Lagos State: The Centre of Taxation 🚖
Lagos' new tax laws, Mauritius Oil spillage, Naspers caught in the China vs US tension
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Lagos State: The Centre of Taxation
If excellence comes at a price, then in Lagos, the city of excellence, that price is more taxes.
The Lagos state government recently released a new guideline for online hailing operations which was reviewed/clarified after a meeting with operators.
What this means
License fees & tax: ₦10 million ($25,814) for every 1,000 e-hailing taxis. There’s also an annual renewal fee of ₦5 million ($12,907). After the meeting, it was reduced by 20%. Still on the high side
Instead of a 10% service tax on each transaction paid by passengers to the operators. There’d be a flat fee of N20 known as Road Improvement Fund which will be levied on each ride/trip. Way better but still a lot of money if you do this: N20 x how the number of rides you think happen daily in Lagos x 30 days.
Access to more data: The government would have access to the database of operators/companies operating e-hailing taxi business in Lagos. The government clarified that it’d only be needing high-level encrypted data on the patterns of movements in the city and not granular personal info e.g number of trips made in a day and routes plied to aid better planning.
Fair enough, also a way to track how much is remitted.
Better documentation and insurance:
Vehicles must have a comprehensive insurance cover which will cover drivers and passengers. Drivers have a 90-Day window to comply with the documentation requirements. There will be a one-stop-shop for all the documentation. This sounds good, hard to fault this.
Why it matters
Lagos looking less attractive: There are also talks to charge betting companies a licence fee of N20M and 3% charge on every transaction.
With Lagos looking less appealing with every new tax/levy, this could open opportunities for other cities who aren’t asking for much.
Making it easier to do business: On the bright side, recently, some adjustments were made to the Companies Allied Matters Act (CAMA) in order to make it easier to do business in Nigeria. Many changes were made, such as the required fees for SMEs have been cut by 65%. Small businesses are exempt from appointing auditors and a company secretary, and they don’t need a lawyer to sign a Declaration of Compliance.
Damaged control in Mauritius
Photo source: Straitstimes
Mauritius has been forced into damage control as an oil spill from a Japanese ship threatens environmental security.
A disaster in the making: for almost two weeks, tons of oil has been leaking from a Nagashiki owned Ship carrying up to 4,000 metric tons of fuel in Mauritius and a stretch of rivers and wetlands have been threatened to cause massive environmental pollution in the area.
Poor Mauritius: The small island nation is known for its greenish-blue waters as well as vibrant corals and diverse ecosystem but now over 1000 metric tons of oil have leaked into the once turquoise water and it's an ugly mess.
Fears: There is a greater threat, a growing crack on the ship might cause the ship to split in two, releasing the rest of the ship's oil into the water. Fishes were found dead and sea animals covered in oil, ultimately left to the mercy of their immune systems.
When the government came in: Prime Minister Pravind Jugnauth declared a state of an environmental emergency, seeking intervention from French government who sent a military aircraft carrying pollution control equipment from the nearby island of Reunion to help alleviate the disaster. Also, Japan has sent a six-member team to assist.
This could have been avoided, but the authorities started doing things only when grieve damage had been done in the area.
Meanwhile, even in their trying times, locals living on the Island are not slacking in protecting their environment. Despite government pleas to let authorised officials handle the situations, locals have sewn into temporary booms, sugarcane leaves and plastic bottles to change the angle of the leak. 👏
Going forward: The shipping company has offered compensations and damage control but this doesn’t lift the toll it will have on the tourist Island whose major tourist attraction is its turquoise waters and safe ecosystem.
Ripple Effects of US-China Fight
Wanna know how it feels when something so far from you affects you in a way you don’t like? Ask South African conglomerate, Naspers, whose interests are being impacted by the tensions between the two economic superpowers, US and China.
Rewind the Track
Known for being the most valuable publicly-traded company in Africa, Naspers started out as a newspaper group and has built a solid business around technology-based investments in internet services and entertainment. In the year 2019, it recorded a revenue of $19 billion.
Back in 2001, it made an investment of US$32 million, purchasing a 46.5% stake in Chinese company Tencent. Fast forward to 2018, the initial investment had ballooned to a stake worth over $175 billion!
At the moment, the market valuation of Tencent is more than that of Naspers and it recorded a revenue of $54 billion in 2019, in comparison to Naspers’ $19 billion.
And Tencent...
Being one of the largest companies in Asia, it specializes in various internet-related services that cut across social networks, music, web portals, e-commerce, mobile games, internet services, payment systems, smartphones, and multiplayer online games.
The most used messaging app in the world, WeChat, is also owned by Tencent. It amasses over a billion users who spend a reported 1.7 billion hours on the app every day because of its numerous service offerings in chatting, shopping, ordering food or playing games.
Why do these matter?
So here’s the interesting bit. Because of Tencent's huge success, its profitability is directly linked to that of Naspers, and one its internet products, WeChat is under intense scrutiny by the US government.
Why again?
Earlier this month, The U.S. signed a pair of executive orders prohibiting U.S. residents from doing business with the Chinese-owned apps, Tik-Tok and WeChat. For both apps, the US government fears that because the apps automatically capture a lot of information from its users, allowing China access to Americans’ personal and proprietary information. This poses a national security threat.
Wider impact
A day after the executive orders were signed, Naspers stock price dropped by 4.4%. This affected the South Africa main stock index as it also fell by 1.3%, largely attributed to the huge market valuation of Naspers. One possible solution to this dilemma is Naspers developing its other business segments so its success is not overdependent on that of Tencent.
A positive for Tencent (and Naspers) is its video game segment which has seen a huge demand because of the coronavirus-induced lockdowns.
Worth reading 📚
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Quote 💭
“The easiest thing is to react. The second easiest thing is to respond. But the hardest thing is to initiate.” Seth Godin
Thank you for reading this week’s edition 💙
Written by Daniel Adeyemi, Damilola Amusan & Bright Azuh
The piece on Tencent and Naspers had me doing research. Well done guys!