Techstars Maelle Gavet steps down as CEO; David Cohen returns to lead the company
Maëlle Gavet will step down as CEO of Techstars at the end of May 2024 due to health reasons, ending her almost four year leadership of the global accelerator. She will be replaced by David Cohen, co-founder and board chairman of Techstars. “I will be rooting for all of you from the sidelines and will remain a supporter of #Techstarsforlife,” she wrote. Gavet’s exit comes at a time when Techstars faces difficulties in balancing growth with profitability. Techstars fell short of revenue targets in 2023, leading to cost-cutting measures. This included a 7% staff reduction and the closure of accelerator programs in Seattle, Boulder, Sweden, and others. “I want to thank Maëlle for pouring her passion, blood, sweat and tears into Techstars. But now Maëlle must focus on her health. I speak for everyone at Techstars when I say that we wish her strength and courage as she addresses what is ahead,” Cohen said in a statement. Gavet, who became CEO in 2021, leaves the global pre-seed investment firm after what is believed to be an impressive stint. The company made over 2000 startup investments, 469 of its portfolio companies raised a total of $2.4 billion with 322 of them raising rounds of $1 million or more in 2023. Applications to Techstars programs doubled while the diversity of the founders increased to 25% female founders and 36% black and brown founders. “Techstars is practically in my DNA,” said Cohen, who is returning as CEO after leading the company for 13 of its 17 years. He has been a board member since the company’s inception.
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👨🏿🚀TechCabal Daily – Nigeria has new rules for BDC operators
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning We’ve taken off most of the images in TC Daily over the past month to keep the newsletter short. If, like Osaz from Lagos, you’d like the memes and images back, please let me know at timi@bigcabal.com. And if you prefer the newsletter this way, let me know too. Cheers! In today’s edition Nigeria sets new guidelines for BDC operators Inside BlackCopper’s struggling attempt to disrupt lending Apple accused of using war zone minerals in Congo Nigeria rejigs blockchain implementation committee Microsoft and G42 to build eco-friendly data centre in Kenya The World Wide Web3 Opportunities Economy Nigeria set new rules for BDC operators in Nigeria Bureau de Change operators in Nigeria, over the past year, have seen more than their fair share of action as Nigeria’s apex bank struggled to fix its ailing currency. At least twice—in February and May—the country’s financial crimes watchdog, the Economic and Financial Crimes Commission (EFCC), rounded up forex traders across major cities. The Central Bank of Nigeria, in the past, has partly blamed the BDC operators for the country’s volatile exchange rate. In fact, in March of this year, a year after revoking its two-year ban on foreign exchange (FX) sales to Bureau de Change (BDC) operators, the apex bank started selling dollars to eligible operators. Then four days later, it revoked the licences of over 4,173 operators. Now, the Central Bank of Nigeria (CBN) has new guidelines for BDC operators whose licences weren’t revoked. The revised guidelines outline that Tier-1 BDCs must now have a minimum capital base of ₦2 billion ($1.4 million), while Tier-2 BDCs need ₦500 million ($349,000). Additionally, the application fee for a Tier-1 license is set at ₦1 million ($699) and ₦250,000 ($174)for a Tier-2 license, with licensing fees at ₦5 million ($3,496) and ₦2 million ($1,398), respectively. Tier-1 BDCs are permitted to operate across all 36 states and the Federal Capital Territory (FCT), and they may open franchises nationwide, pending CBN approval. However, the new guidelines also impose several restrictions, prohibiting BDCs from engaging in futures, options, and derivative trading, outward international transfers, receiving international inward transfers, and dealing in crypto assets. BDCs have new restrictions. For forex transactions, BDCs are now restricted to Personal Travel Allowance (PTA), Business Travel Allowance (BTA), payment of overseas medical bills or school fees abroad, payment of professional examination and annual subscription fees, and repurchase of unused naira from non-residents. All existing BDCs are required to reapply for a new license under their chosen tier within six months and meet the corresponding minimum capital requirements. Startups Inside BlackCopper’s struggling attempt to disrupt lending Lending to individuals and small businesses in Nigeria is a $2.7 billion market. Yet, big banks and financial institutions avoid it like a plague. In 2019, Nigerian banks only lent money to about 6.2% of the country’s adult population, leaving a vast untapped—or ignored—market. Digital lenders across the country have built businesses on the premise of closing out this gap and making profits while doing it. However, in lending, giving out funds is just one side of the divide, recovering is an even tougher nut to crack. According to a 2022 report by McKinsey & Company, three out of every 10 loans issued may not be fully recovered. And BlackCopper, a Techstars-backed startup knows that too well. The startup launched in 2020 to provide collateral-free loans to small and medium businesses. The startup disbursed ₦2.1 billion ($1.45 million) in loans to SMEs but was unable to recover most parts of it. Currently, it is trying to recover ₦1.2 billion ($839,000) of unpaid loans and has only been able to recover about ₦200 million ($139,000). Dig deeper into BlackCopper’s attempt here. Moniepoint is Africa’s fastest-growing fintech The Financial Times has ranked Moniepoint as Africa’s fastest-growing fintech based on its absolute and compound growth rate. Read more about it here. Big tech Apple accused of using war zone minerals in Congo The Democratic Republic of Congo (DRC) is teeming with exceptional mineral resources: tin, tantalum, tungsten and gold known as 3TGs. They are found in our electronics such as phones, laptops, DVDs, etc and their origin can be traced to the Democratic Republic of Congo. The Democratic Republic of Congo leans heavily on its extractive mining sector, with this industry generating nearly 46% of its income—accounting for almost 98.9% in 2021. In 2024, the Congo held an estimated $24 trillion in raw mineral deposits, making it the world’s richest country in terms of natural resource wealth. The Southeastern provinces of the country mine over 60% of the world’s cobalt supply. So it’s no surprise that the mining of these minerals became directly linked to financing and perpetuating armed violence. Rebel groups and militias have seized control of many mines, using the profits from selling these minerals to fund their activities. The mining itself is often unregulated and brutal, with reports of forced labour, child labour, and violence against miners. Data from October 2023 reveals at least 400 hundred households have been displaced in Kolwezi, a place well-known for cobalt mining and at least 35,000 children, some as young as six years, are involved in illegal and dangerous mining. To address this US Securities and Exchange Commission (SEC) regulations that require companies to disclose the source, use or trade of these minerals, aiming to discourage armed groups from profiting from their extraction and fueling conflict over them. Big tech companies aren’t sticking to the rules: In April, Apple, despite regulations, was suspected of sourcing minerals from a supply chain that benefits these armed groups and smuggled the 3TGs across the border from the DRC into Rwanda. Lawyers from Amsterdam & Partners LLP who are investigating claims of mineral smuggling wrote to Apple but got no response. Despite sending their questions four weeks prior, the law firm noted in a statement on Wednesday that Apple has yet to acknowledge receipt, let alone provide a response A
Read MoreDRC lawyers claim new evidence shows Apple is using conflict minerals
The Democratic Republic of Congo (DRC) claims it has new evidence linking Apple’s supply chain to illegally exported minerals from the troubled east. DRC is rich in “3T”–tin, tungsten, and tantalum–critical components to manufacture electronic devices like smartphones and computers. US-based Amsterdam & Partners LLP said on Wednesday in a statement seen by TechCabal that new evidence from whistleblowers shows that the iPhone maker benefits from blood minerals–a term used to refer to minerals from war-torn countries. If true, the claims could dent the California-based company’s social and environmental responsibility credentials. “In recent weeks, since the release of the Blood Minerals report by Amsterdam & Partners, we have received new evidence from whistleblowers. It is more urgent than ever that Apple provide real answers to the very serious questions we have raised, as we evaluate our legal options,” said Robert Amsterdam, a partner at Amsterdam & Partners LLP. Amsterdam has claimed that Apple has benefitted from minerals smuggled by armed groups in Easter DRC through Rwanda and Uganda, claims the iPhone maker has denied. Apple has maintained that it has a vigorous due diligence process that keeps smelters and refiners who source 3T from war-torn countries. This is done according to US Securities and Exchange Commission (SEC) regulations that require firms to disclose components that contain conflict minerals. In April, Amsterdam & Partners and Paris-based Bourdon & Associés wrote to Tim Cook, Apple CEO, raising concerns about the company’s supply chain, which they wanted addressed within three weeks. “The absence of a response is an implicit admission that the questions we asked Apple were relevant,” said William Bourdon, partner at Bourdon & Associés. DRC’s mineral-rich eastern provinces have been embroiled in decades of war between armed groups like the M23 rebels and government forces. The region has some of the world’s largest coltan deposits, from which tantalum is extracted.
Read MoreExclusive: Techstars-backed BlackCopper set out to disrupt lending, now it owes investors ₦1 billion
Lending is a tough nut to crack, and Nigeria’s biggest banks, valued at trillions of naira, know this too well. Only 6.2% of Nigeria’s adult population had access to loans in 2019, a measure of how much banks avoid retail lending. Lending to small businesses is the same story; banks avoid it like a plague. Fintech startups saw the opportunity in this untapped market, but turning digital lending into a viable business has been tougher than expected. Without strong incentives to pay back loans, defaults are common and losses can mount quickly. Every lesson in digital lending is expensive. Enter BlackCopper, a Nigerian digital lending startup founded in 2020 to give small and medium businesses collateral-free loans. Despite its bright start and significant press coverage, the startup soon faced an existential crisis: it could not recover over 60,000 loans disbursed to customers. The Techstars-backed startup, cofounded by Olumuyiwa Faulkner (CEO) and Azeez Oluwafemi (CTO) customers falsifed crucial information like addresses during the Know-Your-Customer (KYC) process, allowing them to drop off the radar once they took loans. Some other customers simply cannot repay. BlackCopper is working with loan recovery companies to claw back some of the loans, but Faulkner has no faith in the process. “It is expensive to chase thousands of individuals to return ₦5,000 or ₦10,000. It would have been more feasible if we were chasing down a few individuals owing us large amounts of money each.” The defaults are not BlackCopper’s problems alone. At least 75 investors who made debt investments in BlackCopper in hopes of a return, will take it in the neck for yet another ill-conceived digital lending venture that once talked up the strength of its loan decisions. The company has also laid off about 30 of its 40 employees. The scale of the defaults is staggering and the numbers are distressing. Of the over ₦2.1 billion BlackCopper loaned to customers, it is unclear how much was recovered. Nevertheless, extraordinarily high default rates have led to a ₦1.2 billion debt. Of that amount, BlackCopper has only paid back ₦200 million in the last eighteen months. Faulkner says he has explored several options to repay investors—selling personal belongings, borrowing from his wife’s school fees, and pivoting BlackCopper to generate new income streams. So far, nothing has worked out on the scale required to return the billions of naira owed and his investors are unimpressed. Five investors who spoke to TechCabal say Faulkner failed to communicate the true state of affairs at the company at the start. “He would give one excuse or the other whenever I brought the matter of my payment up,” said one person who invested the proceeds from the sale of her house in the US in hopes of a return. While they waited in vain for returns on their investments, Faulkner relocated with his family to Canada. Some investors viewed it as an attempt to escape responsibility, but Faulkner claims he travelled to Canada for his wife’s education. He told investors after his relocation that their payments were delayed because BlackCopper’s customers were not repaying their loans. To those investors, the most puzzling aspect of Faulkner’s claim was that all the customers who received loans defaulted. “It made no sense, the only way to have 100% non-performing loans (NPL) is through poor risk assessment, poor underwriting, or issuing fraudulent loans,” said an investor who also owns a digital lending startup. Another investor told TechCabal that it is possible BlackCopper didn’t give out any loans to customers and squandered investor funds. “From the data I’ve seen of a company with over 300,000 customers, you can expect anywhere from 40% to 65% loss of NPL in a month,” said Mejero Emmanuella, founder of Yana Finance, a company that provides cashflow solutions to SMEs. But Faulkner denies any foul play, insisting BlackCopper’s NPL ratio was initially between 12-15%. He blamed the inability to pay investors on a “funding mismatch.” While lending needs sufficient long-term capital, he argued that his investors were more focused on the short to medium-term. “In Nigeria when people give you money they benchmark it against the treasury bills and the foreign exchange markets,” Faulkner said. “So if a person gave you the money for six months and the foreign exchange moved in two months, they usually will come back to ask for their money back. This is because, going by the foreign exchange, they could make more than what I am offering to give in a whole year.” Despite all the signs pointing to a shutdown, Faulkner claims he’ll take the company’s “technology and skill set to help other companies build apps and automate processes.” While he claims it could provide the revenue stream the company so badly needs, he also mentions equity fundraising, raising questions about whether Faulkner understands the precariousness of the situation. Time will tell if his confidence is misplaced. Ultimately, Faulkner’s investors will look back on this moment and wonder how the script got so badly mangled. In an environment where VC firms say they back teams and the antecedent of the team leads, it was easy to buy into Faulkner. He counts GTBank, Moniepoint, and Flutterwave as past employers and claims his grandfather Bruce Faulkner, was secretary to Lord Lugard. And like most figures in digital lending, he talks a good game. “50 years from today, when my children ask me what I did to help Nigeria in my youth, I will tell them that I founded a business that helped many Nigerians to thrive,” Faulkner told The Vanguard in a 2022 interview. These days, Faulkner is a more subdued figure and jokes that the burden of a struggling startup has greyed his beard faster than he expected. He’ll give digital lending another go if he gets another chance, he says. “The reason why traditional institutions do not serve these customers is solid and valid, but it can still be done.” More cynical observers will retort that there’s a reason the market was untapped in
Read MoreKenya brings back controversial bill to regulate ICT industry
Kenya has revived the controversial ICT Practitioners Bill, now rebranded as the ICT Authority Bill, 2024. The new legislation aims to regulate its ICT industry by licensing and registering ICT companies and professionals. First introduced in 2016 by the then majority leader Aden Duale, the ICT Practitioners Bill received industry-wide criticism. Critics pointed out that the bill duplicated existing laws and faulted its potential to hinder talented professionals by mandating university degrees. In the end, it did not receive presidential assent. With the reintroduction of the ICT Authority Bill 2024 by ICT cabinet secretary Eliud Owalo, Kenya is again attempting to mandate that companies offering ICT services be accredited by an authority under the ICT ministry. This accreditation will involve meeting minimum technical qualifications, relevant experience, and having the necessary resources—all determined by the authority. The process will also include paying a fee similar to the original bill proposed eight years ago, although the charges were undefined. The costs will be determined by the Authority should the current bill be passed. Despite multiple amendments to the Practitioners Bill, the new ICT Authority Bill carries forward some unresolved issues. For instance, it remains unclear on two key points: the definition of “ICT services” and the “minimum technical qualifications” required by practitioners and companies. This lack of clarity echoes concerns raised during the bill’s previous iterations. “The Authority may revoke a certificate of a service provider, where the service provider ceases to carry on the business with respect to which the certificate was issued; is wound up, liquidated or otherwise dissolved; and at the end of suspension period, the service provided has not complied with any directive offered,” reads part of the proposed bill. A controversial Practitioners Bill In 2018, the ICT Practitioners Bill was revised to introduce certification by the Practitioners Council. Although the amendment no longer required practitioners to have a bachelor’s degree, eligibility remained unclear. Further amendments in 2020 included fines of up to KES 500,000 ($3,800) and jail terms for non-registered businesses, raising concerns about overly harsh penalties. The bill narrowly avoided passage in June 2022, just before the national elections held in August. While President Kenyatta did not sign it into law, the re-emergence of these unresolved issues suggests further debate is likely. Kenyan ICT professionals maintain that the true measure of success often lies beyond formal qualifications. Others argue that the industry rewards those who can think creatively and expand their knowledge base and that validation comes from effective solutions, not just institutional approval. “I have never worked for any client or company that cared about my qualifications, all they ever wanted is to know if I can solve problems in their organization and add value to their business,” said John Irungu, a computer programmer.
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👨🏿🚀TechCabal Daily – Nigeria to launch 1-petabyte data centre
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning In more news about OpenAI, the company has found itself embroiled in a battle with Black Widow actress Scarlett Johansson. OpenAI, in October, had asked Johansson if they could use her voice for the ChatGPT voice Sky, and Johansson refused. But when Sky was updated with GOT-4o last week, the AI suspiciously had the vocal fry associated with Johansson. Now, Johansson says she’s taking legal action and OpenAI—which says they hired another actress to voice Sky—has now withdrawn Sky. Our guess: we’re going to see a lot more of these cases as AI continues to gain prominence. AI doesn’t create from scratch, it’s based on data that we feed it, and not very many people would be happy to have their likenesses available to everyone with an internet connection and a phone. What do you think? Imagine your voice being used in an AI. Would it bother you? In today’s edition CBN raises interest rates Nigeria to launch 1 petabyte data centre LemFi partners with Flex Money Liquid inks new satellite internet deal The World Wide Web3 Opportunities Banking CBN raises interest rates Since Yemi Cardoso took the helm at Nigeria’s apex bank, the Central Bank of Nigeria (CBN), he has sought to answer one question: how to tame Nigeria’s surging inflation rate. In search of answers, Cardoso has tried orthodox policies which his incumbent, Godwin Emefiele, ignored. The CBN governor has increased interest rates multiple times in hopes of taming the rising inflation. While experts believe his plans are working, albeit slowly, a lack of complimentary fiscal efforts has hurt the full recovery of the ailing naira. In CBN’s latest effort, members of the Monetary Policy Committee voted Tuesday to raise interest rates by 150 basis points to 26.25% from 24.75%, a tempered increase compared to hikes in February—400 basis points—and March—200 basis points. Why does this matter? Nigeria’s inflation rate stands at 33.69%. The inflation rate has continued an upward climb despite rate hikes from the CBN. Yesterday’s meeting was a major test of the bank’s stance of increasing interest rates until inflation is stabilised. The increase was less than analysts’ prediction of a 100 basis point increase. “You can’t hike your way out of this mess”: As the CBN continues to navigate the inflation hurdle, experts believe that complementary fiscal efforts from the government, could be crucial to achieving moderate levels of inflation. “We need to take some tough decisions on the fiscal side, you can’t hike your way out of this mess,” Prof. Joseph Nnanna, Chief Economist at the Development Bank of Nigeria said. The downward turn of the naira has also contributed to driving a high inflation rate for Nigeria which heavily relies on a dwindling oil income for foreign exchange earnings. Moniepoint is Africa’s fastest-growing fintech The Financial Times has ranked Moniepoint as Africa’s fastest-growing fintech based on its absolute and compound growth rate. Read more about it here. Cloud Computing Nigeria to launch new data centre Apple launched the first iPod with the tagline “1,000 songs in your pocket”. It launched with a promise that a small handheld device—about the size of a matchstick—had enough storage capabilities to contain all of your favourite songs. While 1,000 songs was a significant feat for the iPod, the world quickly shifted from downloading music onto personal devices to streaming it directly from the web. But do you ever wonder where those streamed songs come from? Like the 1000 songs stored on the iPod, all the music, movies, and shows we stream come from massive data centres. Think of data centres as giant digital warehouses that store all the information you use online, like your emails, photos, music, and even movies. Data centres operate in petabytes (millions of gigabytes). That’s like having enough space to hold all the music ever recorded… 400 billion times over! You must be wondering why you’re learning about data centres. Well… Nigeria is set to launch a data centre with a 1.4 petabyte storage capacity by May 29, 2024. One petabyte (PB), by the way, is equal to 1,024 terabytes (TB). Why does this matter? Nigeria is racing to meet global standards in terms of digital infrastructure and such a massive storage capacity provides a secure and powerful platform for businesses and government institutions. The government claims the data centre will also house citizens’ bio-data, and individuals to store their critical information The launch of the data centre also puts Nigeria in conversations around AI, cloud computing and big data analytics, all of which require large compute and data spaces, as these technologies can help leapfrog growth in certain areas of Nigeria’s economy. Very little is known about where this data centre is located or how long it’s been in the works, but we’ll bring you more news as soon as we have it. Collect payments anytime anywhere with Fincra Are you dealing with the complexities of collecting payments from your customers? Fincra’s payment gateway makes it easy to accept payments via cards, bank transfers, virtual accounts and mobile money. What’s more? You get to save money on fees when you use Fincra. Get started now. Fintech LemFi partners with Flex Money LemFi, a Nigerian fintech startup aiming to transform financial services for immigrants, has seen explosive growth in the past year. It secured $33 million in Series A funding in 2023. This year, it hit the ground running, restarting operations in Ghana in February after a brief pause, and in March it secured a strategic partnership with Visa’s Cross-Border Solutions division. The collaboration aimed at fueling LemFi’s global expansion into key markets like China, India, and Pakistan. In more good news, the company has now received approval from the Central Bank of Kenya (CBK) to operate remittances in the country. LemFi will work together with a Kenyan financial technology company called Flex Money Transfer to deliver remittance services. Per LemFi, this development will enable Kenyans
Read MoreNigeria’s Central Bank delivers modest 150 basis point interest rate increase
Members of the Monetary Policy Committee voted to raise interest rates by 150 basis points to 26.25% from 24.75%, a moderate increase following more aggressive rate hikes in February and March. The vote for a moderate increase is unsurprising as the general thinking is that more time is needed for the previous rate hikes to have an effect. At least four policy experts surveyed by TechCabal predicted a 100 basis point hike. “The key focus of the MPC at this meeting remained to achieve price stability to rein inflation. Members observed that while year-on-year inflation rose moderately, the month-on-month measures of food and core declined significantly,” said Olayemi Cardoso, the Central Bank chief. “The tight monetary stance of the bank is yielding outcomes.” Nigeria’s inflation rate has continued to accelerate despite those rate hikes; in April, headline inflation rose to 33.69% with food inflation reaching unprecedented levels. This week’s Monetary Policy Meeting was a test of the bank’s resolve to keep raising rates until inflation moderates. “The persistent weakness of the Naira will continue to drive higher inflation, necessitating even higher interest rates and leaving a precarious outlook for non-oil sector growth,” a note from Agora Policy, an Abuja-based policy research firm said. “We need to take some tough decisions on the fiscal side, you can’t hike your way out of this mess,” Prof. Joseph Nnanna, Chief Economist at the Development Bank of Nigeria said. In the FX market, price stability is a continuing issue. Despite being the best-performing currency in April 2024, the naira has lost all of those gains. An outsized focus on “unathorised FX” trading has led to a raft of policies, but FX volatility remains.
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Apply for the new Nigeria NELFUND Student Loan 2024
The Nigerian Education Loan Fund (NELFUND) is the body now instituted to manage the day-to-day activities of the federal government of Nigeria’s student loan initiative announced sometime last year. The new student loan programme is designed to make higher education more accessible. Here’s a detailed breakdown of the 2024 Nigeria Student Loan programme and how you can apply: Eligibility requirements for the Nigeria Student loan programme in 2024 The initial restrictions based on family income of an average of ₦500,000 and positive parental loan history have been eliminated. As long as you are a Nigerian student enrolled in a public tertiary institution (university, polytechnic, college of education, or vocational school), you are eligible to apply. Repayment of the Student loan The Federal Government acknowledges the challenges graduates face in securing employment immediately after NYSC. Therefore, loan repayment doesn’t begin until two years after your National Youth Service Corps (NYSC) service. This allows you time to find a job or establish a business. So for example, once you get a job and you signify so, the repayment period starts, and a manageable 10% of your salary or income will be automatically deducted through the payroll system, similar to tax or pension deductions, till you pay off the debt. Hardship consideration and Loan Forgiveness The scheme makes an exception for possibilities of unforeseen circumstances. If you’re unable to secure employment or launch a business after two years, you can appeal for an extension by submitting a sworn affidavit and other forms of evidence (to be determined upon such appeal) as proof. The fund will then review your situation and determine if an extension is warranted. The programme also offers “Loan Forgiveness” in cases of permanent disability or death, ensuring your family isn’t burdened by the debt. Important Notes on the Nigeria Student loan Providing false information or trying to manipulate the NELFUND system is a serious offense and can result in a three-year jail term, a fine, or both. NELFUND operates with complete transparency – the application process is entirely online, free of charge, and you won’t need to meet with anyone in person. How to apply for the Nigeria Student loan programme in 2024 The NELFUND student loan application portal opens on May 24th, 2024. To apply, you’ll need your: JAMB registration number National Identity Number (NIN) Bank Verification Number (BVN) Student matriculation or registration number. Detailed registration steps and more information on required documents or data will be communicated once the application portal is opened on Friday, 24th of May, 2024. Follow only reputable platforms like TechCabal to get the latest information on the Nigeria Student loan scheme.
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👨🏿🚀TechCabal Daily – Kenya’s plan to regulate ICT professionals resurfaces
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning If you’d like to gain exclusive access to Africa’s next tech unicorns, TechCabal Battlefield is building the most comprehensive database of investable African startups. Our platform is your gateway to uncovering the next big thing in tech, with startups building various tech solutions from across various sectors, leveraging emerging technologies. If you’re ready to discover Africa’s most promising and investable startups, fill out the investor application for now. Apply now. In today’s edition Kenya’s bill to regulate ICT professionals resurfaces Zimbabwe to track gold smuggling Nigerian neobanks get rules to resume customer onboarding Congo to launch national data centre OpenseedVC launches with a $10 million fund The World Wide Web3 Opportunities Regulations Kenya introduces ICT operator licence It’s digital tax season in Kenya. Last week, Kenya’s national treasury proposed a 1.5% digital tax on local platforms that offer services such as online jobs, rentals, food delivery, and ride-hailing. If approved by Parliament, the tax would add to Kenya’s existing digital service tax, which currently applies to the sale of e-books, films, music, games, and other digital content. More tax, please: Kenya is planning the introduction of operational licences for ICT operators. The licences are part of a broader ICT Authority Bill 2024, a plan aimed at regulating the country’s ICT sector and ensuring compliance with national laws and regulations. The bill requires ICT operators to obtain an operational licence and assigns accreditation categories based on experience and technical skills. This tiered system could potentially benefit smaller operators by requiring less stringent qualifications for basic services. Operators who fail to get accredited, under the bill, will pay fines of up to KES million ($39,000) or/and face up to five years in prison. Kenya’s new move mirrors Nigeria’s vaguely conscripted rule to regulate ICT professionals in the country. Why does it matter? While the ICT operator licence aims to guarantee high-quality ICT services in the country, its introduction could significantly impact the cost of doing business for ICT operators in Kenya, potentially leading to increased costs for consumers This, in turn, could stifle the growth of the digital economy and limit access to technology for some Kenyans. Is Kenya’s failed ICT bill resurfacing? Since 2016, Kenyan legislators have been proposing a controversial ICT Practitioners Bill which would require ICT professionals in the country—tech bros—with 3 years of experience to get licensed or pay notable fines. The bill resurfaced again in 2022 and passed all its readings until then-President Uhuru Kenya rejected the bill. Now, two years later, it appears the ICT Practitioners Bill has now morphed into the “ICT Authority Bill”. It’s arguable that the new bill is even harsher than the old one. The new bill’s fines are 10x the KES500,000 (3,900) fine prescribed by the old ICT Practitioners Bill. Zoom out: Applications for the operator licences will be reviewed within 30 days and successful applicants will be accredited. According to the ministry of ICT and digital economy, approved and accredited applications must be renewed annually. An ICT provider that breaks the rules of its accreditation risks having its certificate suspended by the authority. Moniepoint is Africa’s fastest-growing fintech The Financial Times has ranked Moniepoint as Africa’s fastest-growing fintech based on its absolute and compound growth rate. Read more about it here. Economy Zimbabwe to track gold smuggling Zimbabwe is on a roll to protect its most valuable resource. This week, Zimbabwean authorities announced a new system that will trace the supply of gold from the mines to the markets. Starting September 30, Fidelity Gold Refinery Ltd, the sole authorised gold buyer in the country, will implement the new golden rule. Why is this policy necessary? The International Crisis Group reported Zimbabwe loses $1.5 billion annually due to the smuggling of its precious metals. Losing this huge revenue annually represents a significant loss for the already struggling economy of Zimbabwe. Gold is tied to Zimbabwe’s new currency: This year, Zimbabwe also launched a new gold-backed currency, the Zimbabwe Gold or “ZiG”. The ZiG is backed by 2.5 tons of Zimbabwe’s gold reserves and an additional $100 million. If significant amounts of gold leave the country illegally, it undermines the ZiG’s core value proposition. Smuggled gold could be sold on the black market for a higher price than the official rate. This could incentivise people to smuggle more, creating a vicious cycle that weakens the ZiG which is already declining. How will the tracing work? “The new system will enable real-time monitoring of gold from the weighing of the metals in its unrefined form by the producers to its delivery to Fidelity Gold Refinery and subsequently it will be traced to the market”, said Peter Magaramombe, an official at Zimbabwe’s apex bank. High-ranking officials are smuggling gold: Al-Jazeera previously reported on the involvement of high-ranking officers from the government and the Reserve Bank of Zimbabwe in gold smuggling, allegations Zimbabwean authorities denied. Last November, however, the President of the Miner’s Federation, Henrietta Rushwaya, was convicted of gold smuggling. Moving forward: The country aims to produce 40 tons of gold this year, an increase from 30.1 tons produced in 2023. With significant revenue at stake and accusations of high-level involvement, Zimbabwe’s new gold tracing system signifies an attempt to combat smuggling and improve the nation’s struggling economy. Fintech Nigerian neobanks get rules to resume customer onboarding Last month, Nigeria’s central bank asked four neobanks—Moniepoint, Kuda, Opay, and Palmpay—to pause onboarding of new customers. Per a TechCabal report, the pause was linked to a directive from the National Security Adviser (NSA). To understand the restrictions, leaders of these neobanks converged in a meeting with the CBN and the NSA in Abuja on Friday, April 26. What came out of those talks were instructions for neobanks to tighten up loose ends within their KYC processes. Palmpay began asking its users to complete facial recognition verification before May 31 or face account restrictions. Kuda also asked customers to provide proof of
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Exclusive: One month after ban on onboarding new customers, fintechs and regulators talks continue
One month after a ban on onboarding new customers, fintechs are still at the negotiating table with regulators. Five Nigerian neobanks—Moniepoint, OPay, Palmpay, Kuda, and Paga—remain unable to onboard new customers one month after a TechCabal report revealed the restriction was connected to a directive from the National Security Adviser (NSA). The leaders of those neobanks met with the NSA, the Economic and Financial Crimes Commission (EFCC), and the Central Bank of Nigeria (CBN) in Abuja on Friday, April 26, two people familiar with the talks said. In those talks and continuing engagements, the fintechs were given conditions before new account openings could resume. If those talks stall, it will slow growth for the venture-funded neobanks that have benefited from an explosion in digital payments. It also highlights the weak lobbying power of fintech as they continue to face scrutiny over Know Your Customer (KYC) procedures and fraud prevention. According to one person familiar with the talks, the neobanks have been asked to restrict peer-to-peer crypto transactions. It aligns with a plan by authorities to ban P2P crypto trading, first reported by TechCabal after the NSA classified crypto trading a “national security issue.” One neobank executive said banning P2P transactions was “impossible” because there’s no way to know if a transaction is crypto-related. Since Nigeria’s initial ban on crypto, traders quickly learned to avoid adding descriptions or comments in transactions. Despite the complex nature of the request, the neobanks have sent notifications to customers warning that P2P transactions will be blocked and reported to authorities. The neobanks have also been asked to update customer details and mandate bank verification numbers or national identity numbers for all tiered accounts in line with a December 2023 directive. That directive mandates valid identification for all types of accounts, strengthening KYC processes that were initially relaxed to boost financial inclusion. Last week, Palmpay asked customers to complete facial recognition verification before May 31st or face account restrictions while Kuda asked customers to upload proof of their house addresses before the same deadline. Other affected neobanks will also ask customers to update their details in the coming weeks, an executive at a neobank told TechCabal. A screenshot of Kuda’s notification These conditions will compel the fintechs to enhance their KYC processes and ensure they comply with the CBN’s new KYC rules, one person with knowledge of the talks said. The conditions will also change what regulators perceive to be a crypto-friendly attitude on the part of the fintechs. The government’s hard stance on crypto trading began in February 2024 after it arrested two Binance executives. In April, the Economic and Financial Crimes Commission blocked 1,146 bank accounts involved in “unauthorised forex dealings.” The Securities and Exchange Commission (SEC) also held a meeting in May asking crypto exchanges to delist the p2p feature. Kucoin, a popular crypto exchange paused its p2p trading last week. The fintechs and crypto players have no leverage in these talks, one former CBN insider shared. Attempts to band together and lobby the government have led nowhere, with one fintech executive claiming that the initial plan to present a united front to the regulators was ignored by industry players. In 2023, a plan to convene fintech players to fight fraud similarly led nowhere, highlighting how intense rivalry may complicate cooperation. Traditional banks on the other hand, routinely cooperate and wield some influence with the regulators. As the talks between fintechs and regulators continue, investors in the affected fintechs are “skittish,” said Moniepoint’s Tosin Eniolorunda. The lifting of the ban cannot come soon enough. *Additional reporting by Muktar Oladunmade
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