US fintech UMBA acquires Daraja Microfinance

US-based fintech company UMBA Inc. has acquired a majority 66 per cent stake in Daraja Microfinance Bank.

The acquisition follows requisite approvals by the Central Bank of Kenya (CBK) and the National Treasury in May and June respectively.

UMBA which was incorporated in Delaware has its headquarters at the heart of US Silicon Valley in San Francisco.

Until the acquisition of Daraja, the fintech has been running a non-deposit-taking credit business in Kenya and Nigeria through its subsidiary UMBA Technology Limited.

Daraja MFB is licensed to carry out community microfinance business within Dagoretti Division in Nairobi and has its head office and a single branch in Dagoretti Corner.

Daraja is ranked as a small microfinance bank with a market share of less than one percent according to the latest available CBK data.

“CBK welcomes this transaction that is a critical component of Daraja MFB’s transformation plan. It will strengthen Daraja MFB and support the stability of Kenya’s microfinance banking sector,” the CBK said in a statement on Friday.

The transaction represents the growing interest by fintech in Kenya’s micro bank space which has been mirrored by two previous acquisitions earlier this year.

Key Microfinance Bank was for instance acquired by Mauritius-based micro-lending firm LOLC in February.

During the same month, CBK approved the acquisition of Century Microfinance Bank by digital lender Branch International which marked the first time in Kenya that a digital lender had acquired a bank.

Branch has made a bet on its recently acquired status to disrupt digital banking.