Policy & Regulations - Afrikan Heroes

Ethiopia Awards First Private Telecoms License To Kenya’s Safaricom

May 23, 2021

The Ethiopian government has granted the Ethiopian Communication Authority permission to grant a license to Global Partnership for Ethiopia, a consortium led by Safaricom and consisting of Vodafone, Vodacom, Safaricom, and Sumitomo Corporation. The consortium will pay $850 million for the license and will spend $8.5 billion.

*Balcha Reba, director-general of the Ethiopian Communications Authority*

“We will soon open a bid for the remaining licence,” said Balcha Reba, director-general of the Ethiopian Communications Authority speaking to Reuters.

MTN, the other competitor, bid $600 million but did not receive the license.

A Look At The Winning Consortium — Global Partnership for Ethiopia

Making up the winning consortium is Vodafone, a British multinational telecommunications firm which has partnered with Vodacom, Safaricom, CDC Group, and Sumitomo Corporation.

While South Africa’s Vodacom will have a 6.2 percent stake in the consortium, Safaricom, a Kenyan telecommunications behemoth will retain 56% and consequently be the lead partner in the bid. Sumitomo will, however, own 25% of the company while the CDC Group — the UK’s development finance institution — is expected to hold 10% of the new consortium’s shares.

“The respective consortium members may invest through special-purpose investment vehicles for structuring purposes,” Safaricom said of the new Ethiopian entity’s structure to Reuters.

Safaricom Most Likely To Launch Its Mobile Money Arm, M-PESA In Ethiopia Soon

The newly granted license will mean so many things for Safaricom, including the launch of its famous mobile money brand, M-PESA in Ethiopia.

This follows a recent review of its previous position on foreign participation in Ethiopia’s mobile money services by the ECA. Hence, for the first time in history, the country would be letting foreigners into its financial services. According to a source, the proposed new telecom licenses will enable licensees to sell mobile money services. They will also not be limited to using Ethio Telecom’s infrastructure, according to the same source.

Notwithstanding the expected entry of Safaricom into mobile money services, Ethio Telecom, the state-owned telecoms outfit had proceeded to launch Telebirr, its mobile money service recently. Ethio Telecom’s Telebirr is already available to the company’s over 53 million customers.

Ethiopia had received harsh criticism from a number of authorities, including the World Bank in February, for its policy of prohibiting new operators from offering mobile money and restricting infrastructure competition.

Despite the latest move to allow foreign participation in the provision of mobile money services, Ethiopia (which is Africa’s second most populated country after Nigeria) continues to place a bar on foreigners owning stakes in banking, insurance, brokerage services, and legal consultancy businesses.

In October 2020, after series of negotiations and deliberations, the National Bank of Ethiopia (NBE), finally granted a license to state-owned telecoms company, Ethio Telecom, to start mobile money service in the country. This followed the issuance, in April 2020 by the bank, of a regulation called Licensing & Authorization of Payment Instrument Issuers. For the first time in Ethiopia’s history, the regulation allowed mobile money transactions.

The regulation has also opened up the country’s financial services sector to include that a licensed payment instrument issuer may, with the relevant agreement with regulated financial institutions and pension funds, be allowed to provide micro-saving products; micro-credit products; micro-insurance products; or pension products in the country.

The National Bank of Ethiopia also issued, that same year, a “Licensing and Authorisation of Payment System Operators Directive (ONPS/02/2020), allowing financial technology companies (fintechs) to start off payment processing and related services in Ethiopia.

Five licenses under the payment system operator directive include National Switch, Switch Operator, ATM Operator, POS Operator, and payment gateway license.

Although not yet there, it does seem that the days of bar against foreign participation in the country’s financial services sector are numbered.

Ethiopian license Safaricom Ethiopian license Safaricom Ethiopian license Safaricom

Foreigners Are Still Not Allowed To Participate In Ethiopia ’s Financial Services Sector Under New Rules

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Kenya Admits Blockchain And Foreign-stock-trading Startups Into Sandbox Regime

May 17, 2021

Kenya is never leaving its growing startup ecosystem behind, including in its capital markets. Since the launch of the country’s record-breaking regulatory sandbox licensing regime in March 2019, the Capital Markets Authority (CMA) has admitted seven companies into the scheme. The Regulatory Sandbox Policy Guidance Note (Regulatory Sandbox PGN) which was approved in March 2019 is part of CMA’s strategic focus to leverage technology across the capital markets value chain, as espoused in its 2018–2023 Strategic Plan. The CMA has also launched a report studying the performance of the sandbox regime so far.

*CMA Chief Executive, Wyckliffe Shamiah*

“The Authority’s commitment to the introduction of the sandbox is aligned to the Capital Market Master Plan (CMMP, 2014–2023) which identiﬁes technological innovation as one of the five centres of excellence of the Kenyan capital markets,” The CMA Chief Executive, Wyckliffe Shamiah said.

Here Is What You Need To Know

Pezesha Africa, Innova Limited, Genghis Capital Limited, the Central Depository and Settlement Corporation (CDSC), Pyypl Group Limited, Belrium Kenya Limited, and Four Front Management are among the companies that have been admitted to the Regulatory Sandbox.

The CMA has received 24 applications in the areas of robo-advisory, blockchain technology, real estate tokenization, global stock access, crowdfunding platforms, Electronic Know Your Customer platform, Screen-Based Security Lending and Borrowing platform, Regtech solutions, and Data Analytics.

CMA’s keen interest in proactively reviewing its supervisory and regulatory model to take into account the fast-changing environment across the capital markets’ product and service architecture, technology, and supervision was noted by Shamiah, who launched the CMA Regulatory Sandbox Study.

“CMA has been at the forefront of implementing initiatives to stimulate and support the growth of FinTech and innovation within Kenya’s capital markets,” Shamiah said.
Read also:Africa’s Digital Payments Race Becomes a Scramble

“In line with its facilitative role, the Authority seeks to provide a conducive regulatory environment for the deployment of innovative FinTech and business models that have the potential to deepen capital markets in Kenya,” she added.

Crypto projects granted approval for regulatory sandbox testing in South Africa — *In simple terms, this is how a regulatory sandbox works. Image credits:* *LinkedIn*

The report highlights some of the main achievements, including SMEs receiving funding through Pezesha Limited’s crowdfunding platform.

It also goes into the core lessons learned by the sandbox review committee, as well as the opportunities found so far and how they will be implemented to improve future sandbox engagements.

*How to apply to the regulatory sandbox license in Kenya. Source: CMA*

The Authority has also gathered information to aid in the implementation of a Fintech-friendly regulatory system. CMA has also been pursuing collaborations with key stakeholders, which are important catalysts for the capital markets’ growth and development.

South Africa Grants Four Crypto Projects Approval For Sandbox Testing

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Ethiopia Lifts Restrictions On Social Media — NetBlocks

According to internet blockage monitor NetBlocks, service to social media sites Facebook, WhatsApp, and Instagram has been restored in Ethiopia after they were limited earlier on Monday.

Update: Service to impacted online platforms in Ethiopia has been restored as of Monday mid-morning. We continue to monitor. pic.twitter.com/hniga6HbNg
— NetBlocks (@netblocks) May 17, 2021

Here Is What You Need To Know

Facebook, WhatsApp, and Instagram were restricted in Ethiopia, according to network data, the London-based watchdog said in a tweet earlier on Monday. NetBlocks, according to its director Alp Toker, observed the restrictions in six locations across Ethiopia.

On Monday morning, Shumete Gizaw, the head of Ethiopia’s Information Network Service Agency, did not immediately respond to phone calls and text messages seeking comment.

Telecommunications monopoly regulated by the government Frehiwot Tamiru, the CEO of Ethio Telecom, did not immediately return phone calls or text messages requesting comment.

Twitter, YouTube, Snapchat, LinkedIn, and Reddit, among other platforms, had remained available, according to Toker. He added that users with connections to VPN services were able to circumvent the restrictions.

Due to logistical difficulties, Ethiopia’s electoral board postponed parliamentary elections on June 5 to an unspecified date, the second time the vote has been postponed since the original August 2020 date was scrapped due to the COVID-19 pandemic.

In the past, internet access in Ethiopia has been limited during times of political instability, such as last year in Tigray’s northern region after the military launched an offensive against regional forces attacking its bases there.

NetBlocks reported that an internet outage in June 2019 cost the country’s economy $17 million.

Ethiopia social media Ethiopia social media

Why Ride-hailing Is Thriving In Egypt, And Why UK’s UVA Just Joined The Race

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

South Africa Perfects Plans To Block WhatsApp’s New Privacy Policy

May 14, 2021

WhatsApp’s new privacy policy comes into effect tomorrow, May 15th, but South Africa looks prepared to kill it before it takes roots. In light of that, the country’s Information Regulator has announced that it was pursuing legal advice to have WhatsApp update its privacy policy in the country to comply with European Union requirements (EU).

“On the 15th of May 2021, WhatsApp will require users to accept new terms and conditions for using the App. The Information Regulator (Regulator) has after correspondence, written to WhatsApp LLC and requested it to revise the privacy policy in South Africa to the standard used in the European Union (EU). The Regulator has received no agreement from WhatsApp. Under the circumstances the Regulator is briefing attorneys to prepare an opinion on the way forward in terms of litigation,” a statement from the regulator reads in part.

Users of the Facebook-owned messaging app were notified earlier this year that they would either have to agree to new privacy conditions, which go into effect on Saturday, or avoid using the service.

The update, which allows WhatsApp to obtain personal information from users, has sparked outrage around the world.

South Africa Wants WhatsApp To Respect Data Protection Laws Across Africa

According to the Regulator, it had engaged the Global Privacy Assembly (GPA), of which it is a member, in order to obtain the view or position of the GPA on the compliance of the Revised Policy with generally acceptable data protection principles and whether it intends to engage WhatsApp on this matter.

The Reseau Africain Des Autorite De Protection Des Donness Personelles (RAPDP) an African Network of Data Protection Authorities, which South Africa is also a member to, has also engaged robustly with Facebook on 9 April 2021 on the matter, according to the regulator.

The Regulator further said the Network made strong recommendations to WhatsApp requesting them to bring the WhatsApp privacy policy in line with Africa data protection laws.

“RAPDP emphasised that the privacy policy should be applicable to Africa in line with those applicable to other regions, particularly the European region.”

Without getting any favourable response from the concerned authorities, the Regulator therefore said it had asked the Portfolio Committee on Justice and Correctional Services to request Facebook South Africa (SA) and WhatsApp LLC to appear in Parliament in respect of the matter.

“We are obligated as the Regulator to ensure the protection of personal information of all South African citizens and monitor compliance of the POPIA by responsible parties. We therefore will take this matter further and seek legal opinions and advocate for collaborated efforts,” Chairperson of the Regulator, Advocate Pansy Tlakula said.

A WhatsApp spokesperson said in March that the update would not increase the company’s ability to exchange data with Facebook or affect the privacy of users’ communications with friends and family.

What Happens From Tomorrow?

It appears WhatsApp is poised to go ahead with the implementation of the new data policy, including in South Africa, and the rest of Africa.

Sources claim the latest update is intended to “offer integrations around the Facebook Company Products”, which also includes Instagram and Messenger.

Data collected includes “battery level, signal strength, app version, browser information, mobile network, link information (including phone number, mobile operator or ISP), language and time zone, IP address, system operations information, and identifiers (including identifiers specific to Facebook Company Products associated with the same device or account).”

On social media, some WhatsApp users slammed the latest privacy policy, with many threatening to switch to a competing messaging app like Telegram.

WhatsApp, on the other hand, is by far the most popular messaging app in the world, with about 2.5 billion users worldwide.

However, after being purchased by Facebook for $19 billion in 2014, it has been criticized for how it manages user data.

Jan Koum, a co-founder of WhatsApp, stepped down as the company’s CEO in 2018 after a confirmed irreconcilable disagreement over Facebook’s decision to monetize personal data in the app.

An older version of WhatsApp’s privacy policy stated: “Respect for your privacy is coded into our DNA. We’ve aspired to develop our Services with a set of solid privacy standards in mind since the beginning of WhatsApp.” This line has been removed from the most recent edition.

WhatsApp Privacy South Africa — Source: Internet Freedom Foundation

Because of the new rules, merely deleting the app from a smartphone would not prohibit WhatsApp from storing a user’s personal information. Users must now use the in-app function to delete their account to ensure WhatsApp does not fail to do so.

“When you delete your account, it does not affect your information related to the groups you built or the information other users have relating to you, such as their copy of the messages you sent them,” the policy states.

WhatsApp Privacy South Africa WhatsApp Privacy South Africa

How to Tell if Your Website is POPIA Compliant

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Ethio Telecom’s Money Mobile Service, Telebirr, Now Live In Ethiopia. Here Is How To Register

May 12, 2021

Ethiopia has launched ‘Telebirr,’ a mobile money service that enables Ethio Telecom, the country’s telecom services provider’s customers to send, store, and receive money using only their phone number.

#Ethiopia today launched ‘Telebirr’ – a mobile money service that allows Ethio Telecom mobile customers to send, store and receive money by just using their telephone number. ‘Telebirr’ aims to extend mobile services to our financially excluded sections of society. 1/2 pic.twitter.com/ZYiahYSQpo
— Abiy Ahmed Ali 🇪🇹 (@AbiyAhmedAli) May 11, 2021

With the launch, the stage is now set for some fierce competition between Ethio Telecom, a telecom company owned by the country’s government, and M-Birr a mobile money company which has been active since 2009 with over 1.8 million users and a network of almost 33,000 points-of-presence covering branches, agents and other merchants. This competition stems from the fact that with this launch, Ethio Telecom’s Telebirr will now be available to its over 53 million customers.

Through TeleBirr, customers will be able to email, receive, and store money using their mobile phones via the TeleBirr mobile money service.

They will also be able to pay for goods, utilities, and utility bills, as well as receive money from the diaspora, apply for loans, and connect their bank accounts to their TeleBirr wallet.

How to Register for Telebirr

Users may make self-registration for telebirr using their own mobile phone via App/USSD, or by visiting the nearest Ethio telecom’s shop, authorized retail agents or partner bank branches.

For more information on how to register, visit: https://www.ethiotelecom.et/telebirr/telebirr-registration/

how to register TeleBirr — *Number of mobile money users as a percentage of the population of the relevant African country…Source:* *African Payment Solutions*

Late To East Africa’s Booming Mobile Money Market?

Despite being the second most populous country in Africa with a population of more than 109 million, only about 33.86% of Ethiopian adults have formal accounts at financial institutions in Ethiopia, compared to the neighboring Kenya with over 82%.

The country has also been largely left out of the booming mobile money market across the East African region. As of 2019, the total value of mobile money transactions reached $17 billion in Kenya, $12 billion in Tanzania and $5.9 billion in Uganda.

Even war-torn Somalia, with a meagre population of 15 million, about seven times smaller than Ethiopia’s, recorded approximately 155 million mobile money transactions, worth $2.7 billion, every month in 2018.

In 2019, the Global System for Mobile Communications (GSMA) declared East Africa number 1 in the world in terms of transaction volume and value of mobile money.

With more than 102 million active accounts, generating more than 17.1 billion transactions — an unmatched $293.4 billion in value and a 24% increase from 2018 — the region is the highest of any other sub-regions in the world. Sadly, none of these figures included Ethiopia.

It is therefore little wonder that a 2018 report by the GSMA described Nigeria, Ethiopia and Egypt, home to a combined adult population of over 242 million, as Africa’s mobile money sleeping giants.

Ethiopia’s low rate of mobile money usage could be attributed to the rigid regulatory walls that have ensured monopoly and lack of innovation. Telecommunication, aided by enabling legislations, has particularly driven the widespread adoption of the relatively new financial service type across Africa.

Safaricom’s M-Pesa, recently acquired by Vodacom, accounted for 655.95 million out of the 810.9 million mobile money transactions recorded in Kenya in the third quarter of 2019 alone. In Uganda, MTN enjoys over half the market share for mobile money.

“The reasons for this vary,” notes GSMA in its report about why Nigeria, Egypt and Ethiopia remain the continent’s sleeping giants when it comes to mobile money usage in Africa. “…In Ethiopia, a strictly regulated telco, restrictions on competition, lack of internet connectivity, and low levels of consumer trust and financial literacy have created barriers to uptake and market entry.”

Finally Loosening The Regulatory Barriers And Joining The League

In October 2020, after series of negotiations and deliberations, the National Bank of Ethiopia (NBE), finally granted a license to state-owned telecoms company, Ethio Telecom, to start mobile money service in the country.

This followed the issuance, in April 2020 by the bank, of a regulation called Licensing & Authorization of Payment Instrument Issuers.

For the first time in Ethiopia’s history, the regulation allowed mobile money transactions. However, there is a caveat: any company interested in the new financial service regime must set up a trust account with a deposit money bank in Ethiopia.

“As part of the application process,” the directive read, in parts, “the National Bank, may request for a preliminary meeting and demonstration of the intended payment instrument to be issued, its related services, products as well as operation. Based on requests made and written approval of the National Bank, a payment instrument issuer may be allowed to provide cash-in and cash-out; local money transfers including domestic remittances, load to card or bank account, transfer to card or bank account; domestic payments including purchase from physical merchants, bill payments; over-the-counter transactions; and inward international remittances services.”

The regulation has also opened up the country’s financial services sector to include that a licensed payment instrument issuer may, with the relevant agreement with regulated financial institutions and pension funds, be allowed to provide micro-saving products; micro-credit products; micro-insurance products; or pension products in the country.

The National Bank of Ethiopia also issued, that same year, a “Licensing and Authorisation of Payment System Operators Directive (ONPS/02/2020), allowing financial technology companies (fintechs) to start off payment processing and related services in Ethiopia.

Five licenses under the payment system operator directive include National Switch, Switch Operator, ATM Operator, POS Operator, and payment gateway license.

how to register TeleBirr how to register TeleBirr

Foreigners Are Still Not Allowed To Participate In Ethiopia ’s Financial Services Sector Under New Rules

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Digital Lending Startups In Kenya Resort To Buying Banks To Survive

May 9, 2021

Desperate times call for desperate measures. This is the condition of things for multifarious digital lending startups which are on the brink of extinction following a new wave of killing regulations that would require them to hold a banking license to survive in Kenya.

In a latest move to beat the regulations, “Branch”, a famous mobile loan app in Kenya has earned regulatory approval to purchase majority ownership stake in a local bank, Century Microfinance Bank Limited.

Branch International Limited was authorized to purchase 84.89 percent of Century Microfinance Bank Limited’s issued share capital, according to a gazette notice dated Friday, May 7.

“Pursuant to the provisions of section 46 (6) of the Competition Act, 2010, it is notified for general information that in exercise of the powers conferred upon the the Competition Act, the Competition Authority has authorised the proposed transaction as set out,” the gazette notice reads in part.

Here Is What You Need To Know

One of the conditions for the approval of the purchase is that Branch and Century must both keep the terms negotiated with the borrowers on all loans in their respective loan books at the time of the purchase.

Branch and Century will both, also, keep their current performing and non-performing loans in compliance with their terms until they expire, so that the terms do not violate the provisions of the Competition Act №12 of 2010.

The switch is part of Branch’s larger strategy to move into the formal lending market.

The decision came a month after parliament passed a bill aimed at regulating mobile loan rates and defaulted credit care in order to protect borrowers from abusive lending.

Century Microfinance Bank is a microfinance institution that specializes in providing financial services to micro, small, and medium enterprises. Branch is one of the most popular apps in Kenya on the Google Play Store.

In 2012, the Central Bank of Kenya granted Century Microfinance Bank a deposit-taking microfinance institution license to provide a full range of financial services, including savings accounts and credit facilities.

The Central Bank of Kenya (Amendment) Bill of 2020, although purports to curb the steep digital lending rates that have plunged many borrowers into a debt trap as well as predatory lending, also extends its tentacles, by its operation, to all financial technology services in Kenya.

In October 2020, more than 337 unregulated digital mobile lenders and micro financiers were also barred from forwarding the names of loan defaulters to Kenya’s credit reference bureaus (CRBs). This followed a statement from the Central Bank of Kenya (CBK) in a circular released in March 2020 that digital and credit only lenders will no longer submit credit information on their borrowers to Credit Reference Bureaus (CRBs).

In the statement, CBK explained that the withdrawal is in response to numerous public complaints about misuse of the Credit Information Sharing System (CIS) by the lenders and particularly poor response to customer response.

The Implications Of The New Law On Digital Financial Services Startups In Kenya

Licensing of Digital Financial Services Companies/Startups

The first direct implication of the new law on digital financial services startups in Kenya is that the Central Bank of Kenya will now possess recognized power under the law to issue operational licenses to startups desiring to provide services related to a digital financial product, financial product advice, market, administrative or management services or credit under a regulated credit contract in Kenya.

What this means is that startups that offer digital banking services will now also have to maintain a minimum authorized capital of five billion shillings ($46.4 million), which may be increased by such amount as shall be determined by CBK, unless the contrary is stated by the CBK.

In other words, all the rules regulating commercial banks and other financial institutions will now have to apply to startups offering digital financial services under the law.

*FinTech covers all areas of human interaction with commodity-money circulation and uses a large class of IT technologies. Source: —* *Aspilos.com*

Regulation of Interest Rates Charged Users Of Digital Lending Services

Even though digital lenders in Kenya may still be allowed to lend, the law would, however, see that they do not charge interests on their loans excessively. This is because the CBK could now determine the maximum rate of interest they may charge their customers.

Implied Lifting Of The Ban On Credit Lending Startups

Another implication of the new law would also be to terminate the ban on credit lending startups in Kenya which obtain CBK’s license as regards submitting credit information on their borrowers to Credit Reference Bureaus (CRBs).

Thus, with renewed power to report customers for blacklisting to the country’s central credit information sharing center, it is only safe to say that the risks associated with their business model have become, once again, more manageable.

The latest move to control the activities of digital lenders follows the removal of legal cap on commercial lending rates by the Central Bank of Kenya in March 2020.

The cap, established far back in 2016 and which set interest rates chargeable by banks at 4%, was intended to address the issue of the affordability of credit for small enterprises and working people, as they had complained for years that high interest rates had locked them out of accessing credit.

Its removal in March 2020 has, however, resulted in the proliferation of digital lenders, who seek to take advantage of the business opportunities it offered.

Some of the complaints include that digital lenders do not provide full information to borrowers on pricing, punishment for defaults and recovery of unpaid loans.

For instance, before now Tala, Branch, which are among top players in the mobile digital lending market in the country, offered interest rates of 152.4 percent and 132 percent per year respectively.

Digital lenders have also been accused of abusing personal information collected from defaulters’ mobile phone contacts list to bombard relatives and friends with messages regarding the default and asking third parties to enforce repayment.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Ethiopia’s Financial Services Sector Gradually Gives Way To Foreigners

For the first time in history, Ethiopia would be letting foreigners into its financial services. According to a source, Ethiopia’s proposed new telecom licenses will enable licensees to sell mobile money services.
They will also not be limited to using Ethio Telecom’s infrastructure, according to the same Bloomberg article.

Ethiopia had received harsh criticism from a number of authorities, including the World Bank in February, for its policy of prohibiting new operators from offering mobile money and restricting infrastructure competition.

In a hard-hitting blog post published by the World Bank, Ousmane Dione, the country director for Eritrea, Ethiopia, South Sudan, and Sudan, cautioned that the policy, which has now apparently been abandoned, “may slow down network rollout, especially in rural areas.”

Only two bidders — an MTN group and a Vodafone group — submitted license applications by the deadline in late April.

MTN made it clear that it is sponsored by the Silk Road Fund, a Chinese state-owned investment fund aimed at boosting investment in countries along China’s One Belt, One Road economic development initiative.

The Vodafone consortium is funded by the International Development Finance Corporation (IFC), which has provided a $500 million loan, and the CDC, which is backed by the UK government.

Digital 2019 Ethiopia (January 2019) v01

Foreign (Non-Ethiopian) Investors Are Barred From Participating In Ethiopia’s Fintechs

Despite the latest move to allow foreign participation in the provision of mobile money services, Ethiopia (which is Africa’s second most populated country after Nigeria) continues to place a bar on foreigners owning stakes in banking, insurance, brokerage services, and legal consultancy businesses.

In October 2020, after series of negotiations and deliberations, the National Bank of Ethiopia (NBE), finally granted a license to state-owned telecoms company, Ethio Telecom, to start mobile money service in the country. This followed the issuance, in April 2020 by the bank, of a regulation called Licensing & Authorization of Payment Instrument Issuers. For the first time in Ethiopia’s history, the regulation allowed mobile money transactions. However, there is a caveat: any company interested in the new financial service regime must set up a trust account with a deposit money bank in Ethiopia.

“As part of the application process,” the directive read, in parts, “the National Bank, may request for a preliminary meeting and demonstration of the intended payment instrument to be issued, its related services, products as well as operation. Based on requests made and written approval of the National Bank, a payment instrument issuer may be allowed to provide cash-in and cash-out; local money transfers including domestic remittances, load to card or bank account, transfer to card or bank account; domestic payments including purchase from physical merchants, bill payments; over-the-counter transactions; and inward international remittances services.”

The regulation has also opened up the country’s financial services sector to include that a licensed payment instrument issuer may, with the relevant agreement with regulated financial institutions and pension funds, be allowed to provide micro-saving products; micro-credit products; micro-insurance products; or pension products in the country.

The National Bank of Ethiopia also issued, that same year, a “Licensing and Authorisation of Payment System Operators Directive (ONPS/02/2020), allowing financial technology companies (fintechs) to start off payment processing and related services in Ethiopia.

Five licenses under the payment system operator directive include National Switch, Switch Operator, ATM Operator, POS Operator, and payment gateway license.

Although not yet there, it does seem that the days of bar against foreign participation in the country’s financial services sector are numbered.

Ethiopia financial foreigners Ethiopia financial foreigners

What Difference Have Startup Acts Made In African Countries Where They Exist?

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Digital Service Tax Claims Its Latest Victim In Kenya. Startups Stranded

May 5, 2021

No more signing on of Kenyan startups wanting to set up online shops. This is what Bulgarian web-hosting firm, SiteGround, has said via its Twitter handle as it cancels out Kenya from its list of patronizing countries. The company said it had been frustrated by Kenya’s newly introduced Digital Service Tax regime, which levies 1.5% digital service tax on all digital marketplaces operating in Kenya.

The site is popular among Kenyan startups because it offers them a chance to set up their online presence on low budgets.

“Due to new local regulations (mostly tax-related), we have recently stopped offering new sign-ups for a number of countries and Kenya is one of them,” SiteGround replied to a Kenyan web designer, who had unsuccessfully sought to sign up an account for a client, via Twitter.

“Complying with said regulations would be expensive for us, making offering our product there not feasible for us.”

The Sofia-based company, which has data centers in the United States, the United Kingdom, Germany, the Netherlands, Singapore, and Australia, provides domain registration, business solutions, and email hosting for free or at a low cost.

Shrinking Kenya’s Startup Space?

Last month, global social network giant, Twitter, ditched Nigeria, Kenya, Egypt and South Africa — Africa’s leading startup ecosystems — for Ghana over its choice of African operations’ headquarters.

Analysts claimed choosing Ghana over other countries such as Kenya may not be unconnected with Kenya’s digital service tax which took effect from January 1st, 2021.

2/2 We respect everyone regardless of race, gender, or class. The decision was mainly due to the rapid legal and tax-related changes in several regions that made offering our services there not feasible.
— SiteGround (@SiteGround) May 4, 2021

“The way the taxes have been structured lately, the likely effect is that they will lower the eventual tax throughput to the KRA,” Kamotho Njenga, secretary-general for ICT Association of Kenya, said.

“The taxman may think they are getting innovative, but they may be doing a disservice to their bottom line collection because not every investor will go public on why they have … left a given destination.”

In addition to the 1.5% digital service tax, digital marketplaces (ecommerce websites) must also pay (if eligible) Value Added Tax of 14% in accordance with the provisions of Section 5(8) of the country’s Value Added Tax Act of 2013.

The 2020 Value Added Tax (Digital Market Supply) Regulations provide that failure to pay the relevant taxes will make defaulters liable to restriction of access to their websites in Kenya until such taxes are paid.

The Kenya Revenue Authority (KRA) plans to register 1,000 businesses “deriving or accruing profits” from Kenya through a digital marketplace in the next six months through June, 2021, with a target of raising Sh5 billion ($46m) in the process.

What's up with Kenya? First I couldn't renew my hosting on Siteground because they are no longer available in Kenya, now I can't subscribe to Alexa Rank because it no longer allows subscriptions in Kenya. Makes it hard to work on projects #digitalmarketing #Kenya #digitaltax
— Digital Marketer (@Ruikimutai) April 14, 2021

Which Digital Marketplaces (Ecommerce) Are To Pay Tax?

Under the regulations, taxable services made through a digital marketplace include electronic services under Section 8(3) of the Value Added Act and: –

Downloadable digital content including downloading of mobile applications, e-books and movies;

Subscription-based media including news, magazines, journals, streaming of TV shows and music, podcasts and online gaming;

Software programs including downloading of software, drivers, website filters and firewalls;

Electronic data management including website hosting, online data warehousing, file-sharing and cloud storage services;

Supply of music, films and games;

Supply of search-engine and automated helpdesk services including supply of customized search-engine services;

Tickets bought for live events, theaters, restaurants etc. purchased through the internet;

Supply of distance teaching via pre-recorded medium or e-learning including supply of online courses and training;

Supply of digital content for listening, viewing or playing on any audio, visual or digital media;

Supply of services on online marketplaces that links the supplier to the recipient, including transport hailing platforms;

Any other digital marketplace supply as may be determined by the Commissioner.

What Criteria Are To Be Used In Determining Whether The Digital MarketPlace Is Required To Pay VAT?

Under the new regulations, a digital services company (Ecommerce) rendering taxable services through a digital marketplace shall be required to register for VAT in Kenya if:

(a) the online services are offered by a business located outside Kenya to an end user in Kenya in business-to-consumer transactions.

(b) the business entity is doing business in Kenya and any of the following situations occur:

(i) the user of the services is in Kenya; or

(ii) the payment made to the business entity staying outside Kenya by the user, for the rendering of the internet-based services, starts from a Kenyan bank registered or authorized in the country; or

(iii) the user of the internet-based services, even though he/she resides outside Kenya, has business, residential or postal address in Kenya.

In any case, where the business entity staying outside Kenya to offer the business-to-customer services is not able to register for tax under the simplified Kenyan VAT registration framework, it shall appoint a tax representative to account for the VAT on their digital services.

Kenya Revenue Service Adds Social Media Influencers To The List Of Those Who Must Pay Digital Service Tax

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Uganda Imposes 12% Tax On Internet Data With Effect From July 1, 2021

May 4, 2021

Already considered one of the most expensive in Africa, the cost of Internet access has increased further in Uganda. Despite consumer protests, the government remains stoic in meeting its financial targets that will help pay off public debt. To this effect, the Ugandan government has imposed a 12% excise tax on data plans.

The 2021 excise tax bill, in which this new tax appears, tabled on April 1 by Finance Minister Matia Kasaija, was adopted on Thursday April 29 by the Ugandan Parliament. The new tax officially comes into effect on July 1, 2021.

The House passes the Excise Duty(Amendment)bill,2021. This will see a shs100 tax on fuel & 12% duty on internet data among others. The proposal of shs100 on each kilo of what was however dropped. #PlenaryUg
— Parliament of Uganda (@Parliament_Ug) April 29, 2021

Here Is What You Need To Know

Through this tax, which is part of a series of fiscal measures adopted — including the introduction of a tax of 100 shillings (0.028 USD) for a liter of fuel — the government says it wants to increase its revenues which will help to mop up the public debt.

By December 2020, Uganda’s total public debt had reached a record 65.82 trillion shillings (US $ 18.4 billion).

As of December 2019, it was 49 trillion shillings.

It increased by 16.82 trillion shillings due to increased government borrowing.

Sub-Saharan Africa has just one country among the top ten cheapest in the world — Sudan, in fifth place overall at USD 0.27. The region also has six out of the ten most expensive countries in the world, with Equatorial Guinea the most expensive in the world (USD 49.67), joined by Saint Helena (USD 39.87), São Tomé and Príncipe (USD 30.97), Malawi (USD 25.46) and Chad (USD 23.33) at the bottom of the table. *Source: Cable.co.uk*

The Implications Of The New 12% Data Tax Regime

The data tax follows the failure of the tax on over-the-top (OTT) applications — WhatsApp, Twitter, etc. — introduced in 2018.

In the second quarter of 2020, while the number of mobile Internet subscribers was 18.9 million, the Communications Commission (UCC) estimated that only 11.3 million subscribers paid the tax on OTT.

The rest of the users have switched to virtual private networks (VPNs) to stay out of sight of the government.

With an excise duty of 12% on any internet package purchased, access to connectivity is set to be more expensive for Ugandan consumers, who criticized the move, saying it is a drag on the economy at a time when the Covid-19 pandemic has made online services even more essential.

According to the report “Worldwide mobile data pricing 2021: The cost of 1GB of mobile data in 230 countries” from Cable.co.uk, Uganda is the 19th country in Africa with the most expensive average cost per Gigabyte, or 1.56 USD.

Uganda data tax Uganda data tax

Nigeria Has A New Law For Companies. Here Is What It Means For Startups

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Digital SACCOs Operators In Kenya Must Register Under New Regulations

May 2, 2021

Anybody operating any form of savings and credit co-operative societies (Saccos) in Kenya, whether physically or digitally, must comply with new regulations and accordingly procure a license by June 30.

To that effect, the Sacco Societies Regulatory Authority, in charge of regulating the operations of saccos in Kenya, has ruled out the possibility of an extension for compliance to the Sacco Societies (Non-Deposit-Taking Business) Regulations, 2020, stating the societies had over a year to prepare for the rules.

*Sasra Acting chief executive Peter Njuguna*

“Any person, including members of the public and public entities who undertake such specified non-deposit-taking business transactions or other businesses with an unauthorised person, entity, or Sacco society shall be doing so at his or her risk and peril,” said Sasra Acting chief executive Peter Njuguna in a statement yesterday.

Here Is What You Need To Know

It warned the public not to do business with any Sacco that did not comply by the deadline.

The rules apply not only to Saccos with physical locations, but also to those that operate entirely online.

This involves organizations that solicit membership by subscriptions and those that accept share capital from non-Kenyans.

The regulations’ main goal is to secure members’ savings after cases of Saccos going bankrupt with millions of shillings in assets and leaving members penniless.

Many Kenyans, according to Sasra, have lost money to pyramid scheme-like organizations operating virtually and posing as Saccos, which entice the public to save with them with promises of high returns only to vanish.

“The new regulations will thus rein in such dubious entities,” Njuguna said.

Non-withdrawable Deposit Saccos, where members get their deposits back after leaving the Sacco but may use them as collateral for loans during their membership, are also targeted by these regulations.

How Can New SACCOs Register Under The New Regulations?

Saccos’ Specific Licensing Requirements

The Act (Section 24) and Regulations (Section 4) specify the details that must be provided in order to obtain a license. The following is a partial list of the most important requirements:

1. Capital: SACCOs must have a minimum core capital of Kshs 10 million ($92k) in their financial statements or by submitting bank statements. According to the Regulations, all SACCOs must meet three capital adequacy ratios.

2. Fit and Proper Test: Both directors and senior management (or department heads) will be subjected to a “fit and proper” examination, which will assess their moral and technical suitability to serve on the board and run the SACCO society, respectively.

3. Business Plan: A comprehensive four-year business plan as well as a feasibility study with estimated financial statements is needed. SACCOs that conduct deposit-taking business or plan to start a FOSA must meet all of these criteria.

Saccos’ Primary Licensing Steps:

A five-stage process will be followed to obtain a license:

The SACCO will apply to SASRA the license application forms and required supporting documents contained in the First Schedule of the Regulations.

If SASRA is satisfied, a Letter of Intent will be sent, requiring the SACCO to establish its business premises, implement a management information system (MIS), and create a comprehensive isk management structure.

SASRA will conduct an on-site inspection within 30 days after the SACCO has completed (2) above, and if satisfied, SASRA will issue a Letter of Compliance to the SACCO within another 30 days;

SASRA will then issue a license after the SACCO has paid the licensing fee of KShs 50,000 ($461k) for a head office and KShs 20,000 ($184k) for each branch retained.

SASRA predicts that issuing a license to a SACCO that completely complies with all licensing conditions would take an average of four (4) months.

The deposit-taking business license will be extended on an annual basis.

SACCOS Kenya license SACCOS Kenya license

Why Did Nigerian Pioneer Fintech Company Paga Headquarter Away From Mauritius To The UK?

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer