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Cryptocurrencies and its usage in Africa

Cryptocurrency is basically, a digital currency based on an innovative technology called the blockchain. Its users range from small businesses

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Rich investors are moving cryptos at an alarming rate, Bitcoin, BTC, cryptocurrency,Cryptocurrencies and its usage in Africa

Cryptocurrency is basically, a digital currency based on an innovative technology called the blockchain. Its users range from small businesses to process payments, financial tech-based startups, and retail consumers that use it to send money across border and as an investment asset.

Since crypto assets like Bitcoin and its contemporaries, also known as altcoins, have been gaining high acceptability and in high use around the world for payments, investing and banking,

Such that the total daily trading volume of bitcoin,which is the most popular cryptocurrency, is around $38.68 billion and market capitalization touching $123.12 billion on 4th April 2020.

Many Africans largely use cryptocurrencies like Ethereum, Ripple, Bitcoin, and Litecoin for applications in banking, making payment transfers

(READ MORE: Ikeja Hotels Plc proposes final dividend of 2 kobo)

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There are numerous causes for the surge of cryptocurrencies usage in the continent but unreliable local currencies could be a major factor among other rationales

6 features to look out for in a Cryptocurrency, Cryptocurrency: Discern investors’ goldmine , Cryptocurrencies and its usage in Africa

High uncertainty of economies in most part of Africa makes cryptocurrencies, a viable medium for asset management in lieu of storing its value in most cases

For Individuals and startups, it is a better approach in transferring funds to anyone in the world for paying remittance, suppliers, e-commerce shopping, to and from friends and family members based overseas, as it cost very low charges than many commercial banks in Africa which charge excessive fees in unstable currency markets and unreliable economic ecosystem.

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Consequently, many Africans in urban areas have relative access to Internet access via mobile penetration and such platform have made the adoption of cryptocurrencies accessible to everyone through mobile

Financial tech-based startups which are very disruptive in Africa is using crypto-assets for new technologies like mobile money.

(READ MORE: Zoom’s founder reacts to security criticisms, says company was unprepared for demand surge)

They are also experimenting with Blockchain and cryptocurrencies in simplifying their processes across African borders and globally. Many of such startups have built blockchain apps, crypto exchanges, and money transfer services for the needs of the average African

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Furthermore, a lot of African businesses and startups are now accepting and paying in bitcoins, XRP, bitcoin, bitcoin cash in reaching global suppliers and buyers.

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This has been made easy for many Africans by a growing number of disruptive payment gateways and exchanges based in Africa and around the globe, they include Payfast, Gemini, Coinbase, Luno, Bitpay, Bitstamp, Bithumb, Binance, and many others

Gerald Cotten, Quadriga CX,Cryptocurrencies and its usage in Africa

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Luno Exchange a South African based company is the leading crypto exchange in Africa was established in 2013. It has more than a million customers in over 40 countries worldwide and it’s the first crypto exchange to be based in Africa with a presence in Nigeria and South Africa, offering ZAR/BTC, NGN/BTC crypto trading pairs.

(READ MORE: Polaris Bank to wave penalties on loan defaults due to Covid-19)

Meanwhile, there are some notable crypto-based transfer services such as London-based Kobocoin working in Nigeria.

Crypto assets  such as  Bitcoin was created  after the global recession of 2008 with an intention of a decentralized currency with transparent and controls to consumers advocating for low transaction cost, better security and easier access to its medium of choice

In  Nigeria is the largest ecosystem in Africa, its use and trading are still unregulated by the government. Nigeria’s central bank has declared cryptocurrencies as being non-legal tender.

However, the use of cryptocurrencies has not been banned entirely in Nigeria. It was reported that Nigeria’s Securities and Exchange Commission set up a committee in 2019 to create a framework for the regulation of digital assets and local crypto exchanges in Nigeria. 

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Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Follow Olumide on Twitter @tokunboadesina or email [email protected] He is a Member of the Chartered Financial Analyst Society.

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  1. Bayei Daniel

    April 7, 2020 at 3:02 pm

    Educative Block chain news

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Economy & Politics

Nigerian government spends equivalent of 83% of revenue to service debt in 2020

The Federal Government of Nigeria achieved a debt service to revenue ratio of 83% in 2020.

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The Federal Government of Nigeria achieved a debt service to revenue ratio of 83% in 2020. This is according to the information contained in the budget implementation report of the government for the year ended December 2020.

According to the data seen by Nairametrics, total revenue earned in 2020 was N3.93 trillion representing a 27% drop from the target revenues of N5.365 trillion. However, debt service for the year was a sum of N3.26 trillion or 82.9% of revenue.

Nigeria’s debt service cost of N3.26 trillion has now dwarfed the N1.7 trillion spent on capital expenditure of N1.7 trillion incurred in 2020. This is also the highest debt service paid by the Federal Government since we started tracking this data in 2009.

The total public debt (External and Domestic) balance carried by Nigeria as of September 2020 stood at N32.22 trillion ($84.57 billion). Included in the total debt is a domestic debt of about N15.8 trillion.

 

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What this means: Nigeria’s debt to GDP ratio is estimated at about 22%, one of the lowest in the world and much below what is obtainable in most emerging markets.

  • However, the challenge has always been the debt service to revenue ratio, a metric that reveals whether the government is generating enough revenues to pay down its debts as they mature.
  • Since the first recession experienced in 2016, Nigeria has struggled with higher debt service to revenue ratio as revenues slid in direct correlation with the fall in oil prices.
  • Nigeria’s government spent about N2.45 trillion in debt service in 2019 out of total revenue of N4.1 trillion or 59.6% debt service to revenue ratio.
  • At 83%, 2020 ranks as the highest debt service to revenue ratio we have incurred. Before now it was 2017 with 61.6%.

Breakdown of what debts were serviced

The following amount was spent on debt service during the year

  • To service domestic debt, the government spent N1.755 trillion in 2020 as against a budget of N1.87 trillion.
  • For foreign debts, a sum of N553 billion was spent against a target budget of N805.47 billion. The drop here is likely a result of lower interest rates on foreign borrowing as well as very limited borrowing from the foreign debt market during the year.
  • The government only contributed N4.58 billion into its sinking fund instead of the budgeted N272.9 billion.
  • The sinking fund is required to set aside funds that will be used to pay down on other loans such as bonds when they mature in the future.
  • Finally, a sum of N912.57 trillion was spent on servicing CBN’s loans, granted via its Ways and Means provisions.
  • Nairametrics reported last week that a total sum of N2.8 trillion was extended by the CBN to the FG as Ways and Means.

What happens next: In 2021, the government projects a debt service of N3.1 trillion against revenue of N6.6 trillion or a debt service to revenue ratio of 46.9%.

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  • The government plans to spend N4.3 trillion on capital expenditure during the year.

 

 

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Tech News

Top 10 African tech companies and capital raised in 2020

These are the top 10 tech companies and the capital they raised in 2020.

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Startup funding in Africa, Fintech, Disrupt Africa

African startups raised over $1 billion in funding in 2020, with Nigerian startups raising 17% of this amount – 55.37million in Q1 2o2o and 28.35million in Q2 2020, according to Techpoint.

These are the top 10 rankings of the highest fundraisers for 2020.

Flutterwave

The startup provides digital payments infrastructure and services which enable global merchants, payment service providers, and pan-African banks to accept and process payments across various channels.

It raised a $35M Series-B round led by US venture capital firms Greycroft and eVentures in January 2020. The funding was invested in technology and business development to grow market share in the countries it operates in.

ChipperCash

The startup offers cross-border P2P payments services across 7 African countries. It raised $30m in a Series B funding round in November 2020 led by Ribbit Capital, an American based VC firm that invests in early-stage startups.

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The funding was used to improve its products to include API payments solutions, crypto-currency trading options, and investment services and also expand its markets.

54gene

The startup is equalizing precision medicine by including underrepresented Africans in global genomics research. It raised $15M in a Series A funding round in April 2020 led by Adjuvant Capital – a life sciences fund backed by the International Finance Corporation, Novartis, and the Bill & Melinda Gates Foundation.

These new funds will be used to address the gap that exists in precision medicine for people on the African continent.

Aella Credit

The startup is a one-stop app for all your financial needs. Aella makes it super easy for anyone to borrow, invest, and make payments. It secured a $10 million debt financing round from a Singaporean company – HQ Financial Group.

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The new capital raised from Singapore is expected to facilitate the credit company’s effort to provide financial inclusion to many more of the people who are currently unbanked across Nigeria, West Africa, and other emerging markets.

Helium Health

The startup has become the leading provider of full-service technology solutions for healthcare stakeholders in Africa. It raised a $10 million Series A round in April 2020.

Global Ventures and Africa Healthcare Master fund (AAIC) co-led the investment round. Helium plans to use the latest funding round to hire and expand to North and East Africa, including Kenya, Rwanda, Uganda, and Morocco.

Kuda Bank

The startup provides a full banking service on your smartphone. It secured a US$10 million seed round in November 2020 – the biggest seed round ever to be raised in Africa, led by Target Global with participation from Entrée Capital and SBI Investment.

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The funding will be used to help accelerate its growth plans and keep up with customer demand. Specifically, funds will be used for key hires, product development, and to expand operations across Africa.

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Trade Depot

The startup is a Nigerian B2B eCommerce company that utilizes an end-to-end distribution platform aimed at connecting the world’s top consumer goods companies directly to retailers in Africa.

It raised $10-million in a pre-Series B equity round co-led by Partech, International Finance Corporation, Women Entrepreneurs Finance Initiative (We-Fi), and MSA Capital in July 2020.

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The new investment will enable Trade Depot to continue connecting international brands with small businesses in Nigeria, expand into other African cities, launch a suite of financial products, and credit facilities aimed at supporting its retailers.

Field Intelligence

The startup is helping governments and businesses make good on the promise of healthcare in the fastest-growing parts of the world by making the pharmaceutical supply chain radically simple, affordable, and easily accessible.

It raised a $3.6 million Series A round in March 2020, led by Blue Haven Initiative, with investors including Newtown Partners via the Imperial Venture Fund and Accion Venture Lab.

The investment will be used to scale Shelf Life expansion throughout Nigeria and Kenya, as well as the development of additional services for Shelf Life clients and their patients.

MedSaf

The startup connects suppliers to hospitals and pharmacies directly to make the pharmaceutical supply chain more efficient. The health start-up raised $3.5M in a seed funding round in December 2020.  It will use this funding to expand to other African countries.

Auto Chek

the company is an automotive technology company that aims to build solutions for the African market. It raised $3.4 million in pre-seed funding round in November 2020, co-led by TLcom Capital and 4DX with inclusion from Golden Palm Investments, Lateral Capital, Kepple Africa Ventures.

Autoochek will use the investment to grow its Nigerian and Ghanaian markets, invest in its tech, and grow its team.

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Despite the ravaging impact of Covid-19, Nigerian tech start-ups raised millions of dollars in funding. We hope to see more investors in the first quarter of 2021.

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Economy & Politics

FG receives N144 billion in dividends from NLNG in 2020

NLNG, paid the Federal Government a dividend of N188 billion in the fiscal year ended December 2020.

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LNG

Nigeria Liquified Natural Gas Company, NLNG, paid the Federal Government a dividend of N144 billion in the fiscal year ended December 2020.

This is according to the information contained in the Ministry of Finance Budget implementation report for the period of January 2020 to December 2020 and presented by the Minister for Finance Dr. Zainab Ahmed.

During the year, the Federal Government budgeted a sum of N80.3 billion as its share of dividends from NLNG, however, the actual sum received as its share was N144 billion, N63.2 billion more or 79% higher than projected.

The year 2020 was a difficult year for the government as the fall in crude oil prices and the economic shutdown that was triggered by the Covid-19 Pandemic dented projections and ravaged revenues.

READ:  NLNG says Train 7 project will surge production capacity to 30 million MPTA 

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NLNG Dividend Bliss

The dividend received from NLNG was a major bright spot in the government’s revenue performance for the year.

  • During the year, the government projected revenue of N5.36 trillion but only received N3.9 trillion in revenues representing a shortfall of N1.4 trillion or 27% for the year.
  • The huge dividend windfall received in 2020 is a stark contrast from 2017 when Nigeria just exited a recession triggered by falling oil prices and a sharp exchange rate devaluation.
  • In that year, the Federal Government’s share of dividends from Nigeria Liquefied Natural Gas (NLNG) dropped by as much as $687 million, from $1.04 billion in 2015 to $365 million in 2016, a 65% drop.
  • The N144 billion received in 2020 topped the amount received from signature bonuses only N78.2 billion and complimented the N192 billion received by VAT.
  • It is the most effective form of revenue generation for the government.

READ: NLNG signs 10 year sales deal with Eni

NLNG Controversies

Back in July Nairametrics reported that the House of Representatives planned to investigate the alleged illegal withdrawal of $1.05 billion from the NLNG account by NNPC without its knowledge and appropriation.

  • They had accused the NNPC of illegally tampering with the funds at the NLNG dividends account to the tune of 1.05 billion dollars thereby violating the nation’s appropriation law.
  • NLNG is a company jointly owned by Nigerian owned NNPC(49%), Shell (25.6%), Total (15%), and ENI (10.4%).
  • The company is located in Bonny Island and has six trains with a total capacity to process 22 million tonnes of LNG a year and as much as 5 million tonnes of natural gas liquids.
  • NLNG currently accounts for about 7% of the total LNG supply in the world. Nigeria is ranked as the 4th exporter of Natural Gas in the world.

READ: NLNG signs supply agreement with Galp Trading SA

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Upshots: The FG is targeting a revenue of N208 billion from NLNG as dividends in 2021. If this materializes, it will be a significant payout in dividend (in naira terms) competing with the N238.4 billion expected from VAT.

  • Important to note that the recent devaluation of the naira will increase the naira value of dividends and other government revenue, as it did in 2020.
  • The government also targets N6.6 trillion in revenue for the period under review.

Updated: An earlier version of this article captured the dividend as N188 billion instead of N144 billion. It has now been corrected. 

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