It's the weekend brief and we are here again to take you through one major story that happened this week. We also shared a roundup of some of the noteworthy stories that broke within the week, as well as opportunities for Nigerian graduates and tech founders.
Today's major story is about the taxes remitted to the Nigerian government by non-resident digital firms like Google, Netflix, and Meta. We have the gist inside.
Still on revenue made by African governments via taxes paid by digital companies, the Ghana Revenue Authority said it collected about $38.7 million in taxes from 110 registered e-commerce businesses in the country within six months.
🗞️ The weekend’s top story
Nigeria made over ₦2 trillion from taxes paid by Google and other Big Techs
The news: Within 15 months, the Nigerian government raked in over ₦2 trillion from taxes paid by Google, Facebook, and other Big Techs offering services in the country.
This figure is based on data findings from the National Bureau of Statistics, according to a research by the Punch Newspaper, a leading local media in the country. The aforementioned amount includes company income tax (CIT) and value-added tax (VAT)
Why it matters: At around 4.5% of GDP, Nigeria has one of the lowest tax rates in the world and has struggled to increase tax collection from the non-oil sector.
In 2021, the Nigerian government disclosed its plan to impose tax on non-resident digital firms operating within Nigeria. According to the then minister of finance, Zainab Ahmed, it is part of fiscal reforms to boost revenues and diversify the oil-dependent economy.
“If you visit Amazon, we are expecting Amazon to add a VAT charge to whatever transaction you are paying for. I am using Amazon as an example. We are going to be working with Amazon [and other non-resident digital firms] to be registered as a tax agent for the FIRS,” Ms Ahmed said in January 2022.
“We have been missing out on this stream of revenue,” she added. Following this announcement, Google and other Big Techs operating in the country introduced 7.5% VAT on ads placed by Nigerian users.
Zoom out: When this tax was introduced, several analysts complained that it would affect businesses, especially SMEs. “A direct implication of [the tax]...is the issue of multiple taxations. SMEs have been vocal about how the poor administration of taxation in the country is negatively affecting businesses, killing profits and forcing businesses into bankruptcy,” Dataphyte reported.
Earlier this month, Nigeria President, Bola Tinubu inaugurated the Presidential Committee on Fiscal Policy and Tax Reforms with the responsibility “to transform the tax system to support sustainable development and achieve a minimum of 18% Tax to GDP ratio within the next three years without stifling investment or economic growth”.
📰 What else happened this week?
- $33 million Series A: Lemfi (formerly Lemonade Finance) has raised $33 million Series A in a funding round led by Left Lane Capital. With this latest funding, the fintech startup intends to expand its product offering to Europe, the Middle East, and Asia. “We want to pursue more licenses to drive expansion and also build up the products,” Rian Cochran, LemFi's co-founder, told Bendada.com.
- Moniepoint cleared to acquire Kenyan fintech: The Competition Authority of Kenya has approved Moniepoint's request to acquire 100% shares in Kopo Kopo. If completed, this will mark the company's expansion into the East African country where its mobile money service is dominated by M-Pesa.
- NALA enters Nigeria’s cross-border payment market: Tanzanian fintech startup, NALA has launched payments from the UK and Europe to Nigeria. The East Africa-based startup will compete with Send by Flutterwave, LemFi, and other startups that already exist in the market.
- TikTok in Kenya: TikTok CEO, Shou Zi Chew, has announced that it will open an office in Kenya to oversee its operations on the continent. This comes after he met with the Kenyan President, William Ruto, following calls for the app to be banned.
- For Nigerian graduates: Pan-African edtech startup, uLesson is hiring graduates who have completed NYSC and have a minimum of a second-class in any degree. Apply by August 31, 2023.
- For African developers: MTN’s fintech, MoMo is hosting developers and innovators from 15 African countries, including Nigeria, Rwanda, South Africa, Ghana, and Cameroon, to participate in its online application programming interface hackathon. The top three winners will be rewarded with $5000, $3000, and $2000 respectively. Applications will close on Sept 03, 2023.
- For tech entrepreneurs: The SaaS Accelerator Programme: Africa 2023 is currently receiving applications for its accelerator program to enable early-stage startups in Africa to receive up to $70,000 in funding.
- Startup Accelerator: Applications have been opened for the Startup Wise Guys SaaS acceleration Africa program. Selected startups will receive up to €100,000 investment for equity with a follow-on possibility. The deadline to apply is September 7, 2023.
- Google AI First Accelerator: Google in Africa is inviting startups to apply for the AI First accelerator program, a 10-week equity-free accelerator program focused on Africa-centered solutions with AI and machine learning.
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