The Competition Authority of Kenya (CAK) has granted unconditional approval for Moniepoint Inc. to acquire a 78% shareholding in Kenya’s Sumac Microfinance Bank Limited.
According to CAK, the deal poses no threat to competition or public interest.
In a statement released Monday, June 2, CAK said the acquisition met the legal threshold for a merger under Sections 2 and 41 of the Competition Act, having surpassed the Ksh1 billion turnover or asset mark that necessitates mandatory notification.
Moreover, this means that the US and Nigeria-based fintech will be able to enter the Kenyan market through this deal.
“During merger analysis, and in order to determine the impact that a transaction will have on competition, the Authority identifies the relevant product market as well as the relevant geographical market.”
“The relevant product market comprises products/services that are interchangeable or substitutable by the consumer due to their characteristics, prices, and/or intended use,” stated CAK in part.
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About Moniepoint Inc., the US-based Fintech
Moniepoint Inc. is a US-incorporated fintech company with subsidiaries in Nigeria.
However, its subsidiaries include TeamApt Limited and Moniepoint Microfinance Bank Limited, both active in Nigeria’s digital banking space.
On the other hand, Sumac Microfinance Bank, founded in 2002, operates as a deposit-taking microfinance institution in Kenya.
Its services include financial leasing, insurance agency and brokerage, deposit-taking, lending, money transfer services, and forex trading.
According to CAK’s merger analysis, the transaction is not expected to distort the competitive landscape of the microfinance sector in Kenya.
“Sumac is ranked as a medium player with a 4.3% market share. This will not change as Moniepoint Inc currently has no operations in Kenya.
“Therefore, the structure and concentration of the microfinance market will not be affected,” CAK explained.
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Microfinance Banks in Kenya
As of December 31, 2023, Kenya had 14 microfinance banks categorised into three peer groups.
Large microfinance banks (above 5% market share), medium (1%–5%), and small (below 1%).
According to CAK five banks dominated the market with a combined share of 83.8%, led by Faulu MFB (31.2%) and Kenya Women MFB (29.1%).
Sumac was among six mid-tier institutions with a total market share of 15%, according to the Central Bank of Kenya’s 2023 report.
CAK indicated that it also considered the transaction’s impact on public interest. No red flags were raised.
“Premised on the foregoing, the proposed transaction is unlikely to result in a substantial lessening or prevention of competition in the market,” the Authority concluded.
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