It’s Tuesday, and today we’re diving into Lupiya, a Zambian fintech startup. Founded in 2016 by Evelyn Chilomo Kaingu and Muchu Kaingu, the company recently extended its Series A funding round, with the original round led by Alitheia IDF Fund and participation from INOKS Capital SA and KfW DEG.

As with many countries in Africa, Zambia’s financial inclusion journey is somewhat different from what people in European or North American markets would expect. This datapoint illustrates it best.

Between 2015 and 2020, overall financial inclusion rose from 59.3% to 69.4%. However, banking access fell from 24.8% to 20.7%.

So how did inclusion rise? Mobile money access skyrocketed from 14% to 58.5%. Several providers, including MTN Mobile Money Zambia, Airtel Money, and Zamtel Kwacha, have gained massive share in the market and now, to a large extent, control it.

As a result, there were two broad consequences of how the financial system landscape formed.

1. Traditional banks are an afterthought. In markets where banking has been established for centuries, it’s normal to go to your nearest branch, do your business, and leave. In Zambia, there aren’t that many branches to begin with. It doesn’t make sense economically, since there aren’t enough people to serve, and banks themselves haven’t yet expanded geographically. Hence, there were only 298 branches in Zambia in 2024. There are probably streets in New York City with more.

2. Making digital payments has become the norm. The number of active mobile money subscribers has risen from 3.44 million in 2018 to 12.92 million in 2023. Both transaction volume and value have almost tripled between 2020 and 2023. Importantly, the largest share of value comes from simple e-wallet-to-e-wallet transfers at 60%. Digital payments have also penetrated small businesses. A World Bank study on women-led SMEs found that 71% used mobile platforms to receive payments, and 61% used them to make payments.

With that, we’ve established that while financial inclusion has grown, it has largely happened in the digital realm.

But payments are just one pillar of the financial inclusion pyramid. Another is loans, and here Zambia isn’t performing well.

Most people haven’t accessed loans at all. Zambia boasts just 47 borrowers from commercial banks per 1,000 people. Also, 92% of loans are salary-backed, and in three sentences you’ll know why that’s important.

There are three main reasons for why Zambia in underfinanced.

First, scoring creditworthiness is difficult. Even with the advance of mobile money, most transactions are still cash-based. Combine that with the fact that 76.3% of people are employed informally, and you get a situation where neither individuals nor businesses have much, if any, verifiable financial history. That makes traditional credit scoring close to impossible.

Second, because traditional institutions aren’t set up to serve individuals and SMEs, many turn to informal lending. Interest rates there are extremely high, ranging between 30% and 70%. Others rely on family and friends; in 2020, this was the primary source of loans at 62.9%. But that only works if there is capital within the immediate network, which is often not the case.

Third, and this relates to SMEs specifically, bank requirements are not realistic. Traditional banks require collateral, which many SMEs lack, and often a minimum of three years of operating history. While a degree of caution is understandable, it effectively excludes most small businesses, especially those operating offline, whether that’s a grocery store, a barbershop, or a farm.

Lupiya is now building a product that brings loan access to thousands of Zambians, both individuals and businesses, while fitting local behavioral patterns.

While starting with loans, Lupiya is now positioning itself as an all-in-one financial app.

As loans are still the core of the business, I’ll start there and then move to two other verticals.

Lupiya helps Zambians access affordable loans. It has built a portfolio of loan products targeting different segments and jobs-to-be-done.

Personal loans include several products for the formally employed, such as civil servants, defense forces, and employees of Lupiya’s partner organizations. All of these loans have flexible terms (3-36 months) and are tied to the borrower’s salary. To serve those in need of emergency liquidity, Lupiya offers instant loans. Clients can access up to ~$2,500 with instant approval by providing a National Registration Card, a selfie, and a home address.

Business loans come in four forms:

The core of Lupiya’s lending operations for a long time has been balance sheet lending, where the company borrows from institutional investors and then lends that capital to its customers.

Since 2023, the company has also introduced P2P lending, which brings me to…

From loans, Lupiya has expanded into two other pillars of the financial inclusion stack: investments and payments.

As mentioned, P2P lending is currently the only investment product available to Lupiya’s customers. The company recognized that borrowing capital to lend on its own balance sheet is not sustainable at scale, so it introduced an alternative. The platform allows users to deposit funds and directly choose whom to lend to, while borrowers request loans within the same system.

This differs from traditional microfinance models, where funds are pooled and returns are distributed without clear visibility into how they are generated. Here, investors see expected returns upfront, and borrowers immediately see repayment terms based on the requested loan.

Lupiya has also built wallet functionality, allowing users to send funds to mobile money accounts, make P2P transfers, and move money to bank accounts. Users can also make basic payments, such as electricity and data purchases. The next step is a card product. For this, the company partnered with Network International to enable customers to shop and withdraw funds. This product is currently in development.

Lupiya’s business model, as I see it, is built around broadening access to loan products while at the same time hedging against the risk of financing the least reliable borrowers. That hedging happens in three ways.

The first is scoring. To assess prospective clients, the company uses a model consisting of 200 alternative data points, including mobile phone transaction history and location data. It has become quite common in emerging markets to rely on alternative scoring models, and Lupiya fits that trend well.

The second hedge is serving more reliable loan candidates alongside riskier ones. On the consumer side, that means government employees and partner employees, in other words people with stable, provable income. Serving this audience enables Lupiya to also take on a riskier segment through instant loans. On the business side, there are companies financing inventory or equipment, which means there is collateral behind the loan. That, in turn, gives Lupiya room to finance farmers, who operate in a more volatile and lower-margin sector than, say, manufacturers or retailers.

The third hedge is P2P lending. All loans on the platform are insured. However, the liability for issued loans ultimately sits with the P2P lenders. It is the lender’s choice whether to fund an individual or a business, so it is also their responsibility to assess the risk.

At the same time, the company is broadening loan access and making the process more convenient by keeping it digital and fast.

The company charges interest rates with ranges depending on the loan type with some going as low as 20% and as high as 40%. It also monetizes its investment marketplace through platform fees. There’s a 0.25% monthly tenure fee on active loan investments and a 1% listing fee on the selling price.

The company has served over 120,000 customers.

I would underline two potential issues.

First, the core business. Lupiya operates in a market where formal credit access is limited for a reason. Those constraints put a ceiling on how many borrowers it can realistically serve without taking on increasing levels of risk. The company often mentions expansion into other African markets, but those markets come with their own regulatory environments while facing many of the same structural issues as Zambia. It’s hard to argue that acquiring one million customers in a single country is easier than building the same base across ten countries.

Second, Lupiya has expanded into additional financial products before establishing a large-scale lending business. Given that lending is already capital-intensive and risky, layering additional products on top, especially in an emerging market context, may introduce unnecessary capital strain, increase operational complexity, raise compliance requirements, and elevate execution risk. Lupiya could end up with a more complicated company without the improved economics.

Lupiya is operating in a market where digital-first financial behavior is becoming the norm, while also targeting a segment with limited formal competition. The company is introducing products that align with existing user behavior rather than trying to reshape it, which lowers friction in both acquisition and usage.

It’s also notable how Lupiya has built multiple lending products and financing sources, effectively distributing risk across segments. If one borrower segment underperforms, others can offset it. Similarly, if one source of capital tightens, alternative channels remain available. This diversification provides a degree of resilience that is not typical for early-stage lenders in similar markets.

What’s the one lesson investors and founders can take away from Lupiya?

The thing I keep coming back to is how the company approaches risk. Even in a structurally risky market, it is possible to design a business in a way that does not eliminate risk but contains it.