Lipa Later, a $12 million BNPL startup, plans to expand throughout Africa

After obtaining $12 million in pre-Series A funding, Kenyan consumer lending company Lipa Later wants to extend its financial services to other countries in Africa.  Among the investors in the round of equity and debt financing were Cauris Finance, Lateral Frontiers VC, GreenHouse Capital, SOSV IV LLC, Sayani Investments, and Axian Financial Services.

Tanzania, Ghana, and Nigeria are among the new markets that the startup, a buy-now-pay-later (BNPL) company formed in 2018, plans to explore.

Across these markets, Lipa Later has unique partnerships with retailers that allow people to pay for things in instalments. With Carrefour’s regional presence, clients may pay for things like furniture, electronics, and even perishables in instalments through Lipa Later’s collaboration with the French store.

In the case of Carrefour, customers pay a monthly interest rate (about 2.3% in this case) on the credit they get from the store. The start-up wants to work with more merchants as it tries to reach more countries in Africa.

For consumers, Lipa Later’s credit score and machine learning algorithm provide a credit limit practically immediately after signing up for the service. If you want to buy something and pay for it in instalments, the startup has also built an API that works with e-commerce platforms. This API lets merchants sell their products directly to customers and allows customers to pay for their purchases over time.

There is still no word on how much money the Uncovered Fund, a Tokyo-based fund that backs early and seed-stage startups in Africa, is willing to invest in the new project. This round of funding went to a total of five firms, including Lipa Later.

Kenya’s BNPL market is dominated by Lipa Later, Aspira, Miti, Flexpay Technologies, and Julla. E-commerce penetration and the economic downturn caused by the COVID-19 pandemic have both contributed to the rise of Kenya’s BNPL payment business, according to a poll conducted in 2021. Between 2021 and 2028, the BNPL industry in Kenya is expected to grow at a rate of 30.8%. There will be $589.5 million worth of BNPL goods in 2028, up from $51.6 million in 2020.

Lipa Later wants to spread across Africa, where e-commerce and alternative credit sources are becoming more popular. It will have to deal with competition from South Africa’s Payflex, PayJustNow, and PayQart, as well as Nigeria’s PayQart and Carbon Zero.