Kenyans are up in arms against Ruto’s new taxes
Kenya’s 2024 Finance Bill, which proposes new taxes on several items and services, has drawn widespread criticism from citizens this week. If passed, the law will give the Kenya Revenue Authority (KRA) sweeping powers to enforce tax compliance; the KRA will be able to access bank and mobile money accounts to ensure compliance. The changes in the Finance Bill 2024 propose new levies ranging from a VAT tax on bread to a 5% increase in excise duty on financial transactions like bank payments and mobile money transfers. Others include new taxes on insurance services and a significant economic presence which will require non-residents with online businesses in Kenya to pay a 20% tax on gross turnover. Some Kenyans say they have lost faith in President William Ruto, who rode a wave of voter anger on key issues like the economy and over-taxation, to victory. Supporters and the opposition alike say he has backtracked on key campaign pledges. They also point out some poor optics, like chartering a $1.5 million jet for his US visit, amid his calls for austerity in the eye of a growing debt repayment burden. According to the National Treasury Budget Policy Statement, Kenya is looking to boost revenue collection to over 20% of the GPD in the financial year starting July. It targets $22.2 billion (KES2.95 trillion) in tax collections, up from $19.7 billion (KES2.62 trillion) in the previous year. A dozen industry associations and lobby groups have written to the National Treasury and Parliament opposing certain sections of the new law that would force them to increase the prices of goods and services. The Kenya Bankers Association (KBA) was the first to express their disappointment in the Finance Bill 2024, which has already gone through the first reading in the National Assembly. For KBA, the increase of excise duty on bank transactions from 15% to 20% and a further 16% VAT on services will raise the cost of banking to 40%, reversing gains made in financial inclusion. Read also: Kenya brings back controversial bill to regulate ICT industry “It has long been held, and rightly so, that while VAT applies to payments for goods and services, bank charges are not a direct payment for anything, but a cost recovery. Since banks are not delivering any goods to customers, bank charges are not considered VATable. Kenya has until now, held this principle to be true,” KBA said in a statement sent to TechCabal. “Regarding foreign exchange transactions, the proposed VAT will widen the margin charged on FX transactions. This poses risks to economic growth by taxing export proceeds and hindering the competitiveness of Kenyan products.” Ruto’s coalition, which enjoys a sailable majority in both houses–the national assembly and senate, maintains that the new measures are necessary and will help the country repay its debt. Kenya’s total debt is $75.3 billion (KES10 trillion), of which $52.7 billion (KES7 trillion) is owed to external creditors—the country’s debt-to-GDP ratio at 70%, the second highest in East Africa after Burundi. A joint sitting of the National Assembly and Senate on November 30, 2021. PHOTO | NATION Kenyans are already feeling the heat, as inflation accelerates and interest rates outpace salaries in both the public and private sectors. The Finance Bill also proposes a 25% excise duty on vegetable oils which sector players argue will increase the prices of cooking oil, soap, margarine, and other essential kitchen commodities. “If implemented, this excise duty will trigger an unprecedented surge in the price of cooking oil, a staple in Kenyan households. The cost of this essential commodity is projected to skyrocket by 80%, rendering it unaffordable for millions of Kenyans, particularly low-income earners, and small-scale traders,” Edible Oil Manufacturers said in a statement sent to TechCabal. Since August 2022, cooking oil prices have more than tripled because of the surging cost of global crude palm oil and the Ukrainian crisis, which has also affected the cost of wheat flour. Edible oil manufacturers told TechCabal the effect of the new levy will see prices of 400g bread rise to $0.6 (KES80) from $0.53 (KES70) before the new 16% VAT. The price of a long bar sopa will rise to $2.07 (KES270) from $1.36 (KES180), while margarine will almost double to $2.26 (KES300). “Such price hikes will disproportionately affect the most vulnerable members of society, exacerbating the already high cost of living and plunging millions into deeper financial distress,” the manufacturers said. Kenyans see the Ruto administration’s push to bolster revenue collections by increasing taxes as a U-turn on the lofty promises he made on the campaign trail in before the 2022 elections. Experts reckon that the new law will affect sectors with low penetration like the insurance industry. The Association of Kenyan Insurers (AKI) has written to parliament to discard a 2.5% motor circulation tax that will be pegged on the vehicle value, paid when buying insurance. Kenya has the third lowest insurance penetration in sub-Saharan Africa at 3%. AKI has warned that if the law passes, most motorists will shift to third-party insurance policies to avoid the high cost of comprehensive coverage. “The imposition will notably increase the cost of motor insurance. Currently, the average comprehensive insurance premium rate stands at 5%, and with the additional 2.5%, the total premium rate surges to 7.5%,” said Tom Gichuhi, AKI executive director. Other associations like the Kenya Manufacturers Association (KAM), Petroleum Outlets Association of Kenya (POAK), and Kenya Association of Air Operators (KAAO). Associated Battery Manufacturers (EA), a battery maker based in Nairobi, has also come out to oppose the introduction of eco-tax which will pegged at $5.65 (KES750) per kilo of battery. “A small lead acid battery for a motor vehicle is 12kg, with a retail price of $64 (KES8,500). The eco-tax for this small battery will translate to an additional $67.8 (KES9,000) plus VAT. Therefore, a small car battery will retail at $131.8 (KES17,500). This translates to an increase of 120% as a direct result of the proposed eco-tax,” said Guy Jack,
Read MoreBolt copies rival inDrive, introduces bidding system to ease ride shortages
Ride-hailing giant Bolt has introduced a flexible pricing system allowing passengers to offer higher fares to drivers to increase their chances of getting rides during periods of high driver demand. Trip delays have become more common as ride-hailing giants struggle to convince people to take up driving as gig work. It is commonplace to wait over 10 minutes before finding a driver on the leading ride-hailing apps. One of the key obstacles to onboarding more drivers is pricing. In the past year, drivers have argued that fuel prices—a subsidy removal in May 2023 saw fuel prices almost double—and the commission the ride-hailing companies collect have shrunk their margins. Yet, passing on these costs to customers is tricky partly because of competition and because many Nigerians are also dealing with high prices as inflation continues to accelerate. The bidding system, similar to what competitor inDrive used to differentiate itself when it launched in the Nigerian market, aims to incentivize drivers to accept trips, especially during peak periods. “The benefit for the driver is that they earn more. [The] same standard commission applies to all trips,” said Femi Adeyemo, Bolt’s communication manager. Riding-hailing giants like Bolt and Uber typically charge customers a base fare and use surge pricing during periods of high demand to incentivise drivers. But surge pricing, which is determined by algorithms, does not allow the driver any say in the negotiations. This idea of giving drivers direct access to the customers to negotiate a fair fee has helped inDrive gain popularity and Bolt will borrow the same idea in the hopes that it reduces wait time. The decision to tweak its pricing system will count as a win for drivers, but ultimately, gig drivers continue to push for a seat at the decision-making table. For now, they’ve won some bargaining power with customers, it remains to be seen when they’ll also win the same with the ride-hailing companies.
Read MoreApply for the Namibia Student Financial Aid 2024/2025
The Namibia Student Financial Assistance Fund (NSFAF) supports Namibian students with financial needs, enabling them to access higher education. This initiative is just like the recently launched NELFUND in Nigeria by the Federal Government, for tertiary institution students. Here’s a comprehensive guide to familiarise yourself with applying for the Namibia Student Aid 2024. When the NSFAF applications open for 2024/2025 The Namibia Student Financial Assistance Fund (NSFAF) last opened the 2024 online application process for Namibian students seeking financial assistance for their higher education on Thursday, November 29, 2023 and the application was slated to close on Thursday, February 29th, 2024. Therefore, you can expect the 2024/2025 Namibia Student Financial Assistance Fund aid application to begin around the latter months of 2024. Steps to apply for the Namibia Student Aid 2024 Next are the steps towards the application. Please note that the NSFAF application is fully virtual. 1. Verify eligibility Check if you meet the eligibility criteria before starting the application. To qualify, you must be a Namibian citizen, accepted into an accredited institution, demonstrate financial need, and meet NSFAF’s minimum academic requirements. For more clarity, we have highlighted eligibility requirements across different variables, in bullet points below: General eligibility: Be a Namibian citizen. Demonstrate financial need (income thresholds apply). Meet NSFAF’s minimum academic requirements (differing by programme level). Not have previously benefitted from NSFAF funding for the same qualification level. Not have outstanding debt from previous NSFAF awards. Submit all required documents by the closing date. Funding programmes: Undergraduate degrees (local) Minimum 25 points in Grade 12 with an E in English (or Diploma at NQF Level 6 with 22 points in Grade 12). Household income thresholds apply (applicant/spouse’s income < N$300,000 & parental income < N$500,000). Undergraduate diplomas (local) Minimum 22 points in Grade 12 with an F in English. Household income thresholds apply (applicant/spouse’s income < N$300,000 & parental income < N$500,000). Undergraduate degrees (mature age entry – public institutions only) 23 years or older. Grade 10 certificate with 5+ years’ work experience or Grade 12 certificate with 3+ years’ work experience. Ability to top up funding if insufficient. Proof of admission and mature age entry test results. Household income thresholds apply (applicant/spouse’s income < N$300,000 & parental income < N$500,000). Undergraduate degrees (international) Higher point requirements in Grade 12 depending on field of study (35 points for medicine/engineering, 30 points for others) with an E in English. Household income thresholds apply (applicant/spouse’s income < N$300,000 & parental income < N$500,000). Vocational education training (VET) Income thresholds apply (applicant/spouse’s income < N$300,000 & parental income < N$500,000). Specific requirements for government/SOE-owned vs. private VTCS. International VET trainees require a minimum of 25 points in Grade 12 with an F in English. Postgraduate programs Priority given to fields listed on NSFAF website. Open to students pursuing postgraduate diplomas, honors degrees, masters degrees, or PhD programs. Must have prior undergraduate qualifications. Preference for local institutions and SADC countries. Household income thresholds apply (applicant/spouse’s income < N$300,000 & parental income < N$500,000). 2. Prepare documents for the Namibia Student Financial Aid 2024/2025 Get the necessary documents, including identification, proof of admission, academic transcripts, and financial statements or evidence of financial need. Having these ready will streamline the application process. Required documents in bullet points: Certified copies of birth certificate Recognised valid ID School leaving certificates Parents’/guardians’ IDs/death certificates Payslips(applicant/spouse/parents/guardians) Proof of admission (if applicable) Additional documents required for specific programs (e.g., mature age entry proof, NQA evaluation for foreign qualifications). 3. Online Application Visit the NSFAF website, create an account or log in, and fill out the application form accurately. Mistakes can delay or disqualify your application. 4. Upload Documents Upload prepared documents during the online application process, ensuring clarity and legibility. Follow instructions for specific document uploads at various stages. 5. Submit application for the Namibia Student Financial Aid 2024/2025 Review your application thoroughly, ensuring accuracy and attachment of required documents. Submit your application and receive a confirmation email. 6. Follow up Regularly check your email and NSFAF portal for updates. Respond promptly to any requests, as this enhances your chances of securing Namibia Student Aid 2024. 7. Await results Successful applicants will be notified through their provided contact information. Ensure accurate contact details to avoid missing crucial communication. Important notes on the NSFAF Application 2024/2025: You can refer to the NSFAF STUDENT FINANCIAL ASSISTANCE AND DEBT RECOVERY POLICY AND PROCEDURE for a more detailed view of the application terms and conditions: Ensure you meet all eligibility requirements before applying. NSFAF funding is primarily provided as loans, with grants available for only a minute number of top academic performers. Please note that some adjustments or changes may occur for the forthcoming application in 2024. As such, you are advised to keep in touch with latest news concerning the NSFAF application when it resumes for the year. Contact: For debt clearance inquiries reach out to Recovery@nsfaf.na. Six reasons you may not secure the Namibia Student Aid 2024/2025 There are cases where you may not be considered for the NSFAF funding 1. Exceeding funding limits NSFAF might have a limited budget each year, and applications are processed on a first-come, first-served basis. If applications surpass available funds, even eligible students may be unsuccessful. 2. Previous debt Outstanding debt from previous NSFAF awards can lead to application rejection until the debt is settled. 3. Academic performance If you have a history of poor academic performance, NSFAF might prioritize students with stronger academic records. 4. Disciplinary Issues A history of disciplinary actions at your educational institution could negatively impact your application. 5. Incomplete Academic History Inconsistent academic history, like large gaps in your studies, might raise red flags for NSFAF. 6. Late Submissions for the Namibia Student Financial Aid 2024/2025 Late submissions will not be accepted by NSFAF once the portal is closed. Final thoughts on how to apply for the Namibia Student Financial Aid 2024/2025 Applying for Namibia Student Aid 2024 involves eligibility checks, document preparation, online application, and engagement throughout the review
Read More👨🏿🚀TechCabal Daily – Humane AI is gearing up for a sale
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية TGIF Thanks to Clinton A., Nancy O., Isaac N., Blessing N., Sarah G., and everyone else who emailed to say Bring The Memes/Images back—I’d mention you all if I could. As I explained in my emails to you all, I can’t promise that there’ll be memes in next week’s edition, but we will start to reintroduce them slowly over the next month. And to everyone else who emailed to say they don’t want the images back, I’m sorry but the majority carries the vote! But we won’t mess with the quality of the content, so it’ll still be the same TC Daily you love. In today’s edition Quick Fire with Rowland Okondor Google to lay new subsea cable that connects Africa to Australia Lagos launches cybersecurity centre Humane up for sale after underwhelming launch of AI pin Maëlle Gavet steps down as CEO of Techstars The World Wide Web3 Opportunities Features Quick Fire with Rowland Okondor Rowland Okondor heads the Product Team at BudPay. Having been in the Banking and Financial Technology sector for over 8 years, Rowland has been privileged to lead several cross-functional teams delivering innovative solutions, powering payments for businesses and consumers across Africa. Rowland Okondor Explain your job to a five-year-old. Let’s say you love toys and ask your uncle to build you one from scratch for your birthday in exactly two weeks. First, your uncle asks you to tell him everything you want in your toy (requirement gathering). Then your uncle gets a group of people who can draw (Designers) to show you an image of what your dream toy looks like (User interface Designs). Your uncle then gets people who can build your dream toy (Developers/Engineers). Finally, Your uncle gathers a set of people (Quality Assurance Testers) to try out your new toy to make sure the toy is exactly how you want it. Then your uncle shows up at your house on your birthday with your shiny new toy. Even better, your uncle keeps a journal (Roadmap) where you can write what you would like to improve on your dream toy. That, my dear, is how your favourite Uncle becomes your favourite product manager. In your experience across fintech startups and large corporations, what do you see as the biggest challenges and opportunities for financial inclusion in Africa? One of the biggest challenges we as Africans have faced on financial inclusion is the banking penetration and the lack of banking infrastructure in rural areas which accounts for the largest number of the unbanked population. That has presented a unique opportunity for agency banking which has been taken in great stride if we are limiting financial inclusion to the basic needs of sending and receiving money with the nice-to-haves of bill payments. This has presented another challenge/opportunity concerning the integrity of the data on the financially included population via this agency/community banking scheme since their participation is in fact in proxy via the “agents”. The next step in the evolution of this scheme is to ease regulatory barriers that hinder this population from being more active players, increase financial literacy, and set up infrastructures that aid their ascension on the ladder of financial needs beyond sending and receiving money, to saving and investing. Beyond user acquisition and activation, what other key metrics do you focus on to measure the success of B2B fintech products? The most important metric when building B2B fintech products beyond acquisition and activation is the success rate. The efficacy of your product will be measured against the success of carrying out financial actions on your product simply because these actions have a high impact and reward both to the user and the business. Other notable metrics include Activity rate, Feature Utilisation, Customer Retention & Churn rate, Customer Lifetime Value, Monthly Recurring Revenue (MRR), and Customer Acquisition Cost (CAC) especially as it directly relates to Revenue Per User (RPU). Other customer support metrics include Customer Satisfaction and Net Promoter Score (NPS), Response and Resolution Time. Looking back at your career, can you share an instance where a product misstep led to valuable learnings? Payment is partnerships and part of your product experience has to do with choosing the right partners to deliver the right experience. Understanding the available infrastructure in any given jurisdiction also plays a significant role in this process. To deliver an automated onboarding experience on a Product that we had been working on, we decided to validate one of the user requirements for onboarding automatically. This would also help us streamline the pipeline to more intending users. So we removed the ability for users to complete the validation of this requirement manually. Unfortunately, the instability of the said Infrastructure resulted in a huge dropoff in onboarding whenever there was downtime. We implemented a manual failover to help users complete this process in the event of downtime. How do you manage to maintain a healthy work-life balance in the fast-paced world of fintech? Working in fintech is challenging. Supporting businesses is even more challenging as some of our users have a 24/7 service promise to their customers. This means that I have to be more available than usual. However, maintaining a work-life balance is something that I am intentional about. I take time out to engage in recreational activities that keep me mentally healthy. I play and follow sports very actively. Being an extrovert also means that I am mostly outside, having fun and meeting people. 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. Internet Google to lay new subsea cable that connects Africa to Australia In March, a break in subsea cables disrupted internet connectivity across several African countries for weeks. This disruption didn’t only affect internet services, banks and other essential services across the continent also had downtimes due to the break. By the first
Read MoreeMedia records $17 million profit despite TV advertiser pullback in SA
eMedia, the South African television broadcaster that owns eTV and eNCA, recorded a profit after tax of R315 million ($17 million) despite a 1% advertiser spending pullback in the country. The company’s R3.1 billion ($168 million) topline was driven by advertising revenue, which was R2.1 billion ($114 million), or 70% of total revenues. The advertising revenue, representing a 3% increase from the previous year, is the largest the company has ever recorded. Although on the decline because of load shedding, cord cutting and competition from internet advertising, TV advertising in South Africa is a lucrative business for broadcasters like eMedia. Advertisers are willing to part ways with at least R1,100,000 ($60,000) for 170 placements, or “spots”, of a 30-second ad. They can even spend more if the ad exclusively runs in prime-time slots, weekdays between 6:00 pm and 11:30 pm. “eMedia’s channels collectively have a prime time market share of 33.5%, making the company the market leader in South Africa,” the company told shareholders. eTV recently surpassed state-owned SABC1 as South Africa’s leading prime-time television channel with a 20.7% prime-time market share. Apart from eTV, the rest of eMedia’s channels accounted for 27% of the company’s advertising revenue, amounting to R611 million ($33 million). Loadshedding, which has plagued South Africa for over a decade, impacts TV broadcasters as advertisers are wary of spending top dollar for ad slots which might not yield much viewership because of the blackouts. According to data by Statista, TV ad spending in South Africa is expected to grow by only 1.4% annually by 2029, translating to revenues of $547 million.
Read MoreTechstars 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.
Read More👨🏿🚀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.
Read More