M-Kopa Raises $10 Million Amid Staff Layoffs Controversy

1
m-kopa-staff
Shares

Sometime in early February, rumours began to surface that Kenya-based M-Kopa Solar had fired all its developers back in December 2017. At this point, everything was foggy and unclear.

However, on 11 March, it was reported by Kenyan Wall Street that the company had fired 18% of its staff, including 78 developers and outsourced the development to a British company Applicita, which was founded by its acting chief technology officer John Kattenhorn. This news stirred up quite the controversy with some people even claiming that M-Kopa was preparing to exit the Kenyan market.

Turns out, M-Kopa was only restructuring in a bid to improve its competitiveness, ensure long-term sustainability, and increase return for investors and the cuts targeted almost all departments and management levels, reducing the company’s headcount from 1000 to 850 across Kenya, Uganda, Tanzania and the United Kingdom.

The company’s CEO, Jesse Moore, sought to hose down speculation that they are divesting operations from Kenya. He also explained that they outsourced some of their business functions to “capable and cost-competitive partners” in order to concentrate on improving internal operations. The CEO also noted that the company’s acting CTO was not involved in the procurement decision that saw Applicita win the tender to run M-Kopa’s IT functions, “Our board approved this and the individual [John Kattenhorn] is strictly recused on procurement decisions with companies where could be a potential conflict of interest,” he said.

Moving on to the 10 Million dollar investment hanging over M-Kopa’s head, the company has received this investment from FinDev Canada, Canada’s newly launched development finance institution. “M-KOPA is exactly the type of entrepreneurial company that FinDev Canada wants to support,” said Paul Lamontagne, Managing Director of FinDev Canada. “Our investment will allow M-KOPA to reach more households across East Africa, providing access to clean power, creating significant levels of employment, and helping customers save money and build a credit history. Services like these have a favourable impact on women.”

This round of investment was led by CDC, a previous investor that had injected $7 million into the company and also includes follow-on investments by existing shareholders; Generation Investment Management and LGT Venture Philanthropy.

Well, M-Kopa Solar is one of the most funded Kenyan startups and it the startup reports to recently reached a milestone of connecting over 600,000 homes to off-grid electricity. However, there’s no putting a blanket over the concerns of some notable Kenyan tech space observers who cast doubt over M-Kopa’s status as a Kenyan company, seeing that the majority of its funding and many of its senior management come from outside Kenya, all being made even worse by the termination of local employees only to outsource operations to a foreign company.

Shares