👨🏿‍🚀TechCabal Daily – Safaricom sued for $2.4 billion

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SAFARICOM SUED FOR $2.4 BILLION IN KENYA

Safaricom is in court over the operations of its mobile money arm, M-Pesa.

Three plaintiffs have indicted Safaricom and Vodafone in a lawsuit which claims that Safaricom is operating its M-Pesa arm and Fuliza, its overdraft service, illegally.

According to the petitioners—Gichuki Waigwa, Lucy Nzola, and Godfrey Okutoyi—since Safaricom uses the money from non-borrowing M-Pesa account holders as loans to Fuliza users, then the interest Safaricom accrues from Fuliza should be shared with all M-Pesa account holders. 

“Central Bank failed in its statutory mandate in failing to prohibit the on-lending of funds belonging to non-borrowing M-Pesa account holders to other M-Pesa account holders intending to borrow, through the Fuliza continuous overdraft service which allows Safaricom’s M-Pesa customers to complete their M-Pesa transactions even when they do not have enough funds in their M-Pesa account,” the petitioners claim.

In the case filed before the anti-corruption high court, the petitioners also want the courts to declare M-Pesa as a banking service, claiming that Safaricom developed M-Pesa for a separate reason and is now using it as a banking product without obtaining the necessary licences. 

The petitioners, who allege to be acting on behalf of all M-Pesa users, now want Ksh305 billion ($2.4 billion) in damages for fraudulent misrepresentation and non-disclosure of information. 

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ALERZO LAYS OFF 400 PEOPLE

In more layoff news, tech platform Alerzo has enforced yet another round of layoffs.

September 2022 saw the startup’s first round where it reportedly laid off over 100 workers in what the company described as a cost-saving measure. 

In its latest round, the startup laid off 400 employees on March 1. As part of the new round of layoffs, Alerzo is also reducing its business footprint and will now close 14 warehouses across the country.

Sources who spoke to TechCabal allege that at least 600 people were affected while Alerzo, in a correspondence with TechCabal, stated that 15% of its full-time staff—150–200 employees—were affected along with 150–200 part-time employees. 

According to the startup, this present round of layoffs was brought on by Nigeria’s post-election economy and its ongoing cash crisis. “A lot of suppliers and customers are feeling the pain of the cashless situation and the election slowdown, so we had to put the business on a path to profitability. We want to be in a place where we can control unit economics more closely and we believe that we have the headcount to do so,” the startup said.

Affected employees were reportedly informed by close of business on Thursday, March 1, after which they were promptly logged out of all work tools. As part of their severance package, most will receive two months’ salary, and their HMO plans would be active until the end of the year.

The startup is, however, hopeful for the future. “These changes are tough and unfortunate, but we now have the opportunity to reorient and get to profitability quickly. We have a payments business that’s growing very fast. We’ve gotten a banking licence and a PSS licence and we’re in the process of launching 3 different products,” its statement said. 

OSUN WAIVES RIGHT OF WAY FEES

Nigerian states are ramping up their tech plans.

Governor Ademola Adeleke of Osun state, for one, is dialling up the competition in the telecom industry by cancelling ROW fees! He has announced that telecom companies and internet providers can now lay their fibre optic cables in the state for free. 

What’s in this 100% discount for Osun?

Osun state wants to become the hotspot for digital innovation!

One of the critical starting points for the tech ecosystem in Lagos was laying fibre optic cables around Yaba, often dubbed Nigeria’s Silicon Valley. In 2013, Main One began laying a 27-kilometre fibre optic cable to cover the Yaba area, which led to many startups choosing to have offices there. 

Osun hopes to have similar results; it is signing an MOU with Oodua Infraco to immediately deploy fibre optics across Osun state. The first phase will cover 64 kilometres.

A tip of the iceberg

This is just one component of the state’s digital economy policy. Osun is also poised to be the first state to domesticate the Nigerian Startup Act. The Act is programmed to ensure that new start-up promoters and entrepreneurs secure desired mentoring and financing. Under the Act, startups will be eligible to receive funding from the startup investment seed fund and will receive other tax breaks.

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FAWRY AND XPAY PARTNER IN EGYPT

Egyptian startups Fawry and Xpay want cash to let the people go.

According to Zawya, Egyptian fintech startup XPay has signed a deal with Egyptian payments startup Fawry to enable electronic payments for its customers and merchants in Egypt through the ‘FawryPay Reference code’ and Cash out services. They assert that this partnership will add more bricks to the cashless society Egypt dreams of building a cashless society by 2030.

How?

XPay is a one-stop shop for billing, tracking and enabling payments. It provides various digital payment channels such as credit cards, debit cards, Meeza cards, wallets, and QR codes to companies and individuals. It is expected that adding Fawry’s Cash Out will allow XPay customers to use any of the over 286,000 Fawry POS machines spread across Egypt. XPay’s integration of “FawryPay Reference code” will also give customers more convenient options and boost the volume of customer transactions on the platform.

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