Two directors of Flexitech Group Limited, the company behind Kenyan save-now-buy-later fintech FlexPay, have been arrested over the alleged theft of KES 31.2 million ($242,000) from an unnamed major retail chain. Martin Kariuki Maina and Johnson Gituma Mwangi were taken into custody in Roysambu, Nairobi, by detectives from the Directorate of Criminal Investigations. The arrests add further scrutiny to a startup already facing months of customer complaints about delayed withdrawals and product delivery.
Background and Allegations
The Directorate of Criminal Investigations said the two directors were acting as agents of the retailer and allegedly collected money from customers who had purchased and collected goods at various branches. The funds, totaling KES 31,213,700.95, had been entrusted to the suspects for onward remittance to the retailer. Detectives allege that the directors, acting jointly with other suspects still at large, diverted the money for their own use in breach of trust.
Arrest and Legal Process
Maina and Mwangi were arrested by DCI officers from the Nairobi Regional Office in Roysambu on Wednesday following investigations into a complaint filed by the retail chain. They remain in custody undergoing processing ahead of their arraignment at the Milimani Law Courts. The two are expected to face charges of stealing by agent contrary to Section 283(b) of Kenya's Penal Code.
Customer Complaints Resurface
The arrests come after sustained user complaints about FlexPay's operations, particularly delays in accessing saved funds and receiving products. Recent Google Play reviews describe withdrawals taking considerably longer than expected and poor customer support responses. In one July complaint, a customer said a KES 15,000 refund requested in June had still not been processed, while others reported waiting weeks after completing savings goals.
FlexPay's Business Model
FlexPay operates a save-now-buy-later model that allows customers to reserve goods from participating merchants and pay in installments before pickup. It also offers goal-based and group savings products and describes itself as a payment facilitation and savings platform rather than a lender or financial institution. The company has said it digitises the traditional lay-by model, earning a five percent commission on products and services sold through the platform.
Company Growth and Investor Backing
Founded in 2017, FlexPay attracted investor attention by arguing that many African consumers need flexible payment options rather than more credit. By September 2023, the company said it had more than 600 merchant partners and had served over 200,000 customers. It had raised $785,000 from investors including Acacia Group, LoftyInc, Expert Dojo, Google Black Founders Fund, and Renew Capital, and was selected for TechCrunch's Startup Battlefield 200 cohort in 2023 while planning expansion into Uganda and Nigeria.
Ongoing Investigations
The DCI's current investigation concerns money allegedly collected on behalf of a retailer rather than the separate customer withdrawal complaints. The agency has not stated whether the two issues are connected. Detectives are continuing to pursue other individuals believed to be linked to the alleged multimillion-shilling theft, while Maina and Mwangi await court proceedings.
The arrest of two Flexitech Group Limited directors marks a significant development for a fintech once seen as a promising alternative to buy-now-pay-later credit in Kenya. While the legal process is yet to determine the validity of the allegations, the case highlights growing concerns about accountability and operational transparency in the sector. The outcome may have broader implications for how savings and payment platforms manage funds entrusted to them by both merchants and customers.
Source: The DCI