Co proposers and Additional applicants

Nairobi Securities Exchange

The Nairobi Securities Exchange (NSE) is Kenya's primary stock exchange. The NSE is a public entity, operating under regulations set by the Kenyan government's Capital Markets Authority (CMA). In 2023, the value of shares traded on the NSE was Kshs. 88.2 billion ($676m) with bonds traded to the value of Kshs. 643 billion ($4.96bn).

EY Parthenon (Kenya)

EY has been in Africa for over 80 years. Over the years, the firm has acquired unique perspectives and experience on the region’s business practices through designing and implementing complex programs across integrated service lines.

EY Parthenon (Kenya) has diverse skills in strategy, feasibility studies, finance, tax, legal, deal structuring, modelling, valuation, transactions, business model design, financial product design and business planning and has the capacity to assist in bringing on other sectoral partners.

Please describe your proposed solution.

Current Situation

The current situation in Kenya:

· 27 786 mortgages in a country of 51 million people (0.0005% of the population), compared to the UK which has an estimated 11.4 million mortgages in a country of 68 million people (17% of the population)

· More than 80% of income is informal which means that more than 80% of the market cannot qualify for a mortgage

· 250 000 - the annual housing gap - 98% of current developments targeted at the upper-middle and high-end market segments

· The urban population of Kenya is growing by 3.4% per annum

· $2.5bn capital required annually to begin addressing the gap

Proposed Solution

The NSE is seeking to assess the potential viability of blockchain technology for the creation of capital instruments to address the $2.5bn annual housing finance requirement, with a focus on the informal consumer market.

The proposed solution is the creation of RWA tokens for affordable housing, enabling capital raising, tracking cashflows, ownership and returns – expanding on the existing payments application built by Empowa on Cardano.

Please define the positive impact your project will have on the wider Cardano community.

This initiative has the potential to bring a significant positive impact to the wider Cardano community in several ways:

• Showcasing Real-World Applications:
• Demonstrating the use of Cardano's blockchain technology in addressing critical socio-economic issues, starting with affordable housing finance.
• Positioning Cardano as a leading blockchain for financial innovations in emerging markets, in particular in Africa a geography that Cardano has long stated is a key strategic market.
• Driving Adoption and Credibility:
• Increasing the adoption of Cardano by integrating it into mainstream financial infrastructure.
• Enhancing the credibility and reputation of Cardano as a robust and scalable blockchain suitable for complex financial applications.
• Economic Empowerment:
• Empowering informal market participants by providing access to affordable housing finance, thereby improving their economic stability and quality of life, a publicly stated objective of the Cardano ecosystem.
• Encouraging other regions and sectors to consider Cardano solutions for similar challenges.
• Building a Knowledge Base:
• Creating valuable insights and knowledge around the use of Cardano in financial markets, which can be shared with the broader Cardano community.
• Developing best practices and technical expertise that can be leveraged for future projects on the Cardano blockchain.

Sharing Outputs and Opportunities

The outputs and opportunities resulting from the project will be shared with the Cardano community and other relevant stakeholders through various channels**:**

1. Regular Reports and Updates:
2. Publishing detailed reports on project progress, challenges, and achievements at each phase of the project.
3. Sharing these reports on public forums, Cardano community platforms, and through direct communications with stakeholders.
4. Workshops, Webinars and Conferences:
5. Conducting workshops and webinars to disseminate knowledge and insights gained from the project at events, both in the traditional finance and broader blockchain space. to demonstrate the possibility of Cardano.
6. Engaging with the Cardano community and other blockchain enthusiasts to discuss the project’s findings and implications at more Cardano-specific events like the annual summit.
7. Presenting the project at financial technology conferences.
8. Highlighting the role of Cardano in driving innovation and addressing real-world challenges.
9. Collaborations and Partnerships:
10. Fostering collaborations with financial institutions to explore further applications and innovations.
11. Encouraging joint ventures and partnerships to expand the reach and impact of Cardano-based financial solutions.
12. Open-Source Contributions:
13. Contributing where possible any developed software, tools, and documentation to open-source repositories as we have done with our marketplace built with previous Catalyst funding.
14. Encouraging developers and researchers from the Cardano community to build upon and improve the solutions created.
15. Marketing and Promotion:

• Empowa has demonstrated an ability to get exposure on platforms like Forbes, Coinbase and Coin Bureau and will continue to do so for this project and the role of Cardano
• Leveraging the network of both the Nairobi Stock Exchange and EY to secure more traditional media coverage and promotion of the challenge, the potential solution and the technology.
• Using our in-house media team to produce engaging video content to be used when presenting the abilities of Cardano technology.

This project will not only drive significant value for the Cardano community but also contribute to the broader adoption and credibility of blockchain technology in solving pressing global financial and social issues.

What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

Capability to Deliver:

• Expertise and Experience:

• Track Record: Empowa has a proven track record of delivery in blockchain technology and fintech, as well as on the ground affordable housing delivery, in Africa. Examples of this include.

• Empowa completed both our previously funded Catalyst projects on time and within budget. You can see a report back on how we spent the original $60 000 provided in Fund 5 here.

• We have built Empowa Pay, a blockchain based rent-to-own cashflow management system currently used by 18 developers across 8 countries in Africa, tracking $8.5m worth of housing across the continent.

• Empowa Pay was among the first RealFi solutions to start writing data to Cardano Main net which can be viewed here

• Delivery of instalment sale funding that enables families (50% women), rejected by banks for mortgages, to purchase climate smart affordable homes

• Empowa delivered the official Summit NFT for the 2023 Cardano Summit raising funds for the financing of the homes that will be occupied in June 2024.

• Partnerships: Empowa is working with established entities like the Nairobi Securities Exchange (NSE) and other local service providers. These partnerships enhance their capability by providing technical, strategic, and operational support.

• EY is one of the Big 4 Global consulting firms and has been in Africa for over 80 years.

• Technological Infrastructure:

• Empowa Pay: As a project, Empowa has applications live on main net capturing and recording key financial data on the Cardano blockchain. This not only enhances transparency but also helps in building credit histories for users with informal incomes. This is a building block for this project.

• Regulatory Compliance and Risk Management:

• Compliance: Empowa will work closely with regulatory bodies through the NSE to ensure all solutions are compliant with local laws and regulations, mitigating legal and operational risks

• Risk Diversification: By involving local partners like EY who understand on the ground realities and risks, Empowa effectively manages and diversifies the risks associated with informal market financing.

Existing Capabilities Demonstrate Suitability

1. Experienced Team:
2. Leadership: Empowa has proven project and technology leadership. The Empowa team has extensive experience in blockchain technology, fintech, and affordable housing markets. Their combined expertise ensures informed decision-making, effective project management, viable products and, most importantly, proven delivery.
3. Strategic Partnerships:
4. Collaborations: Working with partners like the Nairobi Securities Exchange and EY Parthenon brings additional expertise and credibility to the project. These collaborations provide access to necessary resources and networks for local knowledge and successful project execution
5. Technology Platform:
6. Empowa Pay: The platform is already in use on Cardano, demonstrating its capability to manage housing finance transactions securely and transparently. This existing infrastructure will be a crucial building block for the expansion and success of the project.

What are the key milestones you need to achieve in order to complete your project successfully?

Milestone 1: Phase 1: Project Scoping (Months 1-2)

Objective: Assess the use of blockchain technology for NSE capital instruments and develop a comprehensive project scope and plan.

Key Activities:

Stakeholder Engagement:

· Conduct initial on-site meetings with key stakeholders (NSE, EY Parthenon, Empowa, Kenyan Government representatives).

· Establish a project governance structure and communication plan.

· Identify and onboard additional necessary partners.

Market Analysis:

· Analyse and detail the current housing market and financing landscape in Kenya.

· Study global case studies of blockchain applications in capital markets.

Technical Feasibility:

· Assess the technical requirements for implementing blockchain solutions in the NSE.

· Identify the exact use case for the Cardano blockchain technology

Legal and Regulatory Review:

· Review Kenyan regulatory requirements for blockchain implementation.

· Identify potential legal challenges and compliance needs.

· Assess if Kenya legislative sandbox required

Outputs:

· Comprehensive report outlining:

o Technical and regulatory assessments.

o Recommendations and reasons for blockchain adoption.

· Stakeholder engagement and communication plan.

· Project governance structure.

Milestone 2: Phase 2: Design and Development (Months 3-6)

Objective: Develop the conceptual design and initial development of blockchain-based NSE capital instruments for affordable housing finance.

Key Activities:

Solution Design:

· Define the functional and technical requirements for the blockchain solution.

· Design the architecture of the blockchain-based NSE capital instruments.

Prototyping:

· Develop prototypes for key components of the solution (e.g., EmpowaPay integration, smart contracts).

· Conduct usability testing with selected stakeholders.

Relationship Development:

· Further relationships with DFI's, asset managers, funders, and other stakeholders.

Regulatory Alignment:

○ Work closely with regulatory bodies to ensure compliance.

○ Develop a regulatory sandbox or pilot environment for testing the solution.

Outputs:

· Finalise division of budget across various stakeholders for the development phase.

· Detailed design documentation, technical specifications and workflows.

· Identification of prototypes of key solution components.

· Partnership agreements and future funding discussions.

· Regulatory compliance plan.

· Marketing communication and PR.

Milestone 3: Pilot Implementation and Evaluation (Months 6-12)

Objective: Launch a minimum viable product (MVP) and evaluate its performance and impact.

Key Activities:

Pilot Launch:

· Deploy the MVP in a controlled environment.

· Implement blockchain-based NSE capital instruments on a pilot basis.

· Monitor and manage the pilot program closely.

Performance Evaluation:

· Collect and analyze data on the MVP performance (e.g., transaction efficiency, cost reduction, user satisfaction).

· Conduct stakeholder feedback sessions to gather insights and identify areas for improvement.

Impact Assessment:

· Assess the impact of the blockchain solution on affordable housing finance.

· Evaluate the scalability and potential for wider implementation.

Outputs:

· MVP of blockchain-based NSE capital instrument successfully launched and evaluated.

· Performance, compliance and impact assessment report.

· Marketing communication and PR.

Final Milestone: Final Report:

· Compile a final report detailing the pilot results, lessons learned, and recommendations for future full-scale implementation and expansion to other markets.

· Present findings to stakeholders and regulatory bodies.

· Marketing communication and PR.

Who is in the project team and what are their roles?

Lead Project Partners

Nairobi Securities Exchange

Contact: Frank Mwiti - CEO

www.linkedin.com/in/frankmwiti/

Empowa

Contact: Glen Jordan - CEO

www.linkedin.com/in/glen-jordan

Service Provider

EY Parthenon (Kenya)

Contact: Christopher Kirathe - Partner

<https://globallawexperts.com/legal/christopher-kirathe/>

Please provide a cost breakdown of the proposed work and resources.

No dependencies.

How does the cost of the project represent value for money for the Cardano ecosystem?

This project represents significant value for money for the following reasons:

1. Credibility. Not only is the NSE a globally known institution, it is also the founding member of the African Securities Exchange Association, and a key player in the introduction of innovation and new products to stock exchanges in 25 countries across Africa - all of which are having similar challenges.
2. Specialist skills. The project brings together a diverse group of specialist skills from world-class institutions to develop a solution to a global challenge. The skills included in this project include financial structuring, financial consulting, legal and technology development. None of these skills are cheap, but all are required to develop such a solution.
3. Size. This opportunity is potentially $2.5bn per annum - and it is just the beginning - as there are other such potential applications, capital sources, countries and partners that would develop from the success of such a project.
4. Application. This offers an approach to the merging of Tradfi and blockchain in an exciting and innovative way to meet very real needs.
5. Legislative Sandbox. The Government of Kenya’s Bottom-Up Economic Transformation Agenda (BETA) aims to achieve inclusive economic growth by prioritizing the needs of ordinary Kenyans and has made affordable housing a key focus. This creates a legislative environment conducive to innovation and testing new concepts.

This is a major opportunity for Cardano to build on what Empowa has already started and Update the System :

https://youtu.be/ojH_9s6hMxg?si=a3ytYMAEywfHYpBSAs Coinbase has already acknowledged in the video above, Cardano technology can change the system, and address a very real political, social and economic challenge in emerging markets. This project, with world-class, globally recognised partners, can demonstrate this.

Just as M-Pesa was a mobile money app developed to directly address a Kenyan issue, but is now found all around the world, so this project could be the catalyst for innovation in both capital markets and affordable housing finance across the globe.