- June 15 2023
SRD application 2023: 5 things to know
The South African Social Relief of Distress (SRD) program is a vital initiative aimed at providing temporary relief to individuals and families in need. The SRD application process plays a crucial role in determining eligibility and ensuring that assistance reaches those who require it the most. In this article, we will explore five essential aspects of the SRD application in South Africa, shedding light on its purpose, eligibility criteria, application process, benefits, and potential challenges. Understanding these key points will empower individuals seeking support through the SRD program. 1. Purpose of the SRD program The Social Relief of Distress (SRD) program in South Africa is designed to provide temporary financial relief to individuals and families who are unable to meet their basic needs due to a crisis or emergency. It serves as a safety net for those who do not have access to any other forms of social assistance. The program aims to alleviate immediate poverty-related challenges by offering cash transfers to vulnerable individuals, helping them meet their essential needs such as food, shelter, and clothing during times of crisis. 2. Eligibility criteria To qualify for the SRD program, applicants must meet certain eligibility criteria. These criteria are subject to change based on government policies and program updates. Generally, individuals must be South African citizens or permanent residents, be 18 years or older, and not receive any other form of income or social grant. They should also demonstrate that they are experiencing a state of distress due to a specific crisis, such as the loss of income or livelihood, natural disasters, or other emergencies. Meeting the eligibility requirements is crucial for the successful consideration of the SRD application. See more information on eligibility here. 3. SRD application process The SRD application process is relatively straightforward and can be completed online or through designated application channels. Applicants are required to provide accurate personal details, including their identification documents, contact information, and proof of residence. Additionally, they must explain their current situation and provide supporting documents, such as bank statements or proof of job loss. The Department of Social Development reviews the applications and assesses eligibility based on the provided information. It is essential to complete the application accurately and honestly to avoid delays or potential disqualification. See more details here. 4. Benefits of the SRD program The SRD program offers significant benefits to eligible individuals and families in South Africa. Approved applicants receive a monthly cash transfer for a specified period, which can help cover essential expenses and alleviate financial strain during times of distress. The program’s support aims to ensure that beneficiaries can meet their basic needs, including food, clothing, and shelter. By providing temporary relief, the SRD program acts as a vital lifeline, allowing individuals to stabilize their circumstances and work towards long-term solutions. Additionally, the program may offer access to resources and referrals for further assistance, empowering individuals to navigate through their challenges effectively. 5. Potential challenges While the SRD program serves as a crucial support system, it also faces certain challenges. Due to limited resources and high demand, there may be delays in processing applications and disbursing funds. Additionally, eligibility criteria and program guidelines may change over time, requiring applicants to stay updated and informed. Individuals need to understand the documentation requirements and submit accurate information to avoid disqualification. Moreover, as the program is temporary, it is vital for beneficiaries to explore long-term solutions to improve their overall financial stability. Collaborating with relevant community organisations and seeking additional support services can help individuals navigate these challenges more effectively. Final thoughts on the SRD application The SRD application process in South Africa plays a pivotal role in providing temporary relief to vulnerable individuals and families during times of crisis. By understanding the purpose, eligibility criteria, application process, benefits, and potential challenges, individuals can access the assistance they need effectively.
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- June 15 2023
Here’s why Flutterwave accounts were frozen in Kenya
From a fraudulent betting company in Nigeria to aggrieved customers, and a Nairobi High Court order, here’s how Flutterwave accounts were frozen in Kenya. Last week, Justice A. Mabeya, a Nairobi High Court judge, placed a 14-day lien on 45 Flutterwave bank accounts at Access Bank, Equity Bank, Guaranty Trust Bank, United Bank of Africa, Ecobank, and 10 mobile money accounts at Safaricom PLC. The lien comes as a result of a petition by Morris Ebitimi Joseph, on behalf of 2,468 investors who were swindled by 86 Football Technology Ltd (86FB, 86W, and 86Z), a Ponzi scheme posing as a sports betting company. Joseph and the other investors claim that Flutterwave and 86FB colluded to defraud them of $12.04 million. In a response to TechCabal, Flutterwave said, “Some accounts have been frozen, yes, but it is a matter of procedure in such civil cases. It is an unsubstantiated claim by the report because last year, during routine checks, we noted a few companies were using our platform to process payments for the company named 85FB/86Z. We proactively notified the merchants to cease processing and suspended their use of Flutterwave. We also reported the matter to the law enforcement bodies in Nigeria. We are following all due legal process in Kenya, including providing all necessary documentation as we work towards settling these matters”. Justice Mabeya’s judgement placed a 14-day lien on Flutterwave’s accounts. Accusations and clarifications In 2022, 86FB accused Flutterwave of “maliciously freezing” its accounts. “This payment company [Flutterwave] maliciously froze our funds and intends to take the funds as their own and extort us by cooperating with the local police. 86FB has never yielded as we have been trying our best to protect the rights and interests of every user, but the other party has a strong background in Nigeria. We cannot fight against it, now 86FB cannot withdraw money normally,” the company said after it was exposed as a Ponzi scheme. At the time, Flutterwave responded in a tweet, saying that 86FB was not “registered or approved by Flutterwave”. Flutterwave also revealed that during its investigation, it “identified direct merchants of Flutterwave who were processing transactions for 86FB without our approval or permission to do so on the Flutterwave platform”. It added that it had suspended the merchants’ use of the Flutterwave platform. Payment processors and Ponzi schemes This was not the first time that Flutterwave had intervened by suspending a Ponzi scheme from using its platform. In 2020, as Racksterly (another Ponzi scheme) was unravelling, Paystack and Flutterwave restricted Racksterly from using their platforms to process payments. Olugbenga Agboola, Flutterwave’s CEO, told TechCabal the restriction was done to protect customers from being defrauded. “The business model of the merchant does not support this sort of transaction that they were doing,” Agboola explained. “And so we saw that customers were going to be defrauded on our platform.” Flutterwave also refunded all transactions by Racksterli’s subscribers done in January 2020. Flutterwave also claimed that in May 2022, it suspended a merchant who had been using its platform to handle 86FB transactions without having the necessary authorisation. It also added that this was done after a routine audit of merchants, through which it was discovered that 86FB’s operations were a Ponzi scheme. An initial trial and a success This is also not the first time that the aggrieved investors in 86FB have tried to sue Flutterwave in Kenya for the loss of their invested funds. Although the fraud happened in Nigeria, the investors tried to join the Kenyan Asset Recovery Agency’s (ARA) application to prevent Flutterwave from transferring or withdrawing the funds in three bank accounts, including two in UBA and one in Access Bank, and 19 Safaricom M-Pesa pay bill numbers. Flutterwave was eventually cleared of any wrongdoing, and the investors lost their bid to get a share of the funds frozen by ARA. However, with this new court case, the 86FB investors have finally been able to obtain a lien on Flutterwave’s accounts and might be able to recoup their losses. After the expiration of the 14-day lien on June 21, the parties will reconvene with Justice A. Mabeya for further directions on how to proceed with the case. The judge will also decide whether to extend the freezing orders. This new court case comes as Flutterwave continues its bid for a payment license in Kenya. Flutterwave has responded by suing 86FB on criminal defamation charges.
Read More- June 15 2023
Nigeria’s headline inflation for May hits record 22.41% as food inflation soars
Nigeria’s headline inflation hit a staggering high 22.41% in May 2023, up by 4.7% recorded in May in the previous year. Food inflation also rose to 24.82%. According to the National Bureau of Statistics Consumer Price Index (CPI) and Inflation Report for May 2023, Nigeria’s headline inflation rate has increased to 22.41% on a year-on-year basis in May 2023. Nigeria’s inflation rate continues its uptrend despite several monetary measures by the central bank to tame the rising rates. The report highlighted that the May 2023 inflation rate showed an increase of 0.19% points when compared to April 2023 headline inflation rate. Similarly, on a year-on-year basis, the headline inflation rate was 4.70% points higher compared to the rate recorded in May 2022, which was (17.71%). Likewise, on a month-on-month basis, the headline inflation rate in May 2023 was 1.94%, which was 0.03% higher than the rate recorded in April 2023 (1.91%). This means that in the month of May 2023, on average, the general price level was 0.03% higher relative to April 2023. As Nigeria’s inflation pushes DStv, GOtv prices up, customers struggle On a sub-atomic level, inflation bit the hardest on Food. The Food inflation rate in May 2023 was 24.82% on a year-on-year basis, 5.33% higher than May 2022(19.50%). Per the NBS, the rise in food inflation on a year-on-year basis was caused by increases in the prices of staple food like Bread and cereals, Fish, Potatoes, Fruits, Meat, Vegetable, and Yam, amongst others. “On a month-on-month basis, the Food inflation rate in May 2023 was 2.19%, this was 0.06% higher compared to the rate recorded in April 2023 (2.13%).“ the NBS report read in part. The average annual rate of Food inflation for the twelve months ending May 2023 over the previous twelve-month average was 23.65%, which was 4.97 % points increase from the average annual rate of change recorded in May 2022 (18.68%). Today’s inflation rates are well above the CBN’s target of 6% and with the removal of fuel subsidies likely to be captured in June’s inflation report, it is likely the rates will increase again.
Read More- June 15 2023
Seni Sulyman and Kayode Oyewole partner to create a learning platform for upskilling talent
Seni Sulyman and Kayode Oyewole, two experienced operators in the African tech ecosystem, have partnered to launch Talstack, a B2B SaaS learning platform. Seni Sulyman’s experience in the global tech ecosystem has seen him work for different organisations like Hewlett-Packard Enterprise, Bellhop, and Konga. But it was his time as the VP of global operations at Andela, a talent company and one of Africa’s unicorns, that led him to partner with Kayode Oyewole, a former partner at Ventures Platform, to launch Talstack, a B2B SaaS company that delivers content, tools, and other infrastructure to support and upskill talents. “Kola Aina [founder of Ventures Platform] introduced us. I have been bouncing this idea off him for two years, and he told me that Kayode also had a very similar idea. So Kayode and I spoke for 3/4 months, and we agreed that this problem was the largest problem on the continent today and also the biggest opportunity for us, and that it was super urgent,” Sulyman said. Talstack has currently raised an $850,000 pre-seed round, which was led by Ventures Platform. “We initially went out to raise $650,000 to prove our initial hypothesis that bite-size learning with more contextual contents by experts who have actually done stuff in Africa is going to be more valuable for an African audience and, secondly, that companies are going to pay for it. We saw a lot of demand from investors who understood the problem, which led us to close the round a little higher at $850k,” Sulyman shared. Discovering the problem “I discovered this problem through firsthand pain and suffering,” Sulyman told me. He explained that at the peak of his team at Andela, he was responsible for 1,500 employees ranging from operational roles to marketing, and one of his biggest problems was upskilling his team. He initially started out solving this problem by directly mentoring the team when it was smaller, but as the team grew, he outsourced mentoring to his contacts at other companies. However, he quickly found out that this method did not work at scale. “As we got bigger, it became incredibly hard to do that, and I started seeing different talent gaps on the team, not just in Nigeria but across our portfolio in Kenya, Uganda, and Rwanda. I tasked the HR team with helping me, but the HR team didn’t really know what to do either,” Sulyman said. According to a report by the IFC, there is a strong demand for digital skills in sub-Saharan Africa, and almost half of the jobs in the region require some digital skills. The World Economic Forum also estimates that only 33% of technology jobs worldwide are filled by the necessary skilled labour. This problem has led CEOs to view investment in technology as a priority area and plan to upskill their workforce to optimise and minimise risk, according to this PWC report. Sulyman added that this problem affected Andela’s productivity, output, and growth. “Even though Andela was a success story, I know there was more room for our people to grow. As a manager, it is extremely painful to watch your team have growth opportunities, or gaps, that are affecting performance and outputs, and you don’t have good solutions to solve them.” For Oyewole, as a founding member of Ventures Platform who invested in over 100 companies, he realised that “the second biggest problem for every company we met and interacted with was just the quality of their team.” He added that, “It was a constant problem that I saw every single time we invested in companies; they were deeply concerned about the quality of their talent and how to get their employees to the point where they’re great enough to deliver the kind of return-on-investment that a company needs to capture value in the market.” Oyewole first encountered this problem as a manager at MAX.ng and then at Ventures Platform. He explained that he tried to solve this problem by sharing courses on e-learning platforms like Coursera and Udacity with his team, but he realised that his employees never took the courses he shared or did not finish them. “The constant feedback I got was that the courses were complex. They started the courses and couldn’t understand what was being taught because it was either not relatable, too hard, the examples were foreign, or the course was just boring,” he shared. Solving the problem With both of them encountering the same problem and realising that their initial approaches to solving it were ineffective, Oyewole told me that they both realised that a different approach was required. “It became obvious to me that we need to build something that helps people get upskilled in certain areas, but we have to do it in a way that is fundamentally different from whatever exists today.” Like most of Oyewole’s former employees, I have also been guilty of starting courses and not following through with them. Platforms like Coursera, LinkedIn Learning, and Udemy use the traditional schooling approach, where a lecture is taught for hours and students take notes. With the average attention span for a human being 47 seconds, this approach might not be effective for today. “We’ve redesigned the learning process; as opposed to sitting through a 2 hour long class, our courses are broken down; they’re bite sized. They are broken down into small chunks of five minutes or less, and what that means is that within traffic, within grabbing that coffee at work, you can essentially watch two or three videos on how to do something,” Oyewole said. “The second thing is that we’ve also made our courses very relatable. Our courses are taught by Africans for Africans, so the content is easy to understand, the examples are very relatable, and the nuance is very relatable. You can also situate yourself within the context of the speaker, because when we give you those examples, you can relate to them. Our courses are also very actionable; you can watch a five-minute video and be
Read More- June 15 2023
Africans have a fair amount of trust in digital news outlets, according to Reuters Institute report
According to Reuters Institute’s 2023 Digital News report, on average, 59% of surveyed Africans trust digital news outlets “most of the time.” Kenya led the way in terms of trustworthy news outlets at 63%, with Nigeria and South Africa following suit at 57% each. Both countries ranked second and fourth respectively, out of 46 surveyed countries in the world. 88% of Kenyans consumed news via online mediums, slightly down 1% from last year’s figures. Tuko.co.ke led the way in terms of attracting traffic, bringing in 62 million visitors. Citizen TV and Daily Nation followed suit with 58 million and 46 million visitors respectively. In Nigeria, where 93% of the surveyed population consumed news via online mediums, Legit.ng, Punch Online, and Pulse.ng led the way in terms of web traffic, attracting 46 million, 44 million, and 41 million visitors respectively. South Africa, where 90% of news consumption was via digital means, led the way in terms of attracting web traffic, with News24, SABC News Online, and eNCA online garnering 70 million, 50 million, and 40 million visitors respectively. This is despite having a lower internet penetration than both Kenya and Nigeria. The country also led the way in terms of media freedom, ranking 25th out of 180 countries according to another report by Reporters Without Borders referenced in the Reuters Institute report. Kenya, on the other hand, ranked 116th while Nigeria ranked 123rd. This year’s Reuters Institute Digital News report covered 46 countries and polled 93,000 respondents via an online survey.
Read More- June 15 2023
WhatsApp incorporates another feature from Telegram and Slack in latest update
WhatsApp users in two countries can now broadcast messages on Channels. However, the feature is not new and appears to have been ‘borrowed’ from rival chat apps. WhatsApp has launched Channels, a highly popular feature among Telegram and Slack users. Channels, which anyone can create, allow broadcasts to be sent to a large number of people. They function similarly to groups but have some limitations. For instance, on Telegram channels, users cannot participate in conversations unless the admin has allowed them to do so. This is because channels are primarily designed for broadcasts and lack conversation-style interactions found in groups. WhatsApp Channels, currently live in Colombia and Singapore, mark another step toward making the chat app as robust as possible. The Meta-owned platform is known for introducing new features months or years after rival apps have had them. WhatsApp does not shy away from copying other chat apps in terms of feature integrations, but that is a common practice in the global tech ecosystem where rival services attempt to appeal to users with great features. WhatsApp has been updated over the last few years with useful additions. For instance, the app can now be used on more than one device, although it is not fully cloud-based like Telegram, which does not need workarounds to function on multiple devices. The instant messaging service can be used on two or three smartphones and not just WhatsApp web. WhatsApp has also released official apps for Windows and macOS. Lastly, it has adjusted its UI with a modern look that matches Material You design guidelines for Android. The launch of the Channels feature seems to make sense. Leading publications such as The Verge share their stories on Telegram as soon as they are published on their sites. If WhatsApp can replicate the popularity of Telegram Channels, it could pull these publishers, and other popular channels from other platforms, into its ecosystem. WhatsApp is one of the most widely used chat apps worldwide, with over two billion users. It is the most used chat app in over 100 countries and is among the select few apps downloaded over five billion times. Meta reported that WhatsApp for Business generated over $900 million in revenue. There are a few areas where WhatsApp could improve to cater to a niche group of users who find Slack or Telegram valuable. Firstly, the app could synchronise conversations on the cloud, enabling users to switch between devices and access their messages seamlessly. Secondly, WhatsApp could strive to introduce unique and original features instead of imitating features other apps have already implemented. However, it’s important to acknowledge that while these suggestions may remain unfulfilled, WhatsApp will maintain its leadership position in the user base due to its early market entry and widespread positive reception worldwide.
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- June 15 2023
TechCabal Daily – MTN is frozen in Cameroon
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Happy pre-Friday AI is taking a serious byte off the workload of developers! GitHub has revealed that a whopping 92% of programmers are already using artificial intelligence at work. And it’s not just the tech bros. Google has some AI tricks up its sleeve for advertisers too. The company is set to unveil not one but two shiny new AI-powered features that will help advertisers find the perfect ad spots. In today’s edition MTN’s assets caught in Cameroonian dispute Kenyan court freezes 45 Flutterwave accounts Nigeria floats the naira YouTube simplifies earnings for creators The World Wide Web3 Event: The Moonshot Conference Opportunities Telecoms MTN’s assets caught in Cameroonian dispute South African mobile operator MTN says it is caught in someone else’s tangled web. It says that its Cameroon operations were threatened by the seizure of its bank accounts containing 14 billion CFA francs ($22 million) in the country as part of a dispute. But here’s the twist: MTN says it has nothing to do with the dispute Image source: Zikoko Memes What dispute? Per Reuters, it all started in 2022 when a Cameroonian big shot, Ahmadou Baba Danpullo, and South Africa’s First National Bank (FNB) locked horns over a real estate loan. The bank decided to get its hands on Danpullo’s properties in South Africa, leading the business tycoon to strike back witha sneaky move. He persuaded a Cameroonian court to freeze the accounts of South African companies like MTN and Chococam, owned by Tiger Brands. Now the funds have been transferred into an escrow account managed by the court registrar. Sounds tough. Yes. MTN said the matter has caused difficulties in paying thousands of service providers and its 800 Cameroonian employees. So far, no resolution has been made but the South African foreign ministry is urging MTN’s executives to pursue all legal avenues available. Moniepoint ranked 2nd fastest-growing African company Moniepoint is Africa’s second-fastest growing company, as shown in FTs latest report. We also processed 1 billion transactions worth $43 billion in Q1 alone. Read all about it here. Fintech Kenyan court freezes 45 accounts belonging to Flutterwave Image source: Flutterwave Nigerian fintech company, Flutterwave, has been sued by 2,468 Nigerian nationals in a Kenyan court, for allegedly being the medium through which they were defrauded of Ksh1.6 billion ($12.04 million). The lawsuit: Last week, after hearing the case, Judge Alfred Mabeya gave the order to freeze45 Flutterwave bank accounts and 10 mobile money wallets for 14 days. Additionally, six other financial institutions that hold the company’s funds have been named as interested parties. Among the interested parties named, five of them are banks including Access Bank, Ecobank, and Safaricom PLC. Safaricom PLC’s involvement is due to Flutterwave operating 10 PayBill Numbers on their Mpesa Platform. ICYMI: Flutterwave’s image took a beating in July 2022, when Kenya charged Flutterwave to court on suspicions of card fraud and money laundering. It was later reported that Kenya dropped the financial impropriety case against Flutterwave. The fintech company has a history of dealing with court processes and facing unfavourable rulings. Economy Nigeria floats the naira Image source: Zikoko Memes Nigeria’s Central Bank (CBN) has floated the naira in a bid to loosen its control of the exchange rate, and eventually unify it. Floating? The country has been tightly controlling the official exchange rate even while its forex reserves drowned. Now that the CBN has made this move, banks are now free to source for their own forex and exchange USD at the same rate that the parallel market—Bureau De Change—has been doing for years. Trusted sources told TechCabal that banks are now exchanging for ₦699 (buy rate) and ₦700 (sell rate). Why haven’t things always been this way? It depends on who you ask really. However, it has been an obvious option for a long time. Even the World Bank recommended it. However, the CBN maintained an artificial rate of $1/₦462, even when the demand for USD was too high for banks to handle. Instead of floating the naira, it tried several other means to curb the rising demand for dollars. This included limiting goods that could be bought with USD, limiting FX access for students travelling abroad, and other measures. However, the demand only increased, creating an arbitrage opportunity at the parallel market where prices rose to as much as $1/₦755 this year. Why the change? The CBN has unified the rates to improve the exchange rates. While it is a step in the right direction, the immediate result might not be a relief. However, because banks will be responsible for sourcing their own FX supply moving forward, the unification of the rates is sure to happen. Experience Viva Technology Tune in to Europe’s biggest Startup and Business event here. Consumer Tech YouTube simplifies earnings for creators Image source: Zikoko Memes If you’ve got a small YouTube channel, you could become the next thousand-naire! On Tuesday, YouTube announced new eligibility requirements for creators with small followings to be part of the YouTube Partner Programme (YPP) and monetise their content. This means that small creators can now earn money from YouTube, as long as they meet certain requirements. What are the requirements? Creators must have up to 500 subscribers, which is half the previous requirement; three public uploads within a 90-day period; and achieve 3,000 watch hours in the past year or garner 3 million Shorts views within the last 90 days. Once creators meet the updated requirements, they can apply for the YPP and gain access to various tipping and subscription tools and also have the ability to promote their merchandise using YouTube Shopping. In addition, US creators already part of the YPP with over 20,000 subscribers will also be eligible to tag products in their videos and Shorts earning commissions in the process. Not so fast though: It’s not available in Africa yet. The revised eligibility criteria will first be implemented in the US, the
Read More- June 14 2023
Registration cost for new BDC licences falls to N15 million as Nigeria ponders unified exchange rate
Today’s loosening of exchange rate controls will diminish the arbitrage advantage previously enjoyed by BDCs, resulting in a notable decrease in the price of BDC licenses. The cost of obtaining a Bureau De Change (BDC) license is declining following news of Nigeria’s move towards a single exchange rate. While the Central Bank has not confirmed the new policy stance, the Naira fell by as much as 38% on the I&E window today, its largest slide in four years. While it’s still unclear if the CBN will pursue a free or managed float, there are already concerns that a single exchange rate will make the business of Bureau De Change operators a lot less profitable. BDCs have traditionally benefited from arbitrage and Nigeria’s multiple exchange windows. Historically, this gap has remained reasonable, but in the last year, the spread has grown as the CBN stuck to an artificial rate of $1/N462. A unified window will close that spread, and the market is already reacting, with interest in BDC licences cooling this week. Three reliable sources told TechCabal that before now, the CBN required a registration cost of N35 Million share capital company with CAC (fee can be negotiated with a CAC Agent) among several requirements to grant BDC licences. Sources close to the matter told TechCabal that the registration cost is down to N15 million today and will likely plummet further. A market expert explained to TechCabal, “Before now, the BDCs received a $20,000 allocation at the official rate every week and sold it for an almost 100% margin on the parallel market. The significant arbitrage ensured that it was profitable, which led to an influx of a record number of BDC dealers. Now that rates have been unified, they have little motivation to hold on to it.” As this article explains, BDCs are “insanely profitable” businesses because the CBN receives 500 requests for BDC licences weekly. TechCabal reported today that the CBN had floated the naira, with the USD is now exchanging at a sell rate of N700. The ripple effect is that the activities of the parallel market—run by BDCs—will slow down significantly. “Rate parity automatically means whatever BDC offers is the same or slightly similar with/to the banks. Naira floating ensures this, which means the monopoly of BDCs or sure assurance that they are the only ones with readily available FX will dwindle drastically as I can get the same FX at any bank,” another financial analyst explained to TechCabal. The truth is that while a unified FX rate might hold some potential for the market in the long run, it will badly affect the businesses of BDCs that thrive on arbitrage. CBN had in 2021 threatened to stop the issuance of BDC licenses. However, this doesn’t particularly solve the problem because even a unified FX rate still won’t fix the backlog of FX demand in Nigeria.
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- June 14 2023
Nigeria gets new data protection body as President Tinubu signs much-anticipated bill into law
A new law signed by President Tinubu provides for the establishment of a new data protection body as well as a regulatory framework for data protection in the country. On Wednesday, President Bola Tinubu signed the Nigeria Data Protection Bill 2023 into law. The new law provides a legal framework for protecting and regulating personal information in the country. Data protection is a contentious issue in Nigeria where personal data is collected with no assurance of protection. The problem is compounded by the surge in incidents of data breaches. In January 2022, for instance, a hacker claimed to have accessed the NIN database in January 2022, but the National Identity Management Commission (NIMC) denied the breach. There have been many other reported breaches like this, with the organisations involved often denying them. The new law will put a better framework around protecting personal information and ensuring they won’t fall into the wrong hands. A new data protection body The key provision of the new law is the establishment of the Nigeria Data Protection Commission, which replaces the Nigeria Data Protection Bureau (NDPB) established by immediate past President Muhammadu Buhari in February 2022. The new body will be headed by a National Commissioner appointed by the President for a term of four years which is renewable once. According to Section 8 of the Act, the powers of the Commission include issuing regulations, rules, directives, and guidance under the Act; engaging consultants for assistance in the discharge of its functions; imposing penalties; prescribing fees payable by data controllers and data processors in accordance with data processing activities, and prescribe the manner and frequency of filing, and content, of compliance returns by data controllers and data processors of major importance to the Commission. The Act also provides for creating a Governing Council to be chaired by a retired judge of a superior court of record. The members of the Council—who the President will appoint—will be part-time members other than the National Commissioner. Framework for processing data Section 25 of the Act outlines the principles of the processing of personal data, stating that the data controller or data processor must ensure that data is collected legitimately and “processed in a manner that ensures appropriate security”. While Section 26 provides the lawful basis for personal data processing anchored on the consent of the subject data for the specific purpose or purposes for which the data will be processed. Similarly, section 35-38 establishes the rights of a data subject—a person whose information is being collected. The law also prohibits the cross-border transfer of personal data, except if there is legal backing for it. It equally states that all data controllers and processors of significant importance must be registered with the Commission within six months after the commencement of the Act. The timeline of the bill October 2022: The bill was developed by the Nigeria Data Protection Bureau (NDPB). January 2023: The Federal Executive Council (FEC) approved the bill for further ratification and endorsement by the National Assembly. April 2023: President Muhammadu Buhari transmitted the bill to the National Assembly for consideration and passage May 2023: The Nigerian Senate announced that the bill had passed its third reading and sent to the House of Representatives for consideration.
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- June 14 2023
Digital Economy Taxation: The Two-Pillar Framework and Africa’s Response
The evolution of digitalization is changing how multinationals operate and relate with foreign governments. It is raising questions about taxation in the digital economy. There have been debates over the last few years about how the standard international tax system needs to properly capture the expanding reach of digitalization. Hitherto, big tech firms like Netflix, Meta, Google, Microsoft, Spotify and a host of others did not pay taxes on revenues earned in countries other than the home country – typically the United States (US). This is so because, under the standard international tax rule, multinational firms paid corporate income taxes where production takes place (rather than where consumption occurs) or where there is a physical presence. But the amount of revenue generated by these multinational companies leveraging digital technologies and platforms has shown that value can be created with little or no physical presence as long as there are consumers for these services. This scenario entitles foreign governments to impose varying taxes on revenues drawn by multinational companies from local consumers. To address these concerns, the Organisation for Economic Co-operation and Development (OECD) and the G20 Inclusive Framework developed a two-pillar solution to settle the inherent challenges of taxation in the digital economy. Twenty-three African countries were part of the 136 countries worldwide that met to discuss the global tax reforms. Pillar 1 focuses on the reallocation of (a portion of) the consolidated profit of a multinational enterprise to jurisdictions where sales arise as well as the standardization of the remuneration of routine marketing and distribution activities. By changing where/how companies pay taxes, Pillar 1 essentially expands a country’s authority to impose taxes on the profits of non-resident companies that make sales from local consumers in the country. Effectively, more countries all over the world have imposed and are implementing value-added tax (VAT) and other service-level taxation on digital products and services. In 2019, the Minister for Finance in France, Bruno Le Maire approved a digital services tax (DST) of 3% on intermediary services and advertising services based on users’ data. The United Kingdom imposed a DST of 2%, while Italy and Spain imposed a DST of 3% among other countries in Europe. Some other countries like Slovakia, and Turkey applied withholding tax (WHT) of 5% and 15% respectively. In Africa, DST has also been applied to revenues generated by digital services companies in market jurisdictions. In Nigeria, the Finance Act 2021 introduced a six (6%) digital service tax on non-resident companies with a significant economic presence estimated to be N25 million ($54,230) in annual revenue. Other African countries that imposed some form of taxes on digital services provided by non-resident companies include Zimbabwe (5%), Tunisia (3%), and Tanzania (2%); Sierra Leone and Kenya have DST of 1.5%. The latest is Uganda which proposed a DST of 5% to take effect in July 2023. This map reports only DST. Even more countries have imposed VAT on digital services Nonetheless, the varying rate of taxes across markets and the concentration of multinational companies in the United States implies that it would bear most of the taxes of digital service export. This scenario could have implications for retaliatory taxation and trade wars. For instance, the United States Trade Representative (USTR) responded to France’s imposition of DST by proposing tariffs of up to 100% on certain French exports to the US, citing discriminatory practices against US-based digital service companies. France eventually suspended the collection of DST revenue. Given the issues generated by DSTs, it became pertinent to review how the digital economy is taxed and work towards a fairer tax rule. As Pillar 1 focuses on changing where multinational companies are taxed (considering consumer location), Pillar 2 introduces a global minimum tax of Effective Tax Rate (ETR) through a system where multinational companies with consolidated revenue over €750m are subject to a minimum ETR of 15% on income arising in low-tax jurisdictions. Both Pillars 1 and 2 are of the OECD/G20 Inclusive Framework of Base Erosion and Profit Shifting (BEPS) 2.0 to address the tax challenges of the digital economy. Pillar 2, also known as the Global Anti-Base Erosion Rules (GLoBE), streamlines international taxes rules to ensure that large multinational companies pay a minimum tax (of 15%) on the income arising in the jurisdiction where they operate. The OECD has recommended that the Pillar Two rules become effective in 2024, except the Undertaxed Profits Rule (UTPR) recommended to become effective in 2025. The UTPR allows a country to increase taxes on a business if that business is part of a larger company that pays less than the proposed global minimum tax of 15% in another jurisdiction. According to the initial analysis of the original proposals, Pillar 1 and Pillar 2 would increase the effective average tax rate by around 0.7% across all jurisdictions. Pillar 1 is responsible for only 0.1% of this increase. So far, about 138 countries have signed up to be Pillar 2 compliant as of December 2022. The Africa case: Spotlight on Kenya, Nigeria, and Uganda Nonetheless, African countries have not entirely bought into the Two-Pillar framework. Though some African countries have segued to the idea of a framework, many are yet to join or enact domestic laws that are consistent with the BEPS 2.0 initiative. Nigeria is one of four countries (Kenya, Pakistan and Sri Lanka) that did not endorse the agreement in October 2021. This article cites complex compliance frameworks and the high cost of implementation as some of the reasons the Nigerian government is sceptical about joining the agreement. In 2022, the Nigerian government enacted a DST of 6% on large corporations with significant economic presence. In the first week of April 2023, the OECD sent a delegation to meet with representatives of the Nigerian government from the Federal Inland Revenue Service (FIRS) to discuss the maximization of the benefits of the framework for Nigeria and the need for Nigeria’s continued participation in developing the rules. Interestingly, Kenyan President, William Ruto announced that Kenya will withdraw
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