From Mombasa to Brasilia: How Watu’s $340 Million Bet On Smartphone Lending May Be Africa’s Best Export

In 2015, Andris Kaneps, co-founder of Watu Credit, walked into a small hall in Mombasa and handed cash—just a few hundred dollars—to a women’s group. That gesture, humble yet symbolic, marked the birth of what would become a pan-African BNPL and asset financing venture.

Over the next decade, Watu quietly built a footprint across eight African nations, funding motorcycles, phones, and small enterprises. But perhaps its most audacious move yet is its leap into Latin America—first Mexico, now Brazil—with plans to scale revenues from $230 million in 2024 to $340 million in 2025.

The collapse was driven by rising loan defaults in key markets—Kenya, Uganda, Sierra Leone—and operational costs ballooning as the company scaled. This sharp profit decline raises the question: is Watu exporting more risk than growth to Latin America? The company argues it has stress-tested its model in Africa, where informal markets, regulatory holes, and currency volatility demand robustness. “If you can do business in Africa, you can do it anywhere,” Kaneps says. But Latin America isn’t Africa—and global credit scars may yet catch up to this bold expansion.

Watu’s Africa operations hinge on two core products. The first is Watu Boda, vehicle loans (motorcycles, three-wheelers) to informal transport operators. The second—and increasingly dominant—is Watu Simu, smartphone financing. In Kenya alone, it issued 1.46 million phone loans in 2024, representing nearly 48 percent of all its device financing across markets.

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Across all its markets, cumulatively more than 3.059 million smartphone loans have been disbursed. Watu sees smartphone financing as its highway to scale. While the boda-moto market in Kenya might address an estimated 1 million riders, the smartphone addressable market extends to 30–40 million economically active individuals.

In 2024, active loans nearly tripled to 1.9 million, and Watu plans to reach 2.3 million by end-2025. The firm expects nearly 3 million of its projected 4 million loan accounts by year’s end to be smartphone-based. Yet behind that optimism lie financial cracks. In 2024, the nonperforming loan environment worsened across East Africa. Watu declined to publicly disclose explicit NPL ratios but acknowledged that a “majority” of customers delay at least one payment.

In response, the company uses a flexible “lot storage” approach—allowing clients to park unpaid bikes temporarily with minimal penalties, rather than aggressive repossession. That sort of client forgiveness may buy goodwill—but also masks latent credit losses, especially under stress.

Moreover, Watu’s profit collapse in 2024 is not uniform. Tanzania stood out: profit in that market reportedly nearly doubled to $5 million (KES 650 million), a surge of 93 percent. The company hasn’t disclosed granular data for all markets, but that disparity hints at uneven credit quality and macro risks across geographies.

Globally, BNPL is under scrutiny. Critics accuse some BNPL players of pushing low-income households into overleveraged positions. Watu pushes back: its model is not a typical “spend now, pay later” trap but a structured asset-based lending scheme with income checks and device-locking technology.

Still, as the portfolio expands toward millions of small accounts, underwriting discipline and loss absorption capacity will be tested. In Latin America, Watu enters a more mature credit environment. Credit bureaus are stronger, consumer protection rules are stricter, and competition from global fintechs and local credit providers is intense.