Kuda MFBank’s Loan Woes

According to a report by TechCabal which references obtained financial statements, Kuda Microfinance Bank, which started off in Nigeria in 2017 and has risen to become one of the biggest on the continent, suffered a loss of more than USD 14M in 2021 alone.

This is some way short of the USD 7 M it amassed in revenue in that same year, and significantly more than the USD 2 M losses it incurred in the previous year.

“the income of the firm does not justify this spend in the short time”

There are several other revelations around the state of Kuda’s financials in what appears to be a rare case of an African private tech startup having its financials in the public domain.

The losses is said to be as a result of credit losses. Kuda introduced an overdraft facility early last year, targeting minimal defaults on the back of data they have on customers, which – as Kuda CEO, Babs Ogundeyi reiterated last August – will guide the company to “allocate the overdraft portion based on the customer’s activities, aiming for it not to be a burden.”

Kuda’s lending product – which as of the end of the second quarter of 2021 was reported to have disbursed USD 20 M worth of credit to over 200,000 qualified users – is not faring as good as the company would have liked.

Figures quoted in TechCabal report suggests non-performing loans have ballooned to more than USD 5 M, or as much as 69 percent of its loan book. Specifically, in the analysis part of the report, loan impairment is said to have eroded 96 percent of the interest income made from the loan product. This is suggestive of shortcomings.

Besides that, personnel expenses and marketing spend are also mentioned as significant cost centres that have put Kuda’s finances in the red, with the latter hitting USD 1 M by the first quarter of the past year and being quoted as a major reason for why the company’s operating expenditure soared in 2021.

Kuda is reported to have noted in its financial report that “the income of the firm does not justify this spend in the short time.”