Lending Sh1 Million, Getting Back Sh100,000: The Lipa Later Autopsy Every African Founder Should Read
Eric Muli has done something rare for an African founder: explained, in public and in detail, exactly how his company died.
Lipa Later was not a small failure. Launched in 2017 as a digitized buy-now-pay-later service, it issued $100 million in credit at its peak, served nearly 1 million customers, and employed over 200 people across Kenya, Rwanda, Uganda, and Nigeria. It raised $16.6 million across multiple rounds. In March 2025, it entered administration. Muli’s post-mortem, given this week, is the most useful document the East African credit sector has produced in years.
The Model Ate Capital by Design
Buy-now-pay-later has a structural appetite: the company pays the retailer immediately and waits months for the customer to pay it back. Every new customer is a new cash outflow. Growth does not relieve the pressure but multiplies it. The model only works while fresh capital keeps arriving, and when African startup funding collapsed, the first half of 2024 brought just $780 million continent-wide, down 57% year-on-year and the lowest since late 2020. The music stopped mid-song. A 2023 acquisition of the struggling e-commerce platform Sky.Garden for Sh250 million tightened liquidity further, and a targeted Sh2 billion raise in 2024 never closed.
The Repayment Collapse
Then the post-COVID economy hit the loan book. Muli describes it plainly:
“You find that you are lending Sh1 million, but coming back as Sh100,000 instead of Sh3 million.”
Eric Muli
A credit business can survive thin margins. It cannot survive a loan book returning 10 cents on the shilling.
The Silent Killer Was the Currency
The most transferable lesson in the entire confession is about foreign exchange. Lipa Later borrowed investor funds in dollars and lent in shillings. “When you borrow money in dollars when the rate is Sh100, and you repay it at Sh170, that’s a 70 percent loss,” Muli explains. The business was short its own operating currency, and the macro environment called the position.
This is the same trap that has quietly broken multiple African ventures.
The echo of Koko Networks’ fall is loud here. Dollar liabilities against local-currency revenues is not a financing detail. It is an existential bet on exchange rate stability that no founder controls.
Add misaligned investors. “Their needs and ours were not aligned”, pressuring changes that hurt the model, and a founder who started at 23 and admits the gaps only became visible in hindsight, and the collapse stops looking like bad luck. It looks like a system with 4 simultaneous structural flaws.
The Signal for Builders
Who wins from this story?
The founders who read it.
Currency-match your liabilities or hedge them. Stress-test the loan book against the worst repayment quarter, not the best. Take capital from investors who understand the model’s cash cycle.
And the gap it exposes: the demand Lipa Later served, consumer credit at the point of sale, did not die with the company. Nearly 1 million customers proved it exists. What failed was the capital structure, not the market. The opportunity is BNPL(Buy-Now-Pay-Later) rebuilt on local-currency funding, embedded in merchants’ own rails, with repayment risk priced honestly. Someone will build it. Muli, notably, is already building again: MRE Real Estate, backed by his previous investors.
The market forgives failure. It does not forgive unlearned lessons.
The hardest-won knowledge on the continent is sitting with the founders who have been through the fire. The Business Week Afrika Summit on 1st and 2nd October 2026 is where those lessons change hands.
Builders, operators, and the investors backing the next cycle, in one room. Secure your seat.
#TwendeBWA