Moniepoint Expands to Kenya with Sumac Acquisition

Moniepoint Inc. has received regulatory approval from the Competition Authority of Kenya (CAK) to acquire a 78% stake in Sumac Microfinance Bank Limited, marking the Nigerian fintech’s official entry into the East African financial services market.

In a statement released by the CAK, the authority confirmed that the proposed transaction met all necessary requirements for regulatory review and was approved without conditions, following a comprehensive assessment of its potential impact on competition and public interest.

Moniepoint, headquartered in the United States but operating primarily through its Nigerian arm, Moniepoint Microfinance Bank, is now set to expand its footprint beyond West Africa. This acquisition marks its first move into Kenya’s banking landscape.

Founded in 2002, Sumac Microfinance Bank is a licensed deposit-taking institution in Kenya, offering diverse financial services including lending, deposit-taking, monetary intermediation, leasing, insurance, money transfer, and forex trading.

Why the Deal Passed Regulatory Scrutiny

According to CAK, Moniepoint’s acquisition of Sumac does not threaten market competition, as the fintech has no prior presence in Kenya. Therefore, its entry will not result in increased market concentration or dominance within the local financial sector.

Sumac currently holds a market share of 4.3%, classifying it as a medium-tier microfinance bank. Kenya’s microfinance sector is divided into three tiers—large, medium, and small—based on factors such as assets, deposits, capital, and loan accounts. As of December 2023, there were 14 licensed microfinance banks in Kenya, with large institutions controlling 83.8% of the market, medium-sized banks 15%, and smaller ones just over 1%.

Assurance on Jobs and Public Interest

In evaluating the transaction’s impact on broader public interests, CAK noted that no employment losses would occur as a result of the deal. All current employees of Sumac Microfinance will be retained under their existing employment terms.

The authority also confirmed that the acquisition would not negatively affect small and medium-sized enterprises (SMEs) or Kenya’s wider financial services ecosystem.

“Specifically, there will be no employment loss, and all the current employees will be retained under the current terms,” the CAK stated. “Premised on the above, the Authority approved the proposed acquisition of 78% shareholding of Sumac Microfinance Bank Limited by Moniepoint Inc. unconditionally.”

Broader Context of Nigerian Firms Expanding to Kenya

Moniepoint’s entry into Kenya reflects a broader trend of Nigerian financial institutions seeking to establish a presence in East Africa. Other notable players making inroads include Flutterwave, which now offers payment solutions such as M-PESA integration and cross-border transfers within Kenya.

Additionally, Access Bank PLC, a subsidiary of Access Holdings PLC, recently completed its acquisition of the National Bank of Kenya (NBK), having secured approvals from both the Central Bank of Kenya and the National Treasury. The deal is intended to combine NBK’s local expertise with Access Bank’s global infrastructure to drive financial innovation and inclusivity across the Kenyan market.