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The Central Bank of Nigeria (CBN) extends its ‘Naira4dollar’ scheme, Paystack's expansion to South Africa, Ugandan Government’s new tax

Hello there,

How many companies in Africa make $1 billion in annual revenue?

10? 20? 100?  See the answer at the end of the Newsletter.

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The Central Bank of Nigeria (CBN) has indefinitely extended its ‘Naira4dollar’ scheme for diaspora remittances which was introduced on March 8 and expected to end on May 8.

What’s this about?

This initiative rewards individuals and companies in Nigeria with ₦5 for every $1 they receive through licensed International Money Transfer Operators (IMTOs) and commercial banks. For instance, if a person receives $5,000 the CBN gives him/her an additional ₦25,000. 

It doesn’t seem like much but who says no to free legit money? Not me.

Throwback: In July 2020, the CBN devalued the naira from ₦360/$1 to ₦368/$1 and the black market responded by increasing to ₦465/$1. The exchange rate at the black market has risen from ₦395/$1 on March 27, 2020, to ₦495/$1 in the last quarter of 2020.

Zoom out: The goal of the ‘Naira4dollar’ initiative is to boost the inflow of dollars to provide liquidity of the forex market and ensure the stability of the Naira, which has been under pressure after the crash of oil prices last year due to the pandemic. 

In other related news, the Nigerian government has extended the deadline for SIM-NIN linkage from May 6 to June 30.

This gives more Nigerians ample time to sort themselves out before their SIM cards are blocked.

And the telcos?

Earlier this week, MTN Nigeria released its financial report for the first quarter of 2021, despite showing strong performance its numbers reflected the effects of the suspension of SIM card registration.

The effect: Its mobile subscribers declined by 5 million, but it’s peculiar to MTN alone as other telcos experienced the loss of subscribers. They also weren’t able to register new ones for months.

On the bright side: Its service revenue increased by 17.2% to ₦385.2 billion (~$950 million), fintech revenue rose by 28.5%, voice revenue increased by 8% and data increased by 42% year on year.

Read more:  Read MTN’s earnings reports

Hello Mzansi! 👋

Nigerian fintech company Paystack has announced an expansion into the South African Market. This comes after six months of a business pilot in the country. 

A little detail:

This announcement is coming seven months after Paystack was acquired by U.S fintech giant Stripe for $200 million. Paystack has over 60,000 organisations on the continent using its software and services from around the world. It raised an $8 million Series A in 2018 and reportedly used it to expand to Ghana.

What this means: Businesses in South Africa can now accept payments online using Paystack.

During their testing stage, Paystack revealed they helped hundreds of businesses, tech startups, eCommerce stores, agencies, and creators get paid online, so they are confident that the South African market needs their services.

Why matters: Stripe is looking to go public soon and it has been aggressively expanding to other markets. Before acquiring Paystack, the company added 17 countries to its platform in 18 months, but none from Africa. Paystack is its key to expanding in Africa. 

Competitors: Paystack and Flutterwave are mostly placed side by side when talking of payment solutions from the Nigerian market. Although they provide almost the same service, Flutterwave has its presence in 20 African markets while Paystack is just entering its third market.    

Ugandan Government’s new tax 

In 2018, Ugandan Government introduced “Over the top tax,” a daily fee of 200 Shillings (~$2) to use social media apps. 

Why? A popular narrative was thatmore people were using internet data for communication and the telecoms were losing revenue, as well as the government. Another narrative is that it's  a way to censor communication in a country which has been ruled by the same president for 34 years.

How did this tax pan out?

It wasn’t so effective. The Ugandan government projected to generate a revenue of about $77.8 million (248 billion Ugandan shillings) but it ended up raising only about $13.5 million (49.5 billion shillings). 

Why? Many Ugandans still use Virtual Private Network (VPN) - a software that helps to make you more anonymous online and lets you effectively trick your laptop or mobile device into thinking it's in another location - and public WiFis to sidestep the tax anyway.

So the government has come up with a new tax

It’s introducing a tax on internet data at a rate of 12%, with the exclusion of data used to provide medical and education services. Unlike the current tax on social media, this tax is collected when buying internet data and as such will be near impossible to avoid using VPN.

Answer:  400 companies. 50% are in South Africa. Source

Worth reading 📚

Quote 💭

“Do the best you can until you know better. Then when you know better, do better.”

– Maya Angelou