Africa Law & Tech Review Vol. 20

Welcome to the Africa Law & Tech Review, a publication, by Lawyers Hub, that delves into the intersections of law, technology, business, digital rights, and features policy advancements across Africa and beyond. The Lawyers Hub is an organization based in Kenya working at the confluence of Law, Policy, and Technology. Learn more about who we are and what we do.

Event: Institutionalizing Gender-Transformative AI Governance in Africa’s Judiciary

The Lawyers Hub in partnership with UNESCO East Africa invites Judges, Magistrates and the Legal fraternity in Africa to attend the webinar "Institutionalizing Gender Transformative AI Governance: What’s Next for Africa’s Judiciary?" As AI rapidly transforms various sectors, including the judiciary, its adoption in Africa promises enhanced efficiency, transparency, and access to justice. However, without addressing inherent gender biases in AI technologies, these advancements may unintentionally perpetuate gender inequalities. This webinar will explore practical solutions on how Africa's judiciary can institutionalise gender-transformative AI governance, ensuring AI deployment promotes gender equity and human rights in the administration of justice. Register HERE

What Happened at the Lawyers Hub this week?

Lawyers Hub Joins Coalition for Digital Africa

The Lawyers Hub has become the newest member of the Coalition for Digital Africa, an initiative by The Internet Corporation for Assigned Names and Numbers (ICANN) that is focused on bringing together stakeholders to expand internet access across the continent. The coalition promotes innovation and supports entrepreneurial efforts aimed at strengthening internet infrastructure, fostering the development of Africa's digital economy. Learn more .

Lawyers Hub trains Kenya Judicial Officers on Emerging Jurisprudence in the Digital Arena

June 6th to 8th, 2024, the Lawyers Hub participated as a key stakeholder in a collaborative training event organized by the Kenya Judiciary Academy in Naivasha, Kenya. Alongside Safaricom, Airtel, and the Communication Authority, the Lawyers Hub’s representative, Maria Mbeneka, facilitated a session on data collection, authentication, and handling guidelines, aiming to equip judicial officers with the necessary skills to navigate the digital landscape. Lawyers Hub also participated in a panel discussion on the legal and ethical considerations of Artificial Intelligence, highlighting the intersection of technology and law.

Lawyers Hub Participates in ICANN80 Kigali Policy Forum

The Lawyers Hub is pleased to participate in the ICANN80 Kigali Policy Forum, a four-day meeting focused on policy, advice, and technical work. Representatives Louiza Odingo and Maria Mbeneka are attending the forum, which started on June 10 and will conclude on June 13, 2024, at the Kigali Convention Centre.

Central Bank of Kenya to Issue Payment Licences to Fintech Startups

The Central Bank of Kenya is poised to issue payment licences to fintech startups, marking a significant shift that will open up East Africa's largest payments market. The CBK governor announced that the regulator is amending the National Payment Systems Act of 2011 to create a legal framework for fintech firms.?

These changes could benefit remittance and payment providers, who have faced investigations and raids over money laundering allegations. The proposed amendments aim to resolve legal uncertainties that have hindered fintech expansion, allowing commercial banks and telcos to dominate the market.

Eliminating Legal Grey Areas

CBK’s proposed changes to the National Payment Systems Act to allow the registration and licensing of fintech startups could eliminate a legal grey area that has slowed down fintech growth in the country. This move is expected to level the playing field, enabling fintech startups to compete with commercial banks and telcos.

“We are in the process of updating and amending the Payments Act, essentially creating a new act. We hope to finish that soon, along with the regulations, which will guide our way forward in the payments service providers space,” said Kamau Thugge, CBK governor.

Current Regulatory Landscape and challenges

Kenya’s financial sector is currently regulated under the Central Bank of Kenya Act, the National Payment Systems Act, the National Payment Systems Regulations of 2014 , and the e-money Regulations of 2013 . However, these regulations have been unclear on the role of fintechs.

This regulatory ambiguity has put remittance and payment startups at odds with Kenyan authorities, with agencies like the Financial Reporting Center (FRC) and the Asset Recovery Authority (ARA) freezing accounts and seizing assets of sector players on money laundering charges.

In 2022, CBK ordered local financial institutions, including banks and mobile money service providers, to cut links with fintechs, citing unspecified threats to the country’s financial systems. The regulator stated that these firms were operating without authorization.

The upcoming amendments are expected to bring clarity and support the growth of fintech startups, fostering innovation and competition in Kenya's financial sector.

Zimbabwe plans to come up with a crypto regulatory framework

Zimbabwe has launched a public consultation on cryptocurrency, seeking input from crypto service providers to shape a regulatory framework. A multi-stakeholder committee will engage with various stakeholders within and outside Zimbabwe's cryptocurrency ecosystem.?

Participants, including exchanges, brokers, traders, developers, miners, and wallet hosts, must submit a questionnaire by June 26, 2024. This initiative aims to align with global best practices and comprehensively assess the country's cryptocurrency and virtual asset landscape.

In recent years, Zimbabwe has faced significant financial challenges, leading to several monetary reforms. Last year, the country introduced a gold-backed virtual token to combat chronic financial instability, followed by the launch of a new currency called ZiG , short for Zimbabwe Gold, in April. ZiG replaced the Zimbabwean dollar, which had repeatedly crashed since its reintroduction in 2019, exacerbating inflationary pressures.

The economic turmoil dates back to 1999 when Zimbabwe defaulted on its debts and was subsequently excluded from international capital markets. Currently, Zimbabwe is working to restructure approximately $19.2 billion in debt owed to various creditors, including $13 billion to international investors.

At this critical time for Zimbabwe’s economy, the government aims to promote a secure and transparent environment for cryptocurrencies through the introduction of a structured regulatory framework. By doing so, the government hopes to attract investment and strengthen economic stability, with successful cryptocurrency regulations potentially playing a major role in supporting the country’s financial sector.

South Africa Amends Land Transportation Act, Imposes Stricter Regulations on E-Hailing Services

E-hailing drivers in South Africa are now subject to stricter regulations. The country has amended its land transportation act, requiring e-hailing operators to apply for licences and ensure that their drivers have the necessary permits. Companies must disconnect drivers without permits from their platforms or face fines of up to R100,000 ($5,428). The act's enforcement date is yet to be announced.

Transport Minister Sindisiwe Chikunga welcomed the development, noting that the regulations will be submitted to the Office of the State Law Advisor for certification before being sent to the Minister for approval.?

The Bill updates the National Land Transport Act of 2009 to reflect recent developments, simplify provisions, and address issues that have arisen since its implementation. It also includes provisions for non-motorised and accessible transport, demonstrating a commitment to a modern, inclusive, and efficient transport system.

Former transport minister Fikile Mbalula highlighted that the amendments create a new category of operating licences and require technology providers to prevent illegal operators from using their platforms, with noncompliance punishable by up to R100,000. The bill strengthens regulations, allows for licence revocation and suspension for violations, and aims to reduce conflict between metered taxi and ride-hailing drivers.

While ride-hailing companies in South Africa may view these changes as a significant win, they face challenges in Kenya with the proposed Finance Bill 2024, which introduces a 6% Significant Economic Presence (SEP) Tax. Companies have expressed dissatisfaction, noting that the tax disregards operating costs and results in net losses for passengers.

KYC requirements to cost Fintechs over $1million

Nigeria’s central bank lifted its six-week ban on customer onboarding by the country's leading fintech firms. The central bank issued new requirements for these fintechs to resume customer onboarding. The requirements include blocking peer-to-peer (P2P) crypto transfers and mandating physical address verification for all customers and POS agents offering agency banking services. With over 1.5 million POS agents, these fintechs could incur costs up to $1 million for physical address verification.

The directive to freeze new customer sign ups was first issued on April 29, 2024, shortly after over 1,000 accounts were blocked for P2P crypto trading. The National Security Adviser (NSA) categorised crypto as a security concern and urged fintechs to enhance Know Your Customer (KYC) and fraud prevention measures to prevent crypto transactions through their platforms.

On May 20, 2024, fintechs were given several conditions to lift the onboarding freeze, including blocking P2P crypto transfers, mandating physical address verification for all account tiers, and updating facial verification for customers. These measures aimed to address concerns about lax KYC practices that have led to fraud, an issue affecting the broader industry.

Despite the criticism, fintech startups will welcome the decision to lift the ban, which had crippled growth for weeks and prevented them from onboarding thousands of new customers.

Court overturns ruling holding law firm liable for email scam

The Supreme Court of Appeal in South Africa has overturned a High Court ruling that had held the law firm ENSafrica liable for a $295,683 loss suffered by a homebuyer due to a cyber scam. The High Court had initially found ENSafrica responsible for the loss, citing a duty of care to its client.?

However, the Supreme Court of Appeal argued that upholding the lower court's decision would set a dangerous precedent, potentially holding businesses unfairly accountable for email scams. Judge Dawood emphasised that the homebuyer could have avoided the loss by verifying the bank details, highlighting the importance of vigilance in electronic transactions.

Kenya Power sets an August deadline for token meters upgrade.?

Kenyans have until August 31 to update their prepaid meters as part of a campaign by Kenya Power targeting 7.4 million customers. This update is part of a global initiative aimed at all prepaid meters using the standard transfer specification, a universal method for transferring tokens to prepaid meters while ensuring the security of generated tokens.

Airtel Kenya Expands 5G Network to 39 Counties

Airtel Kenya has expanded its 5G network to cover 39 counties and 285 wards, with over 690 operational sites, driven by a rising number of 5G users. The telco plans to launch an additional 1,000 sites by the end of the year, bringing the total to 1,690. According to Communication Authority data, 5G network users in Kenya increased by 13.3% to 509,737 in the three months leading up to September 2023.?

Airtel Kenya's Managing Director, Ashish Malhotra, emphasised the company's commitment to digital inclusion, stating that the network expansion will extend connectivity to more communities nationwide. Airtel initially launched its 5G service at over 370 sites in July 2023, aiming to transform sectors like smart cities, education, healthcare, agritech, transportation, and entertainment.

Kenya has advanced in adopting 5G technology, with Safaricom leading the charge by launching the country's first 5G service in October 2022 and expanding to 35 counties by November 2023. Equitel, partnering with Airtel, became Africa's first mobile virtual network operator to offer 5G services in February 2024. As of early 2024, Kenya had 22.71 million Internet users with a penetration rate of 40.8%. According to Globalmonitor, the telecom market in Kenya is expected to continue its significant growth, driven by a growing population, improved communication services, and increased smartphone adoption.

Telecom Egypt and SubCom Complete India-Europe-Xpress Landings

Telecom Egypt and SubCom have announced the completion of the India-Europe-Xpress (IEX) landings in Egypt. IEX will now connect Mumbai directly to Milan, Italy, enhancing diversity and enabling advanced, high-capacity services. Telecom Egypt will ensure a smooth, speedy, and flexible local cycle of permits, approvals, and landing-related logistics. The new cables are designed for high-capacity transmission with 13 fibre pairs per segment.

Kenyan Banks Embrace Digital Lending

A survey by the Central Bank of Kenya reveals that 74% of commercial banks in Kenya have digitised their lending services, up from 44% in 2022. Banks have shifted to smartphone applications and mobile banking systems as digital lenders encroach on their traditional market. Currently, 51 digital lenders are licensed in the country, with 480 more awaiting CBK’s approval, intensifying competition.?

The Central Bank of Kenya's report indicates a 19% increase in banks leveraging financial technology, rising from 60% in 2022 to 79% currently. Only 2% of lenders do not actively use technology to streamline services, instead relying on fintech startups and third-party firms for digital solutions. Banks collaborating with fintech startups dropped from 25% in 2022 to 9% in 2023, signalling a trend of banks increasingly opting to go digital independently.?

African Startups Secure $187 Million in May Funding Surge

In May, African startups raised an impressive $187 million in funding, marking a 149% increase from April's $75 million. According to 'Africa: The Big Deal, ' a firm tracking startup deals on the continent, 64 companies secured at least $100,000 each, with 17 startups raising over $1 million. This surge indicates growing investor interest in African startups. The funding sources included 4% from grants, 31% from equity, and 65% from debt, reflecting diverse investment strategies. Despite this significant increase, total funding for the year stands at $729 million, still below previous periods.

Botswana unveils digital post office platform to improve its financial infrastructure

BotswanaPost has launched Digipost, a digital post office aimed at modernising the nation’s financial infrastructure and promoting economic growth and financial inclusivity. This innovative platform enables individuals and small businesses to resell postal services, including cash withdrawals, post box renewals, insurance payments, mobile money transfers, and more.?

With 24% of Botswana's unbanked, BotswanaPost aims to reach over 500,000 people, focusing on youth and women, within three years through its PosoMoney and DigiPost services.

Starlink goes live in Sierra Leone a year after receiving licence

Starlink has launched its satellite Internet service in Sierra Leone, a year after receiving its licence, marking its availability in the 100th country globally and the 10th African country to officially have Starlink connectivity. This milestone follows the lifting of bans in several African countries, including Ghana and Botswana, which have now granted operational licences to Starlink.

Ethiopia’s new EV factory

Ethiopia has launched its largest electric vehicle (EV) factory in Debre Berhan, Amhara region, with an expected annual production capacity of around 1,000 cars. This development is part of the country's broader green initiative. The Ministry of Transport recently announced the importation of over 100,000 electric cars and the establishment of 60 charging stations in Addis Ababa, further propelling Ethiopia's commitment to sustainable transportation.

Global News

Prospa Faces Complaints Over Withdrawal Delays

Prospa, the Y Combinator-backed business banking startup, is facing complaints and social media callouts due to persistent delays in processing customer withdrawals. The company has cited service downtime as the cause, but this is not the first time customers have experienced such issues. In February 2024, Prospa also reported service downtime that significantly impacted transaction speeds, leaving customers waiting weeks to access their withdrawals.

Apple Stock Reaches Record High After Announcement Of New AI Features

Apple shares surged over 7% to a record high a day after it unveiled new AI features meant to rekindle demand for iPhones. Apple's stock climbed 7.3% to end the day at $207.15. With a market capitalisation of $3.18 trillion, Apple was just behind Microsoft at $3.22 trillion, and just ahead of AI chip powerhouse Nvidia at $2.97 trillion.

MIT's Breakthrough in General-Purpose Humanoid Robotics Training

MIT researchers have made significant strides in the development of general-purpose humanoid robots by integrating generative AI into their training methods. Their new approach, called policy composition (PoCo), combines information from task-specific datasets to enhance robot performance. This method involves training separate diffusion models for individual tasks and merging these policies to enable robots to perform multiple tasks in various settings. The integration of diffusion models has improved task performance by 20%, allowing robots to execute complex tasks and adapt to new ones.

Opportunities

Kenyan Data Protection Compliance Training Now Open for Registration

The virtual Data Protection Compliance Training is scheduled for June 25th - 26th, 2024, with a registration cost of Ksh. 10,000. This training is designed to help participants understand data protection laws and practices, ensuring compliance for individuals and organisations. It is suitable for anyone looking to develop their knowledge in data protection compliance, particularly legal practitioners across Africa and professionals integrating privacy requirements into daily operations. Participants will receive certification from the Africa Digital Policy Institute, International Association of Privacy Professionals, and the Lawyers Hub upon completion. Register HERE

The Lawyers Hub is an organization based in Kenya working at the confluence of Law, Policy, and Technology. We run capacity-building initiatives on data protection, AI policy and regulation, justice innovation, and the impacts of tech regulation on the African continent, all under the Africa Digital Policy Institute umbrella. We also offer technical legal support to innovators and startups through the Africa Startup Law Accelerator. Additionally, we convene weekly policy discussions and bring together digital policy and technology actors annually at the Africa Law Tech Festival in July. Every December we convene judicial actors during the Africa Legal Innovation Week. The Lawyers Hub is also the publisher of the Africa Journal on Law & Tech. Our thematic focus areas include AI and Data Governance, Digital Platforms and Infrastructure Regulation, Intellectual Property, Internet Governance, Justice-Tech, and Digital Democracy.Learn more about who we are and what we do.

www.lawyershub.org

Subscribe to our email newsletter to receive the inside scoop on Law & Tech!