M-KOPA Accused of Racial Discrimination in Share Structure

M-KOPA, a UK-based fintech company operating in Africa, has been accused of racial discrimination in its share structure. The controversy began when Elizabeth Njoki, a former employee at M-KOPA Kenya, filed a petition in Kenya’s Employment and Labour Relations Court. She claims that the company’s employee share ownership system unfairly favoured expatriate and white employees while disadvantageous African staff.

According to the petition, M-KOPA restructured its employee share ownership in 2019 by introducing a new class of shares called “Growth Shares.” These shares came with special benefits such as buyback rights, preferential pricing at $1 per share, access to company information, and guaranteed exits at fair market value. However, only seven of the first 48 recipients of Growth Shares were African, and later rounds excluded Kenyan employees entirely. African staff were reclassified as “Minor Holders,” stripping them of voting rights and access to shareholder meetings. Their ordinary shares were diluted from 27% to just 7% without their knowledge or consent.

The restructuring was reportedly done to protect major investors like British International Investment (BII) and Generation Investment Management from dilution after Treehouse Investments converted debt into shares. Growth Shares increased dramatically from zero to over 3.3 million between 2019 and 2022, while Preferred Shares grew from 3.4 million to 12.6 million. Despite this, the preferred shareholders maintained a 73% ownership stake, while ordinary shareholders, mostly Kenyan employees, saw their stake shrink significantly.

Elizabeth Njoki also alleges that when she questioned her share options, she was threatened and labelled a “bad leaver,” which would disqualify her from receiving shares. She says she was silenced for asking questions about the share structure.

M-KOPA has responded by trying to dismiss the case, arguing that shareholder disputes should be handled in English and Welsh courts and claiming there is no employment relationship between Njoki and M-KOPA Holdings. The company has not commented publicly on the accusations due to ongoing legal proceedings.

Founded in 2011, M-KOPA has grown rapidly, raising $411 million and providing over $1.5 billion in credit to 5 million customers across several African countries. Its pay-as-you-go model for smartphones and solar kits has won praise and recognition, including being named one of Africa’s fastest-growing companies by the Financial Times. However, the M-KOPA accusation of racial discrimination challenges the company’s image as a socially responsible fintech, suggesting it perpetuates inequality under the guise of financial inclusion.

If the court finds M-KOPA guilty of racial discrimination in its share structure, the company could face severe consequences. These might include paying large compensation sums to affected employees, restructuring the share scheme to allow fair access for African staff, and straining relationships with major investors. The company’s reputation and financial stability could suffer, with possible investor withdrawals and regulatory scrutiny in Kenya and other African markets where M-KOPA operates.

This case is significant not only for M-KOPA but also for Africa’s tech sector as a whole. It raises important questions about equity, corporate responsibility, and the true beneficiaries of investment in African startups. The outcome could set a precedent for how companies address racial and economic fairness in their structures going forward.

M-KOPA is accused of racial discrimination in its share structure, with allegations that African employees were unfairly sidelined in favour of white and expatriate staff. The ongoing legal battle highlights concerns about fairness and accountability in Africa’s growing fintech industry.

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