Today, I’m discussing:
On Friday, July 9, 2021, Nigeria’s banking regulator, the Central Bank of Nigeria (CBN), released the new Framework and Guidelines on Mobile Money Services in Nigeria(PDF) as part of its financial inclusion strategy for the unbanked.
What’s the gist? The last time CBN updated these regulations was in 2015, and while they do not differ significantly from the old ones, there are some new introductions.
Closely resembling regulations for Payment Service Banks (PSBs), Mobile Money Operators (MMOs) are not allowed to grant any form of loans, advances and guarantees (directly or indirectly) or accept foreign currency deposits
They can’t deal in the foreign exchange market — except to sell foreign currencies realised from inbound cross-border personal remittances to authorised dealers — accept any closed scheme electronic value (e.g. airtime) as a form of deposit or payment, or establish any subsidiary.
What’s the bigger picture? CBN’s goal is seemingly to enhance financial inclusion. However, like we pointed out when we discussed Why Payment Service Banks could face an uphill battle in the Nigerian market, despite new services like agent banking, the introduction of BVN 2.0, and mobile money operations, there’ve been minimal changes.
As of July 04, 2021, there are 48,762,163 BVN users in Nigeria. In comparison, in August 2020, there were 43.2 million users. For a country seeking an 80% financial inclusion rate by 2020, these are not good numbers, especially when examined in the light of its over 200 million population
Will these new regulations bring the winds of change? During the week, I’ll try to make sense of this puzzle.
The Nigeria Investment Promotion Commission (NIPC) has released its Report on Pioneer Status Incentive Applications Q1 2021 (PDF) under the Industrial Development (Income Tax Relief) Act.
The pioneer status is an incentive that gives tax holidays to qualifying industries and products for three years, extendable for one or two additional years. It can be full or partial.
Nigeria’s second unicorn, Flutterwave, was one of the ten companies denied the incentive. Others include Flour Mills of Nigeria (FMN), Envoy Hotels, Fountain Manufacturing Company Limited, Al-Hamsad Rice Mill Limited, Benchmark Constructions Limited, and Super Packaging Limited, Royal Foam Products Nigeria Limited, ENGIE Fenix Nigeria Limited, Technology Solutions Limited, and Echostone Development Nigeria Limited.
Per The International Centre for Investigative Reporting, Emeka Offor, Director of Strategic Communication Office of the NIPC, said that some of the firms whose applications were denied could have avoided the situation if they had followed the directives of the Industrial Development (Income Tax Relief) Act.
Speaking on Flutterwave, Offor said, ”In the case of Flutterwave, for instance, they applied within the third year of operations. Therefore, it is time-bound, according to the Industrial Development Act. Some other firms who had their applications for tax reliefs declined had a similar concern.”
Essentially, Flutterwave’s application was denied because it failed to apply in time. This brings all sorts of questions to my mind. How many Nigerian startups know about government incentives like this one? And if they know, do they apply? Which incentives apply to them?
You already know the drill. Watch out for a story later this week by yours truly.
Did you know that July 11th was World Population Day? Don’t be shy. You probably didn’t. You can shock me and send evidence that you knew. Believe me. I want to see this.
Why does this concern you though? Just hear me out. Currently, Nigeria’s population is estimated to be a whopping 211 million or more. According to the United Nations, from 2017 to 2050, it is expected that half of the world’s population growth will be concentrated in just nine countries, and Nigeria is one of them. Big numbers indeed.
But there’s more: According to the UN’s population projections for 2020, about 62% were below age 25. By contrast, less than 5% are aged 60 years and above. Essentially, the median age in Nigeria is about 18, although this is expected to increase to 21.4 in 2050
Still wondering why you should care? Nigeria’s young population has been cited as a major attraction for digital activities. Is this an opportunity or a problem? If it is either, can we trust these figures?