How PayPal & the UK Government are nudging Kenyan Online Workers to Bitcoin

Kenyan online workers, PayPal and the UK Government are entangled in a mess that is paving way for Bitcoin and cryptocurrencies

A spat between the UK government, PayPal and Kenya freelancers has got everyone mixing up issues.

“Thousands of jobless graduates from Kenya who help lazy university students in developed countries to cheat academically could soon be forced to find something else to do after the UK government started clamping down on essay mills.

On Thursday, international digital money transfer service, PayPal, announced it was withdrawing its services to essay-writing firms selling to university students. This was after weeks of pressure from the UK government, which insists stopping payments for essay mills would go a long way in beating academic cheating.’ Daily Nation

There are 3 parts to this story.

First, the British Education Secretary, Damian Hinds, says when UK students tap cheap labor in Kenya for their assignments, it is unethical and cheating. 46 university vice chancellors last year wrote to Hinds, calling for the banning of cheating websites.

Secondly, PayPal is caught up in the wrangles for facilitating online payments between UK students and Kenyan freelancers. PayPal has come under pressure to stop processing these payments and declared it will not support unethical academic behaviour by UK graduates. Some people have suggested, cryptocurrency may serve well as an alternative for Kenyan freelancers.

Finally, in Kenya, we are all caught up debating whether it is cheating or job creation, as thousands of graduates are dependent on the thriving business for wages and employment.

This case is a glimpse of tectonic shifts at play on the future of Africa, its youth population and the web economy. It is easy to miss the forest for the trees.

To get at the heart of the matter, we need to go back to 2009 when it all began.

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Why Facebook’s New Cryptocurrency Is a threat to Mpesa and Safaricom

Using blockchain and cryptocurrencies, popular internet platforms, are about to disrupt Mpesa in East Africa, the same way Mpesa disrupted banks.

According to sources, Facebook Is Developing a Cryptocurrency for WhatsApp Transfers known a Facebookcoin. If true, this spells doom for Mpesa and Safaricom as they will soon end up as a commodified dumb pipe, like a utility company resigned to a passive role in the medium to long term future.

Popular internet platforms in East Africa have grown beyond social, and now support value exchange within their closed environments – for example Facebook  and whatsapp, both social platforms where people engage in online trade and biashara.

By adding a US dollar pegged coin known as a stablecoin within its virtual network, more value can be captured and retained within the network until it is absolutely necessary to cash out into local currency.

Facebookcoin, platform based currencies and network cryptocurrencies pose a threat to Mpesa just because of the sheer size of the networks they command and everything that goes on within them. This is great news for Fintech startups and banks in East Africa who can reinvent themselves in a post Mpesa world.

Here is how I see it.

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How Africa’s Airtime Currency Traders Birthed A Fintech Innovation Playbook

This is a story of how informal airtime currency resellers of Africa birthed mPesa, mobile money, and an innovation playbook for Africa’s emerging economy.

Not everyone can see it.

If you are keen though, you’ll realize Africa’s informal economy is an open playbook on how to innovate, build and scale successful products and services for the emerging African consumers. Ask me how I know, and I’ll point you to the little known story of prepaid airtime currency re-sellers in Africa who, by cobbling up a rudimentary hack, were able to model a country-wide money transfer network, that would later be adopted by Africa’s telecommunication companies (Telco), spun off into a massive revenue generating business to eventually dethrone the monopoly of banks in East Africa.

But the real story is neither about airtime, nor Telcos. What it is really about are the lessons we can draw upon Africa’s informal economy on how to approach innovation in Africa.

This is a story of how the prepaid airtime re-sellers of Africa not only birthed mPesa, and mobile money, but an innovation playbook for Africa’s emerging economy.

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How The Chinese, Africa’s Most Popular Browser , And A Bitcoin Mining Company Are About To Change African Payments

Africa’s most popular mobile browser, Opera is about to radically change the payments landscape in Africa.

China Loves Africa 2 by Michael Soi
Michael Soi’s China Loves Africa Collection

I think before this blog and thread, the global cryptocurrency community will not appreciate the strategic relevance of Bitmain’s $50 million investment round into one of Africa’s most popular Chinese owned mobile browser, Opera. What they will not see is the Fintech connection at play in East Africa, where the wildly successful mobile browser is creeping into digital financial services like mobile payments. For the payment professionals of East Africa, the pertinence of this investment on the future of their industry will not dawn on them perhaps until it is too late.

Last week’s SEC’s disclosure on Opera’s newest investor for their $115 million IPO, was the best strategic news on cryptocurrency ‘adoption’ in Africa I have seen in the last 5 years with far reaching implications on e-commerce, trade and payments for the region than appears at first glance.

My choice of a header image above accurately captures increasing Chinese influence on Kenya and Africa, at both state and commercial level.

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How the Central Bank Of Kenya Plans To Regulate Bitcoin and Cryptocurrencies

Rather than fight change, the Central Bank of Kenya now seems to be reconsidering its stance on cryptocurrencies as a radically new way of high-speed, low-cost value transfer independent of traditional financial intermediaries.

Bitcoin and cryptocurrencies are a puzzle especially for regulators. Over the last 4 years our dear Central Bank Governor, Dr. Patrick Njoroge has consistently been opposed to the idea of cryptocurrencies. He issued 2 damning public notices warning the public to stay away and another circular expressly requesting banks to choke any value transfer activity related to cryptocurrencies.

As per the Central Bank of Kenya Act, he is well within his right. A bank is a regulated private business. You cannot compel a bank to take you as a customer or take your business. Thus, every once in a while, the governor pulls out his trump card to remind us who is boss.

But mounting pressure has pinned the old man against the wall, forcing him to revisit his dogmatism. An article from the Standard dated May 23rd titled “CBK Warms Up to Cryptocurrencies”  read

“CBK Governor Patrick Njoroge said the regulator was open to introducing cryptocurrencies such as bitcoin as alternative payment vehicles with the opportunity to reduce fraud.”

While in the past, all the the financial instruments that intermediary companies use for fund transfers were based on fiat currencies, in the forms of cash, bank deposits and electronic money – it is no longer the case with the advent of Bitcoin.

Rather than fight change, the Central Bank of Kenya now seems to be reconsidering its stance on cryptocurrencies as a radically new way of high-speed, low-cost value transfer independent of traditional financial intermediaries.

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5 Types of Pesa We Use in Kenya Today

Pesa is dynamic. We need look no further than Nairobi for 5 types of pesa in Kenya you’re likely to have come across.

Pesa is dynamic.

One of my favorite projects in Kenya is Bangla Pesa. Besides being greatly underappreciated as an example of how to empower rural and informal communities, its perception is a great example of the miseducation of pesa. Back in 2013 the members of this community currency project were arrested and paraded in the media as secessionists out to overthrow the national government.

Of course it was but a clear case of misunderstanding, like so many out-of-the-box ideas in Kenya.

When thinking about pesa, you gotta loosen up. We need look no further than Nairobi for 5 types of pesa in Kenya you’re likely to have come across.

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