Kenyan BNPL Startup Wabeh Suspends Operations Amid Rising Defaults
Kenyan buy-now-pay-later (BNPL) company, Wabeh, has halted its operations with vendors as of July, citing the need to streamline its business model. This decision comes amidst increasing reports of customer payment defaults, strained cash flow, and the absence of regulatory authorization from the Central Bank of Kenya (CBK). Wabeh aimed to make smartphone ownership more accessible through flexible payment plans, but is now facing significant challenges.
Mounting Defaults and Retailer Concerns
Wabeh’s business model involved allowing customers to purchase smartphones by making an initial deposit and then repaying the remaining balance through daily, weekly, or monthly installments. However, the company is now grappling with a surge in defaults. One retailer in Nairobi revealed to TechCabal that less than 50% of the devices sold via Wabeh are being successfully repaid. According to the retailer, Wabeh paid them upfront for the phones, but now faces the uncertainty of recovering those funds from customers. Wabeh partners with both retailers and device manufacturers, with retailers holding the stock. When a customer seeks financing for a phone, Wabeh steps in to provide the credit, typically requiring a 30% upfront payment.
Wabeh’s situation highlights the challenges faced by BNPL companies in emerging markets, particularly regarding risk assessment and regulatory compliance. The company’s future remains uncertain as it seeks to address its operational difficulties and navigate the evolving regulatory landscape for fintech in Kenya.
Keywords
Related Keywords: Kenyan BNPL shutdown, Wabeh closure, Wabeh defaults, BNPL defaults Kenya, Buy Now Pay Later Kenya, Kenyan startup failure, Wabeh business model, BNPL risks Kenya, Fintech Kenya challenges, Kenyan lending crisis
