After pushback, Nigeria’s ride-hailing union drops ‘workers’ from its new name
Delays in formalising an amalgamated drivers union focused on one technicality, so the drivers union has chosen pragmatism as a way forward. In January 2023, Nigeria’s ride-hailing drivers merged all existing unions and groups into one body: the Amalgamated Union of App-Based Transport Workers Of Nigeria (AUATWON). It was a critical moment for the drivers whose unionisation efforts date back seven years. As part of formalising the new union, AUATWON applied to be registered with Nigeria’s Ministry of Labour. While the application was supposed to be straightforward, a part of the process allows the ministry to hear objections to a union’s registration. When the union’s application notice was published, Uber and Bolt reportedly objected. Both companies argued that drivers cannot form trade unions because they are independent contractors, not employees. This distinction in how drivers are classified is a legal question that Uber has fought and lost in some jurisdictions. See also: Are Uber and Bolt drivers employees or independent contractors? In reaction to those concerns, the drivers union appears to have made a compromise. The ride-hailing drivers have now changed their name to the Amalgamated Union of App-based Transporters of Nigeria (AUATON), dropping the contentious ‘workers’ tag. The drivers still consider this a victory. AUATON can picket, ask for their rights and organise appropriately. The general secretary of the Amalgamated Union of App-based Transporters of Nigeria (AUATON), Ibrahim Ayoade, told TechCabal this morning that the victory was a hard-fought battle. “I can recollect where the struggle started. The first meeting we had was at YabaTech in 2016. Our second meeting was in the national stadium, and since then, it has been filled with ups and downs.” Finally the 1st App-based union in Africa get it certificate from @LabourMinNGGlory be to God, we started this struggle since 2016 lead by me the journey isn’t easy but today our efforts is now crown.Congratulations to App-based workers in Nigeria, Africa and Globally pic.twitter.com/qL6H4DMrPv — Ayoade Ibrahim (@maiwega) August 19, 2023 Ayoade said with the approval of AUATON from Nigeria’s Ministry of Labour, the union would have a broader outlook. Ayoade says the name came after a lot of research, but the essence of the change is to extend the union beyond just drivers to everyone in the gig economy involved in the transport business. According to him, the name is a “win-win” and the first time in the history of gig workers in Africa that a union would represent the industry globally. The national treasurer for the Union, Jolaiya Moses, said on a separate call “We are done with registration as far as the trade union act is concerned.” AUATON is open to collaboration The next stage is a collaboration between the app companies and drivers. Ayoade says the union wants better driving conditions for transporters. “A union is not about bringing any company down, whether it is Uber or Bolt. It is a matter of understanding. If these app companies are doing well, we will do well. Our members will earn more money,” he said.
Read MoreSouth Africa is proposing a change in how remote workers pay taxes and employers will bear the brunt
Proposed amendments in South Africa’s tax law may impose stricter tax requirements for remote workers and their employers. South African Revenue Services (SARS) has shared a draft of the proposed tax administration bill [pdf], that will seek to change how remote workers pay taxes. One of the proposed changes includes removing the distinction between remote and non-remote workers and requiring employers of South Africa-based remote workers to deduct pay-as-you-earn (PAYE) tax. Currently, remote workers pay taxes by declaring their earned income during the tax season, which is usually between the beginning of July and the end of October every year. But SARS has valid concerns that this method of tax collection leads to revenue losses. By switching to a Pay As You Earn (PAYE) model for remote workers, the revenue authority can collect tax deductions directly from employers and increase revenues. In its justification for the proposed new law, the treasury said that requiring PAYE tax would “level the playing field between resident and non-resident employers and ensuring alignment with skills development levies and unemployment insurance contributions.” To efficiently withhold the PAYE tax of South African staff, foreign companies would need to apply for and receive a SARS income tax number, register a branch company within South Africa, and register for Skills Development Levy (SDL) and Unemployment Insurance Fund (UIF) contributions. Some labour and tax experts state that these complex demands might prevent international companies from considering South African personnel for remote work opportunities. South African remote workers are already facing scrutiny by foreign employers. The country’s rolling blackouts, also known as loadshedding, have led to employers questioning their likely impact on the productivity of SA-based remote staff. The new regulations will add to the challenges and make it even harder for workers to be considered for remote opportunities. The proposed amendments are currently open for commentary from the general public, with that process expected to conclude on 31 August 2023, after which the final bill will be released for tabling in parliament.
Read MoreUnderstanding the opportunities and challenges of building in pre-emerging markets
Moonshot by TechCabal is the conference that will bring together Africa’s tech ecosystem in person to network, collaborate, share insights and celebrate innovation. Join us in Lagos on October 11 and 12. In this article built around the conference, founders of Union54 and Cashlinq share insights on the opportunities, challenges and future of building in pre-emerging markets. According to Perseus Mlambo, founder and CEO of YC-alumni fintech Union54, the decision to choose Zambia as the startup’s first market was driven by the promise that the pre-emerging market held. Before Union54, Mlambo had founded Zazu, a fintech whose flagship product was a debit card connected to a mobile app which enabled users to understand how they were spending money. “Over time [with Zazu], we started to realise that the problem we had been solving in Zambia was also present in other markets across the continent. So we developed Union 54 as an API to help other fintechs and non-banks, to be able to issue debit cards,” said Mlambo. By using a pre-emerging market like Zambia as a sandbox to solve a continent-wide problem, Mlambo and his team built Union54 into one of the continent’s foremost startups, with over $15 in raised funds and partnership with Mastercard. The intricacies of pre-emerging markets By definition, a pre-emerging market is a country that is more established than the least developed countries (LDCs) but still less established than the emerging markets because it is too small, carries too much inherent risk, or is too illiquid to be considered an emerging market. Tendai Mugovi is another entrepreneur building in an emerging market. He is the founder and CEO of Cashlinq, a Zimbabwean fintech offering core banking services via a banking-as-a-service model. The startup also has operations in Zambia. For him, the decision to launch in a pre-emerging market like Zimbabwe was driven by the fact that it was a country where the founding team members had been operating and had, over the years, built a good reputation. Additionally, it was easier for the banks to go with Cashlinq as they knew how good and experienced our team was. Moonshot: Africa should not play catchup with AI regulation Mugovi points to the numerous advantages of building in a pre-emerging market. These include less competition, more affordable talent, and the fact that consumers with less disposable income in such markets are more receptive to trying out new affordable solutions. “Pre-emerging markets offer a great opportunity to build a great product that can then be shipped to emerging markets. The opportunity to build a great product comes mainly from the following key realities in pre-emerging markets,” he added. Despite the vast number of opportunities and advantages of building in frontier markets, they also come with their set of unique challenges. For Mugovi, these include inflation and unstable currencies, lack of potential investors, regulatory bottlenecks as well a small market size. “It’s difficult to build a great business in a single pre-emerging market. This is a problem we knew from day one, and we have always had a multi-country strategy that is paying off. We developed Cashlinq with ISO standards that make it easy to connect in any country easily. For instance, in Zambia, we connected to the national payment infrastructure within 3 weeks,” Mugovi told TechCabal. On the future of emerging markets in Africa For Mlambo, the future of pre-emerging markets lies in the continent’s ability to address the challenges that entrepreneurs building in these markets face. One way to do this, he adds, is to make it easier to facilitate intra-innovation between pre-emerging markets. “There needs to be greater care placed into supporting cross-country entrepreneurship between such markets. This will prevent the replication of efforts when startups are trying to scale between these markets. There needs to be harmonisation with regards to regulations, and other factors to make it easy for startups to operate in more than one such market,” Mlambo told TechCabal. He believes creating incentives for entrepreneurs to build in such markets would also go a long way. These can include funding as well as business education opportunities for aspiring entrepreneurs. Mugovi adds that to ensure success when building in pre-emerging markets, innovators need to leverage the aforementioned advantages while also using the lean startup model to manage costs and build a startup that will survive with or without venture funds. “I think pre-emerging entrepreneurs need to understand how investors function and avoid ridiculous valuations just because they are similar to a start-up in Kenya which raised those figures. Pre-emerging markets have more risk and if that reflects in valuations, I think the investors might even get more ROI in these markets and they would be more interested,” he added. Additionally, to address the lack of investments issue, he believes leveraging the diaspora could go a long way in helping startups secure funding to seed and scale their innovations. “It’s easy for a Zambian in the USA to invest in a Zambian start-up because they are more likely to understand the problem, impact, culture, etc. At Cashlinq we received our initial investment from Zimbabweans in the diaspora and the process was easy because some of the risks that foreigners will be afraid of are just an imagination far from the truth,” he concluded. With pre-emerging markets making up the majority of most markets in Africa, the value that can be unlocked by entrepreneurs who tackle these markets is large. One remaining stumbling block is the numerous challenges cited above, which can be addressed through collaborative efforts between founders, government, investors, as well as the diaspora. Did you enjoy this article? 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Next Wave: Known for financial services, Mauritius wants the tech brand
Cet article est aussi disponible en français <!– In partnership with –> <!–TopBanner First published 20 August 2023 Having a concentration of mature technology players but very little startup activity is precisely why Mauritius makes my list of interesting technology ecosystems to review. It is easy to dismiss Mauritius’s technology arena as simply a corporate IT and business process outsourcing world instead of a startup ecosystem. But that perception has too many blindspots. The island nation may house more business process outsourcing firms than what qualifies as a startup. But it is certainly not a laggard. It has just being too concerned with regular business administration, its bread and butter, versus pursuing innovation on its shores. And it knows this. Hosting some of Africa’s largest IT infrastructure players is a flex, but Mauritius wants more. And it wants this “more” to extend and enable its robust financial services sector. Mauritius is one of Africa’s richest countries. But it did not start out that way. In a paper published seven years before Mauritius secured independence from colonial Britain, James Meade, the Nobel Prize-winning British Economist described Mauritius as an “outstanding example of a mono-crop economy”. Like Meade, Trinidadian-British writer Vidiadhar Naipaul saw no prospects for a country where only “sugar cane and sugar cane ending in the sea” was the only source of economic activity. In order: (1) Painting by Raouf Oderuth showing indentured Indian labourers arrive Mauritius (Licence CC BY-SA 4.0) (2) Painting by Raouf Oderuth (Source: Wikipedia). (3) Port Louis at night (Source Wikipedia – CC BY 2.0) GIF by Abraham Augustine In 1968, when it gained independence, Mauritius boasted a stunning per capita income of only $350. The majority of the population were indentured workers who had come from India to work in the plantations after the abolishment of slavery in the 1830s led to a labour shortage. Creoles—mostly descendants of former slaves, Franco-Mauritians (the small class of French-descended land-owners) and a tiny Chinese minority made up the rest of the population. For Naipaul, writing his 1972 essay, The Overcrowded Barracoon, Mauritius was a volatile hodgepodge not destined for greatness or even middling. Today, the per capita income in Mauritius is just over $10,000 (or about $23,000 in purchasing power parity terms). One of the highest in Africa. From sugar to “pan-African tech” center The startup funding amount bellies what is possible. | Infographic: Ayomide Agbaje — TechCabal Insights. From an economy built on sugar and textiles exports and tourism, Mauritius is now synonymous with financial services. But it also has a strong manufacturing sector (courtesy of aforementioned suger and textile industry) and is a significant business outsourcing hub in addition to hosting a luxury real estate market. With 87% of the country covered by high-speed internet and a smartphone penetration that rivals that of any other African country at ~80%, the country is clearly not a greenfield. But there is a difference between using technology and creating it—or at least hosting the people that create it. To this end, there is no shortage of government-run or designed “digital economy” or “digital innovation” programs. There is a central bank digital currency in the works. A fintech promotion agency and a regulatory sandbox targeting blockchain applications. A revamped research council known as the Mauritius Research and Innovation Council (MRIC) is also in a race to fulfil its mandate to search for and fund innovative ideas in robotics, blockchain, AI, and cloud computing. And no, that mandate predated this year’s AI frenzy. This tech ambition is not exactly new. It started in earnest 22 years ago. In 2001 construction started on Ebène Cybercity, a 64-hectare technology park to serve as the centre of the country’s then fast-growing IT sector. IT in the early 2000s was telecoms, subsea cables, data centres and such like. It is also home to AFRINIC, the regional internet registry for Africa and the Indian Ocean region. But in 2001, when the idea of tech hubs or even smart cities as the larger versions are known today, was not in the lexicon of most African governments. But Ebène Cybercity was not designed to make Mauritius attractive to a technology ecosystem from across Africa. In 2001 most African countries were just at the beginning of the mobile telephony boom curve. Instead of a tech park, Ebène slowly became the house of many of the financial services firms in Port Louis that struggled with traffic congestion in the capital city. Especially as the financial services sector began to take off and dominate the business profile of the island. Partner Message Did you know that you can embed financial services with SeerBit Alpha? No??? Well now you do! Say goodbye to developmental stress and hassles, and launch your fintech products faster when you build with SeerBit Alpha. Click here to learn how you can add fintech to your product As a technology ecosystem profile begins to mature in Africa, Mauritius’ leadership and policymakers are seeing an opportunity to redefine the island by making technology one of the country’s economic descriptors. A few stumbling blocks to clear Over the years, successive governments in Mauritius have pursued an economic diversification program so that no one economic sector is too much of an Achilles heel. But some of that reform agenda has lost its steam. In addition, the crowded marketplace of business process outsourcing firms is gaining a reputation for bait and switch tactics that is weighing heavily on investor and entrepreneur interest. Especially younger and typically naive investors and entrepreneurs unfamiliar with navigating high finance. This market for fees contrasts sharply with the type of environment that can foster startup activity. The result is that while the financial services sector is still going strong, it is also losing what competitive appeal—even if only slightly—it might have had years back, to places like Dubai. So much so that even Mauricien corporate services firms are increasingly setting up outside to serve clients through other financial hubs. Partner Content: Read how Kippa’s founder and president,
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👨🏿🚀TechCabal Daily – Hey BDCs
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning ICYMI, venture funding soared to $916 million in Q2, fueling innovation across the continent. And interestingly, energy startups are now leading the pack, securing a massive $486.9 million. What’s happening with fintech startups? Is West Africa still the go-to destination for investors? We’ve answered these questions in our State of Tech in Africa, Q2 2023 report. Download the report here to find answers and more. In today’s edition Patricia converts users’ assets into tokens Twiga lays off 283 employees Nigeria reinstates BDCs Rethinking energy accessibility in Africa The World Wide Web3 Event: NTICE Expo 2023 Opportunities Crypto Patricia converts users’ assets into tokens Last week, Nigerian cryptocurrency exchange Patricia converted its user assets into its newly minted Patricia Token (PTK). The move came as part of the relaunch of its app, Patricia Plus, which was originally launched in April 2023. Per the company, the move is a way to protect customer funds. The company noted that the PTK token is backed by the US dollar and that 1 PTK is equal to $1. Customers who had their funds converted to PTK will be able to access them through the Patricia Plus app. Unfortunately, it appears that users were not informed of the conversion beforehand. The question on many minds is if customers will be able to access their funds now. Hanu Fejiro, CEO of Patricia ICYMI: Earlier in May, Patricia revealed that it suffered a hack in January 2022 which cost it nearly $2 million. Patricia partially froze withdrawals after the 2022 breach, allowing customers to deposit funds but not move them from wallet to wallet. Instead, Patricia offered to buy those coins from customers and pay them cash to manage the situation. This workaround continued until March 2023. By April 2023, the company launched Patricia Plus, its new app which had no withdrawal restrictions, which triggered a bank run and led to a deficit of 75 bitcoins. The company was then forced to reinstate the freeze in May 2023. Since then, customers have been unable to access their assets. And now, Patricia has converted it all to the new PTK. An unstable token? Some experts have raised concerns about the legality of Patricia’s move and the stability of the PTK token. While some argue that the company cannot unilaterally convert customer funds to a new token, others argue that the token is not backed by any assets and that its value could fluctuate wildly. Zoom out: It is unclear what the next steps will be for Patricia and its customers. At this time, the company has not responded to questions from users or the media. The hack and the subsequent conversion of customer funds to PTK have left a cloud of uncertainty over Patricia and its future. Secure payments with Monnify Monnify has simplified how businesses accept payments to enable growth. We are trusted by Piggyvest, Buypower, Wakanow, Fairmoney, Cowrywise, and over 10,000 Nigerian businesses. Get your Monnify account today here. Layoffs Twiga breaks off more branches Peter Njonjo, CEO of Twiga Kenyan e-commerce startup Twiga is effecting another round of layoffs. This time, the company will lay off ⅓ of its 850 employees—about 283 employees. This will be the startup’s second round of layoffs. In November 2022, it laid off 21% of its then-workforce. About 211 employees were let go and its sales team was shuttered. In June 2023, it confirmed the layoffs to TechCabal but argued that it had not laid off its sales team, but had instead converted them to “free agents”. The company cited an increasingly challenging business environment as the reason for the second round of layoffs. Per CEO Peter Njonjo, Twiga has been “on a transformative path in the last few months to become a lean, agile, cost-efficient organisation, undertaking several interventions to adopt and sustain the business during these economic times.” Employees across its businesses in East Africa will be affected and the company noted that it will compensate them based on appropriate labour laws. Twiga is still in Uganda: The CEO also denied rumours that the startup had exited Uganda. “There is no closure of operations, we continue to operate in Uganda, and our farm is operational,” said Njonjo. When asked how Twiga is rebuilding confidence among investors and customers, Njonjo responded, “Our investors are fully supportive of this transformation with the objective of Twiga continuing to provide affordable goods and services to our customers into the foreseeable future.” Economy Nigeria reinstates BDCs Image Source: Zikoko Memes Nigeria’s central bank is bringing winds of change. Last week, the country’s apex bank ended a two-year ban on foreign exchange (FX) sales to Bureau de Change (BDC) operators. ICYMI: In 2021, ex-governor of the Central Bank of Nigeria (CBN) Godwin Emefiele halted the sale of FX to BDC operators. At the time, the bank accused BDC operators of speculative, rent-seeking behaviour, involvement in money laundering activities and illegal FX trading. And now? The apex bank believes lifting the ban will help ease the strain on exchange rates. In its announcement, it noted that when BDCs buy and sell FX, the prices should be within 2.5% more or less than the average rate from the previous day. Following this announcement, the naira experienced a surge in value. By Friday morning, it traded at ₦855/$1 on the unofficial market and around ₦744 on the official market. Monitoring BDCs: The CBN has said that it will be issuing new guidelines for BDCs in the coming days. The guidelines will set out the specific requirements that BDCs must meet in order to be eligible to buy and sell FX. The CBN will also be monitoring the activities of BDCs closely to ensure that they are complying with the new guidelines. The bank has said that it will not hesitate to take action against any BDCs that are found to be violating the rules. TC Insights Rethinking energy accessibility in Africa Despite
Read MoreExclusive: Twiga Foods lays off 283 employees citing tough business environment
Twiga Foods has let go of a third of its employees. Contrary to rumours, the company has not shut down its operations in Uganda. Twiga, a Kenyan B2B e-commerce food distribution platform, will lay off a third of its 850 permanent employees, citing an increasingly challenging business environment. Twiga’s CEO Peter Njonjo told TechCabal that Twiga has been “on a transformative path in the last few months to become a lean, agile, cost-efficient organisation, undertaking several interventions to adopt and sustain the business during these economic times.” To this end, Twiga reviewed its operating model and cost to “ensure organisational structure is fit for purpose.” Njonjo also denied rumours of the closure of Twiga’s Ugandan operations. “There is no closure of operations, we continue to operate in Uganda, and our farm is operational,” said Njonjo. Yet, the latest layoffs will affect employees across all markets. An estimated 283 people will be made redundant, and Twiga said they would be compensated according to labour laws.“ In June, TechCabal reported that Twiga adjusted its commercial model, ditching its internal sales team in favour of independent retained contractors based on their performance. It points to a company looking to cut costs wherever it can. “The business has undertaken strategic operating adjustments to enhance its service delivery capacity over the past few months. This has been influenced by the current business environment where people’s purchasing power continues to decline,” Twiga said in a statement. Twiga Foods will continue to operate Twiga Fresh, a business vertical launched in May 2022. Backed by a $10 million investment, the product cultivates onions, tomatoes, and watermelons on a 650-hectare farm in Taita Taveta. “Twiga continues to operate its farm, we have been running the farm operation for a year now, and we continue to incorporate our learnings,” Njonjo said. When asked how Twiga is rebuilding confidence among investors and customers, Njonjo responded, “Our investors are fully supportive of this transformation with the objective of Twiga continuing to provide affordable goods & services to our customers into the foreseeable future.”
Read MoreMonths after $2m hack became public, Patricia converts customers’ assets into ‘Patricia tokens’
After freezing withdrawals for users of its platform in response to a breach, Patricia has announced that it converted all current outstanding BTC and naira balances to its token. The retail trading app Patricia has converted the BTC and other tokens their customers own to its Patricia Token (PTK) token. A Friday post announcing its new app, Patricia Plus, described PTK as a stablecoin backed by the U.S. dollar, with 1PTK equal to $1. Yet the big question Patricia’s customers have is if they will finally have access to their funds. In May, Patricia froze withdrawals for users of its platform after sharing that it was the victim of a breach. The company said Bitcoin and naira assets had been compromised and told customers that it had lost an undisclosed sum. Patricia did not share the date of the incident but TechCabal exclusively reported that the breach happened in January 2022 and cost the company $2 million. The return of Patricia Plus Ironically, the launch of the Patricia Plus app in April triggered what closely resembled a bank run. While customers had withdrawal restrictions on the old app, the new app had no such restrictions, and many customers quickly tried to move their funds. Like most bank runs, the retail trading app did not have immediate liquidity to meet those needs. Many customers have been unable to access their funds since April, and the decision to convert customer assets to the company’s stablecoin is an attempt to solve the problem. Yet the move raises many questions, and it is doubtful that this will let customers access their funds. A crypto expert, who asked to be identified by his X handle @samlogic_, told TechCabal, “Their monies will be a worthless token printed out of mid-air. I think the funds are long gone; Patricia has misappropriated customer assets just like FTX.” By failing to keep its customer’s assets safe–the primary duty of a centralised exchange–Patricia fell victim to a breach that has now put it in a place where it will struggle to return its customer’s assets. Its workaround to that problem is to unilaterally convert its customer assets to stablecoins, rightly raising questions of legality. The most likely scenario is that customers who immediately have access to Patricia tokens will quickly attempt to sell the assets to get their monies back. That market frenzy may cause the stablecoin to depeg and return customers right where they started. TechCabal attempted to get comments from Patricia, but there was no response at the time of this report.
Read MoreThe CBN is bringing back BDC operators two years after freezing them out
The Central Bank of Nigeria has shared new guidelines for the sale of FX by Bureau De Change (BDC) operators in the country, ending a 25-month ban. The apex bank is hoping that the new policy will stabilise Nigeria’s FX market. Nigeria’s Central Bank is ending a two-year ban on FX sales to the Bureau De Change (BDC) operators in its newest move to stabilise Nigeria’s volatile FX market. Under ousted CBN Governor Godwin Emefiele, the CBN banned sales of FX to BDC operators in 2021. The apex bank is now hoping BDC operators will ease pressure on the FX market. In a statement published on its website on Friday evening, the CBN said the spread on buying and selling of FX by BDCs will fail within a range -2.5% to +2.5% of the FX window’s average rate from the previous day. The naira jumped this week, exchanging for N855/$1 on the parallel market as of Friday morning and trading at around N744 on the I&E window. In line with the new operational guidelines, the CBN will also require BDCs to submit periodic financial reports on the Financial Institution Forex Rendition System (FIFX). The CBN’s thinking is that BDCs can help increase the supply of FX in the market and ease pressure on the rates. BDCs have traditionally benefited from arbitrage and Nigeria’s multiple exchange windows. The price of BDC licences declined significantly, following news of Nigeria’s move towards a single exchange rate. But CBN’s latest bet will bring these operators back into business. Some observers say that supplying FX through BDCs could potentially contribute to inflation if not properly managed. The CBN’s attempt to unify the FX rates has failed to hit home due to the bank’s inability to meet demand. As a result, the parallel market continued to be the viable source of supply, opening up a significant arbitrage opportunity.
Read MoreNDIC may probe the directors at Eyowo and 182 banks whose licences were revoked
The Nigeria Deposit Insurance Corporation (NDIC), a statutory body that protects depositors’ funds, might investigate the directors of 183 banks whose licenses were revoked to determine if financial malpractice contributed to the revocation. The Nigeria Deposit Insurance Corporation (NDIC) has said that the Inter-Agency Task Force may soon be called to investigate the conduct of the directors of the 183 microfinance banks (MfBs) and Primary Mortgage Banks (PMBs) that have had their licences revoked. Notable institutions within this group are Eyowo and Purple. According to the NDIC, the Inter-Agency Task Force is mandated by the Failed Banks Act to determine if financial malpractice contributed to the shortcomings and eventual shutdown of some of those banks. In May, the central bank (CBN) revoked the licences of these institutions because they had either been inactive, insolvent, failed to render returns, closed shop, or ceased to carry on the type of banking business for which they were licensed for more than six (6) months. Bello Hassan, the managing director and chief executive of the NDIC, hinted at this investigation in Lagos during a workshop arranged by the corporation. He also noted that the agency is already taking legal action against suspected defaulters. “I am aware that 12 prosecution cases are ongoing at various courts, 25 ongoing investigations with the Financial Management Information Unit (FMIU), 11 with the Economic and Financial Crimes Commission (EFCC), and five concluded investigations with the Financial Management Information Unit (FMIU) for advice and prosecution. This is an indication that we are on the right course,” he concluded.
Read MoreDerek Thompson is building Zambia’s biggest e-commerce marketplace
One Christmas, Derek Thompson’s friend was swindled when trying to buy Christmas gifts on Facebook. After this experience, Thompson was determined to provide an alternative solution for people in Zambia and build Gwila. Gwila is one of the first e-commerce marketplaces in Zambia that allows people to sell their products and services, and Derek Thompson is determined to expand into other markets as soon as he can. He believes that Gwila provides Zambian youth with an opportunity to reach a wider market and earn money. According to Thompson, “We’re here to serve the market.” TechCabal: What’s the e-commerce behaviour in Zambia like? DT: Zambians are already accustomed to buying things online. The sad thing is that they typically buy from social media where they frequently get swindled. There are two factors in making sure that they access e-commerce, one being payments and the other being trusted sellers. In terms of payment, we accept mobile money which nearly all Zambians have access to. We don’t want to accept any cards and have decided on mobile money as it is more inclusive and debit cards are more susceptible to fraud. We’ve also got the buyer protection and refund policy which protects the buyers from scams and gives them a timeframe within which they can cancel the order or return the products if they’re not as advertised. It’s not a very mature market right now and so we’re doing all we can to make the buying process less stressful for customers. TC: How good is the logistics industry in Zambia and how does that affect operations at Gwila? DT: We partner with courier companies that do bike deliveries around, and we also have companies that do bulk deliveries across the country. Logistics is not much of a challenge for us because we’re mainly delivering small packages that are easier to move about. Thankfully, we have a pretty good road network in Zambia so that’s not much of a problem for us. TC: What are the challenges that come with building a startup like Gwila? What does it take to be a founder? DT: One challenge we’ve had is funding. It’s not easy to wake up in the morning with a great idea and just find people who automatically believe in your idea and would like to give you money for it. You basically have to fund everything yourself at first and prove that it works for others to see before securing funding down the line. Countries like Nigeria are different because it’s a much more mature market for investing. In Southern Africa, it’s really tough. Another challenge is skill. It’s hard finding the right people to build with you who understand the nascent nature of the online market and know how to speak to the customers. Luckily, I can do a lot of these things because I have a technical background. I’ve consulted for huge brands, across the UK, Europe, the Middle East, and certain parts of Africa, and I understand what it takes to build a product to get it to market to put a team together quickly. I’m lucky in that sense because I’m pretty much able to gather the different skills together and fill in the gaps where needed. TC: Do you see collaborations with other sectors or industries? DT: Absolutely. With the breakneck speed that the technology space is going, and just business in general, everything is about partnerships. We’re focused on partnerships with different sectors, be it logistics, payments, or even new products for our site. We’re already talking about a partnership with telcos for peer-to-peer payments on the platform. TC: How do you onboard vendors? DT: We initially had this huge process for onboarding vendors, which included uploading their IDs and verifying their addresses among other things. We approached this from a security perspective and that made sense. However, we quickly realised that is a bottleneck and makes it difficult for vendors to onboard. Vendors want to sign up and start selling immediately and all of the questions and long processes just discourage them. What we’ve now done is focus on security measures internally. We make it really easy for vendors to onboard meaning that they just go on the portal, fill in the application form which asks for their name, and phone number, and encourage them to set up a store immediately. When they’re on the portal, they register who they are and after going through the process, they can upload a name and logo for the store, and then publish products. Now, what we do, is that we scrutinise products that are being posted. So instead of scrutinising the vendors, we review each product to be sure that it meets our criteria before approving it to be published. From a security point of view, we have put in place measures to protect against fraudulent vendors and one of those is bank-only settlements. So even though customers pay us using mobile money, we settle with the vendors directly to their bank accounts, and after seven days, to be sure that the customer has received their goods without any complaints. We pay into banks to advantage of the KYC. We rely on the banking system to have already done their due diligence so that if there’s any problem with any of the vendors, the bank’s system already has their details. TC: What should be expected from Gwila in the next five years? DT: Right now, we’re serving a local Zambian market but we plan to expand to other African countries. That’s our vision. We want to cover the continent in the shortest time possible while being cognizant of the fact that we need collaborations to do this. In the next five years, we’re going to collaborate with as many sectors as possible to facilitate this. We’re here to serve the entire market. *This interview has been edited for clarity.
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