Watu has unveiled bold revenue targets for 2025, projecting Sh45.2 billion as it shifts its focus from motorbike loans to smartphones, now its fastest-growing product.

The Pan-African buy-now-pay-later company closed 2024 with gross revenues of Sh30.8 billion, an increase from Sh18.4 billion the year before.

Much of that growth came from handset financing, which has quickly overtaken motorbike lending as the main driver of new business.

But while turnover rose 67 per cent, net earnings told a different story.

Profits plunged 85 per cent to Sh159.7 million, weighed down by repayment challenges in core markets such as Kenya and Uganda, as well as higher operating costs.

In its latest sustainability report, Watu outlined the direction it intends to take.

“We’re targeting the financing of 5,000 electric vehicles, expanding our smartphone financing to over two million devices, and continuing our geographic expansion while deepening our impact in existing markets,” the report stated.

If it meets the Sh45.2 billion goal, Watu will have nearly tripled its size within just two years, a sharp test of whether the bet on smartphones can deliver long-term scale without further eroding profitability.

The loan book has expanded in tandem with this pivot. In 2024, active loans tripled to 1.9 million, and the firm anticipates reaching 2.3 million in 2025.

Around 900,000 of those loans are expected to be taken up by women, a demographic that had largely been excluded from its earlier motorbike-based financing model.

Watu’s core strategy has always been lending to informal workers and low-income groups with little or no access to traditional credit.

That approach has fuelled its expansion but also heightened exposure to income shocks and competition from established rivals.

Even as its portfolio widened, the company trimmed staff numbers.

Employee headcount slipped by 3.6 per cent in 2024 to 2,465, a sign that the firm is increasingly leaning on digital channels to manage the millions of small-ticket loans in its system.

Watu has raised more than Sh2.7 billion through five funding rounds backed by investors including FMO, Gateway Partners, Verdant Capital, and AHL Venture Partners since its establishment in 2015.

Its most recent fundraising, a Series B round, was completed in February 2024.

Despite recent profit pressures, Watu remains among the few Kenyan startups to report consistent profitability.

The year ahead will show whether its smartphone-led strategy can cement its position as a leader in Africa’s micro-lending space.