Blog - Afrikan Heroes

Ethiosat, Ethiopia First Dedicated TV Platform Debuts

October 4, 2019

As part of efforts aimed at telling its own story in a narrative that succinctly captures its rich cultural diversities, Ethiopia’s first dedicated television platform, Ethiosat has been launched. With this development, Ethiopian TV viewers who over the years have had to navigate through a plethora of multinational content in a variety of foreign languages in order to locate their favourite channels will now have something with a domestic appeal to rely on. Ethiosat will now host Ethiopia’s most popular local channels. Sources say that the launch of the Ethiosat was made possible through collaborations between the Association of Ethiopian Broadcasters (AEB), the Ethiopian Broadcasting Corporation (EBC), and the world’s leading satellite operator, SES. It is going to be hosted on SES’s NSS-12 satellite at 57 degrees East and delivers over 30 channels for Ethiopian audiences only, with 12 of those channels already in High Definition (HD) quality.

Ferdinand Kayser, CEO of SES Video — Ferdinand Kayser, CEO, SES Video

While speaking on the development, the Chairman of Association of Ethiopian Broadcasters (AEB) Amman Fissehazion, said that before now, the majority of Ethiopia’s content has been broadcast from an orbital location that also supplies content to Middle Eastern and North African countries, which explains the often confusing mix of content. Explaining that by migrating the most popular Ethiopian TV channels to a new location on SES’s satellite, “we’ve created an Ethiopian-only TV offering, that also delivers a variety of channels in HD, a first in Ethiopia.”

Fissehazion added that this is also a great time for the millions of homes in Ethiopia that currently do not receive TV services to bring TV sets into their home. “For Ethiopians looking to buy a new TV set and receive content from the dedicated TV neighbourhood, we recommend purchasing an HD TV whenever possible, as this will allow for a higher picture quality.” In addition, the launch of Ethiosat will offer Ethiopians a larger offering of both local and relevant international content in the future. Fissehazion said, “We believe consolidating all Ethiopian TV channels and broadcasting them from one orbital position will fuel growth in the Ethiopian media sector, as local networks will now be able to easily expand their audience reach. This will bring in healthy and growing advertising markets, which will result in a greater variety of content, and more localised content.”

“SES is supporting every aspect of this launch and providing on-the-ground services to ensure that Ethiosat is successful, which includes training local installers to correctly repoint the satellite dishes of each TV household to ensure a seamless migration. Ethiosat will be bringing a completely new television experience to Ethiopians. We intend for the reliability and quality of the new platform to bring in many new viewers, powering a bright future for the Ethiopian media sector,” said Ferdinand Kayser, CEO of SES Video.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Effective October 1, 2019 Ghanaians Will Now Pay 9% Communication Service Tax Every Time They Recharge

Beginning October 1, 2019, a 9% levy will be charged mobile phone users for communication services in Ghana.

The Communication Service Tax (CST) was previously set for 6%, however, it was raised to 9% during the presentation of the 2019 Mid-year Budget Review by the Finance Minister.

The Finance Minister, Ken Ofori-Atta, told Parliament that the levy was increased in a bid to build a viable technology ecosystem in Ghana.

MTN Ghana has also circulated the information below on social media.

The Ghana Chamber of Telecommunications explained the implementation of the new levy thus: For every GH¢1 of recharge purchased, a 9% CST fee will be charged leaving GH¢0.93 for the purchase of products and services.

“Dear customer, with the increase in Communications Service Tax — CST to 9%, effective 1st October 2019, CST of 9% will be applied to every recharge. Thank you,” Vodafone Ghana has informed its subscribers.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

CcHub’s Growth Capital Fund Is Raising $60m to Invest In Startups Across Africa

Nigeria’s Co-Creation Hub (CcHub) which recently acquired Kenya’s largest technology hub, iHub in a landmark deal has announced it is raising US$60 million for its Growth Capital investment arm to boost startups across Africa.

Here Is All You Need To Know

According to the Chief executive officer (CEO)of CcHub Bosun Tijani, the fund was currently in the process of raising US$60 million, which he hoped would be completed within the next 12 months.
CcHub’s Growth Capital is a social innovation fund that supports high potential, early-stage businesses building next generation infrastructure. Its pilot fund has made six investments, in Nigerian startups Taeillo, LifeBank, Riby, Edves, Delivery Science and DrugStoc.
This new, bigger Growth Capital fund will make investments in startups across the continent.
The hub has previously invested in about 25 startups directly through its angel fund and in-house incubation programme.
Startups in Rwanda and Kenya will be among the beneficiaries of the enlarged Growth Capital fund, as will those from other African countries. The fund also sees iHub indirectly fulfil a pledge made in December 2016, when it said it planned to raise a pan-African investment vehicle of its own.

About CcHub

CcHub has been expanding of late, launching a Rwandan hub in February and just last week announcing the acquisition of the Nairobi iHub. The deal brought two of Africa’s flagship tech hubs together to form a pan-African entity focused on accelerating the growth of tech innovation and entrepreneurship.
The iHub, launched in 2010 and home to internationally-recognised companies such as BRCK and Ushahidi, will retain its name and senior management structure, with Tijani becoming CEO across both locations.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

Nigeria’s Parliament Is Proposing 9% Communication Service Tax In Place of 7.5% VAT And Digital Tax.

The Nigerian government appears to be abandoning the previously proposed 7.5% VAT increase on all VATable goods and services. Parliament seems to be dancing to a different tune now. The highest legislature in the country, the Senate is proposing to tax Nigerians on all calls, sms or the cable stations they make, send or watch. The tax would be fixed at 9%.

“A 9% communication service tax shall be levied on such Electronic Communication Services like Voice Calls; SMS; MMS; Data usage both from Telecommunication Services Providers and Internet Service as well as Pay per View TV Stations.” Nigerian Senator Ali Ndume, Chairman of the Senate Committee on Army said.

Here Is All You Need To Know

The Bill entitled ‘Communication Tax Bill, 2019 (SB.12)’ sponsored by Chairman of the Senate Committee on Army, Senator Ali Ndume, passed the first reading at plenary on Wednesday.
The bill will now go for second reading before being referred to the appropriate committee for further legislative action including public hearing.
The proposed introduction of the tax is meant to replace the 2.2% increase in the Value Added Tax being planned by the Federal government as announced by Finance and National Planning Minister, Zainab Ahmad, recently.
The Communication Service Tax Bill provides that the rate of the tax is 9% of the charge for the use of the communication service.

A Look At Some Provisions of The Bill

The Bill provides among other things that:

“There shall be imposed, charged payable and collected a monthly Communication Service Tax to be levied on charges payable by a user of an Electronic Communication Service other than private Electronic Communication Services.”

It further provides that

“The tax shall be levied on Electronic Communication Services supplied by Service Providers.”

“For the purpose of this clause, the supply of any form of recharges shall be considered as a charge for usage of Electronic Communication Service.”

The target of the Bill

The targets Tax on the such Electronic Communication Services like Voice Calls; SMS; MMS; Data usage both from Telecommunication Services Providers and Internet Service as well as Pay per View TV Stations,

Once the bill is passed,

“The tax shall be paid together with the Electronic Communication Service charge payable to the service provider by the consumer of the service.”

“The tax is due and payable on any supply of Electronic Communication Service within the time period specified under sub-clause (5) of whether or not the person making the supply is permitted or authorized provide Electronic Communication Services.”

Authority In Charge Of Tax Collection

The Bill provides that:

“The Federal Inland Revenue Service (FIRS) established under section 1 of the Federal Inland Revenue Service (Establishment) Act, 2007 shall be responsible for collection and remittance of tax, any interest and penalty paid under this Bill.”

Consequently, “the FIRS shall pay the tax collected together with any interest and penalty into the Federation Account.”

Who Pays The Tax

Under the Bill, while the tax payers may be the end users of those services proposed to be tax, it is the duty of all service providers to file a tax return to account for the tax.

“The tax return shall be in a form prescribed by the FIRS and shall state the amount of tax payable for the period and any related matters that may be required.

The return and the tax due to the accounting period to which the tax return relates shall be submitted and paid to the FIRS not later than the last working day of the month immediately after the month to which the tax return and payment relates,” the Bill reads in part.

However, under the Bill:

“The FIRS may extend the period within which the tax return may be submitted and payment made on application in writing by a service provider, where good cause is shown by the applicant.
“The extension shall (accordingly) be communicated to the applicant in writing and shall state the circumstances under which the tax return shall be submitted for the particular period.”

Penalty For Non-Payment of The Tax

Under the Bill, any “service provider who without justification fails to submit to the FIRS the tax return by the date is liable to a pecuniary penalty of N50, 000.00 and a further penalty of N10, 000.00 for each day the return is not submitted.”

Sponsor of the bill, Senator Ndume while justifying the proposed tax said the imposition of tax on communication service is a better way of distributing wealth in such a way that would not affect the ordinary people.
According to him, increasing VAT would have very deadly effect on the economy as it could affect prices of goods and services and take them beyond the reach of the ordinary people.

The Implication of This Bill In Relation To The New Digital Tax Proposed By The FIRS And The Proposed 7.5% VAT

The draftsman of the Bill, by coming up with this Bill, obviously has Nigerian internet users in mind. Recall that Nigeria’s tax authority, the FIRS has hinted at the introduction of VAT for all online purchases in 2020. However, until Nigeria’s Value-Added Tax Act is further amended, there is nothing much the agency can do in terms of enforcing its proposed digital tax. The draftsman of the new Bill appears also to be a step smarter here. By renaming it communication sevice tax, instead of digital tax or VAT(amendment), the bill appears to have cast its tax nets wider. Payers of the tax would now not only include internet-savvy users who can buy or sell online but indeed all Nigerian phone users whether connected to the internet or not. The Global State of Digital in 2019 report discovered that there are 98.39 million internet users in Nigeria.

According to a recent report released by Nigeria’s leading ecommerce company, Jumia there were over 172 million mobile subscribers Nigeria in 2018, accounting for a penetration rate of 87% of the population. Compared to the figures on internet users, the latter is way too high and more realistic.

In practical terms, 9% of every ₦100 ($0.28) mobile phone recharge voucher in Nigeria is ₦9, meaning that mobile phone users would only be exposed to ₦91 airtime credit. The effect of multiplying ₦9 by over 172 million phone users could only be imagined.

For now, Nigerian government can afford to shelve the proposed highly controversial 7.5% VAT or the internet tax, originally pegged at 5%. The road to the new communication service tax appears to be the quickest compared to the highly vague and often technical alternative of VAT.

The Nigerian government may have finally caught all Nigerians in its tax net.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

Why Startups Fail to Generate Revenue Quickly — And What to Do Instead

October 3, 2019

The more revenue you have coming in, the better the chances you can raise (and not waste) investor funds. At startups, the difference between survival and running out of runway always comes down to taking our eyes off revenue.

We don’t want to do this, and we certainly don’t do it on purpose. But when we’re in the middle of the startup run, it’s pretty easy to fall into a trap of wasting time on feel-good tasks that feel like progress but don’t bring in any money.

No entrepreneur is immune to this trap, myself included. It’s part of the drive that makes the successful entrepreneurs successful.

I’ve founded, worked at, and advised a ton of startups, and each one tends to make the same mistakes where revenue is concerned. Whether a founder is launching their first company or their fifth, there’s one universal fact they can’t ignore: The path to success starts with survival.

The odds of survival depend on how fast you can generate revenue. The key to getting to revenue fast is to do nothing else but seek it out. Here are the easiest traps to fall into and how to sidestep them.

“Remember: Raising money is not the same as generating revenue.”

Mistake #1: Raising money before you’re ready

No one joins a startup to do something ordinary. But if you want to do something extraordinary, you’ll need a shitload of money to get it all done.

That doesn’t happen overnight. It happens in stages — sometimes long, mostly boring, often very scary stages. The problem is that we usually see, hear, and read about startups as overnight successes: Some kid genius has a great idea, drops out of college, works on it for a couple months, and then raises a few million dollars at a $1 billion valuation.

This is the trap: Like the lure of the lottery but with pitch decks and spreadsheets instead of Powerball tickets.

Before you try to raise money, you need to establish that what you want to build will generate revenue. And remember: Raising money is not the same as generating revenue.

Here’s what I usually advise to avoid this trap: You might estimate that you need a few million dollars to take a serious run at your dream company. Break that number into small pieces, and raise just enough to get to that first revenue-generating piece. As a guide, think about how much of your own funds you can scrape together to put into your company. Multiply that by 10 and go raise that.

But even before that, figure out how you’ll get to your first dollar of revenue, and then build your deck, financial model, and pitch on repeating that process over and over. Because this is what almost all successful entrepreneurs do anyway — they just take bigger strides. It’s also the reason investors love repeat entrepreneurs, because those entrepreneurs can say, “Remember that time I made all that money? I’m going to do it again but a little different.”

Unless you have already built a track record, you can’t say that to investors — and believe me, it’s not that simple even when you do have a couple exits under your belt. The more definitive your proof that revenue will be coming in, the better the chances you can raise (and not waste) investor funds.

Mistake #2: Building out the company before the product

From business plans to business cards, founders can spend a lot of time dreaming and building their company before the first dollar is made. Here are some of the things startups don’t need before going after revenue:

A website or social media presence.
A mission statement, brand statement, or logo.
A board of directors, advisory board, or management team.
A financial plan or P&L statement.
Office space, T-shirts, or stickers.

It’s not that a startup shouldn’t have these things. But how the initial revenue comes in will drastically alter not only whether those things are needed, but also what their true purpose is. A common example of this trap is building out an amazing web app and then realizing all the things paying customers actually need are three or four clicks deep.

I get that company and brand building are intended to establish legitimacy. The advice I usually give to avoid this trap goes like this: “You want to be an entrepreneur? Boom. You’re an entrepreneur. But no matter how cool your brand is or what your mission is or how far out your financial plan goes, you’re not really an entrepreneur until someone pays you money for something you’ve made.”

Everything will change when that happens, so make it happen early.

Mistake #3: Hiring or teaming up before the idea is fully formed

I can’t exaggerate the number of times a startup co-founder has come to me with the lack-of-revenue issue and it turns out there are a dozen people fighting over the strategy of a company that doesn’t have a single paying customer yet.

Look, running a startup can be hard to do alone. But for your own sanity, as well as for the integrity of your vision, it makes sense to get as far as you can down the revenue road on your own. You may not be a coder, but there are a number of SaaS tools that can get you to MVP. You may not be a financial expert, but most of us can wrangle a spreadsheet in the early days. You may not have sales magic, but if your idea is good enough, you’re probably the right person to get it into the hands of those first paying customers.

Yeah, it’s always easier building something with other people, except when it isn’t. There are priorities to juggle, schedules to wrangle, agreements to hammer out, decisions to get consensus on. Believe me, especially in the early days, it can be much less of a headache to go it alone.

Mistake #4: Mapping out the full infrastructure of the product before the first release

If we’re building a rocket, we first need to build something that manages to take off and land without exploding. How far it flies, its reusability, and what color it is don’t matter yet.

This is a trap that most repeat entrepreneurs get caught in, and I still fall for it. I know the true vision I want to build is not version one, but version five of my product, and the trap I fall into is trying to build all five versions at once. In other words, before I launch, I plan for every use case in every scenario with multiple features across multiple customer segments.

My advice to avoid this trap is something I still tell myself on a weekly basis: Narrow it down and get to a small feature set for a small segment with manual steps. Then collect money, figure out the priorities based on where the money comes from and what breaks, and move on to building the next feature.

Mistake #5: Focusing on innovation before execution

A startup without innovation is a small business. But innovation without execution is just a great way to earn a doctorate degree.

Obviously, the trap is worrying about innovation before building the product. Again, I raise my hand as having been guilty of this many times over, just not anymore. My advice is something I started doing about halfway through my career: If you want to innovate on a product, first you need to sell the product. If you have a new way to mow lawns, start by selling regular lawnmowers. If you can’t sell a lawnmower, you can’t sell the lawnmower of the future.

Mistake #6: Chasing a large number of customers before landing one

Almost everyone makes this mistake, especially during the early stages of their startup. The trap is trying to sell your minimum viable product to hundreds or thousands or even millions of customers at once, tailoring the marketing, the pitch, and the price to a target we think might be somewhere in the middle of the curve.

This seems like a good way to generate revenue quickly, but it’s really just a flawed way to try to generate a lot of revenue. It’s also crazy expensive. My advice is to start with one customer and sell the heck out of them. How that first customer gets sold, how they get onboarded, how they adopt the product, and when they stop using it will all be lessons to learn.

Learn from customer number one, then go to 10 customers. Learn from them, then do 20, and so on until you have definitive, repeatable, scalable revenue streams. Then go innovate, launch new versions, hire the team, build the company, and — if you’re still interested in growing — raise the money.

Joe Procopio is a a multi-exit, multi-failure entrepreneur. Building Spiffy, sold Automated Insights, sold ExitEvent, built Intrepid Media. M

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

North Africa And Middle East Focused BECO Capital Closes New $100m Startup Fund

Time for startups across North Africa to dust up their pitch decks and get ready to pitch to the Dubai-based early-stage venture capital (VC) firm BECO Capital’s BECO Fund II. BECO Capital has just announced that it has closed a capital raise for a $100-million Middle East and North Africa (MENA) focused tech startup fund, BECO Fund II.

Here Is All You Need To Know

According to BECO Capita, investors in this round of equity capital financing include the Dubai-based Rimco Investments, the International Financial Corporation (IFC), Bahrain’s Al Waha Venture Capital Fund of Funds, Warba Bank, Watar Partners and KAAF Investments.
The VC said in a statement today that BECO Fund II is “well in excess” of its initial $80-million target and explained that this was driven by the significantly improved technology investment landscape in the region.
BECO Capital primarily invests in early-stage tech startups with founding and engineering teams based in the MENA region.
The firm’s investment strategy is to invest in a diverse range of promising startups at the seed and Series-A stage and then provide follow-on capital to its best performing companies.

BECO Capital has previously invested in startups, notably in Egyptian startups Vezeeta, Swvl and MaxAB

BECO Fund I saw investments In 22 Startups, including four exits

The VC firm, which was founded in 2012, has to date made 22 investments. Its portfolio includes Egyptian startups Vezeeta, Swvl and MaxAB.

BECO Capital said its investments have collectively raised over $1-billion in follow-on capital and created over 9000 jobs in the region.

The firm added that its BECO Fund I has had four exits to date. These include Uber’s acquisition of Dubai-based taxi aggregator Careem in March and Cisco’s acquisition of collaboration platform Voicea in August.

BECO Capital co-founder and managing partner Dany Farha said success stories like Careem have produced dozens of highly skilled and experienced individuals who he said have built businesses to global standards and at immense scale.

“We believe these individuals will go on to have the equivalent impact of PayPal in the region, building the next wave of great companies that will serve regional and global markets,” said Farha.

He also pointed out that of late there have been “substantial leaps” in the technology landscape in MENA.

“Companies like SWVL, Wahed and Kitopi, which we have backed, are now exporting business model innovation from MENA to the rest of the world,” said Farha.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

Date For Nigerian Businesses To Secure More Loan From Banks Further Shifted To January, 2020.

For businesses desiring to raise funds from banks in Nigeria, beginning from January 1, 2020 may be the best time to do so as more banks may be rushing after them. Recall that the Central Bank of Nigeria recently made it mandatory for money deposit banks in Nigeria to maintain loan to deposit ratio of 60% effective September 30, 2019. A new review has been made on that by Nigeria’s central bank.

In its most recent directive to banks and other money deposit banks in Nigeria, the apex bank (CBN) has further raised the Loan to Deposit Ratio of banks from 60 to 65 percent.

Here Is All You Need To Know

The CBN gave the directive in a letter signed by the Director of Banking and Supervision, Bello Hassan, to all banks on “Regulatory measures to improve lending to the real sector of the Nigerian economy.”
The CBN indicated that the credit level in the sector grew by N829.4bn or 5.33 percent at the end of May from N15.56tn to N16.39tn as of September 26.

The circular read:

“The Central Bank of Nigeria has noted the appreciable growth in the level of the industry growth credit, which increased by N829.4bn or 5.33 per cent from N15.56tn at end of May 2019 to N16.39tn as at September 26, 2019 following its pronouncement on the above initiative.

“In order to sustain the momentum and in line with the provisions of our earlier letters, the minimum Loan to Deposit Ratio target for all Deposit Money Banks is hereby reviewed upwards from 60 per cent to 65 per cent. “Consequently, all DMBs are required to attain a minimum LDR of 65 per cent by December 31, 2019 and this ratio shall be subject to quarterly review. To encourage Small and Medium Enterprises, retail mortgage and consumer lending, these sectors shall be assigned a weight of 150 per cent in computing the LDR for this purpose,” it said. The CBN said “failure to meet the above minimum LDR by the specified date shall result in a levy of additional Cash Reserve Requirement equal to 50 per cent of the lending shortfall implied by the target LDR”

This is The First Time The Central Bank of Nigeria Is Weighing In On Minimum Lending Ratio

Previously, there Nigeria had no rule on minimum loan-to-deposit ratios. However, many Nigerian lenders have pegged ratios of about 40%.

However, Nigerian banks are so reluctant with lending to businesses and have resisted lending to businesses and consumers and instead piled their cash into naira bonds, which yield 14.3% on average, one of the highest rates globally.

Lenders worry that with inflation at more than 11%, extending more credit could endanger the financial system through an increase in non-performing loans, or NPLs.

That makes some analysts skeptical of whether the new measures will work.

“Forcing banks to lend under the current macro-economic situation will only result in a buildup in Non-performing loans,” analysts at Lagos-based CSL Research, including Gloria Fadipe, said in a note to clients.

“This could pose a risk to financial stability.”

CSL estimates it could result in an additional 1.4 trillion naira ($3.9 billion) of lending if the central bank gets its way.

Bad Loans

Non-performing loans as a percentage of total credit in the Nigerian banking industry declined to 11% in the first quarter from 14% a year ago, according to the National Bureau of Statistics.
Past experience with such measures isn’t encouraging. The central bank last year allowed banks to use their statutory cash reserves to fund manufacturers on the condition that such loans were at a maximum interest rate of 9% and a minimum maturity of seven years. The lenders didn’t take advantage of the policy due to credit risk and high returns on government bonds, according to Michael Famoroti, an economist and partner at Stears Business.

The Implication of This To Businesses

With this move, it is expected that Nigerian money deposit banks are going to loosen up money to Nigerians. For businesses desiring to raise funds, from January 1, 2020 may be the best time to laugh as more banks would be rushing after them. However, it remains whether Nigeria’s commercial banks would not fight back, by either setting up SPVs or lending to more stable corporations, in which case the vision of the CBN may have been defeated.

In any case, businesses should, once again, dust up their loan procurement files and get set for January 1, 2020.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

Why is Switzerland so wealthy: Lessons for Africa

October 2, 2019

By Frank Ekejija.

Many people think that Switzerland’s wealth is due to its status as a fiscal haven. But Panama, Cyprus, and the Republic of Liberia, are also fiscal havens.

Africa not only offers low taxes to international companies but also offers them capacity. However, countries in Africa remain in low income status while Switzerland remains one of the wealthiest countries in the world.

Not only this, all of Switzerland’s wealth comes without having natural resources and by not compromising on democracy and human rights. In fact Switzerland can boast one of the most egalitarian political systems in the world. Also, its welfare system is as good as that of Norway or Denmark.

In addition, its citizens not only have the right to vote every 4 years but every four months! The Swiss don’t just choose their leaders but they choose their policies with referendums happening several times a year. Switzerland has one of the world’s best political systems. Some argue that this is the reason as to why they are successful. In fact, the Swiss system is so good, that it could be a model for other countries. Here are some key aspects of it:

Decentralization

From a political standpoint, Switzerland is what is known as a confederation, and it is the only confederation that exists on the planet. It is made up of 26 states which are called cantons. The only thing that these cantons have in common are a constitution, foreign policy and a currency — aside from that they are totally different from one another. For instance, if you make a salary of 5,918USD and you live in the region of Jura, you are going to pay an income tax of 14 percent. But if you made the same amount of money and you live in the region of Zug, your income tax is only going to be 4%. If you have a shop in Geneva, you are going to have to close your shop at 6PM. But if you own a shop in Zurich you are free to keep your shop open for as many hours as you want.

The cantons can adjust their laws and pluralities as they see fit. What is more important is that they can compete with each other; this explains why in general the cantons have such low taxation.

Switzerland is so decentralized that they have four official languages; German, French, Italian and Romansh. When you visit Geneva which is in the French speaking part, you are not going to hear anyone speaking German. The billboards, road signs, and local newspapers are all in French. The same applies to Zurich with German or Lugano with Italian.

No head of government

Every country has a head of government who is responsible for certain things. Well, not Switzerland. Yet they are not living in anarchy. What they do is vote for a federal parliament which is similar to congress in the United States. This parliament then chooses seven (7) people who are going to become something like ministers or secretaries. All of these seven people have the same amount of power.

Each year one of them takes a turn becoming Switzerland’s international representative. Technically this person is the president of Switzerland but he or she does not have specific powers over the other 6 people. This is an important difference in the Swiss mentality because in other countries the president is a really powerful person but in Switzerland it is just a symbolic thing because the entire decision making is done by a team.

Flexible Democracy

The most important part of the Swiss political system is their referendums. Most of their laws are chosen by a popular vote, some at a federal level while others at a cantonal level. Proposal for a referendum requires only 50,000 signatures while one that’s going to amend the constitution requires 100,000 signatures. Other countries allow their population to have referendums too, for example Spain. But to seek a referendum in Spain requires 500,000 signatures, and they cannot do any referendums that can change the constitution.

Switzerland holds several referendums every single year. Every four months, the Swiss go to the polling stations and they will vote for any proposal that has been put forward in the previous four months. These polls usually have big turn outs of more than 60%.

Free market capitalism

It would be very easy for a populist, anti-capitalist leader to emerge in a system like this, right? Remarkably, Switzerland is to the free market what France is to the wine industry. Don’t forget that this country is geographically isolated by mountains and has practically no farming land. This means that it has had to sign free trade agreements with pretty much every country on earth.

It is undeniable that Switzerland is a commerce loving nation BUT no more so than the European Union. The Swiss actually subsidize their agriculture as much as the Europeans or the Americans do — yet they also participate in the same trade embargoes that exist with Iran and Russia. The only difference is that Switzerland has embraced free trade since 1874 while the rest of the world has been doing it for the last few decades.

Neutrality in global affairs

Switzerland will not participate in any armed conflicts, making it one of the few neutral countries in the world. They even stayed out in the Second World War despite most of the population being against Hitler. While the rest of the Europe ripped itself apart, killing millions and spending billions in reconstruction, Switzerland didn’t and they used all their savings to improve their system.

Switzerland does have a military, but this army is entirely defensive and will only be used to expell external attacks. It will never be used to fight in anything outside of self-defense. This is where we see one of the few drawbacks of the Swiss system — the military or should we say…. their militia.

The drawback, of course, is not that they won’t attack anyone. It is that every Swiss citizen must spend one month, of every single year, from age 18 to age 30, serving in the military. Even after this service period they must keep a gun at home. Plenty of people argue that this system is good with pundits saying it creates more entrepreneurs and less economic disparity. It is during this time in the military that the rich and poor are mixing together. Several startups and companies have been created from relationships that were formed while people were serving in the military.

The big question is… What about the freedom to choose? Should government force you to work in a place that you may not want to work?

Ease of doing business

This is another area where Switzerland shines. Despite the differences from one Canton to another, Switzerland has very low taxation overall. The laws to start a company are straight forward. Anyone can see those laws by just going online. Switzerland is one of the most transparent countries in the world which has encouraged a lot of international companies to establish their fiscal residence in Switzerland. But it’s also very easy for Swiss people, living in Switzerland, to set up their own company

Banks do make up a large part of the Swiss economy but it probably not as much as people think. There are many other industries in Switzerland including Logitech, Nestle, and Norvatis. They are among the most popular companies in the world.

All of this is being done in a country with a population that is smaller than New York city’s. Switzerland perfectly embodies the argument that it is not the country’s natural resources or luck to determine a country’s success but rather its systems of government and institutions that do this.

The Swiss have a lot to teach Africa in this regard.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Dangote Donates $20 Million to Tackle Negative Perception About Africa

Africa’s richest man, Aliko Dangote has made a donation of $20m to The African Center focused on Accelerating Change in Global Narratives about Africa in Policy, Business and Culture. This donation came even as the Bill and Melinda Gates Foundation announced additional $5 million grant at the Future Africa Forum. Aliko Dangote said that the donation became necessary because of the urgent need to tackle and correct some of the negative perceptions of Africa by the outside world. The donation was made to The Africa Center in New York, United States of America towards reversing the trend.

President of the Center and a Group Executive Director of Dangote Industries, Halima Aliko Dangote

The Africa Center is a leading non-profit institution focused on challenging historical stereotype around the African continent and a hub for creating an intersection of African policy, business, and culture and recreating narratives about Africa’s economic and cultural significance today and into the future.

Sharing in Dangote’s vision, the Bill & Melinda Gates Foundation noted that the new $5 million grant at the Future Africa Forum will be directed to the Center’s capital campaign and for the development of its policy initiatives. Other foundations, corporations, and individuals that provided leadership support for the capital campaign, including the Mo Ibrahim Family, and the New York City Department of Cultural Affairs, were also recognised at yesterday’s event, which marked the conclusion of the second phase of construction.

In recognition of his love and unusual passion for the continent, Dangote was honoured as the main hall of The Africa Center, was named “The Africa Center at Aliko Dangote Hall”. Speakers at the event which was part of The Future Africa Forum, praised the efforts of Dangote describing his various philanthropic interventions in Africa and beyond as very significant. The Forum was this year’s signature policy and business dialogue event of The Africa Center in partnership with the Aliko Dangote Foundation. Dangote, Africa’s leading entrepreneur had announced that the donation was towards the completion of the second phase of The Africa Center’s physical space, which he described as transformative, thus enabling the Center to accelerate its capital campaign, to further activate its public spaces and programming, and support ongoing operations.

Speaking on the gesture, Dangote said the donation through the Aliko Dangote Foundation is focused on supporting The Africa Center’s work in transforming global understanding of the continent and promoting partnership and collaboration between Africa and the rest of the world. He added that the Africa Center is showcasing Africa in a contemporary, multifaceted manner as a center of innovation, growth, and limitless potential, which makes this project extremely important and worthy of support through his foundation. “There is an opportunity to establish new narratives about Africa today, with its unrivaled mix of people, ideas, and resources, which are both its greatest strength and the basis for its tremendous, untapped promise. The connections The Africa Center will make between Africa, the United States, and the rest of the world, including members of the Diaspora, are needed more now than ever before.”

In her remark, President of the Center and a Group Executive Director of Dangote Industries, Halima Aliko Dangote, who is also leading the Center’s successful capital campaign, described The Africa Center as an important gateway to understanding contemporary and future Africa and Africans. Expressing appreciation towards the landmark gesture, the Chief Executive Officer of The Africa Center, Dr. Uzodinma Iweala said the Center was proud of the humongous support of the Aliko Dangote Foundation and the Dangote Family, whose vision for the future of the African continent is perfectly aligned with The Africa Center’s mission to advance African policy, business, and culture of the 21st century.

He stated “We are profoundly grateful to the Aliko Dangote Foundation, the Mo Ibrahim family, the Bill & Melinda Gates Foundation, and all those whose generosity is enabling us to realise our plans to create a vibrant and essential center of ideas and action focused on the 54 nations and people of Africa and its Diaspora. According to him, since launching its public programming in January 2019, The Africa Center has attracted and engaged thousands of visitors in a series of inaugural performances, installations, talks, readings, book signings, and film screenings.

“The Capital Campaign has received remarkable leadership support from institutions and individuals that recognise the role it has to play in building bridges between cultures in a globalised world village. That support has enabled us to complete the first two public spaces and activate them with programming that has already proven to be compelling and popular among our local community. “We are building on this momentum by reaching out to additional business leaders and global philanthropists and asking them to invest in The Africa Center’s mission.” The Cultural Affairs Commissioner, Tom Finkelpearl said “Congratulations to The Africa Center on the announcement of this extraordinary gift from the Aliko Dangote Foundation and the conclusion of another phase of construction, marking the latest milestones for this important addition to NYC’s cultural landscape.”

The Africa Center is transforming the world’s understanding of Africa, its Diaspora and the role of people of African descent in the world; serving as the hub for the exchange of ideas around culture, business, and policy related to the continent, and in the spirit of collaboration and engagement with individuals and institutions who share the Center’s values. The Africa Center inspires enthusiasm, and advances thought and action around Africa’s global influence and impact on the inhabitants’ collective futures. This mission is guided by a leadership team that includes Board President Halima Aliko Dangote, Board Co-Chairs Hadeel Ibrahim and Chelsea Clinton, and CEO Dr. Uzodinma Iweala.

The Africa Center is a platform for sharing new ideas and strategies that challenge the structures and systems that support one-dimensional narratives of the continent, and that inform policies and ultimately affect the lives of African people, those of African descent, and the future of Africa. The event included a fireside chat with Mr. Dangote, Mr. Gates, and Mo Ibrahim, founder of Mobile Systems International (MSI), Celtel International, Founding Chairman of Satya Capital Limited, and Chair of the Mo Ibrahim Foundation, about the future of African business.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Nestlé Helps African Coffee Farmers Imbibe Sustainable Agriculture

As the negative effects of climate change hits closer home, the need for farmers to engage in responsible farming becomes more imperative, to this end Nestlé has launched a project aimed at helping Coffee growers across Africa, and most especially in West Africa to imbibe more responsible farming processes that promote sustainability and also protect the soil from depletion and erosion. This project according to company sources is aimed at impacting the livelihoods of thousands of farmers in the region to help them make more for themselves and their families and also their communities.

Head of Agricultural Services, Nestlé Central and West Africa, Fatih Ermis

In recognition of its efforts at preserving the environment and promoting sustainability, the NESCAFÉ factory in Cote d’Ivoire has for the third consecutive time this year, won the Eco-Citizen prize at the National Excellence Awards in the country. The factory was equally recognized for releasing only purified water into the environment and for none of its waste ending up in landfills. With our communities at heart, our coffee business upholds Nestlé’s worldwide commitment to protecting and safeguarding the environment and resources.

NESCAFÉ business which forms part of Nestlé’s NESCAFÉ Global Plan is committed to sourcing coffee beans for Nestlé responsibly, through sustainability programs. Under the Plan, Nestlé teaches coffee farmers how to grow coffee in a way that protects the environment. Nestlé has also reached over 13,000 farmers across the region, through Agripreneurship programs.

In addition to the earnings farmers make for their produce, they receive premium payments from Nestlé. Speaking on this initiative, Head of Agricultural Services, Nestlé Central and West Africa, Fatih Ermis highlights how impactful this is to farmers, “This premium allows farmers to have better livelihoods by earning additional income. Last year, Nestlé paid more than $865,000 in premiums to coffee farmers across the region. We are continuing in this vein this year, with a little over $841,000 paid to our coffee farmers, from January 2019 to date.” The company also said that because of the business relationship it has developed with the farmers, the NESCAFÉ consumed in Central and West Africa region is indigenous to the region as it sources over 15,000MT of coffee from Cote d’Ivoire.

Moreso, the company has launched a project that is committed to creating jobs and enabling entrepreneurship. Under the initiative named “My Own Business” (MyOwBu), Nestlé teaches young people how to manage their own micro-enterprise. The company also gives them training on sales, management, hygiene, safety and quality standards. This has a domino effect because these youth, now equipped with skills are encouraged to and often employ up to 10 other street vendors.

The Business Executive Officer of Nestlé Professional, an out-of-home service of Nestlé said that over 4,000 youth across the region have benefitted from this entrepreneurial opportunity. With this financial empowerment, they are on the right path to financial independence. “My proudest moments on the job are when I see how the lives of these vendors are transformed for the better” she said.

Critics however scoff at the above claims not because they are false but because the company is giving back just a very infinitesimal part of its profits from same farmers back in the name of community social responsibility. They opine that the best thing for Africa is to develop processing capabilities within the continent so that Africans can make real gain from their sweats instead of continuing enriching European transnationals who give crumbs in the name of ploughing back profits.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.