Stop Snooping Around! 🙄
Nigeria's amended Banking Act, SportPesa is tangled in a web of court cases, Surveillance by African Government
Someone said 2020 has been a unique leap year. It had 29 days in February, 300 days in March and 5 years in April! We agree!
What were some of your favourite or most memorable stories this year?
Please share them with us.
👋We’d be taking a break for the year from the 19th.
Here’s the amended Finance Act
One of the recent traditions of the present Nigerian government is to accompany the annual national budget with a new finance act. President Mohammadu Buhari presented the 2019 finance bill alongside the 2020 national budget. Another budget presentation will be accompanied by the 2020 finance act, as amended.
What the new act says
Similar to the 1991 rule, the new Banks and Other Financial Institutions Act (BOFIA) 2020 requires anyone who wishes to carry out banking and other financial operations, to obtain a license from CBN. Also, Foreign or Nigerian banks wishing to operate in the free trade or special economic zone are required to obtain a license from CBN alongside an approval from the Nigeria Processing Zones Authority. These operators enjoy up to 100% off taxes.
But there is a restriction
Yes, there is. A new restriction states that foreign banks or other entities:
(i) without a physical presence in their country of incorporation; or (ii) that are not licensed in their country; or (iii) are not affiliated to any supervised financial group – are not be permitted to operate in Nigeria or establish a relationship with Nigerian banks.
For governance: the new act has sealed an effective and productive collaboration between the Executive and Legislative arms of Government, at least according to President Buhari.
For finance institutions: the law will enhance the soundness and resilience of Nigeria’s financial system, again, according to the president. However, since one of the key provisions of the new act is to make bank executives personally liable and in charge of the terms of a banking licence, experts think the act will help avoid incidents like the 2009 financial crises, which affected 40% of the total banking system. It weakened the solvency and liquidity of Nigerian banks, they were unable to meet long term debt.
For small businesses: The new act requires that loans of N3 Million and above without collateral, will require CBN’s approval. So many startups rely on revenue financing and loans from their banks, this amendment will pose a new snag as the Central bank cannot be easily assessed, it will slow down allocations and many SMEs won’t have access to such revenues.
Local banks: BOFIA 2020 gives CBN autonomy to open or shut down any bank branches for whatever reason. Only a few issues require approval from CBN by the banks, so this might stifle operations of local banks.
One more thing
For fintechs, their activities are now governed by the CBN as the scope of financial institutions now covers financial businesses electronically, virtually, or digitally.
Mo Money Mo problems
Kenyan sports betting company SportPesa is tangled in a web of court cases.
How we got here
September 2019: The Kenyan government imposed a 20% tax on winnings for the betting industry. SportPesa refusing to pay this tax had to halt its operations in Kenya.
October 2020: SportPesa came back to Kenya under a licence held by a new operator, Milestone Games but less than a day after opening an office it was blocked for "getting its license via a backdoor."
November 2020: The victory was short-lived as SportPesa was probed of being involved in money laundering $278m (Sh30 billion) and more recently there’s been a fall out amongst its investors.
The Kenyan revenue authority claims that Sh21.4 billion ($190m) is yet to be remitted, covering withholding tax on winnings, penalties and interest for the period between January 2018 and May 2019. The case went to court and SportPesa came out victorious overturning its license suspension.
Now: The Kenyan government doesn’t see SportPesa getting it’s license back.
What else am I missing?
As a result of the court case, SportPesa for the first time ever disclosed it’s financial records.
Annual Revenue: Sh149.7 billion or $1.35 billion
Net Profit of Sh10.1 billion or $9.3 million
Why it matters?
These numbers show how much Kenyans and other Africans are into online sports gambling. What’s responsible for this? The clever marketing tactics of betting companies, smartphone availability is increasing and the significant portion of Africa’s youth population that’s un/underemployed.
It also makes SportPesa the second-largest company by revenue in Kenya, only after Safaricom which reported a turnover of $2.28 Billion (Sh251.2 billion).
With the new revelation of how much SportsPesa is raking in, we doubt it’d get out of mess easily.
Stop Snooping Around!
It doesn’t feel good to know your privacy is not assured.
Imagine how we felt when we found this recent report from University of Toronto’s Citizen Lab, a research group that focuses on cybersecurity, which delved into how African state security departments are allegedly prying on communications of opposition politicians, journalists, and protestors.
Round and Round
The company in focus is called Circles. It specializes in telecoms surveillance and has been linked to NSO Group, the Israeli spyware developer, notoriously infamous for exploiting a vulnerability in WhatsApp to spy on opposition organizers in several countries last year and attracting a lawsuit from Facebook.
More recently, it has allegedly managed to establish contacts with major political bodies across Africa to deploy its ‘services’.
In Botswana, according to the reports, the objects of surveillance were media houses, journalists and their sources. In 2014, the Directorate of Intelligence and Security Services launched a set of security infrastructure to act against private media. The report also names Equatorial Guinea, Zambia, Morocco, Nigeria, Kenya and Zimbabwe as users of Circle’s platform.
We just want to know
While this may seem like a new phenomenon, some African countries launched some initiatives to keep themselves in the know in the past. Zambia has a cyber-surveillance unit in the office of its telecommunications regulator. Uganda and some other African countries have also acquired some digital surveillance tools from tech companies like Huawei and Cloudwalk.
End game: Misinformation vs Not-so-Free speech
The era of internet penetration and mass smartphone usage comes with a major drawback, misinformation. False news can spread like wildfire with just a few retweets on Twitter, a post on FaceBook or a share on WhatsApp which can have a negative effect on the behaviors and actions of people.
Governments across the world have defended their actions in the past using this narrative, and while there might be some truth to it, it seems that the widespread criticism of public shutdown of the internet and the blocking of social media apps has seen a change of direction to behind-the-scenes surveillance.
In the end, it's up to telecos to develop their technical capabilities to identify and block abuses of their infrastructure in the future.
Worth reading 📚
Nothing in nature is random. A thing appears random only through the incompleteness of our knowledge.
– Baruch Spinoza