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M-KOPA, a Nairobi-based fintech firm has been slapped with a Ksh 885.87 million fine in taxes by the Kenya Revenue Authority (KRA) after it assessed M-KOPA’s tax obligations, including withholding tax and Pay As You Earn (PAYE), from 2017 to 2019.
According to the tax tribunal, M-Kopa is based in Kenya as its effective management operations are based in Kenya, not the United Kingdom where it also registered. Founded in 2011 in Nairobi, Kenya, M-Kopa started as an under $20 pay-as-you-go solar systems firm to its present Pay Later and financial services firm providing micro-loans, electronics and house appliances on a layover model.
M-KOPA is also incorporated in the UK and argued with the tax tribunal that it’s based and managed from the UK and not subject to some taxes in Kenya but it failed to prove otherwise as the chief executive officer (CEO), chief financial officer (CFO), and chief commercial officer (CCO) reside in Kenya.
With operations in Kenya, Nigeria, Ghana, and South Africa among others, M-KOPA’s real operations hub is centered in Kenya where key business operations and management decisions are made and it’s therefore liable to pay income and capital gains tax to the Kenyan taxman.
In May 2024, M-KOPA received a $51 million loan that will support digital connectivity throughout the country by helping underserved communities access affordable smartphones. M-KOPA received the $51 million loan from the U.S. International Development Finance Corporation (DFC) in a new financing package to various Kenyan firms during President Ruto’s State Visit to Washington, D.C. DFC alo announced it was going to open a regional office at the U.S. Embassy in Nairobi to support private sector development in Kenya and across Africa. Clearly, M-KOPA was present as a Kenyan company including others incorporated here.
In the same month, M-KOPA was named on the Financial Times (FT) “Africa’s Fastest Growing Companies 2024” list, for its affordable digital financial services. M-KOPA has appeared on the FT’s rankings three years in a row as a Kenyan company. The firm was vetted for its role in providing affordable financing for smartphones, electric motorbikes and digital financial services, such as digital loans and health insurance. The list is a survey made by FT in partnership with Statista, a global statistical and market data.
In May last year, M-KOPA secured over $250m in new debt and equity funding to expand its financial services offering to underbanked consumers across Sub-Saharan Africa.
“We are working hard to create a positive environmental and social impact by systematically addressing the barriers to digital financial services,” said Jesse Moore, M-KOPA CEO and Co-founder. “We have already unlocked $1bn in cumulative credit to over 3 million customers, and are proud of the thousands of local jobs we’ve created during tough economic times. As we continue to scale we remain committed to building a sustainable business and closing economic and digital gender gaps. We are delighted to have the support of new and existing investors who share our vision and mission”.
The funding which marks one of the largest combined debt and equity raises in the African tech sector was led and arranged by Standard Bank Group, Africa’s largest bank and long-term strategic partner to M-KOPA.