The exit underscores the substantial growth and financial stability achieved by Baobab Nigeria and highlights the effectiveness of patient capital in delivering both financial returns and meaningful social impact.
A Shared Vision of Financial Inclusion
The investment in Baobab (formerly MicroCred) in 2012 was driven by a shared vision of promoting financial inclusion in Nigeria. Alitheia and Goodwell’s continued backing through the uMunthu Fund in 2015 marked the first instance of private capital investment in northern Nigeria’s financial sector, which had previously been dominated by development finance institutions (DFIs).
As the first local, on-the-ground investors in Baobab, Alitheia and Goodwell brought Nigerian representation to its board for the first time. Their hands-on governance support, financial structuring advice, and access to vital local networks played a critical role in transforming Baobab Nigeria from a single-unit microfinance institution (MFI) into one of the country’s top-tier national MFIs.
Reflecting on the Journey
Tokunboh Ishmael, Managing Partner at Alitheia Capital, reflected on the transformative journey: “This was a bank that was operating out of a single room in northern Nigeria when we invested, and today it is a 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.”
Driving Financial Inclusion and Business Growth
At the time of the initial investment, an estimated 70% of Nigeria’s population lacked access to financial services, with the situation even more severe in northern Nigeria. By 2023, government data showed that financial exclusion had dropped to 26% nationwide, reflecting significant progress in financial inclusion efforts.
Since the initial investment in 2012, Baobab Nigeria has achieved remarkable growth:
- Customer reach increased by 12 times.
- Bank branches grew by 7.6 times.
- Staff numbers expanded by 3.2 times.
Despite this growth, Baobab Nigeria has remained committed to serving underserved audiences, with average loan and deposit sizes remaining small at NGN 2 million (EUR 1,250) and NGN 91,000 (EUR 58), respectively. During this period, the company’s balance sheet increased by 37 times, and its loan book size grew by 43.5 times.
The financial value of uMunthu’s investment tripled in naira terms during the holding period, demonstrating the potential of patient capital to deliver both financial returns and social impact.
A New Chapter for Baobab Nigeria
The exit of Alitheia and Goodwell marks the beginning of a new phase for Baobab Nigeria. The institution is now fully owned by its international parent company, Baobab Group, which aims to sustain and expand its impact in Nigeria.
Looking Ahead: uMunthu II Fund
With additional exits anticipated in 2025, Alitheia and Goodwell are entering the final fundraising phase for their uMunthu II Fund. The firms are seeking investors eager to replicate the success and impact demonstrated by Baobab Nigeria, furthering their mission of driving financial inclusion and sustainable growth across Africa.