Gold prices pull back after hitting highest levels in 2 weeks
Bitcoin posts biggest daily drop since market crash of March 2020
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Investors get burnt, lose $1.6 billion in crypto within a day
Nigeria records $4.3 billion in Corporate Deals in 2020
Malabu Oil Scandal: Prosecutors demand JPMorgan documents
Nigeria records $4.3 billion in Corporate Deals in 2020
CDC Group pledges $1 billion investment in Nigeria and other African countries
Buhari orders MDAs to grant FIRS access to their systems
N-Power: FG and CBN launch job exit strategies for beneficiaries
Tech News
Nigeria Joins Canada, Thailand and others in taxing digital companies
Nigeriain government has begun to amend its laws to accommodate this new digitalized era bringing many big techs under serious scrutiny.
Nigeria is one of many countries that have begun to amend its laws to accommodate this new digitalized era bringing many big techs under serious scrutiny. It is all part of a move by governments around the globe to introduce digital taxes.
Recent reports showed that there has been an uproar on social media with some concerned citizens speaking against the new tax laws included in the amendment of the Finance Act 2019 in Nigeria. Tech companies’ especially big techs, in the past few years, have faced a myriad of backlash about their involvement in tax evasion; and even more intensely, with the pandemic, came a microscopic look into the affairs of these digital service providers.
In Nigeria, one of the 129 countries under the Organization for Economic Cooperation and Development (OECD) which has yet to conclude an international agreement on digital taxation had the Finance Act 2019 amended with the aim of imposing tax on a foreign entity with respect to certain services or digital transactions if it had a ‘Significant Economic Presence’ in Nigeria, although what that entails is yet to be determined.
The new regulation would apply to companies with income of N25m or equivalent in other currencies from Nigeria in a year, and those with a Nigerian domain name (.ng) or a website address in the country.
READ MORE: Nigerians react as FIRS Chairman asks companies to pay tax before due date
Also, a foreign entity providing technical services such as training, advertising supply of personnel, professional, management or consultancy services shall have a SEP in Nigeria in any accounting year if it earns or receives any payment from a person resident in Nigeria, a foxed base or agent of a foreign entity with the exemption being payments made to employees of a foreign entity or for teaching in an educational institution.
Why this is Important?
As it stands, Nigeria, unlike some other countries, has no serious digital tax plans making the updates to the Finance Bill redundant pending a definition on the criteria for SEP. However, the existence of this law is still significant as it reduces the legal, political and civic resistance to any future digital tax plan, and giving the Minister of Finance full power regarding this makes it easy for Nigeria to implement the OECD plan when it is ready.
The economic instability is the country is remarkably disturbing and the taxation system has always been used to help distribute aggregate income more equally which by all indications ultimately protect the stability of any society. There is no better time than now seeing as with this COVID-19 era the gap of income inequality will continue to grow so this as an option to mitigate the effects is more than welcome.
Yes! There are Challenges
There are concerns as to how the Federal Inland Revenue Service (FIRS) would enforce compliance without international consensus, as a number of the companies affected might be outside the territorial reach of the agency and this problem will be worsened where the companies sell their products and services directly to individual consumers in Nigeria.
READ MORE: FG to facilitate tax incentives for SMEs
A few Considerations Moving Forward
- All developing countries, not just Nigeria will need to maintain pressure on the inclusive framework committee so that their interests can be accommodated in future digital practices.
- Regardless of the loopholes, many tech firms have used to evade paying taxes, in introducing new tax measures, it is important to avoid segregation between digital and non-digital activities.
- Tax measures should only balance the tax burden without overtaxing digital companies with the goal being to preserve neutrality and competition between companies operating in the digital and traditional spheres with fostering the economic development and the growth of startups.
No doubt it can be tempting to try and make up for the lost time without tax payments by these digital firms but it is important that policymakers be deliberate about the neutrality of their demands as ultimately, society is rapidly becoming core digital.
Spotlight Stories
African tech startups raise over $700 million in 2020 despite pandemic
African tech startups raised more funding from more investors than ever before in 2020 despite the Covid-19 pandemic.
Despite the Covid-19 outbreak, African tech startups raised a record high of $701.5 million from investors in 2020. This is according to the African Tech Startups Funding 2020 report released by Disrupt Africa.
According to the report, 2020 was a record year for investment into the African tech startup ecosystem, with more startups raising more money, from more investors than ever before.
Specifically, 397 startups raised $701.5 million in total funding in 2020, indicating a 27.7% and 42.7% increase compared to 311 startups that raised $491.6 million in the previous year.
Highlights of the report
- The number of startups that received investments in 2020 grew by 217.6% compared to 125 tech startups in 2015, when the first edition of the report was published.
- Kenya, Nigeria, South Africa, and Egypt remain emphatically Africa’s “big four” from a funding perspective, accounting for 77% of funded startups and 89.2% of total investment.
- Nigeria (85), Egypt (82) and South Africa (81) lead the way from the perspective of the number of ventures.
- However, when it comes to total combined raised capital, it is Kenya that is Africa’s leader, with startups from the East African country raising over US$190 million in funding in 2020.
- The financial technology sector was the most attractive to investors in 2020, with more startups securing funding than any other sector and a combined total that dwarfed all others
Though these markets remain clear leaders, there are signs of growing activity elsewhere on the continent, with startups backed in 24 African countries, up from 19 in 2019, 20 in 2018, and 18 in 2017 respectively.
Meanwhile, a recent report by Nairametrics revealed that African startups raised over $1 billion in funding in 2020, with Nigerian startups raising 17% of the total amount. The report showed a list of notable startups that raised funds in the year, some of which include; Flutterwave, 54gene, Aella Credit, Helium Health, Kuda Bank amongst others.
Why this matters
- Nigeria recorded significant growth in the number of startups securing funding in 2020, as the country saw a 77% increase compared to 2019. This is a welcomed development, as it indicates that the Nigerian tech space is on an upward trajectory.
- More businesses will look to explore the tech industry considering the growing attention received by investors in recent times.
Spotlight Stories
Top 10 Nigerian tech companies and capital raised in 2020
These are the top 10 tech companies and the capital they raised in 2020.
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.
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.
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.
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.
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.
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.
Auto Chek will use the investment to grow its Nigerian and Ghanaian markets, invest in its tech, and grow its team.
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.
Rensource Energy
The startup allows qualifying companies throughout Nigeria and West Africa to start selling Power-as-a-Service (PaaS) to their customers.
It raised $3 million from Proparco, with the support of the European Union under the Africa Renewable Energy Scale-Up facility (ARE Scale-Up). The funding will be used to contribute to facilitating energy access in the context of a significant and growing energy gap in Nigeria and support the development of innovative solar energy solutions.
Economy & Politics
Okonjo-Iweala speaks on Twitter’s suspension of Donald Trump
Dr Ngozi Okonjo-Iweala has given her opinion on Twitter’s suspension of US President, Donald Trump.
Twitter board member and candidate for the DG of the WTO, Ngozi Okonjo-Iweala, has said Twitter has rules under which it operates and CEO Jack Dorsey’s statement contains all that needs to be known concerning the suspension of US President, Donald Trump from its platform.
Okonjo-Iweala disclosed this in an interview with Arise TV on Friday evening.
- “Twitter tries to help the public conversation in the world and gives people a means to engage on important issues,” she said.
On the decision to censor Donald Trump
She said the Board agreed as a team to have one voice on the decision to suspend Donald Trump from the service and that CEO Jack Dorsey gave all that needed to be known.
Okonjo-Iweala stated;
- “Being on the Twitter board, I have to respect our rules for communications on what is happening. I have to be very honest that we as a board agreed that we have a team that will deal with this, to make sure that we have one voice. But, I can tell you that if you want to know why the decisions were taken, please look at the statement by the CEO, Jack Dorsey, I think it tells you all you want to know.
- “Twitter is an organization that has rules under which it operates, and if you read what it puts out, you will see that things are being implemented according to the rules.
On welcoming rules and regulations for the social media giant
Okonjo-Iweala said;
- “Let’s wait and see, I don’t want to pre-judge or comment on anything. I don’t want to go beyond what I am willing to say, but let’s wait and see. These are very difficult times in the world. We all saw what happened in the United States. We have to be very careful. We would see what the future would be for the tech companies.”
Flash back:
- Nairametrics reported that social media network, Twitter, permanently suspended U.S President, Donald Trump, citing the risk of further incitement of violence.
- Jack Dorsey, the CEO and founder of Twitter, said that the decision to ban Donald Trump from the social network was the right decision, but one that sets a dangerous precedent.
