Caine Wanjau — transcript

DigiTax

This transcript is generated automatically by YouTube and has not been checked by a person. It misspells names and mishears words, particularly around Kenyan English and company names, so read it as a guide to the conversation rather than a quotable record. Each timestamp opens the video at that moment.

0:03 [Music] Greetings ladies and gentlemen and welcome to episode 39 of the African Jew podcast. Uh today we go back into the world of tax and tax is a good thing. Uh Zakayo, you know, even Jesus had to bring Zakaya down from that tree and tell him h and embrace the tax collector. But Kane Wanja, welcome to the African podcast. Thank you. Thank you, sir.
Ken is one of the co-founders of an outfit called Digit Tax and we'll talk about the compliance and tax in a Kenyan and African context and why it's important. Ken, welcome.
Thank you. Thank you for having me.
So, Ken, let's start before we get into digitax. Yeah. Tax is not
it's not something that you hear when you're in high school and people are talking about dreaming about what careers they they they have.

0:58
Yeah. It's not something that makes the list often. So, how do you find yourself as a as a tax related man? Because you're not really a tax man.
Yeah. Yeah. Um, thanks for the question. So, I mean, if I go way back to like my school days,
um, my my two favorite subjects in high school were commerce, which had components of accounting.
Yes.
And also, um, computer studies.
Mhm.
So, those are the two subjects I really focused on. Mhm.
And um as I you know went through school started my career it always kept revolving and rotating around uh those two things. Um so I had a stint working in banking. Uh but then most of my career has actually been in the technology space but then my you know my focus or have always thought about what I can do is really about uh solving challenges where I feel my skills can be can be put to good use.

1:55
Okay. So the story of Digitax goes back actually about 13 14 years ago
where when I started business I needed to generate a tax invoice
and those days we had ETR machines.
Yes.
Yes.
And so if you know ETR is like a scientific calculator you have to go and really work work on on the transaction just to get the the receipt.
And I thought to myself, yeah, there's probably a an easier way to do this.
Yes. But at that time a lot of this was really how it was defined by law
and what was allowed.
Yeah.
So we said um we
well I say to myself um let me keep this back of mind and um at some point down the road I'll revisit it
before we get into digitax in detail.
Yes.

2:41
So after your love for commerce
and and stuff manifests in high school. Where does that lead you? What do you go to study in uni?
Uh where do you study?
Okay. And uh do you then get employment or go into entrepreneurship direct? What journey do you take to get there?
Yeah, sure. So after high school I spent one year in Japan.
Mhm.
And that was interesting because this is back in the mid 2000s. Yes.
And um at that time I was very interested in hardware and robotics.
How do you get to Japan? So I was doing my research and um at that point the best place in the world to learn hardware yes robotics you know anything to do with machinery
yes
was Japan
so I said okay actually I'd actually go there and actually see what what is possible

3:31
so I spent one year there
uh learned the language um also
did uh a few courses tied to to hardware and robotics and uh I was able to have a very successful one Okay.
And then from there I then moved over to Australia for 4 years.
Yes. For uni now.
Yes. For university. So that's where I did my my undergraduate studies.
Yes.
In what?
I studied um a combination of robotics and software. Okay.
So it's where hardware meets software.
Yes. So I did robotics uh for 4 years and then at the end of 2010 I came back to to Kenya and as soon as I came back I decided to try entrepreneurship.
So I said okay rather than look for work let me try and this was driven by two reasons.

4:21
Um I think at that time EMP I was maybe 3 years in
and everyone was talking about you know mobile money the possibilities of technology.
Yeah.
So there was this whole buzz and interest around that uh when I came back. M
the second thing is uh the market that time at least from an employment standpoint was not really conducive to anyone who studied hardware.
Okay.
Uh there were some adjacencies like you know in Telcom you could do work around base stations.
Yes.
Or you know towers or basically infrastructure.
But generally speaking outside of that there are not that many opportunities. So I said okay let me try my hand at um
So what did you decide to build or what did you decide to start? So initially I decide to do IT consulting.

5:04
Yes.
The good thing is as long as no computers you could you could you could market yourself.
Yes.
And everyone at that time needed some solutions some system
and since I already had studied software uh I wanted to put my skills to use.
Okay. So in 2011, I set up a company, started doing some work and um yes, I think I when I got now my first job or my first contract when I was now looking to get paid, they said, "Yeah, send me a tax invoice or ETR as we call them."
Yes.
So yeah, I was like, "Okay, now how do you get this ETR?" So I called an accountant friend. He was like, "Okay, first of all, you need an ETR machine." I'm like, "Okay,
where do you get one?" So they told me where to get one. I went I bought it

5:52
and I remember it took me such a long time just to get set up.
Yes.
I even had like a a training manual. It was very long.
And I had to figure it out.
So I did the first one. I did the second one. At the third I'm like wow this is really quite some work. It must be an easier way. But anyway, I continued in that vein and then in 2013 uh I teamed up with uh two business partners and then I started a business called uh Flashcasts. Now Flashcast was um um actually the very opposite from consulting but still still a technology business. But what we did is we partnered with Matos.
Mhm.
And installed screens
Mhm.
inside.
Yes. Now, the screens are not your TV screens, but the ones you'd see like scrolling some text

6:43
like what you'd see in Forex bureaus, you know, scrolling the exchange rate and all that. Yeah. So, but we thought there's an opportunity. So, the context here is this is back in 2013.
Yeah.
There is not even that much uh usage of smartphones. Uh from our observations, people would spend quite a bit of time in public transport to work, from work,
uh you know, reading a newspaper, reading a book.
Uh very few people had smartphones then. So we thought this was a captive audience
uh on your on your way to work or you know, wherever you're going, we can show you messages. And so we sold adverts on that space. But then we also introduced things like uh you know we had they had a GPS so we knew where the screens were at any one time. So we started doing location based advertising. So for example if you're passing CBD and you want people to know about your business in CBD.

7:38
Okay.
It can actually show you an ad when you're in CBD. Exactly.
So GPS the the GPS is in the M is in the whatever screen gadget and as you're passing there it starts talking to you about hey this company here. Okay. So that was that was quite creative. How was that received?
Well, it was received very well. Very many small businesses liked it
because we decided to like slice and dice it.
Charge by the hour.
Yes.
Charge by the day, charge by the week.
So we tried to make it very dynamic and affordable
cuz we're targeting people who could not target traditional media.
Okay.
Again, social media was not that big. It wasn't that big at that time.
So I did that for about uh two years. And then um in 2015 uh I got an opportunity now to go into employment but now I joined a young well at least a young company then

8:32
and they were looking for someone to lead their technology arm.
M
so I joined Figure Foods uh at the end of 2015.
Okay.
Uh I was the first member of the technology team. Did you park the entrepreneurship completely or you you you you just packed that bus and went now into employment full-time?
Yeah. So so the thing is uh at that time I had been doing consulting and flash cast in parallel.
Yes.
Yes.
So consulting was very easy to
uh you know Yes.
Then for flashcast there's actually a lot of interest in the hardware and the assets and the gadgets.
Yes. So I was very easily able to transition that
and then now focus full time on
mean sell out or
yes people actually bought the assets.

9:15
People bought the assets bought the assets
and you were good
and I was good.
Okay.
But I think the biggest thing for me that time was the learnings. Yes.
Um
what were the learnings just by the way
because this is a business you start from scratch. Mhm.
The other thing is from a from an entrepreneurship standpoint, you know, you get to learn the ins and outs of building a business, what work, what doesn't work.
Uh you know, what what people are comfortable with. Yes.
Uh you know, I remember
when we were first figuring out the hardware, we had to test a lot of different variations.
Yeah.
And so we there was a time we needed to test it inside Amatu. So, we went with a with a let me call it a contraption because it had open wires and everything. We're just trying to make sure the hardware works.

10:03
Now, when we entered the Matu, people were not sure what this is. Yeah. And they were asking us, "Who are you guys?" Yeah. What is this you're bringing? You know, will it blow up on us? Yeah. So, you know, actually, some people said, "No, us, we don't know what this is. We We're going to
We're going to leave. We don't We don't want to play with these gadgets."
Yeah. Uh so I mean those are kind of things those are the journeys of entrepreneurship.
Maybe maybe a right time to pose a question. Yeah.
Yeah.
You picked a line that is very contextual. Yes.
In an African setting you know there are very little there are very few I would say global countries in the global west and in Japan where you studied Australia where you can get templates for things like something that will work in in amatu.

10:49
Yes. So maybe let's learn from building a contextual story about the the the gadget that you are testing and people wondering what is this guy bringing you know those are things that you can't see sitting in the back of the room you know or in the back of a desk you have to get on the ground and get in. So what were your your your lessons around building an African contextual business?
That's a great question. The way I look at it is, you know, every we know they like there's this saying politics is local, but business is local. Almost everything is local. Yeah.
And the reality is when you're building a business, the things you can read or be told and the things you have to learn.
Yes. And for me the the one key thing was always can you find out the ground truth or you know v2 ground as they say

11:47
what is what is actually the reality.
Yeah. So that was the first thing I needed to like figure out and understand you know what is really happening
and then the thing is uh you can you can have an idea you can create a business plan in your head but what are the realities. So for example in like flash cast you know what you need the first thing was to convince the owner of the vehicle yeah can I install this because you know they have questions okay will it drain my battery where will you put it will it damage my car will people be comfortable with it so that's the first hurdle
this is unlikely something you're like you're going to face in other places
yes
then the second thing is convincing the driver and the conductor

12:32
the reason even we had to do that test in the vehicle during the Okay, as I said, this vehicle cannot stop. Yeah, it has to keep running because we have uh a business to run
and we have targets to meet.
The vehicle is the business. So, we can't come to your workshop and then we just Yeah. There'll be no cash flow for that day.
Exactly. Those days I didn't have the budget to get a vehicle off the road.
The alternative was you wait at night and then you go do it uh where it's parked.
But the thing is, you'll never know where the vehicle is parked. Sometimes it's parked at a petrol station, sometimes it's parked at the owner's house.
So it's a very dynamic situation. So you'd rather deal with it during the day.

13:13
So those are the things like you know what are the dynamics? Who are the stakeholders? Yeah. Who do you need to convince? The passengers also stakeholders because what we had done is we had built a kind of uh closed social network.
Yes.
So if you see the screen and in the in the vehicle
could actually send a message and it appears. But you know, we had to convince people send a message. Yeah.
So they're like, okay, why am I sending a message? Does it cost me? Yeah. Uh will you show my number? You know, so all these concerns and asurances people want. So there's a lot of trust building that you typically may not find in other places.
Yes.
Simply because it's new, it's novel,

13:55
but you know, people once people get around to it, it tends to get life on its own and picks up traction. Yes.
So they started picking up a life of its own people like they started suggesting topics. One of the things we did is because a vehicle had a GPS,
we gave the owner of the vehicle um fleet tracking for free.
Mhm.
Cuz our our hours was a different purpose.
Yes.
But you know they would like to know where is the vehicle as anyone who knows the Matu industry there's always calls.
So we gave them a dashboard where that was no longer an issue. You just log in and you see where the vehicle is. So with time they came around and uh and that really helped. My my take away there in terms of just um you know contextualizing a business is take time to learn who your stakeholders are.

14:42
Yes.
You'll have to do a lot of trust building.
The idea may be perfect in your head. Yeah. It's just like podcasting. You know if I told someone about podcasting 8 years ago like
but do you have an audience? How you distributing? I'd rather go to radio
or TV.
Yeah. But now this a medium is as popular and as strong as any other one. But a lot of that initial context and you know um convincing people that it's actually a thing took time and and that's the story of the African entrepreneur. You have to be willing to wait it out and convince someone that what you're building actually has value but you also have to build trust and make sure people are comfortable with what you're doing. Yeah.

15:21
Okay. Mhm.
So you you park this bus, you take the learnings and you now go into employment.
Yes.
Okay. And uh you're you're in at that time which was quite a forwardthinking technology company.
Yes.
Uh cutting edge trigger foods.
So how was that journey in in the job? I know we it's not really about trigger foods but about your role technical role in that entity.
Yeah. So, so when I when I joined this is when uh venture capital was really kicking off in Africa.
It's around what 2015
2014 I joined end of 2015.
Yes.
But 2014 is when really the tide started turning.
Agreed.
In terms of venture capital
uh people now willing to invest in ideas.
Uh you know we've always had a an ecosystem or a culture where we want to invest in hard assets you know land buildings

16:17
something you can touch. Yeah.
So, venture capital was a breath of fresh air in that respect
and uh yeah, Trigger had just gotten some funding at that point and they were looking for a CTO. So, when I joined um it was very interesting because one they in as much as they had figured out supply chain they wanted someone who can now come and bring in the technology angle uh because the the next step was now efficiency and and scale. So technology was a way to do that. But then at that point then as now I settled into the job when I had to start thinking okay how do we engage and introduce farmers to technology?
Do we build for them apps?
Do we give them tools you know what what what what what are we doing for farmers?

17:07
Yes.
Uh likewise what are we doing for vendors and what's the story for vendors? Yeah. So really the question then became how do you sell value? How does technology improve their lives? Yeah. And so, you know, one of the learnings was sometimes there can be too much technology. You know, when we talked to farmers, they're like, look, I I just want to know when I'll get paid and that you're good for your money. And if your technology helps me do that, fantastic. Because, you know, for them, you're used to a scenario where you're dealing with brokers. Someone comes to your farm,
buys your produce, they pay you on the spot, and that's it. So you need to come with a value proposition that gets more money in their pockets faster. So the question was how does technology help in that respect. Now once you have solved that then you can have all these other value added initiatives you know farmer engagements uh advice and all that and it was the same thing with vendors. So our target market was you know kiosks uh mamogas

18:10 hawkers uh basically the informal trade.
Yes. We're basically trying to give them good quality produce at a at the best price. And the question was how does technology do that? So a lot of my time was spent thinking you know how does technology work for the uh average citizen or the common one in if you like. So I mean to summarize it in my 7 and 1/2 years there we were able to introduce e-commerce.
Yes.
Because by the time I was leaving I think 70% of our orders were online. M which is very which is is it it seems like an easy thing to do but it's it needs a very dedicated effort to get people to change their habits.
Yeah.
Because these are people who would wake up go to the market in the morning and they know they have their person so they would go and know who to order from. They had credit terms. Um those who were buying from distributors had you know same thing good networks. So how does technology you know why why should I move? That was really the question we tried to answer rather.

19:14
In addition, it was a question of um making sure they're comfortable using technology.
So really simplifying it, making it very straightforward.
Yeah.
Now at that point, smartphones had really picked up. But you know, most people the interpretation of smartphones at that time was maybe WhatsApp or Facebook. Yeah. That is the A and the Z
of their smartphone usage. M
anything else was not really in it for them.
They would still basically use it like a feature phone making calls, SMSs, they like and then if you try tell them we have an app or use Twigger's online platform, they'll tell you things about my phone will be too slow. H my my memory is full. I don't have bundles.

20:00
Yes.
So there all these things to to think through
and to try overcome.
Mhm. But be as it may at the end of my stint there um you know we got all our farmers you know having converted to using mobile money um 70% of our orders were coming from from people ordering themselves on the phone
and you know my take away from that was you know it's one thing to say I can build an app and you can have the best app or the best design or the best idea in your head but getting it used is a really really uh dedicated effort in terms of understanding well what would the hesitations be how would they not want to use it can that be solved through the design or the distribution of the platform you know what are the

20:49 incentive structure we're all humans we're driven by incentives
so what's the benefit of you moving to e-commerce so you anyone designing technology in Kenya in Africa you must think through your incentive structure there have been very many initiatives that have not worked out. Um, you know, one one one initiative that I know this was from my flash cast days that has been tried many times is digitizing bus fair payments.
Yeah.
And they've been so many people so many
Yeah.
The thing though is uh our learnings there were you know who are the stakeholders and what is the incentive.
Yeah. The way I used to think of it is the driver and the conductor, they're basically renting the bus for the day because they pay a fixed fee to the owner. The owner requires the vehicle to be filled up again and then whatever remains is there. That's generally how the matter to industry works.

21:50
Yes.
So the the driver and the conductor effectively leasing the vehicle for the for the day. M
so if you bring in digital payments how does that satisfy their needs or how that does that incentivize them in my view that was a missing piece
and I always took that lesson with me
uh in my in my journey
okay
who are the stakeholders you know how do you incentivize them
who are the stakeholders how do you incentivize them
exactly okay
that's what we need in the market
yeah and that's that's pretty applicable in almost everything you you need to do not just from of course even more from a technical pass because you want high adoption.
Yes.
Okay.
Yeah. So, yeah. So, that was a 7 and 1/2 years. Then now leaving Twigger Foods, that's now when now we came to Digitax and uh

22:38
and all these matters start.
So, let's let's now start. Yeah. From that um
time when you had your um experience with the ETR in your first business.
Yes. uh to the time when you you you've now gone you've had now you're not a young man anymore. You know, you've had a full career. You've worked in in your other business. You have done 7 and 1/2 years in employment and now you come. So, what do you see and and and what is Digi Digitax?
Yeah. So, Digitax is a software platform.
Yes.
And what we're really trying to do is simplify tax compliance.
Okay. So the the backstory is um you know my experience of course having used an ETR before
but also it was now at a point where governments were willing to invest in technology

23:30
and modernize their attack system.
Yes.
And it's just not happening in Kenya. It's happening across the continent and beyond. Now I think governments came to the realization that if we want to be more efficient in terms of tax administration, we need to invest in technology and take a technology-led or technology first approach.
Yes. And so the laws supporting electronic invoicing um you know the regulations uh and even governments themselves invest investing in systems to enable exchange of information uh has has greatly improved over the last uh 7 8 years. So in Kenya for example we moved from ETR to teams. Teams was essentially a device still device- based tax invoicing but that device had an internet connection and that device would now send information to K.

24:28
Yes. Now the change with it teams is you don't need a hardware device can all be done via via software.
So anyone in business or anyone with access to a mobile phone or access to technology should be able to submit a tax invoice in in real time.
Yes. The other goal there means the other goal there sorry the other goal there is if you then simplify that you then simplify the subsequent processes because there is you know the information you send and then there's filing and then of course there's payment of taxes but that first step was always a timeconuming exercise.
Yeah.
Cuz you'd either have to fill it in manually
cross reference with many other sources of information. But now the whole idea around uh ETIMS or electronic invoicing more broadly was uh to simplify and make that process more efficient.

25:17
Okay.
So yeah as Digitax we felt um it's it's a space we could play in uh for two reasons. One um I have a technology background and I felt um you know now having left trigger foods I still saw the same issue there actually. We had to buy a device. We always had to reconfigure it cuz the device could not handle the capacity of our transactions.
Yes.
So I'm like, okay, there's still something that needs to be fixed and and addressed.
Mhm.
Um and asking other businesses like yeah, you know, this this device uh is a challenge for us. Can something be done?
So you know entrepreneurship is also about acquiring an opportunity.
Yes.
And capturing that opportunity. Mhm.
Uh you never want to fall into the trap of vanity ideas.

26:04
Yeah. Yeah.
Ideas just cuz you like them or you're passionate, but there's no business case.
True.
So I came to the conclusion in my head um if you build a compelling solution, people are willing to actually pay for it.
And you see the thing about tax is we found them and we leave them. Yeah. Taxes are eternal as I like to say. Yeah.
So I felt it's a it's a sustainable business and if executed well it can do very well over the long term.
Yeah.
So I started this in 2023.
Mhm.
Um the first 18 months was essentially just getting licensed. So this was
by car. So, so the way the way it works is you first build a solution
but because you are doing electronic invoicing.

26:51
Yes.
Your solution has to be certified and approved
by the tax.
By the tax authority. Yeah. So
the first thing was build a solution take it to them. They then verify and ensure it meets what they want and then they they license.
And what does that verification process look like?
Ah so there are two aspects to it. So once you've built your solution,
yes,
there's a whole list of uh requirements and functionality that it has to have
aligned with the e- invoicing regulations.
Yeah. So
they need to know how are you protecting data? Is it safe? Yeah. Are you transmitting information in the format we require?
Yeah. How have you thought about um you know sealing any loopholes for example?

27:34
So those are the things. So you go through a checklist.
Yes. Once they're satisfied, that's a technical assessment. Then there'll be a business evaluation. So, who are you? Are you are you actually who you say you are? Are you good for this business? Because it's, if you think about it, it's a space where the government or you know uh the taxman wants comfort that once this is rolled out, you just fly with the wind and then leave taxpayers. Yes. So,
they also want to make sure that you're good for who you are. Okay.
Operationally as a business.
So once you satisfy those two criteria, you then get licensed and certified then you can go over your
and how was the experience for you from the other side with the tax man. Did you feel that on the technological front they were at par with you know or what was your experience with them in that particularly because you are then going to attempt to take this to other African jurisdictions not just Kenya.

28:34
Yeah. So it was actually a very good experience because one you I got to get a very good understanding of how governments think about technology.
The one thing I'll say is uh you know it comes to taxes or you know the government's own money they willing to invest in technology and forward thinking ideas to ensure that they can
uh maximize revenue assurance.
Yes. So it's one of the entities where you know there's a there's a lot of investment in technology and an effort to make sure that there they have solutions for the marketplace.
Okay.
So even in our case when we were really having those conversations you know I was talking with fellow professionals in the IT space.
Yes.

29:14
And these are people you could talk the same language on a technical level.
So if there any you know issues or gaps or suggestions um you know you're you're you're talking the same language in that respect
which is very refreshing. Yeah. It's not something you can say for too many government departments.
Yes.
And then the thing is because you're in a space where you're essentially helping the government collect revenue,
uh provided they're satisfied with what you have to offer, then getting started is not that difficult. You know, typically it's the opposite where I need a license, I need a document, I need to satisfy XYZ regulations. uh not that that wasn't there in this case but once you satisfied them

29:57
yes
because your business is helping the government to meet a revenue objective uh you tend to find that process much much more straightforward.
Okay.
Yeah.
Okay.
So we then use that learning to expand into other markets but the good thing is you already know what to expect um you know what kind of questions you'll be asked how to make sure your that certification cycle is as short as possible. Okay.
And so whereas Kenya took I would say 6 months or no so more like 9 months end to end.
Yes.
Uh Zambia which was our second country took uh 6 months. Nigeria which is our third country took about 4 months.
Okay.
And this is in terms of building a solution and being ready for certification.

30:44
So
you build the solution,
you get certified by the tax authority in the respective country.
Yes. But who are you selling the solution to?
So once you're certified and once you're licensed,
you now offer your solution uh in the marketplace. And you see most governments as far as this is concerned, it's an open licensing regime.
Yeah.
If you have a solution that we happy with, we're happy to
license you and then you go sell your solution.
Okay.
So you're competing with everyone else.
And so now that's why you have to differentiate yourself.
Yes.
You know what's your value?
Okay. uh you know how do you help me as a business?
How do you make sure that I am not offside when it comes to my tax matters?

31:28
How does your solution help me do that?
Yeah.
So now it's actually a marketplace.
Okay.
So uh in our case we decided to build uh we have about four solutions.
So we have a mobile app for the individual entrepreneur or for the micro business. Uh we have online tools, online portals for larger businesses or people just prefer to do their invoicing on computers
and then for larger businesses you offer an integration.
Yeah.
So because you probably have your own system, you know, you already have a certain way of working.
Yeah.
We just plug in what you have.
So let's take examples of each of three of the three. the micro business or the um solo entrepreneur,
the um the the one the online uh tools and the big business.

32:16
Yes.
How does that work?
I come to you each one of them comes to you and they're seeking a digit solution.
Sure. So for the micro and small business, Yeah.
what we would first ask is what line of business are you in?
So we make sure we configure your taxes correctly.
Mhm.
Uh you know, how do you generate invoices? and how many users would you like to use the solution. With those three things, we can then now configure it for you. So then go set up your business, you know, put in your tax details.
You'll sign up and then we'll help you activate uh your account.
Okay.
Once your account is activated, you can essentially do all your business on your phone. At least as far as tax invoicing is concerned.

32:57
Yes.
So let's take the example of here. You come here and maybe say you charge to rent this room.
Yes. And then this person says, "Okay, no problem. I'm happy to pay you, but please give me a tax invoice." Yeah,
you may decide because I'm a solo entpreneur, is this easy to do it on my phone. So, I'll ask you for your details,
fill in everything
and then send it off to to you.
So, that's uh that's one way of doing it.
Okay.
Alternative, you know, you may be a professional, you're a lawyer, you're a doctor, you're an accountant, you do a lot of work on your computer.
Yes. So if someone emails you and says, "Oh, please send me a tax invoice." Uh you just go online, fill in the details and send it through. Uh in in the case of online, we we also allow for you to share your account with someone else. So if you and I in the same business or you know, say I'm your accountant or your auditor and you need access to that information, I can actually go and log in and basically see what you're seeing.

34:00 So if you
have that collaborative process, your needs are very different. All what you're typically telling us is I have this way of working. I have this processes.
Yeah.
This is my invoicing to
connect it automatically.
Okay.
So in that case, you're really not using anything we've built in terms of a user interface.
Yeah.
But to integrate for you and help you send it through to
K. Okay. uh and that's the same in every market. So those solutions, it really depends on the size of business you are.
One would assume that uh the tax man is your friend because that's that's something that that's probably music to their their ears what what you're telling what you're doing is what they are trying to do because

34:47
at least I see it on the micro side is you would onboard if rightly executed yeah quite a few taxpayers and bring them into the tax bracket.
Absolutely. So you know the thing about uh electronic invoicing is prior to it any automation was really targeted at the large taxpayers.
Yes.
Because of cost because of complexity
that hardware wasn't cheap.
So they would usually say if you're above a certain threshold
Yes.
Yeah. So 5 million shillings annual turnover and above. Yeah. Then you need to uh you need to have a device.
Yes. But with its because it has really democratized uh collection of information.
Yes.
That's why you hear you know stories of avocado farmers being on its and all those stories we're hearing

35:40
we were hearing last year.
Yeah.
So the thing is um for for businesses and individuals it also it's also for them start being more formal and more organized and more compliant.
Yeah. Uh, and then as we were talking before we started recording,
yeah,
you know, if you're thinking about this business longterm and maybe one day you want to sell it, when you're going through due diligence, you know, one of the things they'll ask, okay, how are you collecting your sales?
Yeah.
Have you paid your taxes?
Agreed.
Is there a way to verify?
Okay.
So, I usually tell businesses, uh, you know, look at it as a tool of empowerment. It actually distinguishes you.
Yes. Now with this whole new um regime on e invoicing one of the things is businesses are saying I can only trade with you if you give me a tax invoice.

36:26
Agreed.
Especially the big businesses.
Yes.
So if you come as a supplier the first thing they ask you is
where is your invoice?
And if you don't have an invoice it becomes a very difficult conversation.
Yes.
But then you as a business also want to claim your expenses.
True. You
know so anytime you're buying something you'll then ask for a tax invoice. Okay.
And it basically, you know, everyone now starts asking everyone for an invoice.
It becomes a self-governing mechanism.
Yeah.
So then the question becomes, how easy is it? How quickly can I do it?
How confident am I in platform X or Y?
Yeah.
Being able to solve this for me.
Okay.
So that's how we look at it.

37:05
Excellent.
Now you've brought the topic that I want us to delve on a bit. Yeah.
Which is um I I
I consider myself a student of business. I think every entrepreneur in some shape or form
is a student of business.
I remember one time talking to um
an old man uh who I considered a meta. He has since passed on
and we were talking about being a businessman in the '90s in Kenya.
Mhm. and uh he was lamenting to me how um he has paid I think 900,000 in tax
versus a competitor who was slightly busier. They were both in the oil marketing space
versus a competitor
who who was uh doing similar volumes if not higher
and he paid 90 90,000
sh
and I remember chastising uh the man who paid less in tax

38:05
and um the response from the old man who was talking to me um who I still talk to today the other one passed on but this one is still around
and he says to me you know Leonard And you have to consider that there was a time in Kenya where you taxes were not working for the businessman.
M
and as a result um evading taxes was actually a necessity of business because
you paid extreme you paid a lot for your road maintenance. If you were running a truck,
the roads were not in good condition. your maintenance costs were high and a lot of people evaded taxes. Yeah. In the late 80s and early 90s because
it was a survival tool. It was not just them being greedy. Yeah.
Early 2000s we saw um I guess a a reinvigoration of government delivery

39:04
and then now
the justification of pay of paying taxes improved. You know, you could Kenya has over the last two decades enjoyed immense road construction and so on. And there are various areas where we can
honestly say there's been improvement for over the last 20 years.
And so even paying taxes, we still feel we're heavily taxed and maybe we are. But now the willingness to pay once you can see a better road, you know, a better airport or better this and that and the other, better technology, fiber optic cables coming and so on and and interconnectivity and so on.
Then the willingness to pay for that tax. Mhm.
So let's talk a bit about building compliant and thus sellable businesses

39:52
and how you feel that a product like Digitax which you obviously have African ambitions having gone into Zambia and now into Nigeria how you feel that that ecosystem is evolving.
Yeah, I think thank you for that question. Um, building compliant businesses is it's a fact of many things, but tax is a is a key or tax compliance is a key aspect of it.
One of the things I've learned in my entrepreneurial journey is a conversation will always move faster if your affairs are in order.
Yes.
Yeah. Uh tax or anything else. Um, so I've I've had the opportunity to be in discussions where businesses are being sold um or is a potential buyer. And where it usually fails or doesn't conclude is on um matters to do with a due diligence process not yielding the right information or discovering the wrong information.

40:54
Yeah.
Or generally speaking, things did not check out. Yeah. Now, unfortunately, what tends to happen is the areas you overlook the most are the areas that trip you up. Yeah. So, you know, for many businesses, tax is not what you wake up thinking about. You know, you think about, you know, making money, where are my sales coming from? And, you know, how do I make sure at the end of the day my books are in the in in in in the good from a profit standpoint, which is all well and good and should be the case. But then there's all these what I would call hygiene issues are to running a business. Yeah.
Um and unfortunately people don't tend to think about them until it's too late or until you're in trouble. Yeah. So let's put aside tax for one moment. So say you're running a restaurant. Yeah. You need a food handler certificate for example. But you may say, you know what, it's not a big thing. Provided I'm washing my space or I'm keeping it clean, I'll sell. Then the day the the the county officials come and ask you

41:59 where's your food handler certificate like oh then it's an argument you know they're shutting you down you know you know all these unpleasant conversations I pick on that example just to show that there are so many things that go into running a compliant business
and I think there's a big opportunity in general to make that process easier for people because businesses don't spend too much time thinking about it. it's not their core business. Yeah.
And that's the same approach we've taken with Digitax.
So with Digitax, the way we think about it is we want to make businesses have the easiest compliance journey.
Yeah.
Yeah. We want to make sure that businesses can actually have peace of mind when talking about anything to do with taxes and compliance. M

42:49
want to make sure they have the right information at the right time and can make the right uh
decisions and insights
as as they go about their affairs.
Uh we want to make sure they are not, you know, losing out on anyone who maybe has given them a fake invoice.
Okay.
Yeah.
Okay.
It's very easy for people now now that everyone knows a QR code is is is a is is a confirmation that it's a tax invoice.
Yes.
Who's to say that QR code hasn't been tampered with?
Agreed. has been repeated.
Yes.
Or is not even valid
because many people see it but don't look don't scan it.
Exactly. Then you come to filing your paperwork like oh
but then by that time it's all the effort needed to trace that back.

43:32
It's almost not worth it.
But your business is effectively not compliant. So there's they become an inconsistency is created. Now the thing I'll say is um having done this for for a few years um it's not businesses want do not want to be compliant but it's also a question of effort versus reward. Um you know one of the things we tend to see in Kenya for example is uh you know when people are doing annual returns around June of course most of us wait until the last few days to start looking into this. Then of course as you file because of the number of users the systems seize up. Yeah. And then some people make the decision look there is too much traffic on the system.
Let me do it later. You either forget or you willingly refuse to do it

44:22
and then this catches up with you. Now fines come you know you start seeing you have you can't get a tax um clearance certificate
and so on and so forth.
And these are things that now go against your your record. So the way I look at it is uh investing early in being compliant very very useful uh down the road.
Yes,
it pays dividends way way more than one can think about
especially if you have long-term plans and a long-term vision for your business. Um you know you may sell your business uh you know you may want to hand it over to someone else but you know you don't want to hand them problems. you want to hand them
a business that's running as well and as smoothly as as possible.

45:07
Okay.
So, our job is to make sure at least the tax compliance aspect of it is not something you have to worry about.
What I like about what you say is I I I
compliance is always an effort.
Yes.
And and and a reluctant effort many a time because many people want to run their businesses. But I look at it from the wealth creation perspective. M I feel that Kenyan and African legacy businesses lose so much innate value by non-compliance. You know, someone's run a business for 20 years or 23 years. He's tired. He wants to cash out. He has the proven track record of running the business. And then you watch this transaction that would give him capital to either go kick up his heels under coconut tree, you know, enjoying margaritas. Yeah. But with the comfort of the value he created, he has managed to translate into wealth and store elsewhere. and you see all this fall apart because of compliance. M

46:13
so one of the things that I I I would really like to see more of and and it's interesting to hear the digit tax story because I think it contributes to that
is Africans building sellable businesses
so that should you you we are human you'll get tired you'll get bored or
unlock this value cash out the value you have created get a check for it and move on to other things
do farming or retire
do farming retire and a tree, you know, or go open a beach bar somewhere and have conversations your whole day
because of the hard work and reap the fruits of the hard work. But I find so many entrepreneurs struggling with that and it's good to see a business of this nature.
Thanks. And uh yeah, what I'll say just to what you have shared is, you know, anytime you're building a business, uh you know, build for the long term.

47:05
Yes. The thing about building for longterm is the early discipline is what will increase the chances of of success.
Agreed.
And it can be any kind. You know, I know of people who've sold kiosks, but because their books were in order, everything was, you know, pre and proper.
Such an easy conversation. Exactly.
I've seen also um you know, people
trade uh I mean even just take shares. The thing about at any publicly tradable company is the NSE and uh capital markets authority require you to have very uh they're very strict about you know auditing and information. The thing is if I'm making a decision I have comfort because the governance has been built. these companies are reporting information that has gone through um an audit or a governance process and I can

47:59 easily make a decision. If you apply the same principles to your business, you know, you know, good bookkeeping, uh timely accounts,
you know, being compliant,
whether at national or uh regional level, yeah, you make you're building a case. Yeah, you're building think of it as a brand index of trust. You're building all these things around people saying, "Not only have you run a business, but you've run it right."
Agreed.
So that's that's usually what I encourage businesses to think about. Yeah.
As we as we wind up, let's talk about the future.
Yes.
I really like listening to stories of Kenyan businesses or African businesses that
have set their sights on Africa
as their platform. Yeah. And you are not just saying it, you're doing it because you already operate in in in in Zambia and Nigeria. So what does the future look like for Digitax and what else have you set your sights on on the African continent?

49:00
Okay. Yeah, good question. Thank you. We Yes, we have plans to basically provide the best ex compliance experience in Africa and beyond. Um, one of our slogans, it's it's more like an inside joke is we say we want to make the process less taxing.
Not that you pay less taxes,
but it's less less
burdensome.
So for us, uh, the whole idea is um, you know, this this gospel of simplified tax compliance, we wanted to be in every market we're in. M
want people to think of us as the pain the least pain or the least or the most efficient way to be tax compliant least painful least effortless however you want to put it.
Um the other thing also is we want to be able to say for African entrepreneurs you know that you've helped them on their journey to build a more compliant business. Yeah. the theme we're talking about today because

50:04
the day you really want to exit the business,
yeah,
you will say look I I I feel there's that satisfaction that I did it right, it's helped me achieve an outcome and everyone is happy uh all around. uh for us distinctly as digitax um one of the things we've seen like you know as we've grown across the continent is
you know businesses are very happy to pay for value and to invest in solutions that they feel add value
so that's a question we're always asking ourselves you know how do we add value how do we provide value
how do we make sure we are always not just setting the bar but raising the bar
against ourselves
so where do we see you going in the next few years We'll the goal is to be more African countries. So we'll be expanding across the continent.

50:51
Uh we'll also be you know we'll also be investing in talent and human resources across the continent.
So we have staff in all three countries uh contributing from you know a technology and of course business perspective.
Yes.
And you know with time because we're working this journey with businesses there'll definitely be an opportunity to build for them more solutions. So it's it's not just saying tax compliance,
but okay, now that we've helped you, you know, handle your tax affairs, what else can we do with you? So value added services is definitely on the menu down the road. Yeah. Yeah.
Wow. Kane, very interesting discussion. I never knew tax could be interesting, but it
can be. It can be.

51:36
But excellent. Thank you very much. We wish you all the best with your digitax journey and as you continue to grow and provide solutions to I like what you said to
to African countries and beyond.
Absolutely.
Uh so maybe I'll give you a chance to speak to the audience and tell them where they can find Digitax um locally on on the continent um and uh we see where and and we can then wrap up.
Awesome.
Yeah.
Yeah. So thank you for listening. Uh if you'd like to know more about digitax, please vis visit digitax.te online or search for digitax. We're also available on x LinkedIn. We're also on Tik Tok. Uh so if you want trouble about taxes on Tik Tok, we're also there. And we are happy to work uh your tax compliance journey with you. So please feel free to reach out and be happy to serve you. Thank you.

52:28
Excellent. Uh ladies and gentlemen, that was episode 39 of the African Do podcast where we tell stories of excellent Africans executing excellently. And today we were privileged to have Kane Wanjawo of Digitax uh telling us about their Africawide compliance journey, how they are helping um African businesses become compliant and thus unlock greater value and wealth in the long term. Thank you very much for joining us and look forward to seeing you in episode 40. Thank you. [Music]