Why M-KOPA is using smartphone repayments to expand digital lending

Since 2020, M-KOPA has built its reputation helping Africans buy smartphones on credit. But the Nairobi-headquartered asset financing company is increasingly using those devices as a gateway into digital credit.

According to the company, it has now served nearly 10 million customers across Africa and deployed more than $2 billion in credit. While smartphones remain its customer acquisition tool, M-KOPA is increasingly making money from lending, insurance, and other financial services built on the repayment data generated by those devices, and serving customers underserved by traditional lenders.

“So, when we are selling to our customer, we are not selling them a phone,” Faraimose Kutadzaushe, M-KOPA’s chief financial officer, told TechCabal in an interview. “We are selling them more than a phone. It gives you the ability to qualify for things you would otherwise not qualify for. That is why we call it more than a phone.”

According to the World Bank, only about a quarter of adults in low-income economies, including many African countries, used formal credit in 2024, while 35% relied on informal borrowing from family and friends, with business borrowing remaining informal. This opens the door to cash flow–based lending models that draw on digital payment histories to assess creditworthiness.

That model is now increasingly common among African fintechs. Moniepoint, for example, uses transaction data from merchants on its platform to underwrite business loans. In 2025, the company said it disbursed more than ₦1 trillion ($721.2 million) in credit, relying on transaction histories to assess risk and maintain low default rates.

For M-KOPA, the smartphone is the first loan. Every repayment becomes a data point, allowing the company to build a proprietary credit profile for customers who often lack formal financial records.

A customer who makes daily payments for 30 days has already generated 30 separate credit signals, the CFO explained.

“We can very quickly, in our relationship, start to offer them other follow-on services, for instance, digital loans or digital credit. And how the digital credit works is we will qualify a customer for an affordable loan that they can borrow,” he said.

M-KOPA says it receives more than one million repayments across its markets and acquires more than 10,000 customers daily. Each repayment feeds into a risk model that continuously improves how the company prices credit.

According to the company’s 2025 impact report, half of its customers live on less than $5.50 a day, while 38% are accessing formal credit for the first time. Those customers are increasingly becoming repeat borrowers.

“We increase our customer lifetime value by ensuring that we give them all these other value-added services over time,” Kutadzaushe said. “An increasing proportion of our revenue on a month-by-month basis is coming from our digital financial services and not necessarily through acquisition.”

Nigeria, which became M-KOPA’s fastest market to reach one million customers, has emerged as one of its strongest lending markets. In February, Babajide Duroshola, M-KOPA’s managing director in Nigeria, described cash loans as the company’s fastest-growing business segment.

“Our cash lending business has grown significantly at a faster pace,” Duroshola told TechCabal. “With a smartphone, people require one device every few years. But with cash, customers can borrow multiple times within a cycle if they repay on time.”

To manage risk, the company uses AI-driven models to forecast losses and price products accordingly.

“On a portfolio level, we are talking about something that is very low, close to 10%, between 10% and 12%,” Kutadzaushe said, while noting that the company cannot comment on its loss rates due to market peculiarities.

The CFO said the company is currently not acquiring customers at a loss and is focused on retaining customers.

In 2024, the company reported $9.2 million in profit after a $24.7 million loss the previous year as revenue grew 66%.

To sustain growth, the CFO said the company would lean on equity and debt capital providers to ensure it can continue serving its customers.

“If we continue to grow the way we grow, we will continue to lean on our partners, be it providers of credit, providers of working capital, for us to successfully continue to grow the way we are growing. And we will do it responsibly,” he said.

M-KOPA built its business helping Africans buy smartphones and quickly realised it could use the repayment data generated from those devices to do much more and become a sustainable business.