BD Insider 193: Safaricom faces court challenge over M-PESA trade secrets

Nigeria has dropped two places on the Digital Quality of Life Index. The annual study which is curated by Surfshark ranks 121 countries by their digital well-being based on five core pillars—internet quality, internet affordability, e-security, e-infrastructure, and e-government.

Out of the Index’s five pillars, Nigeria performed best in internet quality, claiming 62nd place, while facing challenges in internet affordability, ranking 108th. The nation ranks 73rd in e-security, 88th in e-government, and 93rd in e-infrastructure. 

Yesterday, our reporter, Johnstone Kpilaakaa, discussed his takeaways from the report on Channels TV's Business Morning. Watch a recap of the conversation.

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📰 The Weekend Brief

Safaricom faces IP lawsuit

The News: Safaricom is currently embroiled in a legal battle over an alleged intellectual property infringement. The case stems from a claim made by Kenyan businessman Peter Nthei Muoki, who asserts that Safaricom's "Manage Child Account" product closely resembles his own creation, the "M-Teen Account," designed as an M-PESA sub-wallet for individuals aged 13 to 17 and 18 to 24, with the aim of helping parents monitor their children's spending habits.

What we know: The dispute dates back to March 2021 when Muoki approached representatives of Safaricom to discuss a proposal for an M-PESA child account called M-Teen Account. However, he encountered obstacles in implementing his idea. In 2022, he learned about Safaricom's plan to introduce the "Manage Child Account", a product he believes to be a copycat of his "M-Teen Account".

Muoki responded to the alleged infringement by filing a copyright claim against both Safaricom and Huawei Technologies (Kenya.) In his legal action, Muoki has requested the court to either compel Safaricom to pay royalties and licensing fees or pay him KSh10 billion ($67.8 million) for the product in question.

Safaricom sought to postpone the case hearing, pending the outcome of an appeal related to an order issued by the court. This order requires Safaricom to produce specific documents, including a letter sent to Huawei Technologies (Kenya), outlining a proposal for a solution to the parent-child control product functionality on the M-PESA platform.

Safaricom's objection to the application for postponement is based on concerns that Muoki's request may entail the disclosure of confidential information related to the Central Bank of Kenya's approval for a crucial payment system that the telco employs for M-PESA.

However, Safaricom's attempt to halt the hearing was unsuccessful, and the case is scheduled for October 31, 2023, according to the East African.

This lawsuit underscores the importance of addressing intellectual property issues in a transparent and fair manner, as well as the significance of protecting innovative ideas and creations within the business and tech ecosystem. The outcome of this case will be closely watched, as it has the potential to set important precedents in intellectual property disputes in Kenya.

Know more: This is not the first time Safaricom has been involved in a copyright claim. Last month a Kenyan court ordered the telco to pay $30,500 to hip hop artiste, Bamboo after a legal battle that had lasted for nine years.

🔍 What else happened this week?

• CBN launched a microfinance bank licence portal: Applications for Microfinance Bank licences will no longer be done manually. There will be a transition process before the application process goes fully digital on Dec 30.
• Fixit raised $1.9million: Nigerian autotech startup, Fixit45 has secured $1.9 million in a pre-seed round led by Launch Africa Ventures, to fund its ambitious expansion plans into East Africa.
• Ebanx expanded to 8 African countries: A year after the Latin American fintech launched in Nigeria, Kenya, and South Africa, it now has a presence in 11 African countries.
• Ghana's Complete Farmer raised $10.4 million: Complete Farmer secured a $10.4 million pre-Series A funding made up of $7 million in equity and $3.4 million in debt to connect farmers to global food buyers.
• The platforms transforming Africa's creative industry: The creative industry in Africa is undergoing a remarkable renaissance and has evolved into a powerhouse serving as the catalyst for transformative change. From art and music to fashion and film, these seven platforms are reshaping the landscape of African creativity

💼 Opportunities

• NCC hackathon for Nigerian startups: Startups working on solutions in blockchain-enabled data protection, renewable energy, and assistive technologies for the elderly and disabled can apply for a chance to win a ₦10 million grant.
• For African developers: Whether you're already familiar with ARM or looking to get started, the ARM Developer program will help you better software and provide a community of experts and developers to learn new skills. Apply here.
• Accelerator program for Bolt drivers: Bolt drivers with viable and relevant business ideas within the tech-mobility sector, with a focus on sustainability and enhancing mobility solutions in Nigeria can apply for the program

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