Kenya warns online platforms to pay digital taxes or face a penalty
in partnership with FLUTTERWAVE AND TANGERINE LIFE 28.04.2020
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PARTNER CONTENT

Shopping in store is a little more high stakes than it used to be. Spar Nigeria, a full service supermarket has transitioned online to make it easier for you to get your necessities, thanks to Flutterwave. Order online, pay securely with Flutterwave and get your groceries delivered to you.

FINTECH
Nigerian fintech Okra has secured $1 million pre-seed investment from TLCom Capital. The startup has been in business for just three months. Founded by Fara Ashiru Jituboh and David Peterside, Okra is an API service which allows clients to retrieve real-time financial information from a bank account to any web or mobile app. This access could be used to power different applications and use cases ranging from lending, payments and even identity verification. That sounds a lot like what Paystack and Flutterwave already offer. Yet Okra works more like Plaid, the US fintech that got acquired for a whopping $5.3 billion in January. After developing code to access over 15 banking institutions, the Nigerian fintech makes money through licences. Its volume pricing plan starts at $500 per month; that’s the same amount Plaid charges to access over 10,000 APIs. Okra’s $1 million raise is testament to growing interest in API based fintech services. Companies like Visa and Mastercard have been snapping up such companies for the last two years.
A NEW FUND
Alexandria Angels, an Egyptian angel investment network, has launched a $6.3 million fund to invest in Egyptian startups. Former managing director of Abraaj Group joins the fund as a General Partner alongside two other GPs, Tarek El-Kady and Loay Shawarby. Outlining its investment plans, Alexandria Angels said the fund will be sector-agnostic and will back entrepreneurs who have grand visions.
FOOD DELIVERY
Still on Alexandria Angels, the new fund has invested in the pre-Series A funding round of Mumm, an Egyptian food delivery startup. The delivery company has previously raised seed funding in 2016 and another $200,000 investment in 2017 from 500Startups. However, its latest investment comes as bridge funding to support its growth. Mumm is one company that could be witnessing a boom as the coronavirus pandemic has forced people to turn to online platforms to order cooked food and groceries. Alexandria Angels hinted at this. "Although it is risky for investors to put more cash into seed-stage companies in these times," the investor said, "[but] certain sectors will find opportunities to thrive if they can stay afloat during these tough times, we believe Mumm is well situated to strive."
TAXES DIGITAL TAXES
Kenya Revenue Authority (KRA) believes a number of digital marketplaces have not been complying with new tax regulations. Although it did not mention any particular platform, the tax body observed that they "are not charging VAT [on transactions] made through their platforms." It warns that these companies could be fined if they do not comply.

The KRA is flexing new tax powers it got last year. In 2019, the government passed the Finance Act which widens the tax net to include digital platforms. Irrespective of whether the platform is resident in Kenya or not, the Act mandates the KRA to collect taxes when these platforms sell goods and services to Kenyans. The East African country is one of the few African countries with such tax laws. Zimbabwe has imposed 5% tax foreign ecommerce companies, while Nigeria signed the 2019 Finance Bill a few months ago, opening the doors for a future online tax.

Implement digital taxes could be challenging. US President Donald Trump has threatened to retaliate against countries that forge ahead with their digital taxation plans. However, Kenya is undeterred. It joined 137 countries to support a global tax proposal from the Organization for Economic Cooperation and Development (OECD) in January. And late last year, Kenya's KRA requested proposals from firms to build a platform to collect digital tax revenue. As the pandemic forces more people to use and pay for digital services, the government's need to tax these platforms could grow.

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CHEAPER 5G
The Ghanaian government wants to provide mobile telephony to over 1,000 communities that have no mobile signals. The Ghana Investment Fund for Electronic Communications (GIFEC) has selected Parallel Wireless, a US-based company, to lead the effort. Parallel Wireless will use an interesting approach called OpenRAN to connect communities to 2G, 3G, 4G and 5G networks. OpenRAN standardises the design of hardware and software used in masts, antennae and other telecom infrastructure. It allows telcos to source components from many companies rather than a small number of vendors (Huawei, Ericsson) and their closed systems. In turn, network development becomes cheaper. OpenRAN is relatively new, but it is gradually getting support. Vodafone is already using the technology in countries like DR Congo and Mozambique.
FUNDING OPPORTUNITY
Applications are now open for GSMA’s Innovation Fund for Mobile Internet Adoption and Digital Inclusion. The fund supports startups that are helping people get connected to the internet in Sub-Saharan Africa and Asia. It will provide equity-free funding between £100,000 and £250,000 to selected startups. Application closes on May 22.
CLEAN ENERGY
MPower, an Africa-focused solar company has raised $430,000 through the crowdfunding platform, Crowdcube. Based in Switzerland, MPower offers a plug and play solar solution for customers in a number of African countries. By the end of 2019, the company had over 2,000 users in Cameroon, Togo and Zambia according to TechMoran. MPower has previously received funding from groups such as the UK Department for International Development and Energy 4 Impact. However, the company said it will use its latest funding to upgrade its software, scale operations and expand to three other markets.
FEMALE TECHNOLOGY
Health-tech companies focused on female technology are growing. Called femtech companies, in 2019 they collectively raised $750 million to develop tools like period trackers, cervical home kits, family planning and reproductive health tools for women. In Africa, femtech companies have emerged and they are gradually showing their potentials. In this article, TechCabal’s Kay Ugwuede writes about the sector and who the African players are.
WHAT WE'RE READING

+ Editor of one of South Africa's leading tech publications writes that the "irrational ban" on e-commerce will backfire on the country's Trade & Industry Minister, Ebrahim Patel.

That's all for today,

Stay safe this week!
- Abubakar

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