credit hit
3 million financed devices.
❌ Meanwhile,
Wabeh is scaling down in Kenya.
🤝
Engage Capital is acquiring
Lipa Later, which has had its own struggles.
So, what gives?
Many point fingers at Kenya’s economy: “people don’t pay loans,” they say. But here’s the thing—if that were entirely true, how is M-Kopa thriving? Why has Watu managed to finance millions of assets?
🔍 The answer: There are two very different digital lending models at play in Africa.
A Tale of Two Models
Type A: Asset Financing (Economic Enablement)
- Targets the unbanked/informal economy
- Finances income-generating assets (smartphones, boda bodas, solar systems)
- Uses IoT lockout features for credit enforcement
- High-touch, agent-driven distribution
- Funded via patient capital
- Examples: M-Kopa, Watu, Asaak, Moove
Type B: BNPL for Consumption (Lifestyle Smoothing)
- Targets salaried, banked consumers
- Used for fashion, electronics, travel
- Integrated into POS and online checkouts
- Short-term, interest-free “Pay-in-4” style
- Funded via merchant fees & securitization
- Examples: Lipa Later, Payflex, Payjustnow
Why the Disconnect?
What we’re seeing isn’t a failure of BNPL—it’s a failure of Product-Market-Ecosystem Fit.
- Type A works in capital-scarce but high-need environments
- Type B needs strong credit bureaus, digital merchants, and deep capital markets
So when BNPL players targeting consumption default in underdeveloped markets, it’s not because of "bad customers"—it’s often because the model isn’t ecosystem-ready.
Final Thought
Two models. Two different growth engines.One continent.
Before launching or investing in a digital lending product in Africa, ask:
✅ Are you solving for
income or
lifestyle?
✅ Do you have the infrastructure to support your model's
risk, funding, and scale needs?
🔗 Let’s challenge the single-story narrative around digital lending in Africa.
💬 I’d love to hear your thoughts:
- Are we overestimating BNPL potential in underbanked markets?
- Is asset-based lending the future of inclusive finance?
👇 Drop your insights, experience, or questions in the comments.
#FintechAfrica #BNPL #DigitalLending #ProductMarketFit #FinancialInclusion #Startups #InvestingInAfrica #MkopA #WatuCredit #LipaLater #VentureCapital #FinancialServices #EmergingMarkets
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