Four years ago, in 2018, Nigerian payment startup Flutterwave announced it had expanded to the East African country of Kenya. But it appears the startup have come to an abrupt end in the country. This is because the Central Bank of Kenya (CBK) has, in a letter to Kenyan CEOs, ordered Kenya banks and microfinance institutions to stop doing business with payments technology companies Flutterwave and Chipper Cash.

In the statement, the regulator instructed banks to break ties with the fast-growing payments unicorns, which may include cancelling all accounts and freezing funds. The lenders must return to CBK within seven days.

Read also Central Bank of Kenya Cracks Down on Flutterwave, Chipper

“It has come to the attention of the Central Bank of Kenya (CBK) that Flutterwave Payments Technology Ltd and Chipper Technologies Ltd have been engaging in the money remittance business without licensing and authorisation by CBK,” the letter reads. “Money remittance services in Kenya are regulated pursuant to the Central Bank of Kenya Act and the Money Remittance Regulations, 2013. Further, money payment services in Kenya are regulated pursuant to the National Payment System Act and the National Payment System Regulations, 2014.”

This comes just days after the CBK governor told journalists at a meeting of the Monetary Policy Committee (MPC) that the two companies are not licenced to provide remittance and payment services in the country.

Here’s What You Should Know

• The rule might spell the end of payments technology businesses aiming to leverage the country’s fast-growing multibillion-dollar online payment market.

• The two unicorns have rapidly expanded across the continent in recent years, much to the dismay of regulators, who accuse them of promoting fraud and transporting illicit currency with low rules.

• The Assets Recovery Authority (ARA) is now investigating Flutterwave for money laundering, and it is unclear whether the company has regulatory authority to operate in the country.

• The High Court froze more than Sh6.2 billion in 62 bank accounts belonging to the Nigerian start-up and four Kenyans earlier this month, citing concerns that the funds were the results of card fraud and money laundering.

• The ARA applied to prevent the transfer or withdrawal of billions in Guaranty Trust Bank (GTB), Equity, EcoBank, KCB, and Co-operative Bank accounts, pending the filing of a petition to have the money forfeited to the government.

• Olugbenga Agboola and Iyinoluwa Aboyeji founded the payments technology startup in 2018 and have offices in Lagos, Nigeria and 1323 Columbus Avenue, San Francisco, California.

• After Nigeria, Kenya is the firm’s second-largest market.

• In February, the company secured Sh28.41 billion in a Series D fund drive, primarily to finance mergers and acquisitions in the continent’s booming payments market.

• Chipper Cash was launched in 2018 by Ham Serunjogi of Uganda and Maijid Moujaled of Ghana to provide rapid cross-border mobile money transactions in Africa.

• The company is headquartered in San Francisco, California, and has secured around Sh35.9 billion ($302.2 million) in investment, the most recent of which being a Series C round in November of last year.

• The platform provides peer-to-peer payment services in nine countries, including Ghana, Uganda, Tanzania, Rwanda, Nigeria, South Africa, and Kenya. Other countries include the United States and the United Kingdom.

Flutterwave Kenya Bank Flutterwave Kenya Bank

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. 
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh