The DeveloPPP Ventures initiative, funded by the German Federal Development Ministry (BMZ), aims to empower indigenous companies in Kenya by offering an entrepreneurial assistance program with a grant of up to €100,000.
The program provides grant funding for growth investments in start-ups that have proven their concept and are ready to scale through a matching-funds mechanism.
German Development Minister Gerd Müller.
“Many developing countries, particularly in Africa, have an exciting start-up scene. This is where the jobs of tomorrow and innovative solutions for the challenges on the ground are emerging. Drones being used to deliver medicines, banks that are completely digital — things which sound like the music of the future to European ears — many African companies are already making these ideas a reality,” said Development Minister Gerd Müller.
“We want to encourage this entrepreneurial spirit even more, thereby helping to create modern jobs for young people. Since the launch of our DeveloPPP program, more than 2,000 projects have been realized around the world, together with local, German and European companies. Last year alone, almost 80,000 people received initial and further training thanks to this support,” he added
The BMZ has established a new pillar to its assistance portfolio in the form of DeveloPPP Ventures.
The initiative is intended at young entrepreneurs who are making creative contributions to sustainable development in their developing countries while also improving the living standards of the inhabitants, with the help of impact investing specialist Seedstars and business incubator NaiLab.
The new initiative will begin in Kenya, which already has a thriving startup community. DeveloPPP Ventures will progressively grow to include other nations after that.
The program is accessible to startups that have their headquarters or a branch in Kenya. For their projected expansion investment, they may be eligible for a grant of up to €100,000. Applicants must meet a number of requirements, including earning some early revenue with their product and being able to secure matching financing from other sources of at least the same amount.
In addition, during their growth path, start-ups will receive personalized support from technical specialists. The first request for proposals for develoPPP Ventures will start on May 26, 2021, and close on July 15, 2021, in Kenya.
The BMZ has been collaborating with enterprises intending to make sustainable investments in a developing nation or emerging economy and grow their activities on the ground for over two decades through its support program DeveloPPP.
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 write
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.
central bank of 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
Startups in Kenya can now laugh last, courtesy of Safaricom ’s Spark Fund which has announced allocation of Ksh 540 million ($4.9 million) to fund local tech startups as part of its initiative to invest in startups that align with Safaricom’s purpose, as well as support high potential tech ventures in the country.
“The fund will support startups through a combination of investment, business development support, and technical assistance leveraging on Safaricom’s unique capabilities, assets, and market positioning,” said Safaricom in a statement.
Here Is What You Need To Know
Under the new fund, Kenyan startups will receive support in the form of investments, business development support, and technical assistance from the fund seeking to grow strategically aligned tech-enabled startups for either a Safaricom Partnership or acquisition.
Even though the fund is meant to benefit Kenyan startups generally, Safaricom is looking for startups that complement its offering.
Spark Fund’s target is also to invest in late seed and early growth stage ventures in education, healthcare, and agriculture.
The fund’s average ticket size is $500k but access to Safaricom’s new fund will be treated on a on a case-by-case basis, with the possibility of larger amounts, preference had over startups that offer local solutions to their communities.
In 2014, the inception of the Spark Fund, Safaricom allocated Ksh 108 million ($1m) to grow startups, leveraging on the company’s unique capabilities, assets, and market position.
The first round of the fund benefitted startups like Sendy, Lynk, Ajua, iProcure, Farmidrive and Eneza between 2015 and 2017, investing an average of Ksh 18.9 million ($174k) for every startup.
Interested Kenyan startups must have a Kenyan presence, and must prove that they have commercially viable business models.
The startups must also have refined working mobile-based products or services with an active user base.
Interested ventures should be generating revenues and sign a partnership with Safaricom.
Eligible startups should be either late seed or early growth stage tech-driven ventures.
The Spark Fund urges applicants to protect their ideas 0or prototypes before submitting their applications.
A strong team will also be an added advantage.
Fund Manager S&B Ventures will identify and select successful applicants, and later present shortlisted ventures to Safaricom’s Investment Committee and the Board of Trustees for approval for funding.
Safaricom will then appoint an internal deal team to offer post-investment support after disbursing the funds.
How Startups May Apply
The Fund Manager is S&B Ventures, based in Kenya, who will source deals, perform due diligence and recommend the investments.
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
Tunisia has proven to be the country where companies have invested the most in innovative technological solutions during the crisis, according to a survey of CEOs in Africa, by the Think tank, Oxford Business Group (OBG), at the end of April 2020 and the results of which were published in the group’s report for July 2020.
Adnane Ben Halima, vice president of public relations for Huawei’s Mediterranean region
“Indeed, having demonstrated exceptional digital capabilities, many of its African peers have identified Tunisia as a cradle of innovation during the crisis”, according to this 30-page document entitled “Report on the Tunisian response to the Covid -19 ”.
Here Is What You Need To Know
Among examples of technological innovations during the crisis, the report cites the robot known as Veasense, developed by Tunisian start-up “Enova Robotics” to safely help patients of Covid-19 at Abderrahmen hospital Mami from Tunis. The robot allows medical personnel to remotely perform preliminary diagnoses and monitor patients without any physical contact.
The Tunisian Home Office has also acquired the PGuard from Enova Robotics, a robotic ground vehicle used to help enforce the country’s lockdown rules. Controlled remotely by government officials, the robot is equipped with infrared and thermal cameras, an audio system, GPS tracking, and a sound and light system that can be used to request IDs and issue verbal warnings.
Another example of the application of new technologies in the midst of the pandemic is the ‘Corona Bot’, a digital application that can provide information and support to people through Facebook. The application uses artificial intelligence and has sent more than 200,000 messages to 10,000 people.
The pandemic has also considerably accelerated the implementation of mobile payment systems, also notes the OBG report, recalling that “before the epidemic, certain players in the private sector had demanded the abolition of administrative formalities which had slowed down widespread adoption of mobile transactions since 2013, but without much success ”.
The crisis has created an urgent need to quickly and safely transfer small sums of money to large numbers of people, after the deployment of exceptional aid of 200 dinars, for 350,000 low-income citizens. “Covid-19 has shown the importance of embracing digitization and improving digital infrastructure,” Adnane Ben Halima, vice president of public relations for Huawei’s Mediterranean region, told OBG.
“This change since the start of the pandemic has been accompanied by political will and a change of mentality in favor of digitization. This has led to an accelerated delivery of projects that had been on hold for years, in just a few weeks, ”the manager developed.
The crisis has revealed the importance and potential of companies, helping to address many of the challenges that have emerged, with innovative solutions designed by local start-ups, such as telemedicine, concludes OBG, in its report.
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.
Startups and other small companies in Kenya now have a rare of opportunity of securing contracts in Kenya’s oil, gas and other sectors. The International Finance Corporation (IFC) is implementing a six-year project to that effect.
“This will include a focus on supporting women and youth entrepreneurship, capacity building, and facilitating access to finance with local financial institutions,” says IFC.
Here Is All You Need To Know
Although funding for the project dubbed Kenya Local Economic Development Project (LED-Kenya) started in September last year, IFC only made the disclosure this month without indicating the amount it will spend in the initiative.
IFC says the project will run up to June 2023 with a focus on strengthening local firms’ capacity and the business environment in communities impacted by oil, gas, mining and infrastructure investments in Kenya.
This coincides with the period Kenya is moving closer to joining the league of oil exporting countries by 2023.
A Look At The Kenya Local Economic Development Project (LED-Kenya)
The project is split into three phases with the first one being to “enhance opportunities for local businesses to participate in the supply chains of multinational firms by improving access to information along with improving local firm capacity to meet standards and international requirements.”
The second component involves creation of different market opportunities for local businesses and boosts their ability to compete in new markets such as agricultural and livestock value chains as well as renewable energy.
The project is also keen on enhancing corporate governance of local boards and advisory councils. IFC has increased its business advisory projects in Kenya, adding to its traditional role of providing debt and equity funding to local firms.
The global financier invested an additional Sh13.4 billion in Kenyan companies in the year ended June, taking its stock of local capital commitment to Sh305 billion.
For Enquiries:
Contact IFC Kenya Office
Kenya International Finance Corporation Commercial Bank of Africa (CBA) Building, 4th Floor Mara/Ragati Road, Upper Hill Area P.O. Box 30577–00100, Nairobi, Kenya Telephone: +254 20 2759000 Fax: +254 20 2759210
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
