👨🏿‍🚀TechCabal Daily – Is climate tech living up to the hype?

Though banks typically enjoy huge financial returns, fraud can still hit hard. And it is becoming a growing problem for Kenya’s financial ecosystem. According to TransUnion Africa, a credit reporting agency, Kenyan banks lose about $130 million to cybercriminals yearly.

While some cases like Equity Bank, the country’s biggest lender, which recently lost $2.1 million to card fraud in April, are usually public spectacle, some other banks silently suffer these losses.

Between 2020 and 2022, Ecobank Kenya lost millions of dollars due to flaws in its card operations. An internal report showed that $43.4 million in transactions were wrongly posted, $232,464 lost in chargebacks, and a troubling $2.1 million balance lacked proper documentation.

“There was disregard for procedures in the merchant’s operation of acquiring product GLs (general ledgers). Many manual entries posted therein were unprocedural and some erroneous,” the report stated.

The bank’s poorly documented procedures allowed these errors to happen. But this wasn’t a case of isolated mistakes; internal control and employee oversight were also guilty. Banks may need to start paying more attention to critical operations in their units, as well as the staff trained to handle them.

Given how a loss this big went under the radar for so long, it’ll be interesting to see how Ecobank Kenya’s financials have recovered and what steps the bank has taken to prevent future issues. More importantly, whether a layoff looms.

Adani Group’s Kenyan ambitions started as a rumour in July.

The country was just coming from a month of anti-government protests, you could still feel a burning sensation on the face from teargas that had been lobbed to disperse angry crowds. And when a whistleblower leaked the details of the secret plan to lease the Jomo Kenyatta International Airport (JKIA), the government was quick. President Ruto termed the reports as “fake news.”

Eventually, the details of the 30-year concession deal were made public. However, a question that has been lingering is how the controversial Indian infrastructure company owned by Gautam Adani, India’s second richest man, knew of Kenya’s airport modernisation plan and sent a private-initiated proposal.

On Monday, Adani Group told a Kenyan court it became interested in redeveloping the Jomo Kenyatta International Airport (JKIA) following media reports of its deteriorating condition. Look out for Adonijah’s reporting on this development.

The $1.85 billion deal has faced intense local opposition, with lobby groups questioning its transparency.

The Kenya Human Rights Commission (KHRC) and the Law Society of Kenya (LSK), which filed a case against Adani Group, want the deal stopped. KHRC and LSK argue that the money required for the project can be raised locally without leasing the airport for 30 years.

Read more about Adani’s claim here.

There’s no doubt that funding from development finance institutions (DFIs) has significantly shaped Africa’s venture capital (VC) landscape. Stuck with limited sources of capital, unlike their global counterparts, African VC firms have turned to DFIs since 2017, when TLcom Capital became the first institutionally backed commercial VC in Africa.

That relationship, described as “great” and “beneficial” by two general partners, has played a part in the boom in funding for Africa’s climate tech market.

Naturally, if you give someone money, you can advise on where to invest the money or the best way to invest the money. And if you’re an DFI backed by a government that is climate-focused, which is most of the rich ones, you advise African VC firms to invest in climate tech.

As a result, climate tech funding in Africa surged, reaching $1.04 billion in 2023 (from $340 million in 2019), making it the second most funded sector after every investor’s darling—fintech.

But that’s the only similarity that both share. Unlike fintech, which has become a vibrant ecosystem in Africa and has clear winners like Paystack, Wave and Flutterwave, climate tech is yet to create a market that matches its clout.

Venture capitalists love to show their investors above average returns and climate tech has not yet displayed enough returns to warrant the amount of investment that it constantly attracts.

At this point, it is only right to point out that creating a market takes time. The aforementioned fintechs did not reach their scale in a short period of time. Rome was not built in a day, but there were always signs that it might become a major city.

Climate tech solutions in Africa must soon demonstrate their value. The path forward requires key players to emerge and deliver scalable, transformative solutions. Otherwise, despite the billions pouring in, the sector risks stagnating as a “policy-driven” space without the commercial breakthroughs needed to address Africa’s climate challenges.

Read Muktar’s article here.

Yesterday, South Africa announced its lowest inflation rate in three years. Headline inflation for August was at 4.4% down from July’s figure of 4.6%. The slowdown in inflation was driven by a slowdown in transport prices and utility rates. Food inflation was at 4.1% down from 4.6% in July.

The 4.4% reading meant that South Africa’s inflation rate dropped below its benchmark rate of 4.5%, raising hopes of the first interest rate cut in two years. The South African Reserve Bank (SARB) monetary policy committee previously raised interest rates nine times in a row in a bid to tame inflation. The move seemed to have worked as inflation dropped from 7% in January 2023 to about 4.4% in August 2024.

However, analysts don’t expect a huge cut in the country’s interest rates which currently stand at 8.25%. Analysts predict a 0.25%-0.5% reduction in the interest rates. The SARB which typically cuts rates by 25% will decide on Thursday by 3 p.m.