Hey Stranger, We're Back! 😊
Hello,
We’ve been away for just two weeks but its seemed like forever. 😢 We’re glad to be back. Happy New Year!
First, a few announcements for the new year:
We’re reducing the number of stories from a max of 10 to 5. We hope this constraint will help us focus on important stories and provide better insights.
We would focus more on important Nigerian stories because Nigeria is kind of a big deal.
As we keep tweaking and trying out new things, Please let us know what we should do more of or less of. We’re counting on you! 🙏
Now, The Stories for the Week.
Economy
CBN: Nigeria’s very own Batman
After much public outcry against the heavy burden of commercial banks’ bank charges, The Central Bank of Nigeria (CBN), has instructed the banks to make adjustments to a set of listed bank charges. This decision came with the aim of making financial services easily accessible and affordable to the public. Banks that default on any of these instructions are subject to a fine of N2 Million (Two Million Naira) per instance or as determined by the CBN from time to time. Here is a shortlist of some of the major changes.
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Good Intentions
The CBN’s continuous insistence on encouraging commercial banks to inject credit into the economy is showing positive results. According to CBN data, credit offered to the private sector rose by 15% (N3.47 trillion), from N22.94 trillion in January 2019 to N26.41 trillion as of November 2019. Credit to the private sector constituted 74%, while credit to government constituted 26%.
The apex bank has also indicated its intention to increase the number of bank account holders enrolled on the Bank Verification Number (BVN) System by 60 million people in the next 5 years by adapting the current system to serve the financially excluded.
Hold up...Something’s not right...
In contrasting news, The apex bank has faced scrutiny as it is yet to publish its 2018 Annual Reports and Accounts which was due by the second half of 2019. Asides this publication being a statutory obligation, it also serves the purpose of informing investors and stakeholders on the impact of its policies on the CBN’s financial health. Sounds like a skeleton in a cupboard...hmmm…
Big Picture: We expect the effort of the CBN to have a positive effect on the lives of everyday Nigerians as they make efforts to stimulate the economy.
Economy
BVN Linked bank accounts to increase by 60 million
Central Bank of Nigeria(CBN) has hinted at its intention to increase Bank Verification Number -- a unique identity that can be verified across the Nigerian Banking Industry -- linked to bank accounts from 40 million to 100 million in the next five years. According to the CBN governor Godwin Emefiele, the BVN project will be classified into two —BVN premium and BVN Lite.
The BVN premium and BVN lite
Basically, the BVN premium would cater to customers that can provide the 18 basic requirements needed for the BVN enrollment. While the BVN lite requires minimal documentation which will only include the name and phone number of the bank customers in rural areas. Hence, the new classification is tailored to reducing financial exclusion rate.
Why this matters?
About 30% of Nigerian adults do not have access to basic financial products (financial inclusion) because of poor identity management system. The expansion of BVN holders would increase the rate of financial inclusion, which would lead to an increase in access to credit facility to grow businesses.
Regulation
The Finance Bill: All about it
In November 2019, the Senate passed the Finance Bill -- a new set of laws that aim to make it easier to do business in Nigeria, incentivize investments in infrastructure and capital market, and also increase government’s revenue (very important).
With the bill set to become law this year, we’d be looking at the changes in the bill and how it affects you.
Why this matters: If you’re thinking of starting a business, running a business or just wondering how it would affect businesses, then you should know this.
Companies Income Tax
Under the existing system, Resident companies are liable to corporate income tax (CIT) -- mostly 30% -- on their worldwide income while non-residents are subject to CIT on their Nigeria-source income. However, under the new system
Companies would pay CIT based on their Turnover(Revenue)
What this means
For Small companies, Good news as more young businesses can focus on growing by reinvesting profits into the business as opposed to the burden of paying tax.
For Medium/Large companies, With this new law, our best bet is that companies would turn their focus to reducing their turnover to the closest lower bracket so that can be taxed at a lower rate.
In order to motivate early payments, Taxpayers who pay their tax liability at least 90 days before the due date would be entitled to a bonus of 2% (medium companies) and 1% (Large companies) of the tax paid.
Non-resident companies are more likely to be taxed.
First off, a non-resident Corporation (NRC) is a company or corporation that is not registered or incorporated in Nigeria but derives income or profits from Nigeria. More NRCs would be taxed more.
More specifically, NRCs carrying out digital activities, consultancy, technical, management or professional services in Nigeria, provided that they have “significant economic presence” (SEP) in Nigeria.
What does significant economic presence mean?
We’re not sure yet, with the meaning of significant economic presence still fuzzy, it is clear that the fine details of this part of the bill is yet to be clearly defined.
Insurance Companies: Insurance companies would be able to carry forward losses indefinitely to offset future profits as opposed to the 4-year restriction currently in place.
New Commencements and Cessation rules: Under the existing system, the profits of a new or liquidating company are subject to double taxation. The new bill would correct this and reduce the tax burden.
Phew! These proposed laws are looking good. We’d stop here for now and continue next week :-)
Tech
CES 2020: Concept products everywhere
Consumer Electronics Show (CES) is arguably the most important consumer-focused gadget show in the world and a key place for companies to show off their new products for the coming year. The show took place within the past week in Las Vegas.
How did it go?
In a nutshell, this year’s event was a reminder that TV companies keep making more expensive stuff (8k screens), foldable screens are everywhere, smaller companies are taking jabs at big companies and there were many concept products(prototypes) everywhere.
Some of the announcements
Uber and Hyundai are planning to offer flying taxi rides by 2023
Samsung is launching actual robotic arms to make your food in the smart kitchen
Ran out of toilet paper? This robot bear will bring you a spare
Sony announced a car, though a concept car
Big picture: CES is a show that gives hints to the trends that would shape the future, and is a source of inspiration to many. While it was a fantastic experience for many, some felt it was all hype, that there’s something wrong with a show where none of the most exciting announcements are for actual products coming to the market soon.
John Gruber laments, saying:
What’s harmful is presenting concept designs to the public as though they are products. And even if a publicly presented concept is something a company truly does intend to eventually ship in some form, why show it early? To give competitors a head start copying it? So that if the product actually does ship eventually, people will view it as old news?
Worth Reading 📚
Quote 💭
“I hope that in this year to come, you make mistakes. Because if you’re making mistakes, then you’re making new things, trying new things, learning, living, pushing yourself, changing yourself, changing your world. You’re doing things you’ve never done before, and more importantly, you’re doing something.”
– Neil Gaiman (an English author)