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Financing for assets such as smartphones and motorcycles is emerging as a strategy to strengthen portfolio quality, reduce default risk, and build more durable digital banking ecosystems across the continent.
After years of chasing breakneck growth through instant microloans and frictionless digital payments, African fintechs are shifting their focus to financing assets that people use to earn a living.
Across Nigeria, Kenya, and beyond, digital lenders are moving beyond short-term cash advances into asset-backed products that fund smartphones for online work, motorcycles for delivery riders, and, in some cases, three-wheelers for transport operators. According to experts, the new bet is that backing income-generating assets rather than consumption offers stronger unit economics, lower default risk, and longer customer lifecycles.
“Over the last decade, most African digital lenders optimized for speed and scale. The model was built on unsecured, high-yield, short-tenor loans priced to absorb significant default risk. That worked in a liquidity-rich environment, but once funding costs rose and investor scrutiny intensified, the structural weaknesses became clear. Asset-backed lending is a logical evolution because it anchors credit to productive capacity, not just cash flow volatility,” says Emmanuel Balogun, a Lagos-based sector analyst.
He notes that instant microloans were effective in driving customer acquisition but often struggled with repeat delinquency and thin margins as competition intensified.
“In many markets, customer overlap across lending apps was extremely high. Borrowers were cycling loans across platforms, inflating portfolio growth but masking systemic credit risk. Financing income-generating assets changes the underwriting equation. You are not just assessing a borrower’s historic repayment pattern; you are underwriting their future earning potential,” Balogun explains.
Nigerian fintech FairMoney is among the clearest examples of this transition. Known for building scale on instant mobile loans, the company has been repositioning itself as a deposit-funded digital bank while expanding into higher-ticket, asset-linked financing, including smartphones and vehicles.
According to Semafor Africa, FairMoney is looking to expand its lending operations to include financing smartphones and vehicles, beginning with motorcycles. In 2025, FairMoney disclosed more than ₦150 billion (about US$108 million) in loan disbursements, reflecting both scale and a broader product mix beyond pure cash advances.
Executives have indicated that deepening customer relationships through financed devices and mobility assets is central to improving portfolio quality and extending lifetime value. According to analysts, unsecured microloans generate high turnover but expose lenders to elevated default risk, particularly during inflationary shocks and currency depreciation cycles that erode household purchasing power. Asset-backed lending alters that risk profile.
“By tying credit to a tangible product that can be repossessed or digitally controlled, fintechs reduce loss given default while increasing loan sizes and repayment periods,” Balogun says.
“Take motorcycle financing for delivery riders. When structured properly, repayments can be aligned with daily earnings and integrated with platform payout systems. That reduces friction and strengthens repayment discipline. It also embeds the lender within the customer’s economic activity, which lowers churn,” he adds.
The model also reshapes customer economics. A financed smartphone or motorcycle becomes a gateway to savings accounts, insurance, payments, and remittance services, extending value beyond a single loan cycle. FairMoney’s repositioning comes amid a broader capital market reset.
African fintech funding peaked in 2021, then declined sharply in 2022 and 2023 as global liquidity tightened and valuations corrected. By 2024, fewer startups were closing deals, and investors increasingly emphasised profitability over user growth. The easy-money narrative that fueled rapid expansion into unsecured microcredit faded.
In 2025, capital began returning in a more disciplined form. According to Disrupt Africa, 54 fintech startups raised funding during the year, accounting for 30% of all funded African tech ventures. Total fintech funding rose 42% to US$693.9 million from US$489.1 million in 2024, marking the first significant rebound after two consecutive years of decline. The sector’s average ticket size climbed to US$12.85 million, up from US$9.59 million in 2024 and US$7.52 million in 2023.
Yet, the rebound tells only part of the story. While total African tech funding jumped 46.2% to US$1.64 billion in 2025, the number of funded startups fell 11% to 178, suggesting capital is becoming more concentrated. Fintech’s share of overall funding slipped slightly to 42% from 43.7%, even as absolute dollars increased. Investors are returning, but they are writing larger cheques to fewer companies with clearer paths to sustainability.
Debt is also re-emerging as part of the mix. Seven fintechs, or 13% of those funded in 2025, raised debt as part of their rounds, nearly double the share in 2024. That funding shift reinforces changes in business models.
“Debt providers demand predictable cash flows and disciplined risk management, conditions that unsecured microloans often struggle to meet in volatile economies,” Balogun says.
Beyond FairMoney, other Nigerian lenders are making similar moves. Carbon has rolled out device financing through its buy-now-pay-later product, allowing customers to acquire electronics through instalment plans rather than relying solely on short-term cash advances.
In Kenya, M-KOPA has demonstrated that asset-backed digital credit can scale to millions of customers. Originally known for pay-as-you-go solar, the company has expanded into smartphone financing and electric motorcycles. In its 2025 impact disclosures, M-KOPA reported unlocking more than Ksh 200 billion (about US$1.5 billion) in credit in Kenya alone, serving millions of customers and financing thousands of electric motorbikes. M-KOPA announced it had sold over 6.4 million smartphones since 2020, including 1.3 million units in 2025 alone. Embedded technology, including remote device locking, helps manage repayment discipline and reduce portfolio risk relative to unsecured lending.
Nigeria-founded Moove offers another variant of the model, providing revenue-based vehicle financing to ride-hailing drivers and underwriting loans based on platform earnings rather than traditional credit scores. Moove has expanded beyond Africa into Europe, the Middle East, and Asia, positioning itself as a global asset-finance fintech rather than a regional digital lender.
“Post-2021, venture capital became more disciplined. Investors are no longer rewarding pure disbursement growth. They are asking tougher questions about cost of capital, portfolio quality, and path to profitability. Asset-backed lending, if executed with strong risk controls, offers a clearer route to sustainable margins,” Balogun says.
Credit: Bonface Orucho, Bird Story Agency
