M-KOPA Faces Racial Discrimination Allegations Over Employee Share Scheme

UK-headquartered fintech firm M-KOPA, known for its pay-as-you-go smartphone and solar financing model across Africa, is at the center of a major legal storm following a racial discrimination lawsuit filed by a former Kenyan employee. The case, now before Kenya’s Employment and Labour Relations Court, challenges the integrity of the company’s share ownership structure and could have wide-reaching implications for investor-backed startups in Africa.

The lawsuit was filed by Elizabeth Njoki, who served at M-KOPA Kenya from 2012 to 2023. Njoki alleges that the company engaged in systemic racial bias by creating a shareholding scheme that disproportionately benefited white and expatriate employees while marginalizing African staff.

A Share Restructure Rooted in Exclusion

At the heart of the petition is a 2019 restructuring of M-KOPA’s employee share ownership program. The restructure introduced “Growth Shares”—a new class of equity offering enhanced benefits such as preferential pricing at $1 per share, buyback rights, access to company information, and guaranteed exits at fair market value.

According to Njoki’s petition, the first round of Growth Shares was distributed to 48 employees, but only seven of them were of African descent. In subsequent issuances, Kenyan employees were excluded entirely. Meanwhile, African staff were reclassified as “Minor Holders,” a status that came with no voting rights, no access to shareholder meetings, and a steep dilution of their Ordinary Shares—from 27% to 7%—without their knowledge or consent.

The move reportedly followed a board-level decision aimed at shielding major investors such as British International Investment (BII) and Generation Investment Management from share dilution. This came after Treehouse Investments converted debt into equity, significantly impacting existing structures.

Court documents show that between 2019 and 2022, Growth Shares ballooned from zero to over 3.3 million, while Preferred Shares jumped from 3.4 million to 12.6 million, further entrenching the disparity.

“I Was Silenced for Asking Questions”

Njoki also alleges that when she sought clarification about her share entitlements, she was met with hostility. According to her, M-KOPA threatened to classify her as a “bad leaver”, which would disqualify her from receiving any shares. “I was silenced for asking questions,” she stated in the court documents.

In a bold claim, the petition brands the company’s 2021 recapitalisation as a “sham” that undervalued the company using outdated comparables, rejecting valuations tied to fintech competitors like Tala, to ensure continued preferential allocation of shares to a select group of insiders.

Represented by Anjarwalla & Khanna LLP, M-KOPA has moved to dismiss the case, arguing that the dispute should be settled in English and Welsh courts, given that no formal employment relationship exists between Njoki and M-KOPA Holdings, the parent entity.

The company has declined to comment publicly, citing the ongoing legal proceedings.

The Reputational and Financial Fallout

M-KOPA, founded in 2011 by Jesse Moore, Nick Hughes, and Chad Larson, has long championed itself as a socially responsible fintech, with over $411 million raised and more than $1.5 billion in credit extended to 5 million customers across Kenya, Nigeria, Ghana, Uganda, and South Africa.

Its recognition as one of Africa’s fastest-growing companies by the Financial Times stands in stark contrast to the allegations, which, if upheld, could upend M-KOPA’s public image and put its investor relationships at risk.

Should the court rule against the company, the consequences could be severe:

• Financial restitution to affected employees could run into millions.
  
• The shareholding structure may be legally ordered to change, diluting existing investor stakes.
  
• Regulatory scrutiny in Kenya could increase, especially from entities like the Central Bank of Kenya.
  
• M-KOPA may face similar lawsuits in Nigeria, Ghana, Uganda, and South Africa.
  
• Its partnerships with key stakeholders such as Safaricom and Mastercard may be negatively affected.
  
• Public trust, especially in key African markets, could significantly erode.
  

With the case ongoing, this legal battle may serve as a watershed moment for corporate equity, investor ethics, and accountability within Africa’s high-growth fintech ecosystem.