👨🏿‍🚀TechCabal Daily – How CashAfrica is tapping into Nigeria’s payments game

Between 2017 and 2019, M-Kopa, the asset financing company whose biggest market is Kenya, remitted zero taxes to the Kenyan Revenue Authority (KRA). Drawing on the UK-Kenya Double Taxation Agreement, a treaty designed to prevent companies from being taxed twice, M-KOPA believed that it shouldn’t pay taxes in Kenya because its directors did not live there. The company also argued that its management decisions are made outside Kenya.

Kenya’s tax authority disagreed and off they went to court. On Monday, a tax appeal tribunal found that the company had not provided evidence that its important operational decisions were taken outside of Kenya, confirming its tax residence in the country. 

 The ruling meant the company is back on the hook for around KES885.87 million ($6.8 million) in back taxes. 

While my colleague agrees that the tax is a small change for a company that has raised $250 million, the ruling may likely set a precedent for other Kenyan startups operating under foreign tax residency.

CashAfrica’s pitch is pretty simple: why bother with cards when you can use your smartphone to pull cash from a Point-of-Sale terminal? In a country where almost everyone has a phone but far fewer have bank cards, the fintech is hoping this will be the future of payments in Nigeria. 

By eliminating card partnerships, CashAfrica significantly cuts costs and improves profit margins, a challenge often faced by Nigerian fintechs dealing with foreign card schemes.

There are clear hurdles: for CashAfrica to thrive, a lot more Nigerians will need to have NFC-enabled phones—and, just as importantly, they’ll need to know how to use them. The tech is promising, but it’s not much good if your customers don’t have the hardware or aren’t sure how to make it work.

Both challenges create a real problem for CashAfrica. User education is timely and costly, and only high-end Samsung and Apple models—which together make up 46% of Nigeria’s smartphone market—come with NFC capabilities. That leaves a significant chunk of the population out of the equation, shrinking CashAfrica’s potential customer base before they’ve even started.

Yet, CashAfrica CEO Malik Asamu chooses to see the positives. His strategy, instead of rational optimism, in a market that is not ready yet is obvious through his comment:

“We believe more NFC-enabled phones will be imported. You don’t want to ride on a wave of innovation when it is sinking. We believe tap to pay is new in Nigeria and we want to be among the first to the market.”

It will also count banks and fintechs as customers as it tries to convince them to adopt its tap-to-pay service.

Read more about CashAfrica.

Kenyan fintech Kopo Kopo has announced a leadership shake-up with Dennis Ondeng stepping in as the new CEO, while former CEO Chad Larson transitions to Chief Financial Officer (CFO). Joining the revamped team are Kibet Yegon as Chief Technology Officer (CTO), and Rosemary Muyeshi as Chief Risk Officer (CRO), rounding out the company’s refreshed executive structure.

These leadership changes come 13 months after Kenya’s competition authority approved the acquisition of Kopo Kopo by Nigerian neobank Moniepoint. However, the deal remains in progress, with both companies yet to finalise the transaction.

Kopo Kopo, a provider of payment services and loans to small businesses in Kenya since 2011, could offer Moniepoint a strategic entry point into the Kenyan market. 

With its extensive customer base of small and medium-sized businesses, Kopo Kopo’s operations align well with Moniepoint’s suite of business-facing products. As Moniepoint continues its aggressive growth trajectory, an acquisition of Kopo Kopo would solidify its expansion plans in Kenya.

“We have been vocal about our interest in Kenya as part of our mission to provide financial happiness for people across Africa,” the company told TechCabal in August 2023.

If successful, the acquisition could strengthen the connection between Nigeria’s and Kenya’s tech ecosystems, fostering a more integrated African fintech landscape—especially in light of recent partnerships like that between Nigeria’s Rise and Kenya’s Hisa.

On Monday, Nigeria’s headline inflation fell to a six-month low of 32.15% interest rate in August. It was a second consecutive ease in inflation thanks to a drop in food prices driven by the harvest season. Food inflation also slowed to 37.52% from 39.53% in July 2024. 

Nigeria’s headline inflation reached a 28-year high in March after policy changes after the impact of a currency devaluation and partial removal of fuel subsidies affected prices of everyday items. Headline inflation slowed for the first time in 19 months in July. 

While August’s figure is far from the CBN’s 21% target, analysts expect the recent increase in fuel prices to drive up the inflation rate in the coming months. Nigeria raised fuel prices by 40% after two months of fuel scarcity. 

The slowdown in inflation rate also raises hope of an interest rate hold when the CBN’s Monetary Policy Committee meet on September 24. Since the beginning of the year, the MPC has continuously increased borrowing rates. In June the committee increased borrowing rates to about 26.25%.