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ADVERTThe founders of Kenyan fintech company Flexitech Group Limited, the operator of FlexPay, have been arrested over allegations that Sh31.2 million belonging to a major retail chain was diverted for personal use, deepening scrutiny of the startup after months of customer complaints over delayed withdrawals and refunds.
Directorate of Criminal Investigations (DCI) detectives arrested FlexPay directors Martin Kariuki Maina and Johnson Gituma Mwangi in Roysambu, Nairobi, as investigators widened a probe into the alleged theft.
According to the DCI, the two were acting as agents of an unnamed retailer and had been entrusted with money collected from customers who purchased goods and collected them from various branches.
The funds, investigators allege, were supposed to be remitted to the retailer but were instead diverted by the suspects, allegedly in collaboration with other individuals who remain at large.
The two are expected to be presented before the Milimani Law Courts and charged with stealing by agent under Section 283(b) of the Kenyan Penal Code.
ADVERTThe arrests mark a significant setback for a fintech that once positioned itself as an innovative alternative to conventional consumer credit and had attracted international investor attention.
They also come at a particularly sensitive moment for FlexPay, which has faced mounting complaints from some customers who say they have struggled to access savings, obtain refunds or get timely responses from customer support.
Recent customer reviews cited by TechCabal include complaints about withdrawals taking substantially longer than expected. One customer reportedly said a Sh15,000 refund requested in June had not been processed by July, while other users complained that withdrawals and refunds were taking weeks.
The customer complaints, however, are separate from the DCI investigation into the Sh31.2 million allegedly diverted from the retailer. Investigators have not indicated that the two matters are connected.
That distinction is important as the criminal investigation unfolds.
FlexPay built its business around a relatively simple proposition: save first, buy later.
Instead of encouraging consumers to borrow money to purchase expensive goods, the platform digitised the traditional lay-by model, allowing customers to pay for products in instalments before taking possession.
The company subsequently expanded into goal-based and group savings through products such as FlexPay Goals and FlexPay Chama.
At its peak, the model offered FlexPay an opportunity to tap into a huge African consumer market where access to conventional credit can be expensive or limited.
By September 2023, the company said it had more than 600 merchant partners and had served more than 200,000 customers.
FlexPay had also attracted funding from investors including Acacia Group, LoftyInc, Expert Dojo, Google Black Founders Fund and Renew Capital. The company said it had raised about $785,000 and was exploring expansion into Uganda and Nigeria.
The startup’s appearance in TechCrunch’s Startup Battlefield 200 in 2023 further raised its profile within Africa’s rapidly expanding technology ecosystem.
Gituma was identified by the company as its co-founder and chief operating officer.
But the latest investigation highlights one of the central challenges facing fintech companies handling consumer and merchant funds: trust is as important as technology.
A digital savings platform can grow rapidly when customers believe their money is secure, transactions are transparent and withdrawals will be honoured promptly. Conversely, delays, poor communication or uncertainty over the movement of funds can quickly erode that confidence.
For FlexPay, the allegations now place that trust under an even brighter spotlight.
The DCI has stressed that its investigation is continuing and that other suspects believed to have been involved are still being pursued.
The founders’ arrest is therefore not a conviction, and the allegations will have to be tested through the Kenyan judicial process.
But for Kenya’s fintech industry, the case is already a reminder that rapid growth, prominent investors and an innovative business model cannot substitute for strong financial controls, transparent operations and customer confidence.
As investigators trace the alleged Sh31.2 million and customers continue to seek clarity over delayed withdrawals and refunds, the questions facing FlexPay extend beyond one criminal investigation.
They go to the heart of what makes a fintech viable: whether customers, merchants and investors can continue to trust the platform with their money.
