What could 2021 look like? 🔮

Nigeria's 2021 draft Budget, Kenya’s digital taxes and Data protection, Pay-TV in Africa: Canal+ takes a piece of Multichoice.

Hello there,

Today’s date is 10-10-2020, it doesn’t really mean anything but just visually appealing to look at. 

The fight against police brutality is still ongoing, and we’re right behind it. ✊

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What could 2021 look like?

Anyone who’s experienced 2020 knows planning for next year must come with an openness to many possibilities. What could happen next year?

Earlier this week Nigeria took a step forward by presenting its financial plan aka Budget for 2021. This budget was called ‘Budget of Economic Recovery and Resilience’, Fair name as that’s the only thing anyone can wish for after 2020

Why it matters

Before we dive into the numbers, the budget gives a sense of how economic resources would flow and what the impact of a shortfall or overspend means.

Nigeria’s proposed 2021 Budget 

Total Revenue: N7.886 trillion

Oil revenue – N2.01 trillion

Non-Oil revenue  –  N1.49 trn

Grants and Aid  –  N354.85 bn

Revenues of 60 government-owned enterprises & others  –  ~N4 trn

Total Expenditure: 13.08trn

Recurrent expenditure – N5.65trn

Capital Expenditure – N3.85trn

Statutory transfer – N484.5bn

Debt service – N3.12trn

Difference: Deficit of N5.20 trillion

The deficit of N5.20 trillion will be financed mainly by new borrowings of N4.28 trillion, N205.15 billion from privatization income (remember there are plans to sell parts of the 4 refineries), and N709.69 billion in additional loans from existing multilateral and bilateral loans secured for specific projects and programs.

What it means

Nigeria needs to spend more than it currently earns so it has to borrow to cover up for the difference.

  • Almost one-quarter (23.8%) of the current expenditure would be spent on repaying previous loans. Compared to 2020, this is an increase of N445.57 billion.

  • 43.1% would be spent on operations & maintenance (recurrent) activities, which is made up of mostly salaries of government workers & public servants. Personnel cost is still Nigeria’s largest single item of expenditure, projected to 33% of the 2021 expenditure.

  • While 29.4% would be spent on capital projects - mostly social amenities. This is mostly dedicated to completing existing projects.

  • Statutory transfers are compulsory payments (that can’t be reviewed or broken down) made to certain quarters such as the Niger Delta Development Commission (NDDC), National Assembly, Universal Basic Education Commission (UBEC) & others. In 2020 the amount budget for this was N556.7 billion.

The big picture:

President Buhari mentioned in his budget speech that revenue generation is the government major challenge, promising to tackle this problem. A sure hint that the government would intensify efforts to generate as much revenue as possible domestically.

To seal the leakages, the government is bent on proceeding with removing its hand from controlling the price of petroleum products & making electricity tariffs more realistic. Finally, to stop the payment of salaries to non-existent (ghost) workers, work is ongoing an integrated Personnel Payroll Information System (‘IPPIS’) platform.

Ps: This is only a draft budget that would still be reviewed & tweaked by the Senate. 

Dig Deeper: Read the 2021 Budget Speech


Kenya’s digital taxes and data protection bill suffer setbacks

Photo source: Unsplash

Kenya’s data protection law which provides new ways for consumers to hold tech companies accountable on how they use their information and plans to enforce digital taxes on these tech giants is currently suffering a setback and here is why. 

The reason?

The data protection bill and taxes are clashing with a new trade negotiation Kenya has with the United States, where the latter demands that Kenya removes provisions to enforce taxes on some digital products including software, music, videos, and ebooks. Also to prevent governments from mandating the disclosure of computer source code or algorithms and to remove provisions in the bill that mandates U.S firms to store data locally.

The free trade negotiation

The negotiation must benefit both countries as it should be.

For the US: The free trade agreement is an open ground to rival China, who is topping the African tech market investment, and opens more doors for further deals. 

For Kenya: It will help develop their growing ICT sector and aid flexibility with US investment, intellectual property protections, and domestic pro-market reformation.

What the initial data protection bill says: The data protection act, among other things, seeks consent from the data bearer either by a clear affirmative action or a statement, before personal data can be processed by any tech companies.

Data localization: It also says that some data transfer can only be made from local storage in the country i.e data processing can only be made from data centers installed in Kenya.     

The tax bill: In 2019, the Kenyan government insisted they will begin charging VAT and Income tax on income-generating digital apps and companies in the country.

This didn’t seem right: Yes. Google initially warned that the Kenyan government is at risk of a trade war if they continue with their tax charges on digital companies, insisting that the bill goes against the international task agreement that states that multinationals should pay income taxes to countries where their services are created and not consumed.

Bottom line: Kenya stands a chance of sealing one of  Africa’s most important trade agreements with the United States. The outcome of the agreement is now dependent on whether or not they come to terms with the new conditions. 


Pay-TV in Africa: Canal+ takes a piece of Multichoice

French TV operator Canal+ Group has purchased a 6.5% stake in South Africa-based pay-TV operator MultiChoice. Owned by French media conglomerate Vivendi, Canal+ is France’s biggest pay-TV company with 20.4 million total subscribers.

MultiChoice is a South Africa-based Satellite Pay TV with several entertainment platforms in DStv, GOtv, Showmax and DStv Now. It reaches approximately 19.5 million people across 50 countries in Africa. Canal+ has been highly active in Francophone Africa, while MultiChoice is primarily in Anglophone Africa.

Why

Big bucks. Canal+ said that the move was a long-term financial investment and seal of faith in Multichoice and the African continent.

Long Time Coming

This part acquisition move has been brewing. Canal+ has been expanding in Africa for a while. In 2013,  Canal+ added new channels offering local content including Nollywood TC, Nollywood Epic, and A+. In 2018 it started producing in Africa. One of which is the Invisibles which was produced in Ivory Coast.

In July 2019, it acquired ROK from Iroko, the Nigerian streaming company. In addition to these, It has also provided French-speaking African countries access to live sports content. 

Competition and Partnerships

While Africa's pay-TV market is a three-horse race between Canal+,  Multichoice, and StarTimes, there seems to be enough for all to share. The number of pay-TV users in Sub-Saharan Africa is expected to increase by 54% to reach nearly 50-million, up from 30.70 million at the end of 2019, while revenues are expected to rise to $7bn. Wow!

Netflix and Amazon Prime have also buddy’ed up with MultiChoice for the former to have some of its content on the MultiChoice platform. It gives Multichoice a wider range of programs and helps the two streaming platforms reach audiences in regions with slow internet speed. 

Zooming In: A pattern?

In reference to a report brought by TechCabal, Canal+ parent company Vivendi has been known to use this technique of purchasing a small stake in a company before going out with aggressive acquisition. It did this with gaming companies Ubisoft and Gameloft.

The good news is that South African regulation regarding foreign shareholders in the media industry gives Multichoice an upper hand, Under South African law, no foreign entity can own more than 20% of voting rights at a broadcasting company.

Zooming Out

This move is in relation to viewing platforms seeking high growth in emerging markets. Last week we talked about how Netflix is adjusting its revenue strategy in African markets. It would be interesting to see if more foreign Satellite Pay-TV operators take deep dives to gain African consumers.


Worth reading 📚

Quote 💭

I think the reward for conformity is that everyone likes you, except yourself.

— Rita Mae Brown

Thank you for reading 💙

Remember, No matter how rough your week was, you can still save face.

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