Alitheia Capital and Goodwell Investments have announced the first exit of their joint uMunthu Fund: Baobab Nigeria, a financial institution creating meaningful impact in sub-Saharan Africa by providing inclusive banking services to individuals and MSMEs in underserved areas.
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.
