Moniepoint may extend its presence beyond Nigeria after getting approval to acquire Kenya’s payments and credit startup, Kopo Kopo. The transaction value has not been disclosed.

A few months ago, rumours circulated about Nigeria’s fintech company Moniepoint Inc considering the acquisition of an East African payments firm. At the time, it was unclear which fintech was the subject of the proposed acquisition. However, today, the Competition Authority of Kenya (CAK) has provided clarity by announcing that Moniepoint Inc can now acquire Kopo Kopo. The CAK oversees competition-related matters for transactions exceeding KES 1 billion ($7 million by the current exchange rate), which means that the acquisition was the same or exceeded this amount.

In an email to TechCabal, Moniepoint Inc said, “We have been vocal about our interest in Kenya as part of our mission to provide financial happiness for people across Africa. This regulatory approval is a milestone in that process and one that we are delighted about.”

CAK said in a statement, “The Competition Authority of Kenya has approved the proposed acquisition of 100% shares in Kopo Kopo Inc. by Moniepoint Inc. unconditionally. This approval has been granted based on the two key considerations during the merger analysis that; first, the transaction is unlikely to negatively impact competition in the market for digital credit; and second, the transaction will not elicit negative public interest concerns.”

Moniepoint Inc, founded by two ex-Interswitch employees, is registered in the U.S. and primarily based in Nigeria. It also has a presence in the U.K. It has no base in Kenya and did not report turnovers or assets in this region prior to the transaction. Kopo Kopo is registered in the U.S. but operates in Kenya, offering digital financial services to local businesses, primarily short-term business loans.

The proposed transaction will see Moniepoint Inc acquire all shares of Kopo Kopo, constituting a merger under Kenya’s Competition Act 2010. This law covers mergers where one business gains control over another in Kenya, achieved through share transactions or integration.

Transactions that surpass a combined turnover or assets of KES 1 billion ($7 million) require CAK’s approval. This means that Moniepoint’s versus Kopo Kopo transaction surpassed that amount. Although the exact value of the acquisition has not been revealed, Kopo Kopo, which last raised $2.1 million in Series B funding in 2015, was valued in the low 10s of millions at the time of the transaction. The company has been profitable since then, according to people with knowledge of the matter.

“Merging parties whose combined turnover or assets, whichever is higher, is over Ksh. 1 billion are required to seek approval from the Authority before implementing the proposed transaction. The transaction between Kopo Kopo Inc. and Moniepoint Inc met this threshold for mandatory notification to the Authority and full analysis as provided in the Competition (General) Rules, 2019,” CAK clarified.

Moniepoint Inc offers payment channels for businesses, credit, business management tools and banking solutions such as savings and investments. Kopo Kopo provides the same tools to businesses in Kenya but does not have a banking product. At its peak, thousands of small and medium-sized businesses in Kenya had adopted Kopo Kopo’s payments platform. A partnership with Safaricom successfully encouraged businesses to embrace digital payments, including Lipa na M-PESA services.

However, based on CAK’s assessment, Kopo Kopo has a competitive edge in providing credit to its clients. The digital lending market is dominated by products linked to M-PESA, with M-Shwari (offering credit and savings), Fuliza (providing overdrafts), and KCB M-PESA (offering loans and savings) leading the space with shares of 34%, 25%, and 15%, respectively. Tala and Branch have secured the fourth and fifth positions with shares of 13% and 9%, respectively. Kopo Kopo’s loan product is part of the 32 other digital lenders registered by the Central Bank of Kenya (CBK), constituting 4% of the online lending market share.

Moniepoint Inc will likely let Kopo Kopo run its credit product alongside other services, although that could change. The company told this publication that there are plans to introduce Moniepoint products into the Kenyan market. “At the end of the process, we expect to extend some of our services into the market, in line with its needs. We will be working with the Kopo Kopo team, and building on the brilliant work they’ve done over the years,”

“The market structure therefore, will not change post-merger since the acquirer is not involved in the same business activity in Kenya, as the target,” CAK concluded. 

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