How China 🇨🇳 Is Taking Over East Africa’s Digital Economic Stack (China Africa Podcast)

In places like East Africa, Chinese technology is indispensable up and down the stack

The technology stack, either in a company or a country, is comprised of the different technology layers that together form a digital communications ecosystem. And in places like East Africa, Chinese technology is indispensable up and down the stack — everything from the internet cables that deliver connectivity to the networks that route all of the data and, most visibly, all those Chinese-made mobile phones that are ubiquitous.

So, when the U.S. government focuses a disproportionate amount of attention on Huawei, and ZTE to some extent, they’re missing the much bigger picture where Chinese technology is pervasive throughout East Africa’s digital ecosystem.

And Chinese tech companies aren’t just playing in the hardware space, they’re also becoming increasingly active in the African app market, e-commerce and laying the ground work for emerging technologies including blockchain and cryptocurrencies.

Kioneki (Michael Kimani) is closely following all of this from Nairobi where he’s an independent blockchain advisor to companies and governments in the region. He joined Eric Oliander and Cobus van Staden on this edition of the China Africa Podcast to unpack how China has taken over the technology stack powering East Africa’s digital economy.

From minute 06:18 – 38.08

Continue reading “How China 🇨🇳 Is Taking Over East Africa’s Digital Economic Stack (China Africa Podcast)”

How Bitcoin is Solving One of Africa’s Biggest Problem (Part 1)

Osiri and her peers are embracing some of Bitcoin’s most controversial features and virtues of privacy and decentralization, to stick it to the man and turn it into fortunes.

It took a white man, CEO of Twitter Jack Dorsey, to point out one of the most powerful, yet underrated stories coming out of Africa, when he said “ Africa will define the future of Bitcoin.”

I am here to tell you that story. 

After years of poor governance and corruption, time has now caught up with Africa’s states. They are unable to generate enough job opportunities for the millions of digital native Africans that spend 6 hours everyday glued to their whatsapp, tik toks, selfies and hyper localized memes.

Half of their time is spent on smartphones and the other half out in the real world looking for any way to make a dollar. It is hard out here. No jobs. That’s all that matters.

In the midst of the digital economy that is taking root in Africa, Bitcoin , a rare, radical, anti-central bank digital asset has found its way into the hands of thousands of young Sub Saharan African digital native, like Osiri.

Osiri and her peers are embracing some of Bitcoin’s most controversial features and virtues of privacy and decentralization, to stick it to the man and turn it into fortunes.

Despite multiple warnings by African Central banks, and an embargo by banks and Mpesa imposing sanctions on Bitcoin & cryptocurrency exchange services, informal networks of virtual currency dealer in Kenya, Ghana, Nigeria and South Africa continue servings millions of dollars worth of demand, in ways that resemble the trading ways of their ancestors.

In the decentralized digital economy, trade of Bitcoin flows free, unhindered.

But while the rise of this decentralized digital economy is creating opportunities for the bulging youth populations of Africa’s economies, it is running up against the old power structures that will go to great lengths to maintain the status quo.

This is part 1 of a 2 part series on how bitcoin is solving one of Africa’s biggest problems.

Continue reading “How Bitcoin is Solving One of Africa’s Biggest Problem (Part 1)”

How Corona Virus in Kenya is Affecting Mpesa Revenues Post Covid19

Mpesa’s inextricable link with Kenya’s informal sector means its fully exposed to the impact of Coronovirus on biashara.

It’s fair to say Kenya’s predominantly informal sector is currently under shock, due to the impact of the rona and the measures and mitigations that have followed: quarantines, social distancing rules, curfews, restrictions and possibly lockdowns.

Mpesa’s inextricable link with Kenya’s biashara economy fully exposes it to this shock. Newly appointed CEO Peter Ndegwa of Safaricom and M-Pesa admitted to Reuters , that the mobile payments darling of Africa and East Africa is fully dependent on the economy of Kenya.

It has only been a month of subdued biashara, but the new Mpesa CEO already expects a 7.3% decline in Mpesa revenues of upto $52 million this quarter. 

Unless a vaccine or cure can be found, and a resumption to the biashara economic levels to Pre-Covid19, Mpesa revenues are likely to be worse than this first quarter for the forseeable future.

Here is why

Continue reading “How Corona Virus in Kenya is Affecting Mpesa Revenues Post Covid19”

How the Young Somali Hawaladars of Little Mogadishu are Shaping the Future of Bitcoin in Africa (Part 1 of 2)

Youthful Somali hawadalars from East Africa are complementing an age old informal financial practice with an odd piece of a new digital resilient tool – bitcoin.

This article is Part 1 of a 2 Part Series

The importance of informal finance arrangements is a reverberating theme across Africa. Informal doesn’t necessarily mean bad or evil or dirty, it’s just that rather than rely on the heavy hand of the law, some communities prefer to place their trust in reputation and social networks for all trade commerce and financial relationships whether offline or online.

Others, will turn to informal institutions of trade and finance when faced by adversity in an immediate harsh environment such as war, political instability, structural programs or lack of reliable services.

For example, the Igbo traders in Nigeria pulling on social networks to scale resilient informal enterprise in the face of political instability in Nigeria. 

The early airtime currency traders of Africa who gave birth to mobile money like Mpesa tapped into the power of networks to fill a money remittance gap using an odd piece of technology.

Today, the peer to peer Bitcoin traders of Kenya are bypassing an embargo by banks to meet demand for bitcoin by leveraging informal bitcoin trading networks based on trust and reputation.

It is all there.

One of the best case studies is of the Somali people, during post black hawk down cold war of Somali in the 90s by Peter D. Little. 

Set in the early 2000s post war Somalia, his stories tells of the resilience of trade of livestock across the whole of East Africa despite the collapse of central government and no functional system. 

The Ethiopia Somali Kenya cattle trade flourished in spite of the failed state conditions, on the back of trust network built on kinship. Through informal financial instruments and contracts of exchange and trade, they were able to sustain demand in Nairobi, forming a key trading corridor network in the Horn of Africa

In the post digital, post mobile world of 2019, the Somali people of little Mogadishu are under a different kind of threat on their digital financial lives.

Digital financial surveillance is underway in Kenya as part of tax reforms by revenue authorities including mandatory monitoring of electronic transactions and taxes on the digital economy.

Kenya is under pressure to reform after taking on too much debt to fund infrastructure projects that haven’t quit materialized as planned. An economic slow down, high youth unemployment rates and the weight of repayments on sovereign debts are some of the symptoms of the times. Some commentators have likened the impending state of the times to the Structural Adjustment Programs of the late 80s to 90s which shaped much of what is today’s informal economy.

As we shall see, the Somali people are some of the most sensitive to threats of erosion capital. It is in their blood, a natural instinct to respond to invasive threats to wealth such as hawala networks to bypass strict capital controls.

This got me thinking, how will the Somali people weather a period of heavy monitoring, high scrutiny and low trust?

The the answer lies in Eastleigh, a bustling business district in one of East Africa’s capitals, Nairobi. Here, youthful Somali hawadalars are complementing the old informal financial practices with an odd piece of a new digital resilient tool – bitcoin.

While there is no war today, times are similarly tough, the only difference is that is all mostly digital.

This is Part 1 of a 2 Part Series on how the young Somali Hawaladars of little Mogadishu are shaping the future of bitcoin in Africa

Continue reading “How the Young Somali Hawaladars of Little Mogadishu are Shaping the Future of Bitcoin in Africa (Part 1 of 2)”

How Nokia and Prepaid Airtime Fractionalization Gave Rise to Africa’s Digital Economy: Guest Post by Niti Bhan

What can we learn about the digital society emerging in Africa without the trappings of legacy infrastructure and institutions?

3 seemingly unrelated events in different parts of the world in the early to mid 90s converged, to culminate in the perfect storm  – what we now call Africa’s Rising digital economy.

One was in the mid 1990s, in a small city in northern Finland, where engineers and designers began work on the product development of a mobile phone that would eventually become one of the best selling Nokia models ever – the 3310, released in Europe and the Far East in the year 2000. The continent of Africa was not yet on their radar as a target market and Nokia’s impact on sub Saharan Africa, as well as its iconic success for its legendary durability was still some years in the future.

The second event was around the same time, in 1994 – 1995. Portugal Telecom’s mobile telephony division TMN, invented the prepaid business model whilst researching ways to lower barriers to credit services, and thus reach a wider audience. They too, were not thinking about the farmers, traders, or biashara vendors on the African continent, for whom the prepaid plan would turn out to be a godsend, matching their needs for flexibility and control over the timing and amounts spent on cellular services. This, too, was still a handful of years in the future.

The third is the liberalization of African state owned monopolies such as in telecommunications in the mid 1990s which opened the doors to private sector operators in cellular telephony, and thus, to competition.

These 3 events would prove to be a fertile time for the perfect storm and the firm foundation on which today’s African digital economy thrives.

Continue reading “How Nokia and Prepaid Airtime Fractionalization Gave Rise to Africa’s Digital Economy: Guest Post by Niti Bhan”

Why Africa’s Policy Makers Should be Worried About Virtual Platforms and Virtual Currencies

In a lot of ways, Facebook is more like a government than a traditional company. What does this mean for Africa’s Governments, fintech industry and policy makers?

“In a lot of ways, Facebook is more like a government than a traditional company” – Mark Zuckerburg

The rise of virtual internet platforms such as Facebook, Whatsapp, Telegram, Kakao is challenging established regimes of state and sovereignty, monetary policy and issuance of currency, control, ownership and governance of virtual resources in developing countries in Africa.

Billions of users, including Africans are spending more time on virtual networked platforms that command the attention of far greater audiences than the populations of individual nation states. WhatsApp has 1 billion, Telegram 200 million users and Facebook has 2.3 billion users worldwide.

Now, these virtual platforms are all getting into the business of  issuing currencies using ‘blockchains’ or shared ledgers to monetize all the possibilities of economic activity within the confines of their platforms. 

Out of all of them, Facebook’s Libra coin drew the most attention. No surprise at all considering the sheer size of its 2.3 billion people user base.

What does this mean for Africa’s fintech industry and policies, that tech giants from overseas can monetize the digital economy of Africa through non-sovereign means including issuance of digital currencies?

What follows is a transcript of conversations between Michael Kimani  and Andile Masuku, about the current shift to internet virtual platforms, and currencies, and what lies ahead for Africa’s Fintech policy.

Michael Kimani is Head of Business Development East Africa at Zippie, a mobile blockchain platform, a Fintech Innovation Advisor for Visa and Secretary General of the Blockchain Association of Kenya. He is one of East Africa’s renowned digital money analysts.

Andile Masaku is a Co-founder and Executive Producer at Africa Tech RoundUp.

Some parts of this Q&A were pulled from a podcast with Andile, while some of it are from phone discussions with Malak Gharib of NPR and Ronit Ghose of Citi Bank.

The structure is presented in the format of a Question and Answer. Enjoy!

Continue reading “Why Africa’s Policy Makers Should be Worried About Virtual Platforms and Virtual Currencies”

5 Reasons Why Facebook’s New Cryptocurrency ‘Libra’ is Bad News for Africa

For many emerging ‘mobile first’ consumers from East Africa the internet is indistinguishable from Facebook and the internet does not exist outside of this singular social network.

Facebook is plotting a new cryptocurrency dubbed ‘Libra’ for its vast social network scheduled for release in 2020. Libra coin, a virtual currency, will be governed by Libra association, a conglomerate of 28 American and European corporations who will decide everything from who can join the network, process transactions and how much currency will circulate.

As an African, it is my opinion that the peoples of Africa, its governments and central banks should be concerned, because we risk ceding more control, from the little we have now, to a digital colonial version of the internet.

That is because, for many emerging ‘mobile first’ consumers from East Africa the internet is indistinguishable from Facebook and the internet does not exist outside of this singular social network.

In a future post, I will write on how Africa can redress this imbalance. 

But today, I have 5 Reasons Why Facebook’s New Cryptocurrency ‘Libra’ is Bad News for Africa.

Continue reading “5 Reasons Why Facebook’s New Cryptocurrency ‘Libra’ is Bad News for Africa”

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.

Continue reading “How PayPal & the UK Government are nudging Kenyan Online Workers to Bitcoin”

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.

Continue reading “Why Facebook’s New Cryptocurrency Is a threat to Mpesa and Safaricom”

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.

Continue reading “How Africa’s Airtime Currency Traders Birthed A Fintech Innovation Playbook”