👨🏿‍🚀TechCabal Daily – Here’s how you can win $5 million

Economy

SMEs in Zimbabwe can cheer for joy as the African Export-Import Bank (Afriexim) has given the country’s largest bank, CBZ Bank, a $60 million line of credit. Think of it like a credit card with a $60 million limit. The borrower can draw on the funds as needed, up to the maximum amount, and only pays interest on the amount borrowed.

Afriexim Bank also launched a $20 million Afreximbank Trade Facilitation Programme (AFTRAF) facility at the bank. This timely injection of funds will bring relief to the country’s Small and Medium-sized Enterprises (SMEs), which have been struggling to access financing due to the country’s lingering economic challenges.

Zimbabwe’s struggling currency: Zimbabwe has grappled with economic instability for over two decades, characterised by high inflation, currency fluctuations, and a severe drought in foreign investment. The government has implemented several measures to stabilise the economy, including the recent introduction of a new currency, the Zimbabwe Gold (ZiG), to replace the inflation-battered RTGS dollar as the official currency.

All that glitters is gold: While the move was aimed at addressing the country’s currency woes, it has had a mixed impact on the economy. The new currency has helped to reduce the demand for foreign currency, but it has also led to a surge in prices and a decline in the value of savings. SMEs, which are the backbone of Zimbabwe’s economy, have been particularly hard hit, struggling to access funding and stay afloat in the face of rising costs and reduced demand.

The Afriexim bank funding which will indirectly support export-oriented Zimbabwean businesses is a welcome respite for SMEs in Zimbabwe, providing them with much-needed access to financing. The AFTRAF facility will also let Afriexim Bank back CBZ Bank’s letters of credit, making it easier for them to do international trade deals when other banks are not willing to take the risk.

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Economy

If you want to understand why rational people may act in ways you consider irrational, examine their incentives. In yesterday’s newsletter, we ended with this poser about Kenya’s President Ruto: “How did a man who swept to victory on the shoulders of young voters become so reluctant to listen to them?”

The answer lies in following the money and economic indices. Kenya had around $80 billion in foreign and domestic debt in 2023. While that number may not tell you much, its debt-to-GDP ratio (73%), a measure that indicates a country’s ability to pay its debts, is more telling.

According to a 2020 World Bank analysis, Kenya was (and still is) at high risk of debt distress. As a result, the country’s debt profile was a key issue in the election campaigns, with Ruto promising to cut public debt and slash taxes. But it wasn’t that straightforward.

Tax collection as a portion of its GDP (15.2%) had been in decline for years and slashing it would mean the government would need new revenue streams to pay off its debts. In the interim, Kenya needed medium-term funding to shore up a declining economy. 

The only sustainable source of funding was the IMF. However, the IMF had a few conditions before handing Kenya $3.6 billion: the country had to commit to increasing tax collection and cutting budget spending. Ruto shook hands on the deal and Kenya received around $3 billion.

Money in hand, Ruto had to deliver on his pledge to raise taxes and Zakayo went about it quickly. New taxes were introduced in 2023 while some old taxes were resurrected. Still needing to shore up collection, the 2024 Finance Bill which introduced a raft of taxes, was born. 

The Ruto administration expected the new taxes would bring in $2.4 billion. 

“When the incentives are crazy, the behaviour is crazy.”

No one would have given that up without a fight. 

Let’s end with another poser: with the tax revenue from the botched finance bill now out of the question, what happens to Kenya’s agreement with the IMF (there’s a last tranche of $900 million yet to be disbursed)? And what new levers can the Ruto administration pull to raise much-needed revenue?

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Crypto

Here’s what $5 million can do for you: Retire now and live on a comfortable income for the rest of your life, buy the latest brand of your dream car…. or you tell me.

All this can be your reality if you can provide the US government with useful information that will lead to the arrest or conviction of crypto fraudster, Ruja Ignatova. For a ransom that big, Ignatova must have been a notorious offender. And yes she is a member of FBI’s top 10 most-wanted list of 2022. 

So who is she? Ignatova has been on the run since 2017 for leading a $5 billion crypto ponzi scheme. The scheme rewarded members with commissions for convincing others to buy into the worthless OneCoin cryptocurrency scam.

Ignatova’s brother, Konstantin Ignatov, who was her assistant, and Gilbert Armenta, her boyfriend, pleaded guilty to fraud and money laundering charges respectively. 

Even after her brother agreed to work with the FBI to find Ignatova, the US government still needs help finding her. The government notched up the reward from $100,000 in 2022 to about $5 million, showing the seriousness of the pursuit.

How can you help? Another question that might come to mind is how the US government can afford such humongous rewards The answer is simple: the cost of justice is a price they’re willing to pay! The US government, under its Transnational Organized Crime Rewards Programme, rewards as much as $25 million for information on transnational organised crime.

If you have useful information, reach out to the FBI via Telegram: @RujaReward, Signal: @RujaReward.01, or online at tips.fbi.gov. The FBI promises to keep your identity strictly confidential. 

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TC Insights

This week, Connect Money, an Egyptian fintech company, closed its seed funding round of $8 million led by venture capital firms Disruptech Ventures and Algebra Ventures. (June 26)

Here’s the other deal for the week:

• Fintech startup Cadana, co-owned by Albert Owusu-Asare from Ghana, secured $7.1 million in seed funding. The financial injection was led by Costanoa Ventures, with contributions from Better Tomorrow Ventures and 500 Startups. (June 26)

Follow us on Twitter, Instagram, and LinkedIn for more funding announcements. Before you go, our 2024 Nigerian Payments Report is out. Click this link to download it.

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Here’s what we’ve got our eyes on

• Safaricom under pressure for conflicting explanations over two-hour internet outage in Kenya
• After dramatic tax win, Kenyan protesters plot next moves
• IMF says Zimbabwe’s ZiG currency has ended bout of instability

Written by: Olumuyiwa Olowogboyega, Faith Omoniyi & Stephen Agwaibor

Edited by: Timi Odueso

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