Insurance policies & African Startups: How inconsistent insurance policies are killing African startups


Insurance policies & African startups is a month-to-month series written by Titi Akinsanmi. All musings are hers and attributable to TechCabal or any organisations she is serving, working or affiliated with. 

Initially, introduction

It has taken a protracted time for me to establish pen to paper – in this accomplish. Why? Smartly I focused and hoped ‘those’ who have the skills, the abilities to jot down etc, etc, etc would salvage round to doing this. Nonetheless…the impactful change one seeks in actuality does originate with one. So right here goes…

I write as I keep up a correspondence – painting photos with phrases, most ceaselessly rambling and stopping at bus stops to half an additional nugget, insight or to detour totally. And most ceaselessly I will enter the rabbit gap of writing in formal tutorial language to tackle a particular anguish.

You ogle, this ‘column’, my writing is no longer your customary treatise or intellectual exposition on the what, why and the arrangement of protection making in the digital economic system. It’s a peek into my perfectly injurious protection wonk mind. A sharing of my suggestions in growth round shenanigans in this home – the beautiful, rotten and gruesome. 


My unbiased? Tripartite (which implies in three parts!). First is to let the phrases out of my head beyond after I exhaust the ‘stage’ and keep up a correspondence to a salvage out few who know; 2nd is to normalize conversations on protection implications of the total improvements happening – and if merely 0.1%, salvage more innovators taking into consideration on this forward of and after they hit the market! Third, and for me the most animated is to raise this discourse to you – the tip particular person, the client, the plot of all these improvements. So you realize, salvage it – and exhaust the vitality to lead in an advised methodology. You ogle that latter? Smartly You have the vitality to be the instigator of the change you would possibly perhaps well perceive.

So right here goes: this most foremost share is worship a salvage to know you more, more records gathering forward of a that you just would possibly perhaps well perhaps perhaps imagine first date (I’m hoping we construct it to the latter ;-))

Earlier than we plod on though – what’s Protection making? Again no assumptions made beautiful?

Search, Protection making is a lot from ‘sexzy’ work – apart from for wonks worship me :-). It is far most ceaselessly a protracted and exhausting ‘determining’, drafting, negotiations, convincing and consensus constructing. In undeniable english:  It takes a ideal duration of time to salvage shut to having the beautiful protection backed by law  – from pattern to influencing direction of to adoption, influencing, implementation and then impact monitoring (and its measurement).

The protection making direction of

It would possibly perhaps well perhaps perhaps look worship it’s in a single day, that no longer ceaselessly the case – nonetheless it does happen. [For instance, the Murambatsvina policy and the ‘look East’ policy in Zimbabwe]. The part you don’t know, having no longer paid consideration or invested time, sources or constructed a network, is that it’s likely been brewing below the ground (deem lava, volcano eruption; or an underlying worship that catches you unawares). Or you would possibly perhaps well perhaps perhaps additionally have carried out all this yet peaceful…

Let’s construct this excellent…exhaust our imaginations (for some studying right here’s a truth I know).

Consider: You are a startup in some city or city in a tier 2 African country. You prepare some solid frugal innovation and arrive up with a essential product and or provider. You worked exhausting (on my own or with a runt crew) and hit the market. You have a frugal advertising and marketing and reputation constructing strategy that harnesses the vitality of social media all over jurisdictions. You originate to perceive a return on investment, merely a trickle first and most foremost and then it gradually (and even no longer – dips are long-established!) and then wham! The government ‘sees’ you.  


Smartly that imaginning is a truth lived by many companies all over our continent – in these cases seemingly concentrated on Tech enabled StartUps. The enviornment more than ever forward of is at phrases with the truth that digitisation is essential for the expansion of the economic system and society. For the economically disparate economies on our continent nonetheless it no doubt seems gamers are working in varied directions – albeit having a scrutinize to reach the the same unbiased of a thriving digital economic system, aside. With the Covid-enabled enhance of the final 18 months these ‘excessive IQ toddler’ companies have faced stiff regulatory actions and inconsistent insurance policies, – in spite of the intentions in the attend of them. This at a time when African startup ecosystem is garnering global recognition and investor self assurance

Listed below are just a few examples of shifts in protection per criminal pointers (most ceaselessly no longer!) all over our continent in the final 18 months.

Fintech in Nigeria, South Africa, and Kenya

Nigeria’s skills sector was once its 2nd-fastest-growing sector from Q1 2018 to Q4 2019. A scrutinize on the smartly appraised Nigerian fintech sector  shows the lately launched regulatory checklist of the Nigerian Securities and Alternate Price (SEC) which states that “by the provisions of Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Principles 414 & 415 of the SEC Principles and Rules, most effective foreign securities listed on any Alternate registered in Nigeria shall be issued, sold or equipped in the marketplace or subscription to the Nigerian public. Accordingly, CMOs who work in concert with the referenced on-line platforms are hereby notified of the Price’s location and advised to desist henceforth.”  

The South African Reserve Financial institution’s (SARB) cautious angle in opposition to digital currencies worship Bitcoin, as acknowledged in Article 5.1 in its Situation Paper on Virtual Currencies NPS 02/2014  that  ‘the Financial institution does no longer oversee, supervise or aid watch over the VC (digital currencies) landscape, programs or intermediaries for effectiveness, soundness, integrity or robustness. In consequence, any and all actions associated to the acquisition, trading or exhaust of VCs (particularly DCVCs) are performed on the tip-particular person’s sole and self reliant be troubled and haven’t any recourse to the Financial institution.’ 

In 2015 Central Financial institution of Kenya(CBK) regarding the apt establish of digital currencies, issued a public look cautioning the public that “Bitcoin and identical merchandise are usually no longer apt relaxed nor are they regulated in Kenya. The overall public ought to peaceful because of the this truth desist from transacting in Bitcoin and identical merchandise”. On 18 December, 2015 the CBK again issued Banking Circular No 14 of 2015, which cautioned, ‘all financial institutions in opposition to dealing in digital currencies or transacting with entities that are engaged in digital currencies. Financial institutions are expressly advised no longer to launch accounts for any particular person dealing in digital currencies comparable to Bitcoin. Failure to conform with this directive would result in acceptable remedial action from the Central Financial institution’.

Simply worship South Africa, Kenya additionally has no direct apt framework tailored specially for its Fintech sector. One because of the this truth sees the fintech sphere being regulated by a diversity of statutes and rules governing rather just a few financial merchandise, products and companies and market participants, as well to other provisions of more frequent utility.

The dearth of specifically tailored laws to manipulate the fintech sector, considered in Kenya and South AFrica, leaves regulators at each level, responding to disorders that come up individually. This leaves a niche for ability conflicts in regulating fintech, and divulges an order the establish the regulatory atmosphere would aid lagging in the attend of skills. 

The ban by the Nigerian Securities and Alternate Price (SEC) negatively impacted thousands of Nigerians who have lately been drawn by skills to investing in foreign securities. Untoward hardship to fintech platforms comparable to Bamboo, Trove, and Risevest who work with native and foreign brokerage companies in allowing Nigerians to invest and commerce in shares listed on the Nigerian and foreign inventory exchanges.

Logistics insurance policies in Nigeria

The Lagos Yell Government on 27 January 2020 enforced a regulatory ban which restricted the operation of enterprise bikes and tricycles on predominant roads at some level of the pronounce, citing that “after consultations with stakeholders, the Yell Security Council, in compliance with the extant Transport Sector Reform Rules 2018, has determined to begin enforcement of the law which bans the operation of Okada and Keke in six Native Government Areas and nine Native Council Pattern Areas (LCDAs)”. This ban forced unplanned pivots and total shutdowns of products and companies for hitherto thriving native organisations worship Gokada and ORide. The regulatory blizz additionally prolonged to the law of on-line sprint-hailing companies worship Uber and Scramble with the enforcement of the requirement for a provider entity regulatory enable provisional utility/renewal  – ₦10 million licence fee for provider entities with 1,000 devices of e-hailing taxi; ₦25 million for those with more than 1,000 devices of e-hailing taxi; with the provisional license discipline to an annual renewal with a renewable fee of ₦5 million for every 1000 and ₦10 million for every 1001 and above unit of e-hailing taxi. It additionally mandated that 10% of every transaction by the passenger to the sprint-hailing operators ought to be paid to the pronounce government. On the national level the recent tenet for the law of logistics and courier companies which elevated the license fees for logistics companies and courier products and companies was once additionally authorized on July 23, 2020. The amount mandated as licensing and renewal fees is fair, because it creates an impediment for most gamers in the sphere, who’re largely struggling MSMEs with out the industrial wherewithal to earn the cash for the charges.

A train implication of the ban of enterprise bikes and tricycles was once the drastic unemployment it resulted in all over a abundant sinful of lagos. Unemployment straight correlates to an upsurge in crimes and insecurity.

Data and Infrastructure in South Africa and Kenya

The draft Nationwide Protection on Data and Cloud which is mostly aimed at “exploiting alternatives equipped by the digital economic system, by the pattern of protection frameworks that harness the industrial and social ability of records and cloud computing” was once lately launched (April 1 2021) . 

The Draft Data Protection (Frequent) Rules 2021 of Kenya additionally introduces records localisation, while among other provisions, requiring worldwide locations or territories to which inner most records is transferred, to have ratified the African Union Convention on CyberSecurity and Deepest Data Protection. This provision apart from limiting the free float of records essential for a digital economic system to thrive, encompasses a requirement for ratification of a convention which Kenya itself is yet to ratify. 

Even supposing the unbiased of the insurance policies would possibly perhaps well perhaps additionally be applauded, their restriction on tainted-border transfer of records by native storage and processing of records is able to affecting productivity and innovation, and ousting the worldwide locations’ startups.


Digital Tax insurance policies in South Africa, Nigeria, Uganda and Kenya

South Africa was once the most foremost, in 2014, to tax digital products and companies by imposing a 14% value added tax (VAT) on digital imports. Several African worldwide locations have since followed its steps. 

The Nigerian Finance Act as an example imposes 5% VAT on on-line transactions.  

In Uganda 74% of companies reported a reduction in earnings following the imposition of digital tax – excise responsibility on over-the-top products and companies over the gain – in the country. This same proposal for digital tax was once most effective shut down by the Benin Government after a gradual bid was once staged by its of us.

In 2013, the Nationwide Treasury of Kenya introduced a 10% excise responsibility on cash transfer products and companies. 

Governments rightly insist taxing digital products and companies helps to buy earnings for in unpleasant health economies – totally plausible IF funds raised were channeled into providing infrastructure and enabling more innovation. This has no longer been the case nonetheless –  digital tax insurance policies and criminal pointers have mainly been veteran to restrict digital say of electorate, infringing on their digital rights.

So why ought to peaceful YOU care, I hear you query? This long chronicle, all of us know all about it – it’s no longer stopping bread from getting to my table. 

Ask is: is it no longer?

From an elevated value in frequent products and companies you would possibly perhaps well perhaps perhaps additionally have arrive to exhaust as a staunch – from hailing a bike by app, cell phone name or on the side of the dual carriageway to the lack of ability to earn the cash for to proceed to feed your loved ones with top rate turkey or hear to your accepted artiste because of the recent Copyright rules that don’t strengthen Swish Use principles. 

Why? As a result of hello you would possibly perhaps well perhaps perhaps no longer sprint uber at an cheap rate (Whats up, Hackney enable), by to it getting harder to store for that item from Senegal since the taxes on it are higher (that’s if the customs obstacles are surmounted by AfCFTA) and it turning into vastly harder (if at all that you just would possibly perhaps well perhaps perhaps imagine) for you to salvage smartly timed lend a hand by elevating a social media yowl for lend a hand.

So you ogle, it matters. It touches you. No longer merely the ‘wide companies’ or the birth ups – You. As Nigerians worship to insist, “… o di kwa severe?!

Over the next couple of ‘musings’ I will ponder on what we needs to be prioritising and why. If the records enables and my brain strings the phrases I will mission on the impact  – presumably keep up a correspondence to the future.

Till subsequent time – aid musing 😉