Lipa Later, a Kenyan consumer credit platform, has raised $12 million pre-series A to expand into new markets across Africa.

The organisations who participated in the equity and debt funding round include Cauris Finance, Lateral Frontiers VC, GreenHouse Capital, SOSV IV LLC, Sayani Investments and Axian Financial Services.

Lipa Later is a buy-now-pay-later (BNPL) company founded in 2018. And with the new funding, it plans to expand in its existing markets, which are Kenya, Uganda and Rwanda, and launch in new markets such as Ghana Nigeria, and Tanzania.

"We are excited to be working with our investors as we look to grow and expand to more markets in Africa. In the next 12 months, we are looking to grow and double our presence in the existing markets, even as we open in three to five new markets in Africa", said Lipa Later co-founder and CEO Eric Muli.

Lipa Later has exclusive partnerships with some retailers across these markets which allows shoppers to pay for products in installments. For instance, Lipa Later’s partnership with French retailer Carrefour (which has a significant regional presence) allows customers to pay for items such as furniture, electronics and even perishables in monthly installments.

Customers pay a monthly interest rate (about 2.3% in the case of Carrefour) on the credit extended to them. Lipa Later plans to forge more partnerships with merchants to cover more countries across Africa.

"Lipa Later is not only changing the consumer credit landscape across Africa, which to date has been largely inaccessible for most, but also catalyzing the future of shopping, e-commerce and payments. They’ve done this in a truly product and customer-led way that benefits both merchants and consumers, and has proven to be incredibly scalable across multiple markets", said GreenHouse Capital Partner Ruby Nimkar.

Lipa Later’s proprietary credit scoring and machine learning system enables consumers to sign up and get a credit limit almost instantly. The startup has also built a BNPL API which integrates into e-commerce platforms and enables merchants to sell products directly to consumers. This makes it possible for consumers to remit monthly installments for items purchased.

The new funding adds to an undisclosed investment Lipa Later received in 2020 from Tokyo-headquartered Uncovered Fund, which invests in early- and seed-stage startups in Africa. Lipa Later was among the five start-ups that received the funding.

Lipa Later is a leading player in the Kenyan market, where it competes with other startups providing BNPL services. Startups such as Aspira, Miti, Flexpay Technologies and Julla. According to this 2021 survey, the BNPL payment industry in the Kenya experienced a strong growth due to a rapid e-commerce penetration, and the effects of the economic slowdown caused by the COVID-19 pandemic.

Kenya’s BNPL industry is expected to record a compound annual growth rate of 30.8% between 2021 and 2028. The gross BNPL merchandise value is also expected to reach $589.5 million in 2028 up from $51.6 million in 2020.