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.

Watu’s proposed play is to replicate its Africa playbook: local agent networks (10,000 commission agents in Africa), responsive underwriting, and embedded distribution. However, building that network from scratch in Brazil—amid incumbents—is a different challenge altogether. Watu projects $340 million in revenue in 2025, up ~48 percent from 2024 levels. It also forecasts net profits of $8 million (some filings suggest) if execution holds.

That projection implies reclaiming margin even as scale grows. It’s a bold bet: revenue multiplied, but financial discipline restored. On the ground in Kenya, Watu has begun forging partnerships. In September 2025, it tied up with Jumia to allow customers to buy premium smartphones on Jumia and pay via flexible Watu installment plans.

Such tie-ups may reduce acquisition cost, improve distribution, and anchor Watu deeper into digital commerce. But the margin is under stress. In 2024, Watu also cut headcount by 3.6 percent (to 2,465 staff), citing automation and digital scale effects.

Yet paradoxically, costs per loan may rise as it tackles the Latin American ramp, compliance, currency hedging, and provisioning buffers. Currency volatility remains a core risk. In Africa, Watu has experienced a sharp depreciation in the Kenyan shilling post-2022, as well as fuel-driven shocks for boda riders. In Latin America, foreign exchange and interest rate swings may compress margins if not hedged carefully. If Watu achieves 4 million active accounts by end-2025, with ~3 million tied to smartphones, as projected, it’ll need to onboard over 2 million customers in 2025 alone.

That growth is steep—but logical, if it sustains its device-finance momentum and cracks Latin American markets. Yet scaling so fast across continents is rarely smooth. The blurred lines between growth and credit risk often become sharp under stress. An aggressive default season or macro shock could erode gains quickly.

Despite these perils, the story of Watu is captivating: from a few-hundred-dollar loan in Mombasa to a multinational fintech scaling toward $340 million, it carries ambition and hubris. Its African roots may give it a margin of error, but Latin America will demand new forms of discipline.

Some analysts quietly question whether Watu’s profit collapse signals a deeper macro vulnerability rather than a one-off blip. If so, what happens when defaults accumulate in Brazil? The borrower base will differ, but low-income segments everywhere share income volatility and repayment constraints.

Even so, Watu’s leadership remains bullish. Their belief: having cut their teeth in Africa’s complexity gives them a competitive moat. Execution, not thesis, will prove the difference.

One decade from that handover to a women’s group in Mombasa, Watu sits at a crossroads. If it hits $340 million in revenue and recovers margins, it will stand as one of Africa’s few cross-continent fintech success stories. But if credit stress resurfaces or Latin America proves less forgiving, the expansion could become a cautionary tale rather than a triumph.

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