Watu, a Kenyan asset-financing company that provides lease-to-own motorcycles and smartphones across Africa and Latin America, has become the first recipient of financing from the Lendable Transportation and Energy Fund, a $200mn blended-finance vehicle anchored by Shell Foundation and the UK government and designed to mobilise private capital into clean transportation and energy businesses in emerging markets.
The fund, which secured $135mn at its first close in December 2025, aims to reach $200mn by mid-2027. Its structure relies on first-loss capital provided by Shell Foundation — supported by the UK Foreign, Commonwealth & Development Office — to absorb initial losses and reduce the risk exposure of senior investors, thereby attracting institutional finance into markets that have historically struggled to access commercial capital.
For Watu, the LTEF financing will support the expansion of its electric motorcycle lease-to-own business to approximately 1,000 vehicles per month, according to the fund’s announcement. The company has already financed more than 8,000 electric vehicles since entering electric mobility in 2021, operating across Kenya, Uganda, Rwanda and Tanzania. Lendable has partnered with Watu since 2017, providing a $1.5mn debt package that has since grown into a relationship involving more than $65mn in financing, according to ImpactAlpha.
The Structure of Catalytic Capital
The LTEF’s architecture reflects a broader push in development finance to use philanthropic and public money not as a substitute for private capital but as a catalyst for it. Shell Foundation’s investment anchors the fund’s most junior tranche, meaning it absorbs losses before senior investors face any exposure. This first-loss position is designed to make the fund’s risk-return profile palatable to institutional investors who might otherwise avoid emerging-market climate assets.
The International Finance Corporation, FMO, SIFEM and several family offices are among the fund’s other investors, anchoring its senior and Class A tranches. The IFC alone committed $86mn to Lendable’s two new funds, according to a separate announcement from the asset manager.
“Too many businesses delivering climate solutions in emerging markets struggle to access the financing they need to scale, despite strong demand and clear potential to improve livelihoods while reducing emissions,” said Nick Jones, Head of Financial Solutions at Shell Foundation. “By anchoring the Lendable Transportation and Energy Fund, we are helping to demonstrate how catalytic capital can unlock significantly larger pools of private investment into sectors that are critical to an inclusive low-carbon transition.”
Lendable, a London-based technology-enabled investment firm managing more than $1bn in assets under advisory, uses its proprietary Maestro platform to assess credit risk, monitor assets and verify financial and impact performance. The firm was founded by Daniel Goldfarb and Dylan Fried with an initial focus on pay-as-you-go solar financing in Africa before pivoting to fintech lending. LTEF represents a return to that original mission of asset-backed lending for sustainability solutions.
Watu’s Business Model and the Electric Mobility Bet
Watu, founded in 2015 by Latvian entrepreneur Andris Kaneps, has grown into one of the largest financiers of motorcycles and mobile phones across Africa. The company operates in eight African countries including Kenya, Tanzania and Sierra Leone, as well as Mexico and Brazil, and has originated more than 7 million loans since inception. In 2025, Watu reported a net profit of KES 4.8bn ($37mn), a fourteen-fold increase from the previous year, on revenue of KES 28.3bn ($219.2mn).
Its core business model links loan repayments to daily earnings, with customers paying in small amounts over up to 24 months. This approach has proven particularly suited to the boda boda sector — the motorcycle taxis that are ubiquitous across East Africa and serve as a critical source of income for millions of riders who lack access to formal credit.
Watu’s expansion into electric motorcycles, however, represents both an opportunity and a challenge. The company financed 2,193 electric vehicles in 2024, a 108 per cent increase from 2023, and has set a target of 5,000 electric vehicles for 2025. The Kenyan government’s new E-Mobility Policy, launched in 2026, has been welcomed by Watu as a “game-changer” that provides the clarity needed to scale electric vehicle adoption.
But the electric motorcycle market in Africa remains at an early stage. While the segment expanded from fewer than 1,000 units in 2020 to approximately 70,000 units in 2025, that figure represents a fraction of the continent’s overall motorcycle sales, which exceed 2 million units annually. Electric motorcycles still cost more upfront than their petrol equivalents, and charging infrastructure remains limited outside major urban centres.
Watu’s CEO Erick Massawe has acknowledged these constraints, stating that the company’s approach to e-mobility is anchored in “long-term sustainability and inclusive growth” rather than rapid expansion at any cost.
The Broader Climate Finance Gap
The LTEF’s first investments — Watu in Africa and a $5mn facility to Metafin, an Indian lender financing solar photovoltaic systems for rural enterprises — are intended as demonstrations that climate-focused businesses serving underserved communities can deliver both impact and commercial returns.
The scale of the challenge they address is considerable. Africa receives only about 3 per cent of global climate finance despite hosting 20 per cent of the world’s carbon sinks and contributing less than 4 per cent of global greenhouse gas emissions, according to the United Nations Economic Commission for Africa. African countries require an estimated $143bn to $277bn annually to meet their Nationally Determined Contributions under the Paris Agreement, but current financing flows fall far short. Private financing comprises only 18 per cent of overall climate financing on the continent.
Daniel Goldfarb, Lendable’s Executive Chairman and Co-founder, framed the gap in stark terms: “There is a critical gap between the capital emerging markets need to decarbonise and the capital currently flowing to them. Asia alone requires an estimated $1.3 trillion a year, while Africa receives just around a quarter of its financing needs”.
Blended finance structures like LTEF are one response to this gap, but they are not a panacea. The model depends on a continued supply of concessional capital from development finance institutions and philanthropic foundations willing to take on risk that commercial investors will not. It also depends on the ability of fund managers like Lendable to identify businesses that can generate both environmental impact and financial returns at scale — a proposition that remains unproven across a broad portfolio.
For Watu, the LTEF financing provides capital to expand a business line that remains relatively small compared with its core petrol motorcycle and smartphone lending operations. Electric vehicles accounted for a small fraction of Watu’s 2024 financing volumes. The fund’s investment will need to demonstrate that the lease-to-own model can work for electric motorcycles at a scale that justifies the concessional capital deployed to support it.
What to Watch
Three factors will determine whether LTEF’s Watu transaction fulfils its promise. First, whether the financing translates into measurable emissions reductions: the fund’s impact thesis rests on displacing petrol motorcycles with electric alternatives, but the carbon benefits depend on the electricity grid’s carbon intensity, which varies considerably across Watu’s African markets. Second, whether the lease-to-own model can remain commercially viable at scale: Watu’s profitability in 2025 was driven largely by smartphone financing, not electric mobility, and the unit economics of EV leasing remain challenging. Third, whether the fund can attract additional private capital beyond the initial commitments: the first close of $135mn is a start, but reaching the $200mn target by mid-2027 will test whether the blended structure is genuinely catalysing commercial investment or merely substituting public money for private risk that remains too high.
The LTEF’s second close, expected later in 2026, will provide the first indication of whether the fund’s model is attracting the institutional capital it was designed to unlock.