Buy-now-Pay-Later startup Wabeh has disputed news that it has shut down, saying that it has just downscaled some of its operations to ‘focus’ on refining critical operations.
- •The clarification follows news that the startup had collapsed, after it sent letters temporarily suspending sales to several of its merchants.
- •Founded with the goal of easing smartphone affordability, Wabeh allows customers to pay a deposit and spread the balance in daily, weekly, or monthly instalments.
- •The company now says that it has only suspended sales through some merchants, primarily based on geography, so it stops “spreading ourselves thin across a long tail of smaller merchants with occasional sales.”
“We chose to concentrate on specific geographic areas and deepen our investment in refining our data-driven underwriting models, rather than spreading ourselves thin across a long tail of smaller merchants with occasional sales,” Susan Ngula, Wabeh’s Chief Operating Officer (COO) told The Kenyan Wall Street in an email.
“This measure was more about geographic scope and reducing the long tail of small merchants. We are still seeing growth in the areas were we are currently focusing, which has a better profitability than a wide geographic reach with our current scale,” Ngula added.
The startup said it will start reactivating merchants and expanding its network towards the end of the year “after we’ve validated the new models and built the necessary geographical infrastructure to better support them.”
The BNPL sector in Kenya continues to grow, with the market projected to reach US$1.18 billion in 2025, up from US$1.03 billion in 2024, according to the Fintech Association of Kenya. The fast-growing BNPL sector is now under formal oversight after the Central Bank of Kenya was granted regulatory authority through the Business Laws (Amendment) Act, 2024.
The law, which took effect in December, classifies BNPL firms as non-deposit-taking credit providers, giving the Central Bank of Kenya power to license operators, set pricing rules, and enforce consumer protections. The move closes a longstanding regulatory gap in the digital credit space, bringing previously unregulated startups into the formal financial system.
A bigger problem for the industry, even with regulation and the vast potential, is the high rate of non-performing loans in the industry.
“Unlike many players who rely on social vetting or external credit scores, we’ve built our models in-house and optimized them for our specific customer and market context,” Ngula says.
“The results speak for themselves: our non-performing loan (NPL) rates are consistently between 7–9%, significantly outperforming the market average of 15–30% for smartphone financing and even the Kenyan banking sector’s NPL rate of 16%.”
In March this year, another high profile BNPL, Lipa Later, was placed under administration after mounting financial distress and failure to secure fresh capital. The firm had previously raised over US$15 million in equity and debt funding but was unable to sustain its model.
“We expect to start reactivating merchants and expanding our network toward Q4, once we’ve validated the new models and built the necessary geographical infrastructure to better support them,” Ndula added.
