👨🏿🚀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
Read MoreThe Guardian sues logistics startup Kwik
Two top executives at The Guardian, a legacy Nigerian newspaper, say the company is suing logistics startup Kwik to collect millions of naira in unpaid rent for two office floors in the newspaper’s Abuja building. Nearly a year after Kwik’s controversial lease ended, those executives claim that The Guardian has not regained access to the property. The building, located in Jabi, Abuja, was leased to Kwik for over two years at no cost by Tive Alex Ibru, a director at the newspaper who is also a shareholder at the startup, according to documents seen by TechCabal. However, The Guardian argued Tive was not authorised to offer the logistics startup the free use of the space. ”Until The Guardian contested my use of the office space, I had no idea that Tive was not empowered to make such decisions,” said Kwik’s co-founder and CEO, Romain Poirot-Lellig. Kwik continued to occupy the office floors even after learning that Tive lacked the authority to make such an endowment. “[We let him stay] because he signed a reverse contract with us and agreed to a payment plan,” Patience Illesanmi, The Guardian’s CFO told TechCabal. “Kwik paid the rent in instalments for some time and later defaulted until its tenancy ended.” On several occasions, Poirot-Lellig requested more time to make payment and failed to. According to Ilesanmi and a lawyer at the newspaper, the company has taken legal action against the startup. Poirot-Lellig acknowledged The Guardian’s expectations of payment for the use of its property but refuted claims that The Guardian is taking legal actions against him or Kwik. “The matter is between Tive and The Guardian. We assessed that we did not have to bear the consequences of his behaviour,” said Poirot-Lellig, insisting that he carried on using the offices for free as his contract with Tive stated. A complicated agreement and another suit against Kwik Tive gave Kwik the use of the office space in September 2021, the same period he brokered a deal for football Jay Jay Okocha to become Kwik’s brand ambassador. “Helping us secure Jay Jay Okocha earned him sweat equity—giving him shares in the startup even though he did not make any financial commitment,” said Poirot-Lellig. Despite the lawsuit, Poirot-Lellig has a close relationship with the Ibru family. Lady Maiden Ibru, the newspaper’s publisher, invested in Kwik’s 2021 seed round. Poirot-Lellig claimed she will also invest in Kwik’s next funding round. In addition to its legal issues with The Guardian, Kwik is also facing a lawsuit in Holland where its parent company, Africa Delivery Technologies, is domiciled. Adam Grant, a former consultant fired in July 2023, is demanding $200,000 compensation for unlawful termination. Months before he was fired, Grant claims he was promoted to lead the marketing team and was never notified of underperformance. “He was expensive but not meeting his KPIs,” said Poirot-Lellig, who described the lawsuit as frivolous. “He displayed anger issues and also had a disruptive relationship with the staff including making racist comments.” Grant blamed the low acquisition of new corporate clients on tax compliance issues and delayed payments to third-party partners including delivery drivers, vendors, and other service providers. In a 2023 company report seen by TechCabal, Kwik affirmed that delayed payments were causing rider churn and threatening Kwik’s relationship with its partners and clients. Poirot-Lellig chalked up the delayed payments of riders, vendors, and often-time employees to the economic conditions of Nigeria but insisted that it has not affected its fleet in any way. “We currently have over 4,000 riders on the platform. We also have 75,000 more customers today than when [Grant] was here so was the impediment him or us?” Poirot-Lellig who was absent at the scheduled hearing of the case in Holland claims that he has proposed a compromise to Grant which he refused.
Read MoreCourt to begin hearing on wrongful termination suit against NIBSS in November
The hearing on the wrongful termination suit brought against the Nigeria Inter-Bank Settlement System (NIBSS), by its former Chief Risk Officer, Temidayo Adekanye, will begin on November 25 at the National Industrial Court in Lagos. In March 2024, Adekanye sued NIBSS for wrongful termination after he shared internal concerns about “serious financial misappropriation, corporate governance, and fraud” at the agency. He alleged fraudulent activity connected to Afrigo, a domestic card scheme launched in 2023, and NQR, a platform for QR-code payments. He also raised similar concerns about a cloud migration project. “This matter is pre-listed before me today and adjourned to November 25, 2024, for a definite hearing. The defendant is at liberty to file his reply to the claimant’s statement of claim,” the presiding judge, Hon. Justice Ubaka, said on Monday. While the court will determine the validity of the claims, these allegations have raised serious questions about the integrity of Nigeria’s financial system. The ex-NIBSS executive is asking the court to award damages of one billion naira for wrongful termination and breach of contract. He also asked for ₦250 million in special and general damages, ₦150 million in compensation for infringement of his fundamental rights, and ₦10 million as the cost of legal proceedings. Another option will be for the NIBSS to “pay him the full amount of salaries, allowances, and other emoluments that he would have earned on the unexpired remaining years upon attainment of 60 years.” He also prayed the court to mandate NIBSS pay him 2% of its profit before tax declared for 2023 and “other entitlements applicable to the claimant in the circumstances.”
Read MoreEarly-stage VC firm OpenseedVC launches with a $10 million fund for African startups
OpenseedVC, an early-stage VC firm that was launched in 2024, has reached the first close of its $10 million fund for early-stage startups across Africa and Europe. The $10 million fund is OpenseedVC’s first fund and will be used to back founders with domain expertise, highlighting the increasing importance of founder experience in Africa’s tech ecosystem. The VC firm expects to reach a second close by May next year. “Before investing, we tend to ask three main questions: How big? Why this team—what’s their unique advantage? And why now?” Maria Rotilu, general partner of OpenseedVC, told TechCabal. The London-headquartered VC firm will invest up to $150,000 in startups across B2B software, artificial intelligence, fintech, digital health, and the future of work. The firm has already invested in two undisclosed artificial intelligence startups in Nigeria and the UK. A lack of domain expertise among founders has been identified as the leading cause of failure among startups. OpenseedVC prioritises founders who demonstrate a clear understanding of the market they are entering and have the skills to navigate the challenges and opportunities it presents. Launched in 2024 by Maria Rotilu, “OpenseedVC operates at a sweet spot where startups with strong potential for success, partly based on the founder’s relevant execution ability, receive support.” The VC firm says its approach ensures that capital is directed towards businesses with a higher likelihood of effectively solving real, scalable, and impactful problems. The launch of OpenSeedVC provides a new alternative for African startups that are looking to raise funds. In 2023, funding for African startups dipped by 33% compared to the previous year, with African startups raising only about $3.2 billion. “The current difficult fundraising climate is especially harsh for early-stage founders, but we believe incredible companies are born in the most difficult macroeconomic climates. We want to be the first believers in these experienced operators to give [them] a great head start, with capital and an extensive operator network that supports [them] from the start to the launch of their technology companies,” Rotilu said in a statement. OpenseedVC claims to have a network of over 50 experienced operators—who have deep experience across its investment sectors—supporting the founders alongside the team. The VC firm, which currently invests across Europe and sub-Saharan Africa, says it hopes to have a balanced portfolio across both regions in the future.
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Next Wave: What’s going on in Kenya’s B2B space?
Cet article est aussi disponible en français <!– In partnership with –> <!–TopBanner Join us for TechCabal Battlefield, Moonshot’s startup competition where you can showcase your startup idea to a global audience and an esteemed panel of judges and stand a chance to win up to 2.5 million naira in funding for your business! Click to register for TC Battlefield First published 19 May, 2024 Kenya’s e-commerce sector, once a picture of growth and innovation, faces a harsh reality for businesses catering to other businesses (B2B). The sector seems to be weeding out players, with many prominent names struggling recently. MarketForce, a major player, shut down its B2B platform, RejaReja. Twiga, a company that connected retailers with farms for their produce, ran into cash flow problems and was forced to make leadership changes, including the departure of its co-founder and CEO. Wasoko, another established name, executed a merger with an Egyptian firm, MaxAB, which resulted in over 100 employees losing their jobs. And just this week, Copia, a company that had previously secured significant funding (over $127 million), announced that it could potentially lay off staff or shut down completely if it could not find additional investment. These aren’t isolated incidents. Other Kenyan e-commerce startups, such as WeFarm, which connected farmers with suppliers for their agricultural needs; and Zumi, a platform that linked retailers with various suppliers, have also faced business challenges and eventually shut down their operations. Next Wave continues after this ad. Register to attend the biggest sales conference of the year! Catapult your sales game to the next level Visit Now What’s causing this wave of business challenges in Kenya’s B2B e-commerce space? Locals understand that Kenya’s business environment can be brutal for companies with a lean financial model. But how? The first reason is that credit terms are unfavourable for any startup or vendor trying to grow. Many Kenyan businesses, especially in the fast-moving consumer goods (FMCG) sector, which includes commodities like food and beverages, routinely expect long credit terms. It’s not uncommon for companies to ask for payment deadlines exceeding six months. This creates a huge cash flow gap for businesses like e-commerce startups. There is also a case of e-commerce platforms burning cash too fast. Imagine a scenario where you, as an e-commerce business, offer your customers 30 days to pay for their purchases, but your suppliers expect you to wait over six months to receive your payment. This extended waiting period creates a financial strain like a wound constantly bleeding cash. This combination of lengthy credit terms expected by customers and a lack of access to short-term credit creates a major obstacle for B2B e-commerce businesses in Kenya. Although a maxed-out credit line can cause problems, it wouldn’t necessarily cripple the entire platform. So, where is the problem? Next Wave continues after this ad. Subscribe to Property Flex and buy land for as low as N30,000 monthly. Visit The uncomfortable truth Kenya’s e-commerce landscape is still very small commercially. While some startups might paint a picture of explosive growth, the reality is that there just aren’t enough online shoppers to support overly ambitious business plans. Let’s not forget that Kenya is a predominantly cash-based society. This means that even for e-commerce businesses that manage to attract customers online, collecting payment can be slow and cumbersome. Forget the buy-now-pay-later (BNPL) options in more developed nations that have been growing lately in emerging markets (a story for another day). Ideally, if one is entering Kenya’s e-commerce space, one must be prepared to look beyond immediate results. Building a successful online business here requires a long-term vision, focusing on customer trust and gradual market development. One cannot expect overnight success because it is clear now that success takes time. Next Wave continues after this ad. Want to become a pro at Product Management? Join our intensive 4-week program starting on May 4th, 2024. Join the cohort for an immersive learning experience, tailored to make you an expert in the field. During the program, you’ll explore theoretical classes, do practical exercises, collaborate in groups, complete assignments, and use valuable product templates. All sessions are conducted virtually, offering flexibility and accessibility to learners worldwide. By the end of the program, you’ll receive a Certificate of Completion, validating your expertise in Product Management. Don’t miss this opportunity to advance your career and become a proficient Product Manager. Secure your spot now and embark on a journey towards success in the dynamic world of product development. Click here to get started It is also worth mentioning that there is a disconnect between perception and reality, which has fuelled these problems. Many e-commerce companies secure funding by presenting inflated valuations to attract investors or for potential buyouts. These valuations often don’t reflect the true size or maturity of the Kenyan e-commerce market. This mismatch in expectations can lead to financial difficulties, and there are multiple examples to cite if one looks around hard enough. “E-companies in Kenya are overvalued for obvious reasons: to get investor cash. Not because that’s the reality of our market,” said one of the key players in the business who asked not to be named. So, what happens now? B2B e-commerce platforms must assess the Kenyan market size and be realistic about it. Overly ambitious plans based on inflated portrayals will create a financial strain that usually does not end well. I would also argue that transparency with investors about market realities is key to avoiding inflated valuations and potential funding shortfalls. Else, e-commerce shutdowns will remain the norm. Next Wave ends after this ad. GITEX Africa returns a second time on May 29–31, 2024 to Marrakech, Morocco, discussing ways to accelerate the continent’s digital health revolution. GITEX is the continent’s largest all-inclusive tech event renowned for uniting the brightest minds in the technology industry Grab your tickets here Kenn Abuya Senior Reporter, TechCabal Thank you for reading this far. Feel free to email kenn[at]bigcabal.com, with your thoughts about this edition of NextWave. Or just click
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👨🏿🚀TechCabal Daily – Unspiralling in Africa
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning To our readers in the Democratic Republic of Congo (DRC), please stay safe over the next couple of days. ICYMI: The Congolese military reportedly foiled a coup attempt against Congolese president Félix Tshisekedi who won the country’s first-ever presidential elections in 2018. Three people were killed in a shootout after the perpetrators attacked the home of Vital Kamerhe, a federal legislator who has been convicted for corruption in 2021. The country was facing a political crisis within President Tshisekedi’s ruling party regarding the leadership of parliament. An election for the position, originally planned for May 18, was postponed, leading to tensions. The Congolese government believes the threat is passed, but tensions are heightened and a little bit of caution over the next week is critical. In today’s edition Nigeria withdraws cybersecurity levy Copia faces a potential shutdown Nigerian court rules for CBN’s social media handle linkage Spiro has $50 million more to expand into Africa NCC suspends issuing MNVO licences The World Wide Web3 Opportunities Regulations Nigeria withdraws cybersecurity levy Two weeks ago, Nigerians were in arms on social media over a new law that would see them pay a 0.5% tax on every digital transaction they made. In speaking about the cybersecurity levy issued by the country’s apex bank, one critic said, “It’s crazy at this point. This is mass financial strangulation.” Another dissenter tweeted, “Nigerians are defeated. Nigerians won’t reject this. Nigerians will make noise and pass on to the next news. In the end, Nigerians are owned.” It looks like Nigeria did reject the bill: On Friday, the Central Bank of Nigeria (CBN), in a circular to all financial institutions, withdrew the bill. “Please be advised that the above referenced circular [the circular that implemented the levy] is hereby withdrawn,” the circular read. This means Nigerians are no longer at risk of paying the 0.5% tax on every inter-bank transfer, and all other digital transactions. The tax, which would have taken effect today, was a 900% increase from the 0.005% Nigerians presently pay. At this stage, it is unclear whether public outcry played a role in the CBN’s decision change, in which case, it would mean it’s never ”just Twitter/social media”. Layoffs Copia faces a potential shutdown Copia, a Kenyan e-commerce startup with over $123 million in funding, is on the brink of collapse. The news: The company announced to its employees through an internal memo that its facing financial difficulties and might have to take drastic measures. These measures could include laying off 1,060 employees or even shutting down the company completely. “It is important to highlight that uncertainties lie ahead. As a result, it is very likely that there will be a reduction in our workforce and it is possible that the payment of salaries could be at risk,” said Tim Steel, Copia’s CEO, in the internal memo seen by TechCabal. Steel stated that layoffs would be the first step to control costs, and if that’s not enough, the company may have to shut down. In accordance with Kenyan labour laws, impacted employees will be notified one month in advance. The company is struggling to raise funding: The company informed its employees that it is exploring all options to secure additional funding but the efforts seem abortive. WeeTracker also learned that Copia was already running out of cash and had just a few months of runway left in March. One of Kenya’s most funded startups: This development comes as shocking news to many as Copia is one of the most funded startups in Kenya. The startup raised $50 million in its last stage funding round in 2022 and $20 million in December 2023. With a network of 50,000 local agents, the startup has served over 2 million customers, fulfilling 13 million orders and reaching underserved markets. Yet, in 2023, it laid off 700 employees and closed its Uganda operations two years into the market. Copia now faces a potential shutdown, raising questions about its execution or market adaptation. Moniepoint is one of Africa’s fastest-growing companies 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. Regulations CBN wants social media handles linked to bank accounts You might need to be careful about what you tweet next. Why? In June last year, Nigeria’s apex bank, the Central Bank of Nigeria, issued a directive mandating banks to append social media handles of users to their accounts. While the move raised concerns about freedom of speech, a fundamental human right, the CBN said the move was to better identify users and prevent crime and terrorism financing. Of the many critics of the law, one lawyer, Chris Eke, took one step forward and sued the apex bank at a Federal High Court in Lagos. Eke, via his attorney, argued that the rule infringes on his right to privacy, a violation of Section 37 of the 1999 Nigerian Constitution. “Undemocratic, unconstitutional, null and void”: The presiding judge, Nnamdi Dimgba, ruled days ago that Chris’s case was “very ambitious and amounts to a very far throw.” The court said the CBN regulations only applied to financial institutions and not private individuals like Chris. The judge tagged the case “undemocratic, unconstitutional, null, and void.” What that means is that banks would still require that user’s social media handles be appended when opening an account or using other banking services, as part of KYC checks. Dimgba likened social media handles to other communication channels like emails and phone numbers, which are considered necessary checks for banks to verify a customer’s identity before doing business with them. Zoom out: Since the CBN issued the directive last year, critics have tagged it as one to stifle the voice of Nigerians who actively share their disdain for the government on social media. Similar concerns have arisen in other African nations. In Uganda, for instance, a proposed social
Read MoreCBN officially withdraws cybersecurity levy
Nigeria’s central bank has withdrawn a controversial 0.5% cybersecurity levy on electronic transfers three days before it was supposed to take effect. The Cybersecurity Act was amended in 2024 and the scope of the levy was extended to cover fintechs, payment service providers and other financial institutions and introduced a 900% increase from 0.005%. “Please be advised that the above referenced circular is hereby withdrawn,” the circular signed by Chibuzo Efobi, the director of the central bank’s payment system management team, and Haruna Mustafa, the director of financial policy and regulation, read. The cybersecurity levy was seen as “regressive” by financial industry experts due to the sharp increase in the cost of an electronic transaction amidst the country’s highest inflation rate in thirty years and a cost of living crisis. Following mounting pressure from labour unions, the federal government suspended the levy and said it would be reviewed on Tuesday. The now-revoked cybersecurity levy meant an electronic transfer of ₦1,000 would attract a ₦5 fee, while a ₦100,000 transfer would attract a ₦500 fee. “Since I heard of the levy, I have only transferred money to bank accounts in my bank,” *Ope, an online phone seller who deals with a lot of money daily, told TechCabal. The levy would have been charged in addition to a stamp duty charge, an SMS charge, and a charge from the national payment switch. A ₦10,000 electronic transaction fee would have cost ₦130.875. But loopholes existed, like an exception with money transfers within the same bank, salary payments, school fees payments, and loan repayments. Its removal would be welcomed by Nigerians like Ope who have come to increasingly rely on electronic transfers as a primary means of payment. Paystack, a Nigerian fintech giant, revealed last week that bank transfers accounted for over half of the transactions it processed in 2023. In that same year, the value of electronic transactions in Nigeria rose by 66% to over ₦600 trillion. *This is a developing story
Read MoreKenya’s Copia mulls shutdown amid plans to lay off over 1,000 staff
Copia Global, a Kenyan B2C e-commerce startup that has raised $123 million in venture funding across seven rounds, is considering laying off employees or shutting down, citing “uncertainties.” The layoffs, which could affect over 1,000 employees, would be a drastic cost-cutting measure for a company that announced an extension of its Series C round in December 2023. ”It is important to highlight that uncertainties lie ahead. As a result, it is very likely that there will be a reduction in our workforce and it is possible that the payment of salaries could be at risk,” said Tim Steel, Copia’s CEO, in an internal memo seen by TechCabal. Steel added that laying off employees would be the first course of action to rein in costs. Should that fail, the company could shut down, joining other Kenyan e-commerce startups that have closed shop since the COVID-19 pandemic, like Wefarm, an agritech startup connecting farmers to farm input distributors, and Zumi, a B2B connecting retailers to suppliers. While the startups have blamed funding drought and tough market conditions for their woes, experts suggest that the viability of the business models, absence of industry data to inform expansion, poor infrastructure, and customer trust deficit could be among the factors causing the closures. “The company is required, in compliance with the law, to give all staff one (1) month notice of potential redundancies and to undertake a one (1) month consultancy period with all potentially impacted staff. Therefore, all staff are receiving this notice. A notice will also be given to the Labour Officer as required by law,” Steel said. Copia is one of Kenya’s most well-funded startups. It announced a $50 million Series C funding round in 2022 and a $20 million extension of the same round in December 2023. Despite Copia claiming that it had “cracked the nut of last-mile delivery” and built a fulfilment system for customers in remote parts of the country, signs of strain became obvious in 2023 when it laid off over 700 employees and closed Uganda operations barely two years into the market. With an economic downturn and tight capital markets, Copia embraced a strategy of optimising operations to maximise its existing resources. This included a 25% workforce reduction that affected 350 employees. In July 2024, Copia told TechCabal that it planned to remain profitable and better serve customers through streamlined processes and cost reduction. It suspended plans to expand to other African markets, including Nigeria, Ghana, South Africa, and Mozambique, citing the need “to accelerate Copia’s drive to profitability. Copia was founded by Tracy Turner and Jonathan Lewis in 2013 to allow customers in remote areas to order goods through its platform and delivered to them through its network of agents.
Read MoreEmpty wallets, empty bellies: Food inflation grips Nigerians
For Olamilekan Kafaru, a bus driver in the Ikorodu area of Lagos, Nigeria, eating three square meals daily is almost impossible. At a dizzying 40.53% increase, food inflation in the country is the highest in nearly three decades, placing more pressure on ordinary citizens who already spend a larger portion of their income on food. With food prices skyrocketing every month, millions of Nigerians face a brutal reality: food has become a luxury. President Bola Tinubu campaigned on a promise to “deliver food security and affordability.” After nearly a year in office, he has yet to deliver on this promise. The price of rice—Nigeria’s most consumed food—rose to ₦1,340 per kilogram in March, compared with ₦540 in the previous year, according to the National Bureau of Statistics. A loaf of sliced bread sold for ₦1,109, compared to ₦561 last year. “These days, you give thanks to God if you can afford two meals a day,” says Kafaru, a father of four who has been struggling to feed his family as inflation erodes his income. Concerns about food insecurity have been expressed for some time now in Africa’s most populous country, which has also been battling poverty and widespread insecurity for several years. Conflicts in certain regions of the country have disrupted agricultural activities and displaced farmers, hindering food production and distribution. Gunmen have kidnapped hundreds of people in Northern Nigeria. The Food and Agriculture Organisation of the United Nations projects more than 26 million people at risk of food insecurity this year. This situation has forced Nigerians into desperation. At least seven people died in February during a stampede at the Lagos regional headquarters of Nigeria’s customs service where it sold off bags of confiscated rice at discounted prices. There were also reported attacks on warehouses across the country. “People are hungry and angry. A meal of bread and beans that used to cost ₦500 now costs at least ₦700 or ₦1000,” says Aminat Balogun, a fashion designer in the Ogijo area of Ogun State. Driven by food prices, Nigeria’s headline inflation hit a staggering 33.69% in April, despite the country’s central bank’s interest rate hikes in February and March. The apex bank is expected to raise the lending rate again at its next monetary policy committee meeting on May 20. The Central Bank of Nigeria (CBN) governor, Olayemi Cardoso, told the Financial Times this week that the apex bank will “do whatever is necessary” to tackle inflation. Lagos-based market-focused consulting firm SBM Intelligence argued that “the structural nature of the country’s inflation drivers” affects the effectiveness of the CBN’s efforts. “The cost of living crisis will kill us all if care is not taken,” said Abibat Olayemi, who runs a grocery store in the Surulere area of Lagos. Her sales have dropped by 50% in the past few months as customers spend less due to rising prices. For Sosanwo who runs a block business, relief is desperately needed. “I don’t even know how an ordinary man is surviving. Right now, rice is ₦75,000 to ₦76,000 per bag. Imagine asking an ordinary man when he last cooked rice in his house.” he told TechCabal. Experts have long argued that Nigeria should focus on achieving food security rather than obsess over food self-sufficiency. In recent years, the Nigerian government has banned importing certain food items and closed borders to increase local production and export. These decisions have only served to increase food insecurity. Nigeria does not produce enough to feed its population, and millions of citizens lack access to nutritious food. “Temporarily suspending import restrictions on key food items can help stabilise prices and ensure access to affordable food for consumers,” said Basil Abia, founder of Verviv Africa, a data insights company. “Incentivising state governments to invest in agricultural competitiveness through revenue-sharing programmes can also enhance food security at the local level.” Since taking office in May 2023, President Tinubu has introduced a raft of economic reforms, removing $10 billion-a-year fuel subsidies and adopting a uniform exchange rate. Though praised by international investors, both moves have triggered a cost of living crisis for ordinary Nigerians. The International Monetary Fund (IMF) projects Nigeria will lose its place as Africa’s third-largest economy to Algeria in 2024. Tinubu, who declared a state of emergency last July to tackle rising food prices and shortages and opened up food reserves, insisted that Nigeria is on course to attain food security. “Nigeria will be self-sufficient in food production during my administration,” he said last week. But poor Nigerians will need more than assurances. “You can’t claim to have the interest of the people at heart when you are spending billions on buying cars and renovating offices,” a visibly angry John Obinna, a Lagos-based banker told TechCabal. “If this government is serious about addressing food inflation, it must show workings.”
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