Earnings from Upwork will no longer be untaxed in Kenya
Upwork freelancers in Kenya face new tax obligations. VAT will be collected and remitted by Upwork to the Kenyan government. Those eligible for exemptions must provide a valid tax certificate. Meanwhile, other freelancing platforms’ tax compliance remains uncertain. For a long time, the Kenyan government has encouraged young people to work online after high school or college. The government launched several initiatives to train and support graduates in finding online work. One is the Ajira digital programme, which provides training and mentorship in digital skills such as software development, graphic design, and copywriting. Thousands of students who have undergone Ajira training say they were encouraged to find any kind of work online, including on platforms such as Upwork. Upwork is a popular platform in Kenya, with many freelancers using it to find work. To work on Upwork in Kenya, you just create a profile and set your rates. You can then search for jobs that match your skills and experience. Once you find a job you are interested in, you can submit a proposal to the client. If the client is impressed with your proposal, they will hire you. Most Kenyans working on Upwork focus on technical writing, including handling assignments for Western students in what has been called ‘contract cheating.’ Kenyans who have worked on this freelancing platform can tell you they never had any tax obligations to the Kenya Revenue Authority (KRA). Any money they make from the platform goes untaxed, but that is no longer the case after users noticed an update that prompts them to include their KRA PIN on their profiles. A statement on Upwork’s website reads, “Kenya requires Upwork to collect value-added tax, or VAT, and remit the tax to the government of Kenya. VAT is a tax on goods or services, including our services to you, and remit means to send money for a payment.” Read more: How new law allows Kenyan taxman to access offshore bank accounts information Implications The government needs your tax info when you are asked for your KRA PIN. To this end, Kenyan Upwork freelancers should be prepared to start paying income tax on their earnings. The VAT rate in Kenya is set at 16% of the total service cost, subject to taxation. This means that if you are a freelancer providing services on Upwork and your client is based in Kenya, they must pay an extra 16% of the service cost as VAT to the Kenyan government. Upwork numbers read, “In Kenya, the VAT rate is 16% of the cost of the service being taxed. For example, if you pay $100 in freelancer service fees, you will pay $16 in tax for $116. You’ll see the estimated amount of tax when you check out and on your invoices and transaction history.” Once the tax is deducted from a freelancer’s income using your KRA PIN, the tax authority receives this amount and is already aware of their earnings, which it records in their account. When the financial year ends, these users must report at least the same amount to KRA. Thus, those filing nil returns will no longer be able to do so. Upwork adds, “We’re required to comply with the tax laws of the countries where we operate to continue to do business in those countries. Kenya requires that we collect VAT on Upwork services and remit them to your government.” Freelancers should therefore consider this VAT rate when setting their prices or negotiating with clients to ensure compliance with the local tax regulations. Read more: Despite public outcry, Kenya has received billions from recently introduced digital service tax How about temporary residents? Upwork must collect VAT, regardless of a freelancer’s temporary residence in Kenya. Should that person relocate to another country, they can update their account information. Afterward, Upwork will automatically modify its VAT to align with the prevailing rates in the new country of residence. If there is no VAT or a comparable tax in the new country, Upwork will cease the collection of such taxes. Exemptions If a freelancer is eligible for VAT exemption, they must provide a valid tax exemption certificate to Upwork. Once Upwork receives and verifies your certificate, it will cease charging VAT. Simply providing your VAT ID will not grant a person tax exemption; the crucial requirement is to submit a valid tax exemption certificate. Upwork is the only platform that has reported the Kenya tax update. There are tens of other freelancing platforms used for freelance work, and it remains unclear whether the taxman will target them in the coming days for tax compliance.
Read MoreAfrica’s traditional economy vs. gig economy: Which way forward?
In today’s vertiginous economic landscape, Africa is plagued with a massive exodus from its longstanding formal traditional work economy to the informal gig economy. While the traditional economy has been the backbone of the continent’s livelihood for centuries, in recent years, the gig economy has created new opportunities and challenges. Let’s face it: the future of work is changing, and the change didn’t begin during the pandemic. The roots can be traced as far back as when informal work arrangements were seen as precursors to gig work. At the time, people engaged in informal and flexible work arrangements, like artisanal skills, small-scale farming, and local trading, to earn a living. These activities were often characterised by short-term engagements and were driven by immediate needs and opportunities. The traditional work economy in Africa has been the backbone of employment for generations. It is characterised by regular hours (9–5), regular pay, various legal protections, registered income taxes, employment contracts, and well-established labour regulations. This sector has been the primary source of employment for many and is often associated with benefits such as job security, health insurance, and retirement plans. The formal sector includes various industries like government, banking, manufacturing, and multinational corporations. The big question is: If the traditional work style has this much security and benefits, why are we even having this debate? As evidence of massive migration to “gig work” continues to be more glaring, there has to be an explanation for this economic exodus in almost every part of the continent’s workforce. Like every sector in a typical economic setting, none is without its challenges, for instance, the unemployment epidemic. Africa has a significant youth population, and many of its young people of eligible working age face challenges in finding traditional employment opportunities. As of 2023, the unemployment rate in Africa is 7.7%. To put this in perspective, the total population in Africa is over 1.4 Billion, and seven per cent of that figure is a staggering 112 million Africans who are either out of jobs, unemployed, or ineligible to work. If that’s not a recipe for an epidemic, what is? In light of these challenges, “gig work” comes into play because it offers and still offers alternatives for young talents to use their skills and expertise to secure work and generate income. The gig economy has been providing the freedom to work and live more efficiently. One MasterCard Foundation survey revealed that the gig economy in Africa is growing at an average rate of 20% per year and is expected to reach a staggering 80 million gig workers by 2030. It’s important to assert here that the phrase “gig economy” is a catch-all term that describes people who are not salaried workers but work independently and get paid for each transaction or “gig” they complete. Experts have often referred to this system as a disruptor in a well-established system. Growth of the gig economy in Africa The growth of Africa’s gig economy is often linked to the advancement of technology and the decline of traditional manufacturing and agricultural jobs, which has forced people to seek new sources of income. The global financial crisis of 2008 also played a role in the growth of the gig economy in Africa. The crisis led to a decline in traditional employment opportunities, forcing people to turn to informal work. However, there is no doubt that 2020 was a defining year for the global economy. Its effects have reshaped our lives for decades on a physical, economic, and behavioural level. Pre-COVID, the biggest change to society resulted from technology. Digitalisation offers better flexibility, freedom, and choice. Although the pandemic forced major changes in how we live, at the time, it ushered in total reliance on technology. Particularly, these changes hit the hardest on the gig economy. It also opened up a lucrative portal for the revenue stream, as millions of people could apply and work as they deem fit. Digital advancements in technology, deeper internet penetration, and the rise of e-commerce spiked demand for freelancers in various fields like web development, graphic design, content creation, and digital marketing. This increased demand has attracted African freelancers to join online platforms like Upwork and Fiverr. In this dispensation of work, freelancers and gig workers can tap into the global marketplace to offer their skills and services to clients beyond their borders. “I know the market is hot and the world needs programmers, so for now, this is the best way for me to be creative and earn good money,” says Sheikh Sarr, a 19-year-old university graduate from The Gambia. Sheikh Sarr took charge of his future by enrolling in a computer programming course at Banjul’s Indian Institute of Hardware Technology. After mastering five programming languages in under 10 months, Sarr has joined Africa’s booming gig economy. Setting up profiles on Fiverr and Upwork, he is leveraging his skills and creativity for lucrative freelance work. With access to affordable broadband, Sarr dedicated nighttime hours to learning and coding. Confident in the demand for programmers, he sees freelancing as a pathway to financial success while fueling Africa’s thriving tech market. According to research by KEPSA (Kenya Private Sector Alliance), over 1.2 million people, which is 5% of Kenya’s adult population, now perform one form of gig work or the other. “The shift towards remote work during the pandemic has led to an increase in demand for certain types of online work, particularly in the tech industry,” says Fabian Stephany, a research lecturer in AI & Work at the Oxford Internet Institute. African governments are proactively developing initiatives to capitalise on the potential of the expanding gig economy in Africa. In Kenya, for instance, the Ajira Digital Clubs initiative equips young people with digital skills to compete in the global marketplace. More so, policymakers are poised to mitigate the challenges plaguing the vast informal sector by promoting upskilling through gig work to enhance the workforce’s overall skill set and employability. Do African women stand a chance in
Read MoreNigerian payments provider, eTranzact reports N1.17 billion profit after tax for 2022
eTranzact International Plc has released its financial report for the year 2022. According to the report, the payments provider recorded N1.17 billion in profit, a 157.81 increase from the previous year. Nigerian payments provider eTranzact International Plc has reported that its profit after tax rose to N1.17 billion in 2022—representing a 157.81% increase compared to the previous year. The company’s chairman, Wole Abegunde, disclosed this during its 19th annual general meeting in Lagos last Thursday, describing 2022 as “a significant year in the history of the company’s financial performance” thanks to the focus and expansion of core switching services. “The landmark achievement is down to the management’s drive for excellence and demonstration of the commitment of the management and the board to ensure maximum returns on the investment of shareholders. The company will not relent on the performance and will seek more business opportunities to boost subsequent financial results,” Abegunde, who was represented by Afolabi Oladele, a non-executive director, at the event, said. Presenting his report on the company’s financial statements, managing director Olaniyi Toluwalope said eTranzact processed over N50 trillion in value of total transactions in 2022, a significant increase from the N39 trillion processed in 2021. According to him, the improved financial performance and profitability were driven by the increased volume of transactions processed by switching services, primarily through its SwitchIT. He added that the company also reported gross revenue of N22.54 billion, gross profit of N5.7 billion, and profit after tax of N1.17 billion. The managing director added that the company ensured a 99% success rate and uptime across the various service offerings during 2022. He said this involved the deployment of technology and the required expertise to ensure prompt and seamless processing of transactions and to ensure constant availability of all the channels with minimal to zero downtime. In a change in leadership, the company also elected six non-executive directors and one executive director to join its Board. The appointment, however, is subject to the approval of the Central Bank of Nigeria (CBN). Similarly, two directors were re-elected following Section 273(1) and 285 (1) of the Companies and Allied Matters Act, 2020, and Article 36 of the Articles of Association of the Company.
Read MoreNigerian insurtech startup, MyCover.ai raises $1.25m in pre-seed round
Nigerian insurtech startup, MyCover.ai, has closed a $1.25 million pre-seed fund to address drawbacks of insurance in African markets Nigerian insurtech startup, MyCover.ai, has secured the close of a $1.25 million pre-seed funding round. According to MyCover.ai, the funding will be used to expand the reach of its product, into other African markets. The funding round included participation from Founders Factory Africa and TechStars, who are making a follow-on investment. Founded in 2021 by Adebowale Banjo, Alexander Igwe-Ifendu, Fred Ebho, MyCover.ai is interested in tackling pain points that exist in the market, ranging from lack of access, inadequate coverage, the unaffordability of insurance products to the poor customer experience surrounding insurance processes. The insurtech startup provides an open insurance API that integrates with insurance companies, such as Hygeia, Leadway, Sovereign Trust, AIICO Insurance and Allianz, to offer over 30 personalised insurance products, allowing other businesses and innovators to embed these insurance products into their platforms. MyCover.ai aims to provide financial security to Africans by improving access to insurance products, especially Nigerians exposed to a wide range of vulnerabilities including health challenges, asset loss and the potential loss of their livelihood. According to Augusta & Co, only 0.5 percent of the population has insurance. This is understandable in Nigeria where 133 million of its 200 million population are submerged in multidimensional poverty, with the minimum wage pegged at ₦30,000 ($37.69). The tech startup is offering its powerful API integration to empower businesses from various sectors to effortlessly integrate insurance into their products and services, with the inclusion of a white label option, without incurring any additional risks or costs. These businesses are presented with the opportunity to offer insurance policies as add-ons on top of their existing core products.
Read MorePlatform Capital hosts Africa Walk 2023 to showcase Africa’s creative industry to investors
Africa Walk, an annual event by investment firm Platform Capital, will be held in Nigeria and Senegal from July 24-27. It aims to bring together global investors and stakeholders to dispel misconceptions about Africa’s creative industry and foster investments in music, cuisine, art, and movies on the continent. Africa’s creative industry—its movies, music, art and food—has captured hearts and headlines worldwide. However, despite its glaring potential, there persists a myth that Africa’s creative landscape is an impenetrable wilderness, leaving investors hesitant to explore its vast potential. To challenge these negative stereotypes and illuminate the way for significant and sustainable investments in Africa, investment firm Platform Capital initiated Africa Walk. Africa Walk is an annual event that brings together investors, companies, and key stakeholders to experience Africa firsthand. In this year’s edition, guests will be experiencing the creative sectors, including music, cuisine, art, fashion, and film on the continent. Speaking to TechCabal, Dr Akintoye Akindele, Platform Capital’s founder, highlighted the mission of Africa Walk: “We started this to quell the negative stereotypes that make investors shy away from the opportunities and potential of the continent,” he said. The inaugural event in 2021 provided an agnostic view of the small and medium enterprise landscape in Nigeria and Kenya. In the second edition, Africa Walk journeyed investors to South Africa and Nigeria, where they delved into the booming tech ecosystem. The third edition, themed “Unleashing the Value and Potential of the African Creative Industry”, will take place in Senegal ( July 24-28) and Nigeria (July 29-31). Since its inception, Africa Walk has been strategically selecting countries to focus on based on the unique strengths and attributes each region offers. The upcoming third edition will happen in both Senegal and Nigeria, a francophone and an anglophone country respectively. Akindele explained the choice saying, “We want to show that language is not a barrier but a bridge. So the Africa Walk will start from Dakar and then end in Nigeria.” The company says that it chose Senegal because of all the francophone countries, it has the most international traffic, tourism attraction, and commendable tech infrastructure which supports the creative industry. “From Dakar, investors and stakeholders will continue their journey to Cote d’Ivoire before concluding in Nigeria,” Akindele said. Despite its vast potential, the creative industry in Africa has often been perceived as lacking the proper infrastructure to enable investment. “African artists like Rema have made millions of streams on foreign streaming platforms. Nollywood movies are grossing millions of naira at the box office, how can foreign and local investors get a piece of that?” Akindele asked rhetorically. Africa Walk will address this question through insightful panel discussions involving key stakeholders, including Nigeria’s Bank of Industry. Even within the African continent, negative stereotypes about the creative industry persist. “Parents want their children to be doctors, lawyers, engineers, but no one walks up to write exams for admission into university thinking that they want to be an actor or a comedian, or an artiste. There is low regard for the professions in the creative industry,” Akindele pointed out. To combat this stigma and showcase the value of creative careers, Africa Walk will feature successful creative professionals as speakers, including actors and other entertainers. Their stories will demonstrate that working in the creative industry is not only respectable but can also lead to tremendous success, just like traditionally accepted professions. Africa Walk breaks away from the traditional conference-style event, offering much more than just panel discussions. It brings together creatives, policymakers, investors, and institutions to engage in insightful conversations. However, the event goes beyond discussions by providing attendees with micro-views of the creative industries in each country and an immersive experience of the local culture. This includes exhibitions of various cuisines, diverse forms of art, and creative showcases that highlight the region’s talent and ingenuity. According to the company, over the past two years, the Africa Walk initiative has been instrumental in securing more than $200 million in investments for African companies. Platform Capital looks forward to fostering investment in Africa’s creative industry through the upcoming event.
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Next Wave: A roadmap for building a culture of venture in Kigali
Cet article est aussi disponible en français <!– In partnership with –> First published 23 July 2023 It is Africa’s most ambitious ecosystem and country. A place I am optimistic about and invested in. Here’s how it can win for itself. This is the first of a series of ecosystem reviews, where I will attempt to pull at the threads of what often goes unspoken as African countries cultivate unique identities around technology, innovation and impact. Our first stop is my host for the past 7 weeks, the fledgling technology and innovation space in the Republic of Rwanda. Every place has two important features. The first is what the place has going for it. The second is what it does not have going for it. Some of what a place lacks is permanent—the lack of geologic resources for example. Other forms of lack or disadvantages can sometimes be moderated if not fixed outright. It is easy to fixate on the disadvantages that cannot be fixed—like Rwanda’s apparent lack of significant natural resource commodities, or that it is landlocked. But that is in my opinion, a nearsighted position—especially in Africa where more resourced economies are consistently dismal performers. What is more important is focusing on the disadvantages that can be moderated or outright eliminated. As an urban space, Kigali (especially infrastructure-wise) is ahead of most sub-Saharan countries. But as the corporate centre of the Rwandan economy and seedbed of a newborn technology ecosystem, it is playing catch up with the continental leaders—Lagos, Cape Town, Nairobi, Cairo, Accra, Dakar, Casablanca, Tunis and even Abidjan. The extent to which it succeeds may depend on how fast it can recalibrate the deep but flawed mix of NGOism, social enterprise and government support that characterises it while catalysing free-spirited entrepreneurship. Today’s review is structured on three pillars. What Kigali’s ecosystem has going for it. What it does not have going for it that can be fixed. And suggestions for where to start. <!–Chart section 1 Naira-USD spreads have narrowed dramatically following FX policy reforms and the removal of Nigeria’s unorthodox central bank governor, Godwin Emefiele. | Chart: Ayomide Agbaje — TechCabal Insights. Chart end–> Partner Message Hey! It’s money here , and I am tired of working for you. Why don’t you try working with me, so you can save and invest in dollars and access the best rates on your investments? Download the Zedcrest Wealth app and let’s work together to grow your wealth. Tap here to start! Fuel for the ambition As I said in the first paragraph, the technology ecosystem in Kigali is both playing catch-up and only in its infancy. Generally speaking, Africa’s technology ecosystem is still quite young. Depending on when you start counting, it is barely a teenager. Fledgling ecosystems are a tight bundle of energy, speed and conflict. Lagos has this undeniable energy. So does Nairobi, Cape Town, Cairo, Shenzhen, San Francisco, London or anywhere else you can think of. Wherever innovation manages to find a footing, it typically also generates and sustains this steamrolling bundle of entrepreneurial energy. It is the fuel for innovation ambition. The key difference between Kigali and any of the places I mentioned above is where the ecosystem energy and ambition are concentrated. For Kigali’s technology ecosystem, non-profit-funded entrepreneur support organisations and the programmes they back and run are the locus of innovation while government support agencies like the Rwanda Development Board are the locus of entrepreneurial ambition. Partner Content: Consensys rebrands and launches a hackathon for builders This is not ideal and is an inversion of how an ecosystem should operate. But it is also one of the biggest things Kigali’s ecosystem has going for it. An unmatched level of directed support from the state. However, because there is an over-concentration of innovation-searching energy at the state level, the government has become a source of ambition for the ecosystem. And a lot of this energy is channeled through ecosystem support programs of all stripes. In theory, the government’s ambitious growth and economic development priorities set the stage for an expected tsunami of innovation. Killing life-support to live But this tsunami has (so far) failed to materialise. Instead, the result of this ambitious push towards innovation from state-backed resources and a deep pool of non-profit checkbox-oriented and development-funded entrepreneur support programmes is a glut of social enterprises and a dependency that may not develop into commercial viability. In 1902—as a global pandemic spread by rats raged—government authorities in French Indochina (now Vietnam) struggled to reduce the rat population in Hanoi, the capital. To speed things up, they created a bounty programme that paid 1¢ for each rat killed. To collect the bounty, people would need to provide the severed tail of a rat. Colonial officials, however, began noticing rats in Hanoi with no tails. The Vietnamese rat catchers would capture rats, sever their tails, then release them back into the sewers so that they could produce more rats. — Wikipedia. <!–Chart section 1 Local investors, including Nigeria’s ‘big men’ are buying up local shares, but foreign investors are still staying away. Chart by Bloomberg. Chart end–> The Great Hanoi Rat Massacre was the first proven example of the Cobra Effect, a perverse incentive theory which explains how the design of a projec can incentivise the wrong behaviour. This Cobra Effect is a story you have probably heard. For those who may not have had the pleasure, the story goes like this. During the British Raj (rule of India), the government decided to, as in the Hanoi example, reduce the population of cobras in Delhi, so they offered a bounty to anyone who brought in a dead cobra. The result? People brought in dead cobras indeed, but only because a thriving cobra farming industry sprung up to supply the new demand. The insight for you, my friend, is that the Cobra Effect is a market design bug which creates artificial markets. Artificial markets have one big problem. They internalise life support—whether in the form
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👨🏿🚀TechCabal Daily – Sonatel snags Senegal’s 5G licence
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning Can’t find X? Don’t worry, Chief Twit Elon is going to shove it right in your face. Over the weekend, the Twitter owner announced a brand change for the blue bird: its logo will be replaced by an X—signifying its connection to X Corp, Musk’s new firm, and definitely not a slow death. “Bid Adieu to the Twitter brand,” the billionaire tweeted. Will this move make or break Twitter? Will it finally prove Musk knows why—and more importantly, how—to make the caged blue bird sing? In today’s edition Sonatel acquires 5G licence in Senegal Bundle Africa shuts down Uber recording is now available in Kenya African startups are harnessing WhatsApp’s power The World Wide Web3 Event: TC Twitter Space Job openings Telecom Sonatel acquires 5G licence in Senegal Sonatel HQ Senegal’s race for 5G is finally picking up. In May, the country announced it was finally ready for 5G by opening up the window for applications for 5G spectrum licences. At the time, telecom regulator L’Autorité de Régulation des Télécommunication et des Postes (ARTP) announced that interested investors should submit applications by July 14. The price? A whopping XOF19.5 billion ($33 million). Per ARTP director Abdou Karim Sall, the application process would help the regulator decide which telecom has the capacity to rapidly provide quality 5G infrastructure across the country. Sonatel does: Last week, the regulator announced that it had “provisionally” awarded Sonatel—Orange Senegal—a 5G licence after the telecom beat out others with its bid. Sonatel reportedly bid XOF34.5 billion ($59.1 million) for the licence, a significantly higher bid compared to Free’s XOF3 billion ($5 million) and Expresso’s XOF2 billion ($3.4 million). “Following the examination of the submitted offers, the committee for the evaluation of technical and financial offers proposed to the Selection Committee to retain Sonatel, which was the only candidate to have fulfilled the conditions set by the regulations,” director Sall said. A growing monopoly: Sonatel’s acquisition of the licence cements its future in Senegal’s telecoms space. Already, the telecom controls over 50% of the telecoms space in Senegal, with Free, Expresso and Canal+ sharing the rest. Its selection also doesn’t come as a surprise. Since 2020, the telecom has been moving on 5G in the country, rolling out tests and trials across various regions. So far, it looks like Orange is definitely Senegal’s telecoms hack. 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. Startups Bundle Africa shuts down proprietary app Image source: Emmanuel Babalola (Twitter) Last week, Nigerian crypto startup Bundle Africa announced that it would shut down its social payments app Bundle Africa. In a tweet announcing the shutdown, CEO Emmanuel Babalola said that the shutdown was a decision made by stakeholders who want a restructuring of the company. The startup will now focus on Cashlink, its peer-to-peer platform. The company reportedly hit 50,000 monthly active users and a $50 million monthly volume on Bundle and crossed over 3 million transactions on Cashlink. “As Web3 and the blockchain community continue to grow, there is a need to focus on payment solutions that meet the ecosystem’s needs, which is the plan with Cashlink,” the statement read. Following the announcement, users of the Bundle App now have until September 12 to withdraw all their funds from their in-app wallets. The big picture: With Bundle’s shutdown, Africa’s crypto startup space takes another beating since the FTX shutdown in November 2022. In April, another Nigerian crypto startup, Lazerpay, shut down after it couldn’t raise funds for its operations. Much earlier, Fluidcoins—which also had trouble raising funds—got acquired by UAE-based crypto company Bitfinex. Mobility Uber recording now available in Kenya Image source: Zikoko Memes Kenyan e-hailing space just got a little bit safer. Over the weekend, Uber announced that Kenya would be the second African country where its audio recording feature would be made available. Hear it from the horse’s mouth: In 2019, Uber launched its audio recording feature to help settle disputes among its drivers and riders. Accessible via the safety toolkit, the feature allows both drivers and riders to create audio recordings of their trips. The recordings will be only accessible to the Uber Support team who can only gain access to it in instances of disputes. Regardless of who’s recording, the app will notify the other party that they’re being recorded. The feature is live in several regions across Latin America and the US, but South Africa is the only African country to have the feature. In September 2022, the feature launched in the country where it’s now being used by 3,400 drivers and 80,000 riders. Per the Uber Support team, the feature will soon be available for Kenyan riders and drivers too. In May, the service also noted that it would launch the feature in Nigeria soon. TC Insights African startups are harnessing WhatsApp’s power In recent years, there has been a notable shift among African startups, as they increasingly turn to WhatsApp as a primary means to offer and distribute their products and services. According to DataReportal’s Digital 2023: Global Overview report, WhatsApp has gained traction with 15.8% of internet users across the world preferring it over other platforms, as WhatsApp users spend an average of 17 hours and 20 minutes on the app each month. This trend is also particularly evident across Africa, where countries like Ghana, Nigeria, Kenya, and South Africa have over 70% of their internet users frequently using WhatsApp. Image source: TC Insights The attractiveness of WhatsApp as a distribution channel for African startups lies in its massive user base and the extensive time users spend on the app monthly. Notable examples include Foondamate, a South African Ed-tech startup delivering educational solutions via an AI-powered conversational chatbot on WhatsApp, and MotiSure, a Kenyan startup offering micro-insurance plans through chatbot interactions.
Read MoreHow new law allows Kenyan taxman to access offshore bank accounts information
Kenya has introduced the Common Reporting Standard (CRS) to improve financial transparency and fight tax evasion. The CRS requires financial institutions to report information about their clients’ accounts to tax authorities, which helps identify individuals evading taxes. In a bid to improve financial transparency in the country, Kenya introduced the Common Reporting Standard (CRS) through the Finance Act in 2021. The Tax Procedures Act was updated to include the CRS. To put the CRS into action, the cabinet secretary for treasury, Njuguna Ndung’u, was tasked with creating regulations officially implemented on 1st January 2023. Origins In 2014, the Organisation for Economic Cooperation and Development (OECD) created the Common Reporting Standard (CRS) due to the lack of transparency in financial account information. According to the OEDC, many organisations use offshore entities to stash taxable income while trading or holding financial assets. The CRS was implemented to require that Reporting Financial Institutions (RFIs), such as depository accounts and other financial institutions, report account information to tax authorities. Why is the law important? The CRS mandates RFIs, which include depository accounts and investment entities, to report account information to the Kenya Revenue Authority (KRA). It empowers the KRA to identify individuals who may have been evading taxes or hiding their wealth in offshore accounts. Besides, by sharing relevant financial data with other jurisdictions, Kenya strengthens international cooperation and becomes integral to the global fight against illicit financial activities. The CRS requires RFIs to identify reportable accounts and share specific account information with the KRA. Reportable accounts include all financial accounts managed or administered by an RFI. What information is exchanged between financial institutions? By joining the CRS Multilateral Competent Authority Agreement (CRS MCAA), Kenya can exchange financial account information with 106 other countries via the OECD Common Transmission System (CTS). The financial institutions must provide details like names, addresses, jurisdictions, residences, and tax identification numbers (TINs) (or similar identifiers if TINs are unavailable) for account holders. According to the regulations, this collaboration builds transparency and international cooperation in the fight against tax evasion and financial malpractices. It is all about compliance Kenyan financial institutions now play a key role in ensuring tax compliance by submitting annual reports to the KRA. These reports contain the aforementioned essential details about specific financial accounts individuals and entities hold. For entities with controlling persons, additional information is required, such as account numbers, names, identifying numbers, and account balances or values at the end of the reporting period. This comprehensive reporting mechanism strengthens the KRA’s efforts to identify tax evaders and individuals attempting to hide ill-gotten wealth in offshore bank accounts. Data privacy and developments The implications of the CRS for financial data privacy and security must not be overlooked. While exchanging financial information between countries is essential for ensuring global tax compliance, it raises concerns about protecting individuals’ sensitive data. It is crucial for Kenya and other participating nations to find a delicate balance between financial transparency and data privacy. To ensure the effectiveness of the laws, Kenya’s treasury cabinet secretary has relinquished the authority to regularly amend the regulations on exchanging financial information with the 106 countries involved. This decision, made by the treasury ministry, comes from President Ruto’s government and the KRA’s collective efforts to crack down on tax evasion and individuals benefiting from ill-gotten gains. Reportedly, removing a clause that previously allowed unnecessary adjustments to the regulations aims to safeguard against potential loopholes for tax evaders. Possible challenges As with any initiative, challenges remain. The responsibility lies with Kenya and all participating nations to ensure that the shared data is used exclusively for legitimate tax compliance purposes. Adequate data security measures must be in place to safeguard against any unauthorized access or misuse. By requiring RFIs to report financial account information, Kenya is moving towards tackling tax evasion and offshore asset hiding head-on. The effectiveness of the CRS lies in identifying possible tax evaders and exchanging financial data between countries to ensure global tax compliance. However, the responsibility to uphold financial data privacy and security remains crucial in this process.
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Bundle Africa shuts down its exchange platform
Lire en français Read this email in French. Editor’s Note Week 30, 2023 Read time: 5 minutes Hello In this week’s edition, we cover major updates in the tech and business landscape, including Bundle Africa’s restructuring, Nigerian ride-hailing drivers’ demand for reduced commissions, smartphone shortage in Kenya, and more. Have you filled out this 3-minute survey yet? Please do if you haven’t. Pamela Tetteh Editor, TechCabal. Editor’s Picks Bundle Africa shuts down its exchange platform In a significant restructuring move, web3 startup Bundle Africa has shut down its exchange services after three years of operation. The company will shift its focus entirely to its peer-to-peer service Cashlink. Learn more. Nigerian ride-hailing drivers demand 10% commission The hike in fuel prices in Nigeria has left ride-hailing drivers grappling with increased expenses. So they want to reduce the commisions of ride-hailing app companies to 10%. Learn more. Ethiopia lifts social media ban Great news hit Ethiopia on Wednesday. The country finally lifted its ban on social media platforms like Facebook, TikTok, Telegram, and Youtube. Learn more. Netflix blocks password sharing in SA South Africans’ days of freely sharing their Netflix passwords with friends outside their household are officially over. Learn more. Shortage of smartphones in Kenya The Kenya Revenue Authority (KRA) has had enough of tax evasion and is cracking down on more businesses. Unfortunately, this crackdown is causing supply shortages for phone vendors and increasing the prices of available phones. Learn more. Entering Tech Interested in getting tech career resources and insights?. Then sign up for Entering Tech to get started! Starlink launches in Kenya Starlink is now available in Kenya. Kenyans can get the broadband internet service for Ksh6,500/month ($45.9) with a one-time hardware cost of Ksh92,000 ($649.72). Learn more. Safaricom to launch Starlink rival Elon Musk’s Starlink will face a new rival in Kenya’s satellite space. Kenya’s top communications company, Safaricom, has partnered with AST SpaceMobile to launch satellite internet services. Learn more. Canal+ is smelling blood The French broadcasting giant, Canal+, has just upped its stake in the Multichoice to 31.7%! That’s a power move because according to South African law, once a shareholder crosses the 35% threshold in a listed entity, they’re obliged to make a takeover offer. Learn more. A $966.8 million thumbs up The International Monetary Fund (IMF) has given Kenya’s new taxes a $966.8 million (Ksh136.7 billion) thumbs up . But the president’s opposition party and numerous Kenyan citizens are taking to the streets to protest these taxes vehemently. Learn why. Telkom plans to sell its tower portfolio South Africa’s biggest Internet Service Provider (ISP), Telkom, has plans to sell its Swiftnet tower within the next two months. Read more. Who brought the money this week? Egyptian fintech company Flash raised $6 million in a seed round. The round was led by Addition other participating investors, including Flourish Ventures and angel investors. Nigerian Health tech company Pharmarun received $10,000 in equity-free funding from the Pitch2Win competition. Mycover.ai, a Nigerian-based insurtech company, raised $1.25 million in a pre-seed round. The round was led by Ventures Platform. Other participating investors included Founders Factory Africa and Techstars. Tunisian mobility company, Kaco secured undisclosed funding from UGFS North Africa. What else to read this weekend? Can Flex Finance conquer Africa’s $1.4 trillion business spend market? SING is building an ecosystem from scratch in Gabon Nigeria’s new FX regime has birthed fresh competition between banks and remittance startups Egyptian fintech report shows a strong focus on bank partnerships Written by: Ngozi Chukwu Edited by: Pamela Tetteh 18, Nnobi Street, Surulere, Lagos, Nigeria Unsubscribe from TC Weekender
Read MoreDo newer social media platforms stand a chance against older platforms?
On July 4, 2023, at about 12:30 pm WAT, Meta boss Mark Zuckerberg announced the launch of Threads, a new microblogging platform powered by Instagram. In less than six hours, the app amassed a shocking five million registered users and the number went up to 100 million after a week, the highest number for any social media platform. Threads was largely touted to be Twitter’s successor, but without the news and heavy political conversations that made Twitter a toxic town. But is it? After nearly two decades of reign as the epicentre of online conversations, Twitter looks to be shrinking as users are fleeing the chaotic 2010s social media scene for platforms that can facilitate conversations in a less messy environment. According to a report by data company, Similarweb, the company’s web visits and app usage have steadily dropped since the beginning of 2023. The platform has been called out for its algorithm and design which reward vileness with more visibility, creating a toxic environment for users. Twitter is not alone. Instagram (also owned by Meta), once simply a popular photo-sharing platform, has seen its usage threatened by other social media apps, TikTok and BeReal. The platform, which was initially established to share photos, has been frequently condemned for promoting superficiality and prioritising ads over genuine interactions, with younger users favouring apps like BeReal that promote the sharing of real, unfiltered photos. On July 1, 2023, Twitter introduced a view limit for users, capping the number of tweets they could view per day to 6,000 for verified accounts and 600 for unverified accounts. This downtime on Twitter served as the proverbial nail in the coffin for a lot of Twitter users who finally got the push to leave the social platform and consider alternative platforms. SPILL, a new meme-forward social platform that calls itself a safe space for marginalised groups and culture drivers saw its number of registered users go up as high as 100,000, 30 times more than before the incident. The app, which launched in mid-June 2023 and is invite-only, became the most downloaded social media app on Monday, July 3, two days after Twitter imposed a view limit. Other social networks like Trump’s TRUTH Social, which had been around since February 2022, also saw a 30% increase in traffic after Twitter’s update, eventually suffering a temporary crash as servers weren’t equipped to handle the influx from Twitter. According to Mark Amaza, a policy expert, while a lot of people are looking to leave social media platforms like Twitter for newer and less chaotic alternatives, these new platforms might not have what it takes to replace existing social media platforms. Amaza is extremely active on Twitter, where he’s been since 2009, and before that, he was an active Facebook user with close to 2,000 friends. While the move from Facebook to Twitter and Instagram was quite easy for him in 2009, he doesn’t think it’ll be the same this time around, especially for people who already have spent a long time on Twitter, as a lot of things are different. According to him, it was easier to transition to Twitter from Facebook because it has a certain “stickiness” and was different from Facebook. “With Facebook, you only could interact with your friends or people whose requests you approve, and so it was kind of limited in the interactions and overall experience. Twitter, however, is more open and gives you access to anyone as long as they have an account.” After 14 years on Twitter, Amaza is suffering from social media fatigue and finds Twitter somewhat annoying, for the most part, due to how toxic it’s become. While he’s learnt to navigate the app well, he’s not entirely sure that he’d join Twitter today if he wasn’t already using the platform. When he was younger, he didn’t entirely mind the toxicity and admits to having engaged in mean interactions sometimes, but according to him, he’s now older and has experienced a lot of personality growth, which now makes the platform largely inhospitable to him due to the unsavoury interactions that dominate the space. Do newer social media platforms stand a chance? Despite its impressive numbers in the beginning, user engagement on Threads has dropped. According to Similarweb, Threads’ daily active users fell from 49 million after its launch to 23.6 million users last Friday. Similarly, the app’s average usage time also fell from 21 minutes to six minutes over the same timeframe. TRUTH Social has also been unable to meet the projected number of users. Five days ago, the network’s head of engineering resigned amidst the platform’s struggle to show consistent growth. The network has only been able to bag two million users out of its projected 56 million users by 2024. To compare, Twitter has over 350 million users while Instagram and Facebook have two billion and 2.9 billion respectively. Saratu Abiola, a journalist and communications strategist, believes that a new social network would only work if they don’t try to replicate another, as the political environment that allowed for the style of older networks to grow rapidly simply isn’t there anymore. “You can’t replicate another social media app. Threads can’t replicate Twitter, for example. Building a social media network post-Cambridge Analytica will never have the trust networks as building one pre-Cambridge Analytica. Twitter and Instagram require you to know some people, and that’s a big responsibility because these people shape your experience on the platform. Nearly all of the other platforms I’ve seen also require some form of social trust, and that’s hard to cultivate in this climate.” According to Abiola, platforms that are capable of providing unique experiences will most likely be the ones to witness sustainable growth. “What’s the point of joining another platform where the value I get is from the people that I know, and I already follow them on one platform?” she asks. “TikTok is almost the only social network that has achieved this. It is the only platform where you
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