The licensing of digital credit providers by the Central Bank of Kenya (CBK) has opened the floodgates of new funding to the non-deposit taking entities.

CBK’s greenlight to 12 additional digital lenders at the end of January has, for instance, enabled Mycredit Limited to tap Sh325 million from Oiko Credit in a deal announced on February 1 with the proceeds expected to spur the lender’s medium-term lending programme to small and medium enterprises.

“The funding from Oiko allows us to start giving medium-term loans to at least 1,000 SMEs in the next financial year,” said MyCredit Limited Managing Director Wangaruro Mbira.

Sources have intimated to the Business Daily that more funding is expected to stream to the recently licensed digital credit providers with M-Kopa Loan Kenya Limited for instance expected to tap up to Sh12.5 billion ($100 million) according to a person close to the transaction.

The fintech platform, which provides connected financing and digital financial services to unbanked customers has been among the top recipients of funding from partners and investors in the recent past.

M-Kopa Loan Kenya sealed a Sh9.4 billion ($75 million) equity round in March last year with the injection bringing M-Kopa’s total equity funding to Sh23.8 billion ($190 million) to support the fintech’s expansion including adding to its hubs in Kenya, Uganda and Nigeria.

On January 30, the CBK issued 12 additional licensing to digital lenders including Inventure Mobile Limited (Tala), Jumo Kenya Limited, Letshego Kenya Limited, MFS Technologies Limited, Natal Tech Company Limited, Ngao Credit Limited, Pezesha Africa Limited, Tenekata Enterprises Limited, Umoja Fanisi Limited and Zanifu Limited.

This brought the number of licensed entities in the space to 22, after the grant of licenses to 10 players in September last year including Ceres Tech Limited, Getcash Capital Limited (Flash Credit Africa), Jijenge Credit Limited, Kweli Smart Solutions Limited, Mwanzo Credit Limited, MyWagepay Limited, Rewot Ciro Limited, Sevi Innovation Limited and SokoHela Limited.

The recent grant of permits to digital credit providers has served to dissipate fears among players especially existing entities who missed out entirely from the list of initial licensees which largely featured new players in the industry. 

The lengthy delay to secondary approvals had caused jitters to the players who lamented struggles in obtaining fresh funds to investors who were demanding CBK certification before disbursing money.

The jitters led to digital lending executives fearing a potential cash-crunch even as their platforms were blacklisted to platforms such as the Google Playstore.

Delays in the issuance of digital credit providers licensing was largely attributed to the wide range of documentation required by the CBK including a list of directors and funding sources.

CBK’s engagement with other regulators and agencies such as the Office of the Data Protection Commissioner is also attributable to the lengthy licensing process.

“The focus of the engagements has been inter alia on business models, consumer protection and fitness and propriety of proposed shareholders, directors and managers. This is to ensure adherence to relevant laws and importantly that the interests of customers are safeguarded. We acknowledge the efforts of the applicants and support of other regulators and agencies in this process,” the CBK stated.

“Other applicants are at different stages in the process, largely awaiting the submission of requisite documentation.”

Concerns including exorbitant credit costs, unethical debt collection practices, and abuse of personal information served to push digital credit providers to the ambits of the banking sector regulator. By By KEPHA MUIRURI, Business Daily

Johannesburg — South Africa hosted the world's biggest mining investment conference this week, with industry experts in attendance saying the U.S. and China are in a race for the critical minerals -- such as cobalt and lithium -- that will likely power the projected transition to clean energy.

African countries like the Democratic Republic of Congo have some of the largest deposits of these resources, but China currently dominates the supply chain as well as their refinement and the U.S. wants to reduce its reliance on the Asian giant.

In his remarks at the mining conference in Cape Town this week, U.S. Under Secretary of State for Economic Growth, Energy, and the Environment Jose Fernandez hinted at this saying, "I don't need to remind you of what happens when the supply chain breaks down or when we depend on a single supplier. We lived it during the COVID pandemic, and this is a vulnerability that we need to solve together."

Fernandez -- who did not mention China by name -- noted that electric vehicles are expected to command half the global market by 2030 and that demand for lithium is expected to increase 42-fold by 2040. China is responsible for some 80 percent of the world's lithium refining. 

Tony Carroll, the director of Acorus Capital and an international adviser to the conference known as the Africa Mining Indaba, told VOA the session came at a critical time for the West.

The Chinese made it a "priority to corner the market for critical minerals about two decades ago and supported that strategy with massive public diplomacy and infrastructure investments into Africa -- most of which [came] via long-term debt. The West woke up to this strategy too late and have been scrambling ever since," he said.

Rare earth minerals are essential for electric vehicle production and expanding the production of green technologies. However, their extraction can come at an environmental or social cost to African countries that have big deposits. 

Fernandez echoed remarks made by Pope Francis on his recent trip to Congo denouncing "economic colonialism" in Africa, which could be seen as a swipe at Beijing. He also assured African countries the United States would respect "environmental, social, and governance standards."

"While late to the game, the U.S. has awakened with more ambition in mining and processing and building alliances with like-minded partners," said Carroll, who is also an adjunct professor in the African studies program at Johns Hopkins University.

A first-time sponsor of the Mining Indaba this year was Chinese company Zijin, one of the largest mining groups in the world with interests in lithium, copper and other metals.

Asked for comment by VOA on whether China is now in a race for rare earth metals with the U.S., as well as other questions about Chinese mining interests in Africa, the PR manager of South Africa Zijin Platinum said the CEO was unable to respond before the deadline for this article. 

African governments are now trying to get the best deals for their people. Namibia's Mines Minister Tom Alweendo told Reuters at the Cape Town conference that his country is insisting that all lithium mined in Namibia has to be processed in the country.

Similarly, DRC President Felix Tshisekedi, who was one of the key speakers at the mining conference, has been demanding better terms from China for several years. China sources the majority of its cobalt from DRC, which produces some 70 percent of the world's total.

Despite its vast mineral resources, Congo is one of the world's least developed countries and Tshisekedi said in January it hadn't benefited from a $6.2 billion minerals-for-infrastructure contract with China signed by his predecessor.

"The Chinese, they've made a lot of money and made a lot of profit from this contract," Tshisekedi told Bloomberg at the World Economic Forum in Davos. "The Democratic Republic of Congo has derived no benefit from it. There's nothing tangible, no positive impact, I'd say, for our population."

"Now our need is simply to re-balance things in a way that it becomes win-win," he added.

There are signs Tshisekedi could be moving toward the West.

The administration of U.S. President Joe Biden organized the Minerals Security Partnership last year as a way of diversifying supply chains. Partners include Australia, Canada, Finland, France, Japan, the Republic of Korea, Norway, Sweden, the United Kingdom and the European Union. At its first meeting last year, the DRC was one of the non-partner nations in attendance.

Then at Biden's U.S.-Africa Summit in December, the DRC and Zambia inked a deal with the U.S. to jointly develop the supply chain for electric vehicle batteries.

"Dependency on China for rare earths is viewed with alarm," said Jay Truesdale, CEO of the risk advisory firm Veracity Worldwide, and a speaker at the Indaba. "Given that Beijing has the means to severely restrict access to these minerals, in the event of a geopolitical crisis it could choose to use its market dominance to cripple non-Chinese manufacturers in such sectors as electronics, automotive manufacturing, aerospace, and renewable energy."

Besides the rising tensions between China and the West in Africa, Russia's invasion of Ukraine will also force mining companies to make hard decisions, Truesdale said.

"The war in Ukraine has placed greater scrutiny on Russian mining activities across the continent. Russia benefits from a lack of transparency and weak governance where its mining companies operate. African governments are now more closely observing how Moscow trades promises of greater security for deeper access to mineral resources and the state capture that can result," he told VOA.  By Kate Bartlett, VOA