Industry News The BitPesa Startup and BitCoin in Kenya

The BitPesa Startup and BitCoin in Kenya

January 12, 2016

bitcoin africaA Kenyan company called BitPesa, representing a BitCoin remittance startup, recently lost Joseph Joe Mucheru, one of the most important members of its board. Mucheru was appointed a government position in Nairobi so he decided to step down and sell off his share in the company.

The same move comes as a bid to take himself out of any potential conflicts of interests before he takes his place as the first man of the Ministry of Information, Communications and Technology of Kenya.

The event, even though seemingly limited in global relevance, shows a trend of BitCoin movement that is starting to gain traction in the regions considered poor by the Western standard. Behind the story of Mucheru stepping down from BitPesa, there is a larger tale of financial and tech development (and struggle) in one of the most relevant nations in the sub-Saharan Africa.

The BitPesa Origins

BitPesa is a BitCoin remittance startup which raised funds worth more than $1.1 million in 2015. The goal of the company is to provide its services in Kenya, but also across the region, including Nigeria, Uganda, and Tanzania. These countries have a combined population of over 300 million people and all of them possess a huge expat population living and working all over the world, including the US and Europe.

The same expats in large numbers send financial means back home and the remittance market is traditionally large. Just like it is the case with Streami BitCoin startup operating in South Korea, BitPesa also desires to enter this market and exchange the old systems with a BitCoin-based operation. In this process, the name of Joe Mucheru was a huge asset.

The veteran of the tech industry became well-known all the way back in the closing years of the 20th century when he co-founded Wananchi Online. Later, he became a Google employee (sometimes even hailed as their first in the Sub-Saharan region) and began expanding the presence of the tech giant in Africa. In an area that is always on the lookout for recognizable local names, Mucheru was the ideal choice for BitPesa. Now, it seems that the same connection will have to be severed.

Not only will he sell his shares of the company, he will also divest the stake in his original company, the Wananchi Group. The news comes at the critical moment for BitPesa because it is involved in a lawsuit that includes Lipisha and Safaricom, ventures that merge monetary transactions with mobile phone use into M-Pesa (mobile-based money).

In the ending weeks of 2015, a Kenyan judge delivered a ruling that allowed the lawsuit to take place, which put the BitCoin startup in disruptive waters. However, the entire case, including the departure of Mucheru, clearly shows that Kenya is one of the leading markets for BitCoin, especially targeting end users.

The Kenyan Window of Opportunity

Currently, Kenya is located in a very dynamic period. On one hand, the proximity to the endless Somali conflict created a connection with the instability in its eastern neighbor. The same instability was demonstrated in events like the 2013 Westgate shopping mall attack, where both aspects of the country collided in a very bloody and dramatic event.

From one side, the Westgate mall, located in Nairobi, provided a complete Western experience, which is one of the reasons why it came under attack from a regional terrorist fraction. In the subsequent hours and days, the low preparedness of Kenya security services was shown not only as an inability to stop the attack from occurring, but also in the slow and painful process of regaining control.

In many ways, the situation became a symbol for modern Kenya, torn between drastically different influences, but still plowing forward. This can also be seen in its young population, who brought social network use, for example, Twitter and its hashtag system, to a level of a global pop-culture phenomenon.

This vibrant population, 20 years younger than the generation of Mucheru and other tech pioneers, managed to become infused in the world-wide civilization more than any other nation in the region aside of South Africa. For them, Internet 2.0, E-Sports, financial dealings provided through their mobile phones and other similar things that were seen as very advanced just a decade ago, are now commonplace.

Yet, in spite of this, the country is still plagued by instability, both internal and external. The post-election violence in 2008 killed hundreds and many worried that the country is on the verge of a civil war. In peaceful times, like its neighbors, the government is seen as corrupt and incompetent, often mixing both negative traits at the same time.

This, including the always-thorny process of bringing in new investment, kept the level of Kenyan infrastructure in a similar state of many other undeveloped nations, even though Nairobi is a bustling regional capital. But, here as well, just like its young generation, the country pushes on, reaching for the next milestone of growth, no matter how small or seemingly far away it might seem.

Fertile Grounds for BitCoin

The latest case of BitPesa shows that entire scope of Kenya’s potential for a big BitCoin hub, but also many dangers that face the cryptocurrency in its development process. As the well-funded remittance startup comes head-on with the challenges of a slow and ineffective court system, the changing political landscape took one of its most important people.

But, on the other hand, the process brought about the interest of the outside world, which in BitCoin case more than often results in new potential business deals. The remittance market alone is a substantial prize, but the capability of the digital currency is much larger. In the Kenya’s population, there are many who would gladly take the opportunity to use BitCoin for online betting and do many other things with this digital currency that makes them equal to any other citizen of the world with a digital wallet.

The downsides of the Sub-Saharan nation in terms of infrastructure and low traditional industry potential do not make a big difference for the cryptocurrency. In fact, like mobile payments, it can use the current situation as an incentive for the people to get into the BitCoin domain faster and with less hesitation. Now, it seems that it is just a matter of getting to other Joseph Joe Mucheru’s of the country and getting them on board for BitCoin development projects.

Source: CoinDesk