Members of Parliament have been “inadvertently misled” by a federal agency on a multimillion-dollar Kenyan cellphone investment deal, according to recent media reports.
Canada’s development finance institution, FinDev, invested $15.4 million with a Kenyan cellphone company on a promise that FinDev would sell its shares this year. Instead, it invested $27 million more in M-Kopa Holdings of Nairobi, a cellphone company that has never turned a profit, records obtained by Blacklock’s Reporter show.
“FinDev Canada has not deliberately or inadvertently misled Parliament,” FinDev spokesperson Angela Rodriguez said, adding that the 2021 promise made to MPs that it would cut its losses “was the perspective offered at the time.”
The agency, at the time of its initial investment, predicted M-Kopa would “achieve a break-even point in 2020,” but that never happened.
In a 2021 Inquiry of Ministry tabled in the Commons, FinDev told MPs it would sell its shares by 2024.
“The expected exit of the investment [is] in 2024,” said the Inquiry.
FinDev instead increased its investment in the company, handing over an additional $27 million last August.
Ms. Rodriguez said the change in direction does not mean the agency lied to the House of Commons.
“FinDev noted simply there might be a ‘potential exit’ of the investment in 2024,” said Ms. Rodriguez. “While this was the perspective offered at the time, any business decision FinDev takes is informed by its due diligence.”
When questioned about the return taxpayers could expect to see on the combined $42.4 million investment in M-Kopa, Ms. Rodriguez said the agency was “not in a position to respond” because doing so would “imply disclosure of confidential client information.”
Better known as FinDev, the Development Finance Institute of Canada was set up by cabinet in 2017 to encourage development in poor countries. M-Kopa Holdings was its first investment.
The Kenyan firm has a “customer-centric lending approach” that puts cellphones and appliances into the hands of consumers, according to the company’s website.
The company’s goal is to provide customers with high-quality products “to power their life and business and use the income they earn to make small daily or weekly payments.”
“We understand that customers have to miss payments occasionally,” the website reads. “When they do, we don’t burden them with steep penalties and we give them options to keep using their product while they get back on their feet.”
The company said it has connected more than one million customers to the internet for the first time and four out of five customers are able to improve their lives because of their new devices.
