More than 12 years after investing in Baobab Nigeria (first via their GWAMDC fund and later uMunthu), Alitheia and Goodwell have now exited the investment.

This is not only a testament to the impressive growth and financial stability Baobab Nigeria has achieved with the support of these two investors, but it also proves the ability of patient capital to drive both financial and impactful returns.

The impact of this now-completed partnership is far-reaching: from operating only in Kaduna state to 16 states in Nigeria, Baobab Nigeria has grown from serving 19,000 customers through a regional network of five branches to serving 230,000 customers through a national network of 38 branches.

Significantly, this was achieved by continuing to serve Baobab’s original, inclusive customer base, with average loan and deposit sizes remaining consistently small throughout the period of impressive growth.

A pioneering partnership: local investor with a local presence 

A joint vision for inclusive financial services was the core motivation for Alitheia and Goodwell’s investment in Baobab (then trading under the name MicroCred) in 2012.

This led to a further investment through the uMunthu Fund in 2015. uMunthu represented the first private capital investors working in northern Nigeria (previously the realm of DFIs). Additionally, Alitheia and Goodwell were the first local, on-the-ground investors in Baobab – prior to this investment there were no Nigerian investors represented on the company’s board.

Since that first investment, Alitheia and Goodwell have poured hands-on, proactive expertise into Baobab. uMunthu supported the bank’s professionalisation, enabling improved governance at board and management level, driving its growth from a unit microfinance institution (MFI) to a top national MFI.

It also advised on financial structuring, and provided access to local networks and a deep understanding of the local business environment.

These improvements drove the bank’s expansion within Nigeria, making it the jewel of the Baobab portfolio and emphasising the potential for sustainable success in emerging markets.

Growing business, growing impact  

At the start of the investment relationship, up to 70% of Nigeria’s overall population lacked access to financial services.

The numbers were even more drastic in northern Nigeria, Baobab’s primary area of operation. Over the past decade, Baobab Nigeria has played a significant role in closing the financial inclusion gap, with government statistics citing that 26% of Nigerians lacked access to financial services in 2023 – a notable improvement.

Since the initial investment in 2012, Baobab has reached 12 times more customers through 7.6 times more bank branches, with the support of 3.2 times more staff. All this whilst the average loan and deposit sizes remained small, at NGN 2 million (EUR 1,250) and NGN 91,000 (EUR 58), confirming Baobab’s ongoing commitment to reaching underserved audiences.

During this time, the company’s balance sheet increased 37 times and its loan book size increased 43.5 times.

The financial value of uMunthu’s investment tripled in naira value during the holding period, truly demonstrating what is possible with patient capital.

This exit marks a new phase for Baobab Nigeria, as uMunthu passes the baton to the holding company. Now fully owned by the international Baobab Group, the Nigerian team plan to keep doing what works: serving the underserved, positively impacting the businesses and communities that have come to rely on – or are just now learning of – Baobab’s inclusive, scalable financial services.

A bright future is an inclusive future 

“This was a bank that was operating out of a single room in northern Nigeria when we invested, and today it is top-three nationally licensed microfinance bank. We’ve walked a journey of leadership, governance, and financial and impactful growth, scaling from small beginnings through to the top-tier national microfinance bank that it is today. We’re proud of what’s been achieved together, and look forward to seeing where the future will take Baobab Nigeria,” shared Tokunboh Ishmael, Alitheia managing partner.

The Alitheia and Goodwell teams are continuing this pragmatic, locally led, hands-on approach with the rest of the uMunthu portfolio, and are optimistic about the potential for additional exits in 2025.

Meanwhile, their uMunthu II Fund is entering its final fundraising phase; it is actively seeking investors who want to be involved in the kind of success and impact Baobab Nigeria has demonstrated.

This rating showcases Baobab Nigeria’s strong financial standing and prudent management practices in Nigeria’s competitive microfinance industry.

This rating which was announced on 3^rd February 2025 highlights Baobab Nigeria’s key strengths, a solid liquidity profile, and an experienced management team.

These factors position Baobab Nigeria as a reliable financial institution dedicated to serving Nigeria’s growing microfinance sector.

Baobab Nigeria has demonstrated resilience and adaptability despite the challenging macroeconomic environment characterized by high inflation and intense industry competition. The bank is actively developing new products tailored to the evolving needs of its customers, ensuring that financial solutions are inclusive, flexible, and aligned with market demands.

Commenting on the rating, Eric Ntumba, AG CEO, Baobab Nigeria

“We are pleased with Agusto & Co.’s affirmation of our ‘Bbb+’ rating, which showcases our commitment to maintaining financial stability and operational excellence. Our strategic focus remains on strengthening our capital base, optimizing our funding structure, and enhancing efficiency to better serve our customers.”

“This is a step further to the impact we are looking to make in the financial services sector. Our services and offerings are strategically focused on improving lives and the economy at large and we are excited to see our impact being recognized.” Eric added.

The bank constantly implements measures to reinforce its financial position and leverages technology and digital solutions to drive operational efficiency, ensuring seamless financial services for its customers.

Baobab Nigeria continues to play a pivotal role in Nigeria’s financial inclusion drive, providing accessible and sustainable financial solutions to individuals and small businesses. This rating further reinforces the bank’s credibility and long-term growth prospects.

With a total loan volume exceeding ₦323 billion, Baobab has played a pivotal role in supporting the growth and development of countless businesses, contributing significantly to economic development and job creation in Nigeria.

This is a statement of the company’s mission to empower small businesses in Nigeria.

“At Baobab, we place our customers at the heart of our strategy and enhance more ways to build a sustainable financially inclusive society,” said Eric Ntumba, AG CEO, Baobab Nigeria. “These numbers reflect not just loans but opportunities for growth, innovation, and resilience for not only our customers but the society at large. Every loan we disburse shows our dedication to empowering individuals and businesses”

He further commented,

“In a time like this, seeing business ideas come alive is what we look forward to achieving at Baobab. Granting credit facilities to small businesses across Nigeria sets the country on a path for advancement and development and this is one key role we desire to fill in the financial services sector.”

The impact of these loans has been felt across diverse sectors, from agriculture to commerce, trading, and transportation, helping individuals in the various sectors advance in their endeavours as well as impacting the Nigerian economy.

Speaking on this significant impact, Dapo Ikupolati, chief business officer, Baobab Nigeria said,

“We remain committed to building a financially inclusive Nigeria, one loan at a time.  It is one of our goals to continue to expand our offerings to reach thousands of Nigerians seeking a better tomorrow. Last year 2024, we had a volume of over N92 billion loans disbursed and this shows how far we are willing to go to impact small businesses across Nigeria.”

Baobab Nigeria has consistently demonstrated its dedication to financial inclusion by providing tailored financial products and services that cater to the unique needs of MSMEs.

The bank’s focus on customer satisfaction, combined with its innovative approach to lending, has enabled it to build strong relationships with its clients and establish itself as a trusted partner in their growth journeys.