By Susan Olalere 
Nairobi-based neobank Umba has raised $5 million in debt funding to expand its secured lending products in Kenya, with a strong focus on vehicle financing and loans for small and medium enterprises (SMEs). The deal highlights a broader shift among African neobanks toward asset-backed lending models that prioritize long-term sustainability over quick, high-interest digital credit.
Strategic Pivot to Sustainable Lending
Umba’s latest funding round was led solely by Star Strong Capital, a U.S.-based asset management firm. Structured as debt—rather than equity—the raise is positioned as non-dilutive capital aimed at scaling profitable operations, not just extending the company’s financial runway.
“This is revenue-generating capital,” CEO Tiernan Kennedy said, highlighting the company’s confidence in the performance of its secured lending products.
Umba’s move reflects a broader pivot across Kenya’s fintech scene: away from short-term unsecured digital loans and toward structured, asset-backed finance solutions that serve a growing middle class and small business sector.
Building on Microfinance Foundations
Umba entered the Kenyan market in early 2023 after acquiring Daraja Microfinance, securing a microfinance banking licence from the Central Bank of Kenya. Since then, it has integrated digital infrastructure to offer faster, paperless loan disbursements—a clear advantage over traditional banks.
Its entry into vehicle financing has proven to be a game-changer. Kenya now boasts over 5 million registered vehicles, and consumer appetite for auto loans continues to rise. Kennedy noted that this vertical now constitutes the largest share of Umba’s loan book in Kenya.
From Expansion to Execution
Founded in 2018, Umba raised $15 million in Series A funding in 2022 with backing from Nubank executives, initially signaling plans to expand into Kenya, Egypt, and Ghana. However, the company has so far focused solely on Kenya—arguably its most promising market.
Umba reported a sixfold revenue growth in 2024 and expects to reach profitability in Kenya by the end of 2025. It has completed senior leadership hiring across both Kenya and Nigeria, but declined to reveal its incoming Kenya CEO.
No Commercial Bank Licence, For Now
While several fintechs are exploring commercial banking licences—including Nigeria’s Moniepoint—Umba is not following that trend, at least not yet.
“We’ll continue operating within the microfinance framework,” Kennedy confirmed, calling it sufficient for scaling its secured loan portfolio.
The Bigger Picture
In an ecosystem saturated with short-term loan apps and digital lenders focused on volume, Umba’s strategy stands out. By prioritizing long-term lending products and investing in vehicle and SME financing, Umba is placing a bet on the real economy—and doing so with digital speed and scalability.
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