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Proposed New Rules May See More Money Flowing Into Kenyan Startups From Overseas

January 25, 2021

Kenyan startups may see more investments if the Kenya Citizenship and Immigration (Amendment) Bill 2020 sails through. By the terms of the proposed new law, Kenyans living in the diaspora may receive special benefits, including wealth security, to allow them to invest back home.

Murang’a Senator Irungu Kangata, states — *Senator Irungu Kangata*

“The Cabinet Secretary may liaise with financial institutions in Kenya to negotiate favourable terms on the investments of any contributions that may be made,” the Bill, sponsored by Murang’a Senator Irungu Kangata, states.

A Big Bait On Kenya’s Large Remittance Market

The proposed new law will see Kenyans sending more money home than they used to. In 2020, Kenyans living abroad defied the pandemic to send Sh337 billion ($3bn) home, according data released by Central Bank of Kenya (CBK). The figure represents a significant increase from the Sh305 billion recorded in 2019. The money sent back home in December alone went towards the festivities and into school fees funding. The voluntary savings scheme proposed by the new bill will not only allow Kenyans living in the diaspora to form associations and voluntarily contribute contribute to a saving scheme, but will also allow them to invest in Kenyan projects and programmes.

“The Cabinet Secretary, may in consultations with the Cabinet Secretary for Treasury and the governor of Central Bank, develop policies and programmes offering incentives to Kenyans living abroad to invest in Kenya,” the Bill states

Key actors under the bill will be Foreign Affairs Cabinet Secretary, who is required alongside the Central Bank governor, to establish a database setting out information on programmes and projects in Kenya for investment by Kenyans living abroad. Among other things, the Bill requires the Cabinet Secretaries and the governor to put in place measures for the prevention of fraudulent practices that hinder investment, in Kenya, by Kenyans living abroad.

The passage of the bill will most likely be a mere formality as the east African country has most recently launched its first ever Diaspora Investment Fund. The fund which is being managed by African Diaspora Asset Managers (ADAM), an investment firm that has been granted the first licence of its kind by the Kenyan Capital Markets Authority, will among other things, provide a safe and regulated investing body for Kenyans living overseas. It will also allow payments to be made using Kenya’s popular mobile money platform M-Pesa, enabling Kenyans to make investments from as little as five dollars.

“The use of technology will be the hallmark of the five diaspora funds, available to investors from all over the world as well as Kenyans. Using the ADAM mobile app, they are able to invest, check their investment balances and even sell their units in real time using VISA cards, bank accounts and MPESA,” Susan Muigai, ADAM’s head of global business development, said.

Almost three million Kenyans living in mostly North America and Europe sent an estimated $3bn in remittances to Kenya in 2019.

While remittances are usually sent to families, direct investment is also common.

“Kenyans living in the diaspora send billions home every year, but mostly for consumption and social support. A few have tried their hand in investments including real estate and farming, but without a way to establish what is happening on the ground, it has in numerous instances ended up with them losing their hard-earned money. We are delighted with this development, as all this will now be a thing of the past, as those investing through these licensed diaspora Funds will have the recourse and protection of the CMA as a regulator,” Abubakar Hassan, director of market operations at the Capital Markets Authority, said.

If the investments from the Kenya diaspora are well managed, they could be a huge opportunity for startups in the country. Despite a population of about 52 million people, about four times smaller than that of Nigeria, Africa’s most populous and richest country, startups in the east African country raised the largest funding amount in 2020 with over $194 million recorded, ahead of Nigeria’s $170 million, according to the latest data gathered by Startuplist Africa on the African Startup Ecosystem.

In 2020, the National Information, Communications and Technology (ICT) Policy was passed which , among other things, encouraged pension funds in Kenya to set aside 5% of their investments for the local ICT startup ecosystem.

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

Kenyan overseas investment Kenyan overseas investment

Kenyan Startup MPost Raises $1.9m Series A Funding Round, Second Deal In A Year

December 17, 2019

African startups are increasingly sapping so much from Venture Capital market this year. Joining, Lori, Twiga Foods and others to raise funds in Kenya this year startup Taz Technologies, which is behind patented addressing technology MPost. In its latest Series A round of funding, the startup has closed a US$1.9 million to finance its expansion and further development of its proprietary platform.

Here Is The Deal

This round of funding was led by both existing investors such the Cape Town-based VC firm HAVAÍC and new investors from South Africa, Australia, Japan, the United States (US), Canada and Nigeria, with more investors including blue-chip institutions, VC funds, and high-net-worth individuals.
Mpost intends to use the investment to fund its expansion and for further investment in its proprietary technology platform and operations.
Taz will continue with its strategy of expanding into the East African region, and later Sub-Saharan Africa.

“With the support of our investors, we are accelerating the development of our product functionalities and creating other value-added service offerings,” said co-founder Abdulaziz Omar.

Why The Investors Invested

South Africa’s Cape Town-based VC firm HAVAÍC has previously invested an undisclosed amount in Mpost, with Rob Heath, the partner responsible for pan-African and international business at the firm citing reasons for investing in Mpost as thus:

“After spending time with Aziz and Twahir in Nairobi and seeing the solution in action, it’s clear that this is not just a technology and commercial product. MPost makes a real impact on people’s daily lives and as an investor, it’s rewarding when we can tie these two elements together. That being said, this is a great example of African problems producing global solutions — one of the cornerstones of our investment thesis at HAVAÍC.”

But perhaps the most crucial metric for investing is that Mpost has already gained more than 40,000 users, mostly as a result of its partnership with the Postal Corporation of Kenya, a fact which would easily excite investors. To further understand that investors invested because of this. the startup has been primarily self-funded since its founding, although it first obtained some angel investment in 2018.

A Look At What Mpost Does

Founded in 2015 by Abdulaziz Omar and Twahir Mohamed, MPost is a platform that enables the conversion of mobile numbers into official virtual addresses, which allows notifications to be sent to clients whenever they get mail through their postal addresses.
The MPost technology provides a convenient, reliable and affordable way of sending and receiving packages, as well as providing last mile connectivity, through post offices worldwide. Taz has partnered with the Postal Corporation of Kenya (PCK) to provide virtual postal addresses, meaning MPost customers can now collect their parcels or letters at any of the 623 postal offices countrywide.
Taz was one of the 10 African tech startups selected into the Startupbootcamp AfriTech programme in 2018, and the accelerator’s co-founder and chief investment officer (CIO) Zachariah George is now a strategic advisor to the company.

“We are extremely pleased at the key commercial traction and corporate partnerships that MPost has achieved during and post the programme, and are delighted that this product-market fit has been validated by a strong consortium of global investors in their Series A round,” Omar said.

Meanwhile, last month mobile operator Safaricom and PCK launched the MPost partnership, which affords Safaricom’s 33 million customers the ability to register for an MPost address via a dedicated USSD code provided by the firm.

Comments:

Indeed, Mpost is teaching other African startups doggedness in the face of tough times, and the importance of attaching to a bigger, but neglected market such as the public mailing system. On the other hand, a look at the diversity of investors shows that trust, which is the central point in choosing where to invest, is building momentum in the East African country of Kenya. Recall that Kenya topped the chart for startup funding in 2019 and that Chinese investors recently led major investment in the country’s locally founded Lori Systems,unlike in Nigeria where they prefer to launch from the scratch. This is one feat we would take away from Chinese investors’ behavior in the African startup ecosystem in 2019. They simply invest directly in ecosystems they have more trust in , while launching out fully from the scratch in others.

On a lighter note, give it to Mpost’s team for the persistence. This $1.9 million round is the deal breaker, the freedom they have been looking for to fly.

As 2019 winds down, there are strong indications that the African startup ecosystem is finally catching up a bit with the rest of the world, and the picture may even look bigger in 2020.

Those who launched out today, may have started early.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

Kenyan Recruitment Startup Lynk Raises Funding For Expansion

July 14, 2019

Kenyan recruitment startup, Lynk is the newest to join the train of startup fund-raising in Africa. Though the amount raised is undisclosed, it is larger than Lynk’s combined total of previous funding, which was a US$1.3 million seed round and US$500,000 in grant money.

A Look At The Funding

This round of funding was led by Lateral Capital and featured local and international family offices and funds such as the Cornerstone Group.
Lynk co-founder Johannes Degn said the funding would be used to help the startup expand its operational footprint, grow its team and improve its B2B offering.

“It will almost exclusively be for salaries as we are hiring a more senior team. We are growing our commercial presence in Nairobi. Our ability to grow market size in Nairobi is the remaining proof point before expanding to second market. We have budgeted a good amount for marketing activities,” Degn said.

What The Startup Does

Lynk connects informal artisans with customers. It allows customers to book professional services from highly vetted artisans. Customers can simply book an assessment with the artisan and the artisans will be with them in as quickly as 4 hours. Quotes are provided at set rates, and assessment costs are deducted from the total job value. So whether it is a gentle full body Swedish massage for deep relaxation or the installation and replacement of sinks, baths, showers, and toilets, Lynk is up for it.

The Kenyan startup also says there is no way a wrong artisan would turn up.

‘‘We’ve been connecting customers to workers since 2015. Our customer base trusts and believes in the quality of our services and our digital platform always the entire process to be transparent — you don’t need to work about inexperienced workers, hassle about payments or rates, or worry about communication. We serve as the neutral intermediary and ensure all work is delivered and completed to industry standards. This means ensuring that the Pros we connect you with have a breadth of experience, are professional, trained, and certified in their craft. Once we find the right match, we will notify you of the details — name, and contacts of your Pro before the service,’’ it notes.

The startup was started in 2015.

So far, the Lynk platform claims it has facilitated more than 31,000 jobs and over 100 construction projects.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

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CarePay: Kenyan Startup Looks To Disrupt Health Care Payment In Africa With £40 Million Expansion Fund

May 16, 2019

There are still so much unexploited opportunities in the African health payment market. This is what the Amsterdam and Nairobi-based startup, CarePay International is looking to tap into. With £40 Million in new funding, the startup is trying to expand to more territories.

Key Analyses

The startup is smarter here. It is choosing to expand more on its investment in Nigeria with a population of 200 million people (and which had the value of transactions conducted through mobile devices rise by 56 per cent in the first nine months of 2018 alone to N216bn from the 2017 figure of N138bn (about $600 million).

And it is also choosing Tanzania,the sixth most populous country in Africa ( which had the value of Mobile Money Transactions reaching TZS 50 Trillion ( about $22 billion) in 2016–17) as the starting point of its investment targets.

With the latest funding of £40 million, CarePay is already one of the most funded startups in the whole of Africa, in the rank of Andela, others.

The startup is going to Health tech in the countries and it plans to digitally connect health players including insurers, users, and providers on a single mobile platform, so that they can communicate and make transactions in real-time.

The startup was also strategic with this round of fund raising as it targeted a pool of investors from different investing backgrounds, in order to give the startup a two-sided look: that of generating a social outlook for the startup and bringing back financial returns. Dutch private equity funds IFHA-II, impact investor ELMA Investments, Dutch Ministry of Foreign Affairs which invested through the PharmAccess Group are some of the mixture of investors for this round.

In 2015 alone, investors poured over 14 billion USD into fintech companies globally while African fintech startups have attracted almost 30% of the total VC investments into the continent, which amounts to nearly $50 million.

By December 2017, 49.1 per cent (338.4 million) global mobile money accounts were in Sub-Saharan Africa. Within the region, East Africa had 56.4 per cent of the accounts, followed by West Africa at 30.9 per cent. In Eastern Africa, 66 per cent of the adult population of Kenya, Rwanda, Tanzania and Uganda combined actively used mobile money.

Although health insurance coverage is still low in many countries in Sub-Saharan Africa, mobile money use may have increased access to it. Kenya’s social health insurance, the National Hospital Insurance Fund (NHIF), for instance, experienced a 500 per cent increase in voluntary payment subscribers between 2009 and 2017 after the organisation started receiving payments via M-PESA

Also See: Kenyan e-Health Startup Raises $3m For Expansion

CarePay International was launched in 2015.

“The mobile phone allows you to reach everyone at almost no extra cost, this creates unprecedented opportunities for health insurance schemes,” said Onno Schellekens, CEO of CarePay International.

“Universal health coverage in Africa will only be possible if governments and their citizens can provide and access health services from both the public and private sectors through seamless and efficient mechanisms, CarePay brings that ambitious vision within the realm of possibility,” said Tom McPartland, a Board member of ELMA Investments.

“The current health insurance model excludes huge parts of the African population as the administrative costs are too high, there is not enough data and outpatient costs cannot be controlled,” said Max Coppoolse, IFHA-II’s Managing Partner. “CarePay’s mobile technology addresses all these elements and in addition offers cross-sale opportunities and other significant growth prospects for insurers.”

CarePay International works with private and public health payers, connecting millions of people to its platform that are currently excluded from quality healthcare services in Africa.

Charles Rapulu Udoh

Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.