‘Innovation always precedes regulation’ - A tech myth that needs busting
I think this is an important angle to bring to the fintech innovation (vs) regulation discourse. https://businessday.ng/columnist/article/innovation-always-precedes-regulati... ‘Innovation always precedes regulation’ – A tech myth that needs busting David HundeyinAug 1, 2022 Fintech One of last week’s biggest stories out of Africa was the Kenyan central bank’s decision to effectively blacklist Flutterwave and Chipper Cash from operating in Kenya. Typically, much of the reaction to the story from Nigeria managed to completely sidestep the material facts of the case and turn it into an African macrocosm of Nigeria’s usual ethno-tribal discourse. Flutterwave, according to the narrative, was merely being unfairly targeted because it is a successful Nigerian company operating in Kenya. The “jealous” Kenyan authorities were simply acting as proxies for Flutterwave’s Kenyan competitors who wanted to protect their market share from “de Najeeryans.” When the point was raised that Flutterwave was, in fact, operating illegally in Kenya, in addition to being in clear violation of Anti Money Laundering regulations, the reply that came was, “Obtaining a Kenyan licence is hard. Innovation always precedes regulation.” I have written previously about how there exists a dangerous narrative in Nigerian tech – Fintech especially – that rules are secondary considerations that tech is somehow exempt from. Now, it is time to critically analyse this idea so that if it turns out to lack merit, perhaps we can start the process of killing it dead once and for all. Here goes. “Tech is special” – says who? Earlier in the year, I was approached for a private investigation engagement focusing on an investment scheme promoter who had made away with billions of naira worth of client money. Having registered his investment scheme with the Corporate Affairs Commission, he managed to convince investors that having CAC registration somehow had anything to do with being licensed to offer investment or crowdfunding services in Nigeria. Meanwhile, as anyone with the slightest regulatory awareness knows, only the Securities and Exchange Commission (SEC) has the ability to license investment companies. Unsurprisingly after he disappeared into the night with hundreds of people’s money, there was no way to do anything to him. Because the company had no SEC registration, the commission had nothing to freeze, revoke or investigate. It wasn’t even interested, which is why I was approached. At the point when I was approached, every informed reaction I came across treated the matter as a lesson in the importance of due diligence and making sure that investment schemes have the appropriate regulatory compliance before putting money into them. Nobody made the fatuous argument that perhaps the scheme started off legitimately, and the promoters just needed to get it off the ground first before worrying about SEC registration later. Instead, it was correctly recognised as fraudulent behaviour where other people’s money was involved. Just a few weeks later, however, when news emerged that GetEquity, a tech investment platform purporting to offer access to American stocks was doing exactly the same thing, plus the added illegality of an unrecognised, unenforceable “digital investment token,” the reaction was completely different. This time around, that fatuous argument was thrown around with such regularity that one might have almost begun thinking it was some kind of accepted wisdom. Apparently, when Maxwell Odum floats an investment scheme that has no SEC registration and fraudulently portrays CAC business name registration as “regulatory compliance,” he is correctly recognised as a fraudster who should be prosecuted. When Jude Dike does the EXACT same thing, but slaps a mobile app, a dot io website and a little tryhard tech PR branding on it, he is an “innovator,” a “striver” and a “disruptor” who “moves fast and breaks stuff.” When the story inevitably ends the same way, instead of having private investigators hired to tail his movements around the world, he will instead get to live in peace and security, undisturbed by anyone because apparently fraudulent behaviour is bad, but when you call it https://fraudulentbehaviour.io, it becomes something else. This giant mental black spot is the reason why tech is used to facilitate and abet different kinds of criminality in Africa without so much as an eyelid being raised. Once again, rules exist for a reason In my line of work, a truism that I often come across goes like this: “There is never only one cockroach.” What this statement means to investigators and auditors is that where one serious regulatory or cultural lapse can be observed in an organisation, there will almost certainly be other serious issues afflicting that organisation. In the case of Uber, the initial cockroach was the company’s studious refusal to cooperate with local laws around the world as it followed its “Always Be Hustling” internal motto, moving fast and breaking stuff until the things getting broken were no longer just rules. Read also: Nigerian fintechs grapple with KYC amid rapid growth First came the women who complained about sexual harassment by unvetted Uber drivers, and then came the more serious stuff. Rapes. Homicides. Deaths from traffic accidents caused by fatigued Uber drivers struggling desperately to maintain their near 5-star ratings so as to keep earning a living, while Uber used loss of ratings as grounds for account removal and potential loss of livelihood. All of these issues were avoidable if Uber had spent a few months working with authorities to ensure full compliance first, but “moving fast and breaking stuff” was more important. The story is much the same with Flutterwave, which not only began operating without a licence in Kenya, but then began actively and brazenly facilitating money laundering on its platform in the jurisdiction where it was already operating illegally. It is difficult to picture any other commercial space where such behaviour would not have resulted in conferment of societal pariah status. Can you imagine, say, a Nigerian construction company opening up illegally in Kenya and then deliberately using substandard construction materials resulting in Kenyans’ deaths? Would Nigerians feel moved to defend such a thing? Why then, do so many Nigerian techies feel obliged to defend Flutterwave and its money laundering activities in a country whose last major terror attack was planned and funded using electronic payment platforms? These are the questions that we must ask ourselves as we react to stories like that of Flutterwave. The rules exist for a reason – they are not impediments to the individual egos of people with behavioural disorders who think that they exist as protagonists in a videogame where they can do as they please. Perspective is a healthy thing. Regards, Nanjira. Sent on the move.
Hi Nanjira, This is very timely. Reminds me of the pyramid schemes and i won't name names'. I guess we need to think of how to incubate and promote local innovations within supportive regulator frameworks as opposed to having a free for all regime. Reading the article, i can only imagine the effect of ''wash wash''. Regards On Wed, Aug 3, 2022 at 9:36 AM Nanjira Sambuli via KICTANet < kictanet@lists.kictanet.or.ke> wrote:
I think this is an important angle to bring to the fintech innovation (vs) regulation discourse.
https://businessday.ng/columnist/article/innovation-always-precedes-regulati...
‘Innovation always precedes regulation’ – A tech myth that needs busting David Hundeyin <https://businessday.ng/author/hundeyin/>*Aug 1, 2022* [image: Fintech] <https://i0.wp.com/businessday.ng/wp-content/uploads/2022/07/Fintech.jpg?fit=700%2C400&ssl=1> Fintech
One of last week’s biggest stories out of Africa was the Kenyan central bank’s decision to effectively blacklist Flutterwave and Chipper Cash from operating in Kenya. Typically, much of the reaction to the story from Nigeria managed to completely sidestep the material facts of the case and turn it into an African macrocosm of Nigeria’s usual ethno-tribal discourse.
Flutterwave, according to the narrative, was merely being unfairly targeted because it is a successful Nigerian company operating in Kenya. The “jealous” Kenyan authorities were simply acting as proxies for Flutterwave’s Kenyan competitors who wanted to protect their market share from “de Najeeryans.” When the point was raised that Flutterwave was, in fact, operating illegally in Kenya, in addition to being in clear violation of Anti Money Laundering regulations, the reply that came was, “Obtaining a Kenyan licence is hard. Innovation always precedes regulation.”
I have written previously about how there exists a dangerous narrative in Nigerian tech – Fintech especially – that rules are secondary considerations that tech is somehow exempt from. Now, it is time to critically analyse this idea so that if it turns out to lack merit, perhaps we can start the process of killing it dead once and for all. Here goes. “Tech is special” – says who?
Earlier in the year, I was approached for a private investigation engagement focusing on an investment scheme promoter who had made away with billions of naira worth of client money. Having registered his investment scheme with the Corporate Affairs Commission, he managed to convince investors that having CAC registration somehow had anything to do with being licensed to offer investment or crowdfunding services in Nigeria. Meanwhile, as anyone with the slightest regulatory awareness knows, only the Securities and Exchange Commission (SEC) has the ability to license investment companies.
Unsurprisingly after he disappeared into the night with hundreds of people’s money, there was no way to do anything to him. Because the company had no SEC registration, the commission had nothing to freeze, revoke or investigate. It wasn’t even interested, which is why I was approached. At the point when I was approached, every informed reaction I came across treated the matter as a lesson in the importance of due diligence and making sure that investment schemes have the appropriate regulatory compliance before putting money into them.
Nobody made the fatuous argument that perhaps the scheme started off legitimately, and the promoters just needed to get it off the ground first before worrying about SEC registration later. Instead, it was correctly recognised as fraudulent behaviour where other people’s money was involved.
Just a few weeks later, however, when news emerged that GetEquity, a tech investment platform purporting to offer access to American stocks was doing exactly the same thing, plus the added illegality of an unrecognised, unenforceable “digital investment token,” the reaction was completely different.
This time around, that fatuous argument was thrown around with such regularity that one might have almost begun thinking it was some kind of accepted wisdom. Apparently, when Maxwell Odum floats an investment scheme that has no SEC registration and fraudulently portrays CAC business name registration as “regulatory compliance,” he is correctly recognised as a fraudster who should be prosecuted.
When Jude Dike does the EXACT same thing, but slaps a mobile app, a dot io website and a little tryhard tech PR branding on it, he is an “innovator,” a “striver” and a “disruptor” who “moves fast and breaks stuff.”
When the story inevitably ends the same way, instead of having private investigators hired to tail his movements around the world, he will instead get to live in peace and security, undisturbed by anyone because apparently fraudulent behaviour is bad, but when you call it https://fraudulentbehaviour.io, it becomes something else. This giant mental black spot is the reason why tech is used to facilitate and abet different kinds of criminality in Africa without so much as an eyelid being raised. Once again, rules exist for a reason
In my line of work, a truism that I often come across goes like this: “There is never only one cockroach.” What this statement means to investigators and auditors is that where one serious regulatory or cultural lapse can be observed in an organisation, there will almost certainly be other serious issues afflicting that organisation.
In the case of Uber, the initial cockroach was the company’s studious refusal to cooperate with local laws around the world as it followed its “Always Be Hustling” internal motto, moving fast and breaking stuff until the things getting broken were no longer just rules.
Read also: Nigerian fintechs grapple with KYC amid rapid growth <https://businessday.ng/technology/article/nigerian-fintechs-grapple-with-kyc-amid-rapid-growth/>
First came the women who complained about sexual harassment by unvetted Uber drivers, and then came the more serious stuff. Rapes. Homicides. Deaths from traffic accidents caused by fatigued Uber drivers struggling desperately to maintain their near 5-star ratings so as to keep earning a living, while Uber used loss of ratings as grounds for account removal and potential loss of livelihood. All of these issues were avoidable if Uber had spent a few months working with authorities to ensure full compliance first, but “moving fast and breaking stuff” was more important.
The story is much the same with Flutterwave, which not only began operating without a licence in Kenya, but then began actively and brazenly facilitating money laundering on its platform in the jurisdiction where it was already operating illegally.
It is difficult to picture any other commercial space where such behaviour would not have resulted in conferment of societal pariah status. Can you imagine, say, a Nigerian construction company opening up illegally in Kenya and then deliberately using substandard construction materials resulting in Kenyans’ deaths?
Would Nigerians feel moved to defend such a thing? Why then, do so many Nigerian techies feel obliged to defend Flutterwave and its money laundering activities in a country whose last major terror attack was planned and funded using electronic payment platforms?
These are the questions that we must ask ourselves as we react to stories like that of Flutterwave. The rules exist for a reason – they are not impediments to the individual egos of people with behavioural disorders who think that they exist as protagonists in a videogame where they can do as they please.
Perspective is a healthy thing.
Regards, Nanjira.
Sent on the move. _______________________________________________ KICTANet mailing list KICTANet@lists.kictanet.or.ke https://lists.kictanet.or.ke/mailman/listinfo/kictanet Twitter: http://twitter.com/kictanet Facebook: https://www.facebook.com/KICTANet/
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KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
KICTANet - The Power of Communities, is Kenya's premier ICT policy engagement platform.
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Hehe. Ali and I were in a rather interesting panel where this regulation - innovation paradigm came up. As I’ve been analysing cybersecurity and digital financial ecosystems in Africa over the past year, it’s clear that the tech side of things got carried away with the ‘blitz’ and forgot that societies aren’t just waiting for their disruptions. We’ll need this kind of vibrancy in other sectors too, especially health as digital permeates therein. Some interesting regulatory perspectives from the continent for those who may be interested: https://carnegieendowment.org/programs/technology/securingDigitalFinancialIn... <https://carnegieendowment.org/programs/technology/securingDigitalFinancialInclusion> Regards, Nanjira www.nanjira.com <http://www.nanjira.com/> Twitter <http://www.twitter.com/ninanjira> | LinkedIn <https://www.linkedin.com/in/nanjira/>
On 3 Aug 2022, at 12:01, Barrack Otieno <otieno.barrack@gmail.com> wrote:
Hi Nanjira,
This is very timely. Reminds me of the pyramid schemes and i won't name names'. I guess we need to think of how to incubate and promote local innovations within supportive regulator frameworks as opposed to having a free for all regime. Reading the article, i can only imagine the effect of ''wash wash''.
Regards
On Wed, Aug 3, 2022 at 9:36 AM Nanjira Sambuli via KICTANet <kictanet@lists.kictanet.or.ke <mailto:kictanet@lists.kictanet.or.ke>> wrote: I think this is an important angle to bring to the fintech innovation (vs) regulation discourse. https://businessday.ng/columnist/article/innovation-always-precedes-regulati... <https://businessday.ng/columnist/article/innovation-always-precedes-regulation-a-tech-myth-that-needs-busting/>
‘Innovation always precedes regulation’ – A tech myth that needs busting David Hundeyin <https://businessday.ng/author/hundeyin/>Aug 1, 2022 <https://i0.wp.com/businessday.ng/wp-content/uploads/2022/07/Fintech.jpg?fit=700%2C400&ssl=1>Fintech One of last week’s biggest stories out of Africa was the Kenyan central bank’s decision to effectively blacklist Flutterwave and Chipper Cash from operating in Kenya. Typically, much of the reaction to the story from Nigeria managed to completely sidestep the material facts of the case and turn it into an African macrocosm of Nigeria’s usual ethno-tribal discourse.
Flutterwave, according to the narrative, was merely being unfairly targeted because it is a successful Nigerian company operating in Kenya. The “jealous” Kenyan authorities were simply acting as proxies for Flutterwave’s Kenyan competitors who wanted to protect their market share from “de Najeeryans.” When the point was raised that Flutterwave was, in fact, operating illegally in Kenya, in addition to being in clear violation of Anti Money Laundering regulations, the reply that came was, “Obtaining a Kenyan licence is hard. Innovation always precedes regulation.”
I have written previously about how there exists a dangerous narrative in Nigerian tech – Fintech especially – that rules are secondary considerations that tech is somehow exempt from. Now, it is time to critically analyse this idea so that if it turns out to lack merit, perhaps we can start the process of killing it dead once and for all. Here goes.
“Tech is special” – says who?
Earlier in the year, I was approached for a private investigation engagement focusing on an investment scheme promoter who had made away with billions of naira worth of client money. Having registered his investment scheme with the Corporate Affairs Commission, he managed to convince investors that having CAC registration somehow had anything to do with being licensed to offer investment or crowdfunding services in Nigeria. Meanwhile, as anyone with the slightest regulatory awareness knows, only the Securities and Exchange Commission (SEC) has the ability to license investment companies.
Unsurprisingly after he disappeared into the night with hundreds of people’s money, there was no way to do anything to him. Because the company had no SEC registration, the commission had nothing to freeze, revoke or investigate. It wasn’t even interested, which is why I was approached. At the point when I was approached, every informed reaction I came across treated the matter as a lesson in the importance of due diligence and making sure that investment schemes have the appropriate regulatory compliance before putting money into them.
Nobody made the fatuous argument that perhaps the scheme started off legitimately, and the promoters just needed to get it off the ground first before worrying about SEC registration later. Instead, it was correctly recognised as fraudulent behaviour where other people’s money was involved.
Just a few weeks later, however, when news emerged that GetEquity, a tech investment platform purporting to offer access to American stocks was doing exactly the same thing, plus the added illegality of an unrecognised, unenforceable “digital investment token,” the reaction was completely different.
This time around, that fatuous argument was thrown around with such regularity that one might have almost begun thinking it was some kind of accepted wisdom. Apparently, when Maxwell Odum floats an investment scheme that has no SEC registration and fraudulently portrays CAC business name registration as “regulatory compliance,” he is correctly recognised as a fraudster who should be prosecuted.
When Jude Dike does the EXACT same thing, but slaps a mobile app, a dot io website and a little tryhard tech PR branding on it, he is an “innovator,” a “striver” and a “disruptor” who “moves fast and breaks stuff.”
When the story inevitably ends the same way, instead of having private investigators hired to tail his movements around the world, he will instead get to live in peace and security, undisturbed by anyone because apparently fraudulent behaviour is bad, but when you call it https://fraudulentbehaviour.io <https://fraudulentbehaviour.io/>, it becomes something else. This giant mental black spot is the reason why tech is used to facilitate and abet different kinds of criminality in Africa without so much as an eyelid being raised.
Once again, rules exist for a reason
In my line of work, a truism that I often come across goes like this: “There is never only one cockroach.” What this statement means to investigators and auditors is that where one serious regulatory or cultural lapse can be observed in an organisation, there will almost certainly be other serious issues afflicting that organisation.
In the case of Uber, the initial cockroach was the company’s studious refusal to cooperate with local laws around the world as it followed its “Always Be Hustling” internal motto, moving fast and breaking stuff until the things getting broken were no longer just rules.
Read also: Nigerian fintechs grapple with KYC amid rapid growth <https://businessday.ng/technology/article/nigerian-fintechs-grapple-with-kyc-amid-rapid-growth/> First came the women who complained about sexual harassment by unvetted Uber drivers, and then came the more serious stuff. Rapes. Homicides. Deaths from traffic accidents caused by fatigued Uber drivers struggling desperately to maintain their near 5-star ratings so as to keep earning a living, while Uber used loss of ratings as grounds for account removal and potential loss of livelihood. All of these issues were avoidable if Uber had spent a few months working with authorities to ensure full compliance first, but “moving fast and breaking stuff” was more important.
The story is much the same with Flutterwave, which not only began operating without a licence in Kenya, but then began actively and brazenly facilitating money laundering on its platform in the jurisdiction where it was already operating illegally.
It is difficult to picture any other commercial space where such behaviour would not have resulted in conferment of societal pariah status. Can you imagine, say, a Nigerian construction company opening up illegally in Kenya and then deliberately using substandard construction materials resulting in Kenyans’ deaths?
Would Nigerians feel moved to defend such a thing? Why then, do so many Nigerian techies feel obliged to defend Flutterwave and its money laundering activities in a country whose last major terror attack was planned and funded using electronic payment platforms?
These are the questions that we must ask ourselves as we react to stories like that of Flutterwave. The rules exist for a reason – they are not impediments to the individual egos of people with behavioural disorders who think that they exist as protagonists in a videogame where they can do as they please.
Perspective is a healthy thing.
Regards, Nanjira.
Sent on the move. _______________________________________________ KICTANet mailing list KICTANet@lists.kictanet.or.ke <mailto:KICTANet@lists.kictanet.or.ke> https://lists.kictanet.or.ke/mailman/listinfo/kictanet <https://lists.kictanet.or.ke/mailman/listinfo/kictanet> Twitter: http://twitter.com/kictanet <http://twitter.com/kictanet> Facebook: https://www.facebook.com/KICTANet/ <https://www.facebook.com/KICTANet/>
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KICTANet is a multi-stakeholder Think Tank for people and institutions interested and involved in ICT policy and regulation. KICTANet is a catalyst for reform in the Information and Communication Technology sector. Its work is guided by four pillars of Policy Advocacy, Capacity Building, Research, and Stakeholder Engagement.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
KICTANet - The Power of Communities, is Kenya's premier ICT policy engagement platform.
-- Barrack O. Otieno +254721325277 +254733206359 Skype: barrack.otieno PGP ID: 0x2611D86A
@Ali Hussein <ahussein@kictanet.or.ke> , I would like to hear your perspective. Once thing i know is that people if we are not careful with Fintech innovations we might affect life expectancy in Kenya just like some of the County Governments did with payment shenanigans. Regards On Wed, Aug 3, 2022 at 12:13 PM Nanjira Sambuli <email@nanjira.com> wrote:
Hehe. Ali and I were in a rather interesting panel where this regulation - innovation paradigm came up. As I’ve been analysing cybersecurity and digital financial ecosystems in Africa over the past year, it’s clear that the tech side of things got carried away with the ‘blitz’ and forgot that societies aren’t just waiting for their disruptions. We’ll need this kind of vibrancy in other sectors too, especially health as digital permeates therein. Some interesting regulatory perspectives from the continent for those who may be interested: https://carnegieendowment.org/programs/technology/securingDigitalFinancialIn...
Regards, Nanjira www.nanjira.com <http://www.nanjira.com>
Twitter <http://www.twitter.com/ninanjira> | LinkedIn <https://www.linkedin.com/in/nanjira/>
On 3 Aug 2022, at 12:01, Barrack Otieno <otieno.barrack@gmail.com> wrote:
Hi Nanjira,
This is very timely. Reminds me of the pyramid schemes and i won't name names'. I guess we need to think of how to incubate and promote local innovations within supportive regulator frameworks as opposed to having a free for all regime. Reading the article, i can only imagine the effect of ''wash wash''.
Regards
On Wed, Aug 3, 2022 at 9:36 AM Nanjira Sambuli via KICTANet < kictanet@lists.kictanet.or.ke> wrote:
I think this is an important angle to bring to the fintech innovation (vs) regulation discourse.
https://businessday.ng/columnist/article/innovation-always-precedes-regulati...
‘Innovation always precedes regulation’ – A tech myth that needs busting David Hundeyin <https://businessday.ng/author/hundeyin/>*Aug 1, 2022* [image: Fintech] <https://i0.wp.com/businessday.ng/wp-content/uploads/2022/07/Fintech.jpg?fit=700%2C400&ssl=1> Fintech
One of last week’s biggest stories out of Africa was the Kenyan central bank’s decision to effectively blacklist Flutterwave and Chipper Cash from operating in Kenya. Typically, much of the reaction to the story from Nigeria managed to completely sidestep the material facts of the case and turn it into an African macrocosm of Nigeria’s usual ethno-tribal discourse.
Flutterwave, according to the narrative, was merely being unfairly targeted because it is a successful Nigerian company operating in Kenya. The “jealous” Kenyan authorities were simply acting as proxies for Flutterwave’s Kenyan competitors who wanted to protect their market share from “de Najeeryans.” When the point was raised that Flutterwave was, in fact, operating illegally in Kenya, in addition to being in clear violation of Anti Money Laundering regulations, the reply that came was, “Obtaining a Kenyan licence is hard. Innovation always precedes regulation.”
I have written previously about how there exists a dangerous narrative in Nigerian tech – Fintech especially – that rules are secondary considerations that tech is somehow exempt from. Now, it is time to critically analyse this idea so that if it turns out to lack merit, perhaps we can start the process of killing it dead once and for all. Here goes. “Tech is special” – says who?
Earlier in the year, I was approached for a private investigation engagement focusing on an investment scheme promoter who had made away with billions of naira worth of client money. Having registered his investment scheme with the Corporate Affairs Commission, he managed to convince investors that having CAC registration somehow had anything to do with being licensed to offer investment or crowdfunding services in Nigeria. Meanwhile, as anyone with the slightest regulatory awareness knows, only the Securities and Exchange Commission (SEC) has the ability to license investment companies.
Unsurprisingly after he disappeared into the night with hundreds of people’s money, there was no way to do anything to him. Because the company had no SEC registration, the commission had nothing to freeze, revoke or investigate. It wasn’t even interested, which is why I was approached. At the point when I was approached, every informed reaction I came across treated the matter as a lesson in the importance of due diligence and making sure that investment schemes have the appropriate regulatory compliance before putting money into them.
Nobody made the fatuous argument that perhaps the scheme started off legitimately, and the promoters just needed to get it off the ground first before worrying about SEC registration later. Instead, it was correctly recognised as fraudulent behaviour where other people’s money was involved.
Just a few weeks later, however, when news emerged that GetEquity, a tech investment platform purporting to offer access to American stocks was doing exactly the same thing, plus the added illegality of an unrecognised, unenforceable “digital investment token,” the reaction was completely different.
This time around, that fatuous argument was thrown around with such regularity that one might have almost begun thinking it was some kind of accepted wisdom. Apparently, when Maxwell Odum floats an investment scheme that has no SEC registration and fraudulently portrays CAC business name registration as “regulatory compliance,” he is correctly recognised as a fraudster who should be prosecuted.
When Jude Dike does the EXACT same thing, but slaps a mobile app, a dot io website and a little tryhard tech PR branding on it, he is an “innovator,” a “striver” and a “disruptor” who “moves fast and breaks stuff.”
When the story inevitably ends the same way, instead of having private investigators hired to tail his movements around the world, he will instead get to live in peace and security, undisturbed by anyone because apparently fraudulent behaviour is bad, but when you call it https://fraudulentbehaviour.io, it becomes something else. This giant mental black spot is the reason why tech is used to facilitate and abet different kinds of criminality in Africa without so much as an eyelid being raised. Once again, rules exist for a reason
In my line of work, a truism that I often come across goes like this: “There is never only one cockroach.” What this statement means to investigators and auditors is that where one serious regulatory or cultural lapse can be observed in an organisation, there will almost certainly be other serious issues afflicting that organisation.
In the case of Uber, the initial cockroach was the company’s studious refusal to cooperate with local laws around the world as it followed its “Always Be Hustling” internal motto, moving fast and breaking stuff until the things getting broken were no longer just rules.
Read also: Nigerian fintechs grapple with KYC amid rapid growth <https://businessday.ng/technology/article/nigerian-fintechs-grapple-with-kyc-amid-rapid-growth/>
First came the women who complained about sexual harassment by unvetted Uber drivers, and then came the more serious stuff. Rapes. Homicides. Deaths from traffic accidents caused by fatigued Uber drivers struggling desperately to maintain their near 5-star ratings so as to keep earning a living, while Uber used loss of ratings as grounds for account removal and potential loss of livelihood. All of these issues were avoidable if Uber had spent a few months working with authorities to ensure full compliance first, but “moving fast and breaking stuff” was more important.
The story is much the same with Flutterwave, which not only began operating without a licence in Kenya, but then began actively and brazenly facilitating money laundering on its platform in the jurisdiction where it was already operating illegally.
It is difficult to picture any other commercial space where such behaviour would not have resulted in conferment of societal pariah status. Can you imagine, say, a Nigerian construction company opening up illegally in Kenya and then deliberately using substandard construction materials resulting in Kenyans’ deaths?
Would Nigerians feel moved to defend such a thing? Why then, do so many Nigerian techies feel obliged to defend Flutterwave and its money laundering activities in a country whose last major terror attack was planned and funded using electronic payment platforms?
These are the questions that we must ask ourselves as we react to stories like that of Flutterwave. The rules exist for a reason – they are not impediments to the individual egos of people with behavioural disorders who think that they exist as protagonists in a videogame where they can do as they please.
Perspective is a healthy thing.
Regards, Nanjira.
Sent on the move. _______________________________________________ KICTANet mailing list KICTANet@lists.kictanet.or.ke https://lists.kictanet.or.ke/mailman/listinfo/kictanet Twitter: http://twitter.com/kictanet Facebook: https://www.facebook.com/KICTANet/
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KICTANet is a multi-stakeholder Think Tank for people and institutions interested and involved in ICT policy and regulation. KICTANet is a catalyst for reform in the Information and Communication Technology sector. Its work is guided by four pillars of Policy Advocacy, Capacity Building, Research, and Stakeholder Engagement.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
KICTANet - The Power of Communities, is Kenya's premier ICT policy engagement platform.
-- Barrack O. Otieno +254721325277 +254733206359 Skype: barrack.otieno PGP ID: 0x2611D86A
-- Barrack O. Otieno +254721325277 +254733206359 Skype: barrack.otieno PGP ID: 0x2611D86A
Nanjira Sambuli via KICTANet Hi Sambuli! <kictanet@lists.kictanet.or.ke> aliandika:
I think this is an important angle to bring to the fintech innovation (vs) regulation discourse. https://businessday.ng/columnist/article/innovation-always-precedes-regulati...
‘Innovation always precedes regulation’ – A tech myth that needs busting David HundeyinAug 1, 2022
Fintech One of last week’s biggest stories out of Africa was the Kenyan central bank’s decision to effectively blacklist Flutterwave and Chipper Cash from operating in Kenya. Typically, much of the reaction to the story from Nigeria managed to completely sidestep the material facts of the case and turn it into an African macrocosm of Nigeria’s usual ethno-tribal discourse.
If this is indeed the case, this sucks.
Flutterwave, according to the narrative, was merely being unfairly targeted because it is a successful Nigerian company operating in Kenya. The “jealous” Kenyan authorities were simply acting as proxies for Flutterwave’s Kenyan competitors who wanted to protect their market share from “de Najeeryans.” When the point was raised that Flutterwave was, in fact, operating illegally in Kenya, in addition to being in clear violation of Anti Money Laundering regulations, the reply that came was, “Obtaining a Kenyan licence is hard. Innovation always precedes regulation.”
I have written previously about how there exists a dangerous narrative in Nigerian tech – Fintech especially – that rules are secondary considerations that tech is somehow exempt from. Now, it is time to critically analyse this idea so that if it turns out to lack merit, perhaps we can start the process of killing it dead once and for all. Here goes.
“Tech is special” – says who?
Tech is not special. People's freedom - to use Free[As in Free Beer] software [and privacy] *is*. Regulators and people in the space love to lump these 2 together. [...]
First came the women who complained about sexual harassment by unvetted Uber drivers, and then came the more serious stuff. Rapes. Homicides. Deaths from traffic accidents caused by fatigued Uber drivers struggling desperately to maintain their near 5-star ratings so as to keep earning a living, while Uber used loss of ratings as grounds for account removal and potential loss of livelihood. All of these issues were avoidable if Uber had spent a few months working with authorities to ensure full compliance first, but “moving fast and breaking stuff” was more important.
The story is much the same with Flutterwave, which not only began operating without a licence in Kenya, but then began actively and brazenly facilitating money laundering on its platform in the jurisdiction where it was already operating illegally.
It is difficult to picture any other commercial space where such behaviour would not have resulted in conferment of societal pariah status. Can you imagine, say, a Nigerian construction company opening up illegally in Kenya and then deliberately using substandard construction materials resulting in Kenyans’ deaths?
Would Nigerians feel moved to defend such a thing? Why then, do so many Nigerian techies feel obliged to defend Flutterwave and its money laundering activities in a country whose last major terror attack was planned and funded using electronic payment platforms?
Nationalism?
These are the questions that we must ask ourselves as we react to stories like that of Flutterwave. The rules exist for a reason – they are not impediments to the individual egos of people with behavioural disorders who think that they exist as protagonists in a videogame where they can do as they please.
Rules do exist. But to serve whom? And for what purpose were they created? Sometimes, these rules you speak so highly of are created by people with the same behavioural disorders you speak so strongly against - see Nazi Germany. I am not an advocate of rule-breaking; nor an ardent follower of the same. I lack context in this whole flutterwave business - something I reckon that needs context to follow along. But these same arguments for rules, that: (a) "tech" seems to think they are exempt from rules; and (b) Rules curb bad actors; both have their merits/de-merits. Creating rules for a fast moving industry is hard. It's even harder when the people creating the rules are as clueless as most people are - which is allowed and happens many times. For (b), that's very debatable; look at countries trying to curb E2E encryption with the guise of curbing social evils, only for journalists to later discover that the "rule-upholders" were _the bad actors_. Finally, curious, what's your definition of "tech"? To me, I think you mean any company/corp that uses the internet chiefly as it's core revenue is tech right? [At this point I'm really nit-picky, sorry] To me then perhaps call this a tech-corporation? Also, how do you regulate something that doesn't exist (unknown unknowns) or is too niche that it isn't in the purview of people? Isn't that what people mean when they say "Innovation precedes regulation?" What I see happening is that: (a) Regulation around some field exists and (b) some people in the space feel that the existing regulations hamper progress. (b) is important, it prevents innovation from coming up with non-ethical things; and should (b) be a pain - see the ICT bill as an example - people will complain and in some cases won't fly. Worth mentioning that some people influence regulations to create a monopoly - and that's dangerous.
Perspective is a healthy thing.
When it serves you? Here I see a supposedly bad actor in the finance space that has caused ripples. And it seems you have been somehow involved in this whole saga. Sorry. That m[ay]ust have been difficult. That said, indeed I agree that rules have to be followed to protect us citizens from the whole saga that transpired. But again, will those rules - should they be created - serve to create monopolies, with this saga serving as a convenient example for their creation? Just my 2¢, best spent over a cup of afternoon tea. -- (I Search, I Find, I Misplace, I Research) (D4F09EB110177E03C28E2FE1F5BBAE1E0392253F (hkp://keys.openpgp.org))
Thank you for sharing this. Citing an excerpt from the African Parliamentary Digital Symposium document shared by Mr. Barrack Otieno: "Strengthening Africa’s digital economy ● Policies and regulations for the digital economy should be anchored into local realities and respond to local needs. They should also be balanced, so as not to place barriers for end-users, nor overburden innovators and entrepreneurs (especially start-ups and SMEs)." Regards, Mildred Achoch. On Wednesday, August 3, 2022, Nanjira Sambuli via KICTANet < kictanet@lists.kictanet.or.ke> wrote:
I think this is an important angle to bring to the fintech innovation (vs) regulation discourse. https://businessday.ng/columnist/article/innovation- always-precedes-regulation-a-tech-myth-that-needs-busting/
‘Innovation always precedes regulation’ – A tech myth that needs busting David Hundeyin <https://businessday.ng/author/hundeyin/>*Aug 1, 2022* [image: Fintech] <https://i0.wp.com/businessday.ng/wp-content/uploads/2022/07/Fintech.jpg?fit=700%2C400&ssl=1> Fintech
One of last week’s biggest stories out of Africa was the Kenyan central bank’s decision to effectively blacklist Flutterwave and Chipper Cash from operating in Kenya. Typically, much of the reaction to the story from Nigeria managed to completely sidestep the material facts of the case and turn it into an African macrocosm of Nigeria’s usual ethno-tribal discourse.
Flutterwave, according to the narrative, was merely being unfairly targeted because it is a successful Nigerian company operating in Kenya. The “jealous” Kenyan authorities were simply acting as proxies for Flutterwave’s Kenyan competitors who wanted to protect their market share from “de Najeeryans.” When the point was raised that Flutterwave was, in fact, operating illegally in Kenya, in addition to being in clear violation of Anti Money Laundering regulations, the reply that came was, “Obtaining a Kenyan licence is hard. Innovation always precedes regulation.”
I have written previously about how there exists a dangerous narrative in Nigerian tech – Fintech especially – that rules are secondary considerations that tech is somehow exempt from. Now, it is time to critically analyse this idea so that if it turns out to lack merit, perhaps we can start the process of killing it dead once and for all. Here goes. “Tech is special” – says who?
Earlier in the year, I was approached for a private investigation engagement focusing on an investment scheme promoter who had made away with billions of naira worth of client money. Having registered his investment scheme with the Corporate Affairs Commission, he managed to convince investors that having CAC registration somehow had anything to do with being licensed to offer investment or crowdfunding services in Nigeria. Meanwhile, as anyone with the slightest regulatory awareness knows, only the Securities and Exchange Commission (SEC) has the ability to license investment companies.
Unsurprisingly after he disappeared into the night with hundreds of people’s money, there was no way to do anything to him. Because the company had no SEC registration, the commission had nothing to freeze, revoke or investigate. It wasn’t even interested, which is why I was approached. At the point when I was approached, every informed reaction I came across treated the matter as a lesson in the importance of due diligence and making sure that investment schemes have the appropriate regulatory compliance before putting money into them.
Nobody made the fatuous argument that perhaps the scheme started off legitimately, and the promoters just needed to get it off the ground first before worrying about SEC registration later. Instead, it was correctly recognised as fraudulent behaviour where other people’s money was involved.
Just a few weeks later, however, when news emerged that GetEquity, a tech investment platform purporting to offer access to American stocks was doing exactly the same thing, plus the added illegality of an unrecognised, unenforceable “digital investment token,” the reaction was completely different.
This time around, that fatuous argument was thrown around with such regularity that one might have almost begun thinking it was some kind of accepted wisdom. Apparently, when Maxwell Odum floats an investment scheme that has no SEC registration and fraudulently portrays CAC business name registration as “regulatory compliance,” he is correctly recognised as a fraudster who should be prosecuted.
When Jude Dike does the EXACT same thing, but slaps a mobile app, a dot io website and a little tryhard tech PR branding on it, he is an “innovator,” a “striver” and a “disruptor” who “moves fast and breaks stuff.”
When the story inevitably ends the same way, instead of having private investigators hired to tail his movements around the world, he will instead get to live in peace and security, undisturbed by anyone because apparently fraudulent behaviour is bad, but when you call it https://fraudulentbehaviour.io, it becomes something else. This giant mental black spot is the reason why tech is used to facilitate and abet different kinds of criminality in Africa without so much as an eyelid being raised. Once again, rules exist for a reason
In my line of work, a truism that I often come across goes like this: “There is never only one cockroach.” What this statement means to investigators and auditors is that where one serious regulatory or cultural lapse can be observed in an organisation, there will almost certainly be other serious issues afflicting that organisation.
In the case of Uber, the initial cockroach was the company’s studious refusal to cooperate with local laws around the world as it followed its “Always Be Hustling” internal motto, moving fast and breaking stuff until the things getting broken were no longer just rules.
Read also: Nigerian fintechs grapple with KYC amid rapid growth <https://businessday.ng/technology/article/nigerian-fintechs-grapple-with-kyc-amid-rapid-growth/>
First came the women who complained about sexual harassment by unvetted Uber drivers, and then came the more serious stuff. Rapes. Homicides. Deaths from traffic accidents caused by fatigued Uber drivers struggling desperately to maintain their near 5-star ratings so as to keep earning a living, while Uber used loss of ratings as grounds for account removal and potential loss of livelihood. All of these issues were avoidable if Uber had spent a few months working with authorities to ensure full compliance first, but “moving fast and breaking stuff” was more important.
The story is much the same with Flutterwave, which not only began operating without a licence in Kenya, but then began actively and brazenly facilitating money laundering on its platform in the jurisdiction where it was already operating illegally.
It is difficult to picture any other commercial space where such behaviour would not have resulted in conferment of societal pariah status. Can you imagine, say, a Nigerian construction company opening up illegally in Kenya and then deliberately using substandard construction materials resulting in Kenyans’ deaths?
Would Nigerians feel moved to defend such a thing? Why then, do so many Nigerian techies feel obliged to defend Flutterwave and its money laundering activities in a country whose last major terror attack was planned and funded using electronic payment platforms?
These are the questions that we must ask ourselves as we react to stories like that of Flutterwave. The rules exist for a reason – they are not impediments to the individual egos of people with behavioural disorders who think that they exist as protagonists in a videogame where they can do as they please.
Perspective is a healthy thing.
Regards, Nanjira.
Sent on the move.
participants (4)
-
Barrack Otieno -
Mildred Achoch -
Munyoki Kilyungi -
Nanjira Sambuli