Egypt is about to further increase momentum for its booming startup ecosystem. The country’s stock exchange, the Egyptian Exchange (EGX), has proposed and submitted amendments to the listing rules on the Egyptian bourse to the Financial Regulatory Authority (FRA). The rules proposed new regulations for special purpose acquisition companies (SPACs), which are companies formed only to raise funds for the purpose of purchasing an operational firm.
Dr. Mohamed Farid, Executive Chairman of EGX’
“This step came after Dr. Mohamed Farid, Executive Chairman of EGX’s meeting with the Prime Minister Dr. Mostafa Madbouly, and number of entrepreneurs led by Swvl Company, Dr. Rania Al-Mashat, Minister of International Cooperation, Counselor Mohamed Abdel Wahab, CEO of the General Authority for Investment (GAFI)…The proposed amendments come in response to the changes in the business models of SMEs…it could open new growth opportunities for them. It would allow them to expand through the Egyptian capital market, increase the volume of their businesses, and contribute more to the growth of the Egyptian economy,” a statement from the exchange stated.
According to the proposed guidelines, the acquisition proceeds will be deposited in fixed-income savings pools until the transaction is completed. The SPAC will be dissolved and the funds will be returned to shareholders if an acquisition transaction is not completed within two years.
If adopted, the new rules will open up new chances for startups with tremendous growth potential to expand through the capital market, raise their business volume, and contribute more to Egypt’s economic growth.
Swvl, an Egyptian ride-sharing startup based in Dubai, recently announced that it was going public through a merger with a special purpose acquisition company (SPAC). According to The Wall Street Journal, the mobility company is merging with Queen’s Gambit Growth Capital, a SPAC founded by a group of female CEOs early this year (which claims to be the first women-led SPAC). Victoria Grace, the company’s CEO, is the founder of Colle Capital, a venture capital firm based in New York.
Swvl will be the second Middle Eastern business to go public using the SPAC route. Anghami, an Abu Dhabi-based music streaming platform, stated earlier this year that it intended to go public by merging with Vistas Media Acquisition Company, a SPAC.
A SPAC, sometimes known as a blank-cheque company, is founded to obtain funds through an IPO in order to purchase and publicize an existing company. It will be the first Egyptian-born technology company to list on NASDAQ (or outside Egypt), as well as the second Egyptian technology company overall (Fawry being the first one).
According to the report, Queen’s Gambit Growth Capital raised $300 million when it was founded in January and another $45 million afterwards through underwriters’ overallotment option. Swvl’s purchase will also involve a $100 million PIPE (private investment in a public firm) from a consortium of investors including Agility, Luxor Capital, and Zain Group. Swvl will now have $445 million in additional capital to invest in its growth and expansion.
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
An action plan by the government of Algeria, which will be debated in Parliament next Monday, aims to promote the knowledge economy, research and development (R&D), and innovation while also speeding up the digital transformation and startup development.
“The government is committed to developing a knowledge economy framework law, establishing a national technology transfer plan, and establishing mechanisms for funding prototyping and research and development for the benefit of startups,” a statement from the Algerian government reads.
Yacine Oualid is Algerian Delegate Minister For Startups. Image credits: Government of Algeria
Tax Incentives For Innovative Projects
The plan calls for the creation of tax incentives to encourage companies to invest in research and development, as well as the creation of a regulatory framework governing expenditure that can be classified as R&D expenditure in a company and incentives to encourage companies to conduct research theses.
In addition, the plan calls for the creation of a mechanism to support international patent filing, the encouragement of highly qualified labor recruitment in companies, the creation of the status of researcher in a startup company, and the digitization of patent filing procedures to strengthen the knowledge-based economy.
Free Zones For Startups
The plans also entails the establishment of technological free zones and prototype workshops (makerspaces) for the benefit of innovative project leaders, as well as the utilization of national service providers in the digital and new technology sectors.
In addition, the government intends to promote the startup ecosystem and the digital economy through its action plan by establishing a regulatory framework for open innovation and electronic payment intermediaries as well as the deployment of Crowdfunding application texts (crowdfunding).
It also calls for a revision of the e-commerce legislative framework to make it more flexible for startups, as well as the simplification of business formation procedures for startups and other first-time investors, the creation of statutes for freelancers and self-entrepreneurs, and a stronger role for startups as a vector of financial inclusion through e-payments.
A National Network Of ‘Business Angels’
In addition, the action plan calls for the establishment of a national network of “Business Angels,” regional representations of the “Algerian Startup Fund,” the launch of a startup acceleration program through the public accelerator “Algeria Venture,” the establishment of incubators and accelerators in all of the country’s wilayas (provinces), and the establishment of a system of evaluation and monitoring.
The plan also involves the establishment of a Finlab for the benefit of startups active in the financial technologies sector (fintechs), the promotion of venture capital, which plays an important role in the financing of innovation, and the simplification of administrative procedures for the establishment of investment funds and mutual funds in the innovation sector.
In addition, the action plan calls for the implementation of “Business Angel” incentive programs and tax exemptions for amounts invested in startups, as well as the facilitation of access to e-payment for the benefit of startups, the use of Wilaya investment funds for start-up financing, and the strengthening of collaboration with investment funds likely to invest in startups in Algeria as well as the encouragement of foreign startups to integrate into the Algerian ecosystem.
A Youthful Minister Of Startups Has Been Instrumental In Influencing Policies Affecting Startups In Algeria
Algeria understands that the country’s startup ecosystem is largely driven by young people and has responded to this trend by appointing a youthful minister in charge of startups.
Aged only 27, Yacine Oualid became Algeria’s new Minister of Startups — a newly created ministry under the newly elected President Abdelmadjid Tebboune’s administration — on January 02, 2020.
He studied at the Faculty of Medicine of the University of Sidi Bel Abbès.
Prior to becoming Algeria’s Minister of Startups, in June 2016 Yacine Oualid created SSH, a company specializing in cloud solutions for businesses, which would later become the first private web host in Algeria. In September 2019, he and his partner founded Smart Ways3, a startup in the field of logistics and geolocation. In December of the same year, he founded Bright Solutions, a leading IT company providing IT solutions and services, headquartered in England.
“If I have to sum it up, I would say that the New World Economy is taking shape, and that Algeria wishes, and will, become a major player. My goal, with all the players in the sector, is to participate in this transformation of the largest country in Africa,” Yacine said upon assumption of office.
“In a more practical way, my role is first of all to set up a legal framework which is favorable to startups. Once set up, this legal framework will facilitate the creation of startups and their financing. The goal is to see materialise in a few months’ time, Algerian champions, who will be able to offer their services all over the world. Algeria is determined to become an African pillar of innovation and we want to offer our entrepreneurs the best framework for entrepreneurship and innovation,” he added.
Apart from influencing the enactment of startup-friendly policies, Oualid has been instrumental in activism against ‘bad regulations’ against startups in the North African country. For instance, his intervention ensured that Algeria’s first taxi service solely for women, Moov Services, re-launched its operations just three months after its activities were banned in Blida, Algeria’s northwestern province.
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
Mauritius has always been at the forefront of promoting crypto-backed assets in Africa, but this has not been extended to ‘Non-Fungible Token’ (NFT) platforms. In a latest statement by the country’s Financial Services Commission (FSC), the integrated regulator for the non-bank financial services sector of Mauritius, non-fungible tokens are currently not regulated.
Financial Services Commission (the “FSC”)
“It has been recently reported in the local press article that a foreign entity has partnered with other domestic companies to operate a ‘Non-Fungible Token’ Platform in Mauritius. A non-fungible token typically refers to a unique virtual token which is created for use on distributed ledgers (such as blockchain), and cannot be divided or interchanged with any other type of virtual token.
The public is hereby informed that non-fungible tokens are currently not regulated by the Financial Services Commission (the “FSC”). The FSC will communicate further should there be any new regulatory frameworks to inter alia address the offer of nonfungible tokens in Mauritius,” the commission stated.
What Are Non-fungible Tokens And How Do They Work?
Essentially, this is the most recent craze in the cryptocurrency world, and it has exploded in recent months. If something is fungible, it can be exchanged for another good or asset; if something is non-fungible, it cannot. Plane tickets are examples of non-fungible assets in the real world. Although two plane tickets may appear identical, they will each have a different destination, seat number, and airline class, preventing them from being swapped like for like.
Christie’s held the first auction of a piece of art that does not exist in physical form in March.
It was created by digital artist Beeple and sold for $69.3 million (£50.3 million). Earlier this week, Sotheby’s sold a collection of NFTs by digital artist Pak for a total of $16.8 million (£12.2 million), including an image of a single pixel for $1.36 million (£987,000).
“From the creative industry perspective, we believe this is a great opportunity for artists and IPR owners to monetise their existing assets via a new revenue stream. The myth of the starving artist needs to be rewritten. Every creator, artist, influencer has the right to showcase their IP with dignity and on a credible platform with legitimate buyers,” Vishakha Singh, Adviser, NFT Marketplace said.
Security Token Trading Systems Are Eligible To Be Issued Licenses In Mauritius
Under Section 7.1 of Mauritius recent regulation, any person wishing to establish, maintain or operate a system for the trading of Security Tokens in Mauritius shall apply for a Trading Securities System licence. The implication of this is that all trading in security tokens in Mauritius would require a license, going forward.
However, such token trading companies must at all times, be required to have and maintain a minimum unimpaired capital of 35 million rupees or an equivalent amount ($880,000).That is, the trading system must all times have $880,000 in its accounts to be considered credit worthy. Under the new regulation, the capital must be held in real currency (fiat) as against cryptocurrencies in a licensed Mauritian bank.
The token trading system must also at all times be managed and controlled from Mauritius. The implication of this is that the new trading system would not be available to investors wishing to register their securities token trading companies in Mauritius, while having their central administration and management abroad. Therefore, such companies would be regarded as resident in Mauritius for purposes of taxation; and it should be noted that in Mauritius, they are subject to corporate tax at 15%. Tax advantages for such companies also include that there is no capital gains tax and also no withholding tax on dividends, interest, and royalties paid or estate duties on their earnings.
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
The Reserve Bank of Australia has announced a collaboration with the Central Banks of Malaysia, Singapore, and South Africa. Project Dunbar is a collaboration aimed at evaluating the usage of central bank digital currency (CBDC) for international settlements.
Michele Bullock, Assistant Governor (Financial System), Reserve Bank of Australia
“Enhancing cross-border payments has become a priority for the international regulatory community and something that we are very focused on in our domestic policy work,” said Michele Bullock, Assistant Governor (Financial System), Reserve Bank of Australia.
Here Is What You Need To Know
The Bank for International Settlements Innovation Hub, the Reserve Bank of Australia, Bank Negara Malaysia, the Singapore Monetary Authority, and the South African Reserve Bank will test the cross-border payments system utilizing several central bank digital currencies (CBDC).
The CBDC will be tested to see if it can make transaction settlements cheaper and easier. The project is being led by the Singapore Centre of the BIS Innovation Hub. Financial institutions will be able to transact directly in digital currencies issued by participating central banks using these multi-CBDC platforms. As a result, there will be no need for intermediaries, and transaction times and costs will be reduced.
The project will collaborate with a number of partners to develop technological prototypes on a variety of distributed ledger systems. It will also investigate various governance and operational models that would allow central banks to share CBDC infrastructures. This access allows it to benefit from cross-jurisdictional collaboration between public and private sector expertise.
The work of Project Dunbar will look into the worldwide dimension of CBDC design. It will also complement the G20 roadmap’s attempts to improve cross-border payments. Its findings, which are likely to be released in early 2022, will help to shape future platforms for global and regional settlements. The Singapore FinTech Festival in November 2021 will feature technical prototypes of the shared platforms built in conjunction with various technology partners.
Centre Andrew McCormack, the head of the BIS Innovation Hub Singapore Centre, also made a statement. He believes that this initiative will “break new ground in this next stage of CBDC testing,” according to him.
South Africa digital currency South Africa digital currency
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
According to the circular relating to the preparation of the 2022 finance law, signed on August 30 by President Paul Biya, Cameroon is preparing fiscal measures targeted at discouraging cash transactions. One of the steps to intensify the fight against tax evasion and fraud, according to the head of state’s circular, is “the implementation of fiscal measures targeted at simplifying cash transactions.” The circular urges that financial administrations continue to collaborate in this regard.
Cameroonian President Paul Biya
With the latest move, Cameroon appears to be following Gabon’s lead. Cash withdrawals are subject to a tax in Gabon. This tax, which has a rate of 2%, is calculated on the amount of money withdrawn minus taxes. It applies to any natural or legal persons who make one or more cash withdrawals in a month for a total value of more than or equal to five million FCFA, regardless of withdrawal method or frequency. Simply expressed, any cash withdrawal of 5 million FCFA will be subject to a 2% tax. Alternatively, a 100,000 FCFA tax could be imposed during the withdrawal.
The Gabonese Ministry of Sector claims that “Physical cash transactions are difficult to regulate and promote the informal economy. (…) The goal of this fee is to hasten the shift in consumers’ behaviors by incentivizing them to prefer digital or traceable transactions (through check, bank transfer, payment cards, or even mobile money).”
However, it should be emphasized that if such a tax were to be implemented in Cameroon, it would run afoul of the fact that the informal sector accounts for 90% of the country’s GDP, according to the Groupement inter patronal du Cameroun. Furthermore, the banking rate is only 12%. This means that the vast majority of operators do not conduct their business through banks or financial institutions. According to the projections in the National Development Strategy 2020–2030, the government hopes to raise this banking rate to 80% by 2030.
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
The Treasury in Kenya has published new regulations that give the Capital Markets Authority (CMA) powers to oversee all investment funds formally solicited from the public in a bid to rein in fraudulent and unregulated schemes where unsuspecting Kenyans lose billions of shillings.
National Treasury Cabinet Secretary Ukur Yatani
No one would be able to collect cash from the public or conduct investments without authorisation and periodic checks by the CMA, according to new laws announced by Treasury Cabinet Secretary Ukur Yatani.
For private entities, the CMA will regulate both collective investment plans and alternative investment funds.
People that raise money privately currently just need to notify the CMA that they have set up a private placement.
According to the regulator, this gray area resulted in the emergence of a slew of private businesses, some of which went on to defraud Kenyans of billions of shillings.
All private funds must now have a minimum capital of Sh10 million and can only have 20 investors at any given time.
Alternative funds, according to Treasury laws, are any money raised privately from two or more investors in Kenya or abroad for the purpose of investing it according to a stated investment philosophy approved by the authorities for the benefit of its investors.
Only skilled investors with more than Sh1 million would be permitted to invest in alternative funds with a higher risk appetite, hence widening the asset classes available to investors in the country.
It also released a second set of laws for collective investment funds (CIS), which allow small depositors with as little as Sh5,000 to pool funds for investment under the supervision of a licensed fund manager, custodian, and trustee.
Unless otherwise controlled, such as pension plans or those specifically indicated under the Act, such as family trusts, the CIS laws put all pooled funds under its supervision.
The decision comes as Parliament invited the CMA to explain why Kenyans are increasingly losing money to investment funds under its supervision.
The regulator informed Parliament that it had investigated 500 unregulated items, including online forex frauds, illegally pooled funds, cryptocurrency, real estate, and ponzi schemes, and had issued refunds and criminal penalties in response.
It also initiated investigations into Cytonn Investment’s struggling private funds after receiving complaints from investors who claimed they lost money in the company, despite the fact that the two funds are not regulated by it.
Cytonn manages both regulated and unregistered funds, all of which have essentially identical names.
Cytonn High Yield Fund (CHYF) is a regulated fund with a Sh960.2 million portfolio. Its two unlicensed funds, Cytonn High Yield Solutions (CHYS) and Cytonn Project Notes (CPN), contain Sh13.5 billion in real estate investments. Some investors who sued the corporation for contract violations cited concerns about the two funds’ activities.
To avoid confusion, the CMA wants Cytonn to modify the titles of its goods. The two parties are locked in a legal battle over the issue.
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
The government of Tanzania has reduced the amount of the Mobile Money Tax, which was introduced in July. It decreased it by 30%. In other words, the tax, which formerly ranged from 10 to 10,000 Tanzanian shillings (0.0043 to 4.31 USD) depending on the size of the transaction, now ranges from 7 to 7,000 shillings. In addition to the tax cut, the government was able to persuade telecom carriers to lower their mobile rates by 10%.
President Samia Suluth Hassan
“The government believes that the decision would bring relief to the population and will allow it to raise cash to implement various development initiatives,” the Ministry of Finance and Planning said in a statement. Funds that will be utilized to fund, among other things, school development, social housing, and health-care investments.
The government’s decision to lower the government mobile money tax comes after the public outcry it sparked after it went into effect on July 15th. The people who objected to the high price claimed that it was incompatible with the country’s financial inclusion program. Faced with this strain, President Samia Suluth Hassan instructed the Minister of Finance and Planning, Mwigulu Nchemba, and his colleagues in information technology, Faustine Ndugulile, to investigate a reduction in these expenditures a few days later.
The state initially planned to collect 5 trillion shillings ($ 2.1 billion) from the tax over a five-year period. It planned to raise revenue of 1, 254 trillion Shillings for the exercise 2021/22 in order to partially fund the 36.68 trillion trillion budget. These projections will almost definitely be revised down.
mobile money tax Tanzania mobile money tax Tanzania
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
Barring any further changes and amendments to a recently leaked bill on technology companies in Nigeria, Nigeria’s National Information Technology Development Agency (NITDA), a regulator in charge of regulating, among other things, transfer of technology and data protection, is set to go ahead to initiate processes to enact the bill into law. According to a statement from the agency, the need to repeal the existing Act became necessary with the launch of the National Digital Economy Policy and Strategy (NDEPS), which effectively replaced the Nigerian National IT Policy, 2000.
“NITDA, as the apex regulator of the IT sector, will leverage the proposed NITDAs Bill to extensively engage with crucial IT stakeholders and protect its stakeholders’ interests in the best possible way. However, this can only be achieved through more excellent connectivity and collaboration by registration and licensing processes. Considering the importance of the NITDA proposed Bill. The Bill will be presented to the National Assembly as an Executive Bill,” a statement from the agency reads in part.
According to the agency, the enactment of the bill into law will follow the process listed below:
The Agency initiates the process by sending the initial draft to its supervisory Ministry, the Federal Ministry of Communications and Digital Economy, for policy reviews.
The Federal Ministry of Communications and Digital Economy perform the policy review;
Upon completion of the policy review, the Federal Ministry of Communications and Digital Economy conveys the initial draft Bill to the Office of the Attorney-General of the Federation and Minister of Justice Office for legal drafting and statutory review;
The Attorney-General of the Federation and Minister of Justice Office will revert with their legal opinion to the Federal Ministry of Communications and Digital Economy;
NITDA will engage all IT stakeholders in line with the Rulemaking Process of the Agency;
NITDA will send the updated draft Bill to its supervisory Ministry, the Federal Ministry of Communications and Digital Economy;
The Bill will be presented to the Federal Executive Council (FEC) and upon approval, the President will transmit the Bill to the National Assembly for the enactment process, which will include public hearings and more stakeholder engagements; and
Upon passage by the National Assembly, it will be transmitted to the President for assent.
“As an accountable Agency, NITDA assures Information Technology sector stakeholders as well as the general public that the process will be transparent and subjected to comprehensive stakeholder engagements. We, therefore, count on the support of Nigerians towards the successful passage of the Bill and eventual signing into law. This will undoubtedly help towards ensuring that Nigeria harnesses the potentials of the ever-expanding digital economy,” NITDA states in the statement.
Until now, Nigeria’s NITDA is one of the country most powerful data protection regulators. Image credits: NITDA
Why Is The Proposed Bill Considered Controversial?
If The Bill Becomes Law, All Technology Businesses In Nigeria Must Now Be Licensed And Fined By NITDA
This is the first time this has ever happened in the West African country. Section 20 of the Bill authorises NITDA to issue licenses to technology businesses, as well as provide for licensing and authorisation criteria including renewal, suspension, and revocation, to promote free market operation and competition, among others.
The direct implication of this is that any such licenses granted by NITDA may now be suspended at will, or simply revoked. The Bill did not state in specific details, the procedure for seeking redress from any aggrieved persons whose licenses have suffered such suspension or revocation.
According to the section, the classes of licenses that may be procured under the bill, if it becomes law, are a) product license b) service provider license c) platform provider license. It however did not define the above classifications in specifics, neither did it state the respective licensing fees. In any case, this means that virtually no type of technology business now escapes the regulatory eyes of NITDA, including small-scale technology businesses located in the remotest parts of the country.
The consequence of non-compliance with the rules is that the defaulting business commits an offence, which directly means criminal conviction of the offending parties. Below is the table of these offences and their accompanying punishments.
S/N
OFFENCE
DESCRIPTION
PUNISHMENTS
1
Non-payment of assessed levy
Failure to pay within two months after receiving an official notice from NITDA
The company pays a fine of 0.5 per cent of the assessed sum every day of the default.
2
Failure to comply with the law
That is, failure to obtain a license, or comply with the provisions of the law establishing NITDA, or any regulations made by NITDA, etc.
Individual: fine of NGN3, 000, 000 or jail for not less than 1 year. Company: corporate fine of NGN30, 000, 000 or jail for company officers for not less than 2 years.
3
Denial of entry into the property of the licensee.
Entries include entry into premises or access to records or data.
Individual: fine of NGN3, 000, 000 or jail for not less than 1 year. Company: corporate fine of NGN30, 000,000, plus every director and officer to pay a fine of NGN3, 000, 000 or jail for not less than 2 years or both.
3
No specific offence and penalty stated in the law.
That is, a person commits an offence under the law where no specific penalty is provided.
Individual: fine of NGN30, 000, 000, plus administrative sanctions, or jail for not less than 2 years or both. Company: corporate fine of NGN30, 000, 000.
4
First Offender
Where no specific offence and penalty are stated in the law, and the person is a first offender.
A fine of N3, 000,000.00 or jail for not more than 1 year or both.
5
Subsequent Offender
Where no specific offence and penalty are stated in the law, and the person is a subsequent offender.
A fine of N5, 000,000.00 or jail for not more than 3 year or both.
$1=412 Nigerian Naira as at 12:58 PM, GMT +1. View source.
If The Bill Becomes Law, All Technology Businesses In Nigeria Must Now Remit One Percent Of Their Profit Before Tax Into The National Information Technology Development Fund
This is not the first time this is happening. Under the previous legislation establishing NITDA, a technology company in Nigeria is obligated to pay 1% levy on profit before tax if it has an annual turnover of ₦100,000,000 (One Hundred Million Naira) and above. These provisions have been carried forward into the proposed rules, with the following amendment:
The defaulting person will now have to pay two percent of the levy (that is NGN2,000,000), instead of the previous flat fine of NGN1 million.
The Implications Of The Proposed Bill
The bill implies a lot of things, including that:
All technology companies in Nigeria must now first obtain a license to operate before they can even be allowed to register with Nigeria’s Corporate Affairs Commission. This is counter-productive given the country’s population and land sizes.
By stating that NITDA has the power to “develop regulations, guidelines and directives on the use of information technology and digital services in every sector of the economy to attain the purpose of the Agency” and at the same time have the power to “issue notices of contravention and non-compliance with this Act, regulations, standards and guidelines,” it implies that NITDA may introduce policies through the back door to checkmate the activities of technology companies in Nigeria. This is exactly re-creating the scenarios recently played out by Nigeria’s National Broadcasting Commission, when it introduced a set of sweeping rules that forced startups such as the entertainment startup, iROKOtv, to shutter its Nigerian operations.
The new powers of NITDA are sweeping in their effects, including the power to, on its own, state the licensing fees for the licenses, among other deductions.
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
Kenya is inspiring bolder innovations through its Capital Markets Authority (CMA)’s Regulatory Sandbox Policy regime. The Regulatory Sandbox Policy Guidance Note (Regulatory Sandbox PGN) which was approved in March 2019 is part of CMA’s strategic focus to leverage technology across the capital markets value chain, as espoused in its 2018–2023 Strategic Plan. The latest addition to the scheme — which before now has recorded only about 7 intakes — is Acorn Investment Management Limited.
The licensed Real Estate Investment Trust (REIT) manager has been admitted to the sandbox on account of its investment platform called ‘Vuka’, which aggregates retail investors into asset-backed financial products such as real estate through a regulated and transparent structure.
According to CMA, Vuka is a cross-over from other real estate platforms, whose value proposition is enabling the public to accumulate wealth and achieve financial freedom.
Qualified retail investors, such as investment clubs (chamas), saccos, and other medium-to-long-term retail investors, will be targeted by the invention. Acorn Investment Management Limited (AIML) is an Acorn Holdings Limited wholly-owned subsidiary (AHL).
It is now the REIT Manager for the Nairobi Securities Exchange’s Unquoted Securities Platform-listed Acorn Student Accommodation Development REIT (Acorn D-REIT) and Acorn Student Accommodation Income REIT (Acorn I-REIT).
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
In terms of funding for startups in Africa, Nigeria and Algeria are miles apart. In fact, startups based in Africa’s “Big Four” — Nigeria, Kenya, South Africa, and Egypt– raised 80% of the $1.19 billion in capital raised by African startups in the first half of this year. South Africa and Nigeria drew more than half of the money (28 percent and 27 percent, respectively, each worth $300 million). This is despite the fact that startups in the West African country are being chopped regularly at the guillotines of regulators — CBN; SEC; NITDA, etc.
On the contrary, although Algeria has not seen floods of this funding for its startup ecosystem, it has, nevertheless, not failed to create a favourable ecosystem, by way of policies and financial support system, to make that happen.
And so, intrigued by this, a delegation from the Nigerian Institute of Political and Strategic Studies (NIPSS) set out on a journey to the North African country to learn a few or more things. This gone Wednesday at Algiers, they were introduced to the country’s startup support system by the Minister Delegate in charge of Knowledge Economy and Startups, Yacine El-Mahdi Oualid.
The visit allowed for the exchange of experiences and the presentation of Algeria’s efforts to promote the startup ecosystem through “effective policies aimed at the development of startups in Algeria,” according to the executives from the two nations present at the ceremony.
The Nigerian delegation would travel to six (6) Algerian wilayas — provinces — (Tipasa, Annaba, Souk Ahras, Laghouat, Oran, and Tindouf) — where they would visit a variety of micro-enterprises, startups, agricultural cooperatives, complexes, and research centers (Anthropology Research Center social and cultural, and Renewable Energies Research Unit).
Startup Act Africa
As Nigeria struggles to support its local startup ecosystem, here are a few things the delegation and indeed Nigeria, could learn from Algeria.
Making A Specific Law In Support Of Startups
Although Algeria does not have a Startup Act strictly so-called, the country has enacted legislations and inserted provisions in existing laws to encourage its local startup ecosystem.
Specifically, Executive Decree 20–254 of September 15, 2020 created a national committee for the labeling of “startups”, “innovative projects” and “incubators”. The Decree has since been published in the country’s official gazette.
The implementation of the Decree has been instrumental in shaping a new future for the country’s startup ecosystem.
For instance, startups and incubators in Algeria labelled under the Decree are the greatest beneficiaries of the country’s finance law. The country’s 2021 Finance law provides for changes in taxes (Tax On Professional Activities, TAP; and Value-added Tax VAT).
“Exempt from VAT and subject to 5% of customs duties, are equipment acquired by companies with the label “startup”, ” says article 84 of the Finance Act.
“The purpose of this measure is to allow the Algerian startup to devote all of its financial resources, as well as all the attention of its management to activities related to its startup and rapid development,” the law further states.
For companies with the “incubator” label, they are also exempt from TAP, Corporate Profit Tax (IBS), in addition to Global Income Tax (IRG) for a period of 2 years.
“Exempt from VAT are equipment acquired by companies with the “incubator” label entering directly into the realization of their investment projects,” the law states.
Launch Of ‘Algerian Startup Fund’, A National Fund For Startups; As Well As ‘Algeria Venture’, A National Startup Accelerator
The Algeria Startup Fund (ASF) focuses on equity investments in startups instead of credit facilities.
According to Ahmed Haftari, Director General of this fund which began operations last January, the value of the funding granted by the Fund to companies bearing the label “Startup” and “innovative project” oscillates between 2 and 20 million DA ($15k-$150k).
Already, sixty innovative projects were reportedly being examined for funding by the Fund.
Added to the national startup fund is a national startup accelerator “Algeria Venture”.
Located at the Parc des Grands Vents (Dounia Parc) in Algiers, the startup accelerator will be “the showcase” of innovative Algerian projects on the international scene, according to Yacine El-Mahdi Oualid.
Algeria Venture aims to introduce, according to Oualid, the concept of “Open Innovation” which will allow Algerian and foreign companies to “outsource” their innovation projects by taking advantage of products and services developed by startups in the area of interest to them.
The site for the new accelerator inaugurated in the capital Algiers can accommodate up to 30 startups for a period ranging from six to 12 months, said the minister, adding that calls for demonstrations will be “periodically” launched in order to select projects having strong growth potential and which would be “interesting” to integrate into the accelerator.
A Youthful Minister Of Startups Has Been Instrumental In Influencing Policies Affecting Startups In Algeria
Algeria understands that the country’s startup ecosystem is largely driven by young people and has responded to this trend by appointing a youthful minister in charge of startups.
Aged only 27, Yacine Oualid became Algeria’s new Minister of Startups — a newly created ministry under the newly elected President Abdelmadjid Tebboune’s administration — on January 02, 2020.
He studied at the Faculty of Medicine of the University of Sidi Bel Abbès.
Prior to becoming Algeria’s Minister of Startups, in June 2016 Yacine Oualid created SSH, a company specializing in cloud solutions for businesses, which would later become the first private web host in Algeria. In September 2019, he and his partner founded Smart Ways3, a startup in the field of logistics and geolocation. In December of the same year, he founded Bright Solutions, a leading IT company providing IT solutions and services, headquartered in England.
“If I have to sum it up, I would say that the New World Economy is taking shape, and that Algeria wishes, and will, become a major player. My goal, with all the players in the sector, is to participate in this transformation of the largest country in Africa,” Yacine said upon assumption of office.
“In a more practical way, my role is first of all to set up a legal framework which is favorable to startups. Once set up, this legal framework will facilitate the creation of startups and their financing. The goal is to see materialise in a few months’ time, Algerian champions, who will be able to offer their services all over the world. Algeria is determined to become an African pillar of innovation and we want to offer our entrepreneurs the best framework for entrepreneurship and innovation,” he added.
Apart from influencing the enactment of startup-friendly policies, Oualid has been instrumental in activism against ‘bad regulations’ against startups in the North African country. For instance, his intervention ensured that Algeria’s first taxi service solely for women, Moov Services, re-launched its operations just three months after its activities were banned in Blida, Algeria’s northwestern province.
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
