Umba, a digital bank headquartered in Nairobi with operations in Kenya and Nigeria, has raised a $5 million debt facility to scale its secured lending products specifically targeting vehicle financing and small and medium-sized enterprise (SME) loans in Kenya. This move signals a broader shift among Kenyan neobanks away from short-term, high-interest loans toward more sustainable, asset-backed financing.
The funding comes entirely from U.S.-based asset management firm Star Strong Capital, with Gahigiro Capital serving as the transaction advisor. The deal is structured as debt, meaning Umba doesn’t give up any equity, bringing the startup’s total funding to $20 million.
Umba CEO Tiernan Kennedy emphasized that the new capital is meant to fuel revenue-generating initiatives, not just keep the lights on. “This is revenue-generating capital, rather than runway-extending capital,” he said.
In 2018, Umba officially entered the Kenyan market in January 2023 after acquiring a 66.6% stake in Daraja Microfinance the previous year. That acquisition secured it a microfinance banking licence from the Central Bank of Kenya. While Daraja currently holds less than 1% of Kenya’s microfinance market share, it focuses on serving SMEs—a core audience for Umba’s offerings.
In 2022, Umba raised $15 million in a Series A round led by executives from Nubank to support its planned expansion into Kenya, Egypt, and Ghana. So far, only the Kenyan launch has materialized.
One area showing strong momentum is vehicle financing, which has rapidly become a cornerstone of Umba’s business in Kenya. With over 5 million registered vehicles in the country, up from 3.9 million in 2021 demand for auto loans is surging.
“The vehicle financing market in Kenya is worth about $17 billion,” said Kennedy. “It’s now the largest part of our loan book here.”
Unlike traditional banks that rely on slow, manual processes, Umba offers a fully digital experience: customers can onboard online, verify documents in real time, and access quick disbursements. While exact figures weren’t shared, the company claims its revenue grew sixfold in 2024 and expects to turn a profit in Kenya this year.
As the fintech space continues to evolve, Umba is betting on asset-backed lending rather than the typical high-interest, unsecured digital loans. Competitors in the vehicle loan space, like Autochek, are also gaining traction with similar strategies.
“While many fintechs focus on high-interest, short-term unsecured loans, we’re building long-term customer relationships through asset-backed products,” Kennedy explained.
Umba has completed hiring for its senior leadership teams in both Kenya and Nigeria, though it has not yet named its new Kenya CEO, whose appointment will be officially announced soon. Co-founder Barry O’Mahony exited the company in 2023.
While some fintechs are now eyeing commercial banking licences after reaching certain revenue milestones. Moniepoint in Nigeria being a prime example. Umba is taking a different route. The company says it has no plans to apply for a commercial banking licence in 2025.
“We’re happy operating within the microfinance framework for now,” Kennedy said. “It gives us everything we need to scale secured lending products in Kenya.”