Policy & Regulations - Afrikan Heroes

Egypt’s Banque Misr Ventures into Digital Banking, Files Country’s First License Application

August 5, 2023

Egypt’s Banque Misr, led by Chairman of the Board of Directors, Mohamed El-Atreby, has officially applied for a digital banking license from the Central Bank of Egypt. This move comes after the Central Bank recently issued regulations for licensing and supervising digital banks, aligning with global trends in financial technology and catering to the needs of Egyptian customers.

The new regulations were developed in line with the provisions of the Central Bank and Banking System Law of 2020, which recognized the concept of digital banks and their services delivered through modern technological platforms. This initiative is part of the government’s ongoing efforts to support innovation and foster the growth of the digital economy.

Akef El Maghraby, Vice Chairman of the Board of Directors of Banque Misr

Mohamed El-Atreby revealed that Banque Misr’s application seeks an authorized capital of 2.5 billion pounds and a paid-up capital of 2 billion pounds for the digital bank. The bank has also received offers from foreign partners interested in participating in the venture.

To obtain the digital banking license, certain requirements must be met, such as having an issued and paid-up capital of at least 2 billion pounds, except when financing large companies, in which case the capital requirement is increased to 4 billion pounds. Moreover, the largest shareholder must be a financial institution with prior experience in similar activities amounting to at least 30% of the total capital value.

Among the prerequisites for acquiring the license is the submission of a comprehensive feasibility study that outlines the target customer segments and the planned banking products. Additionally, the study must include information technology plans and cybersecurity strategies. Digital banks are subject to the same regulatory oversight and supervision as traditional banks operating in Egypt, including laws and controls to combat money laundering and terrorist financing.

These new guidelines align with the country’s vision of reducing reliance on cash, enhancing financial inclusion, and creating a favorable environment for the financial technology industry. Digital banks are expected to offer banking products and services in an innovative and convenient manner, catering to various segments of society, including micro, small, and medium enterprises, as well as the youth.

Banque Misr is determined to provide a unique and exceptional digital banking experience by bringing in experts from banking, technology, and communications sectors. The bank aims to become the first digital bank in Egypt, offering unprecedented electronic banking services and alternative channels to cater to the evolving needs of its customers.

Akef El Maghraby, Vice Chairman of the Board of Directors of Banque Misr and Chairman of the Board of Directors of Misr Digital Innovation Company, highlighted that they have been preparing for this step by establishing the Misr Digital Innovation Company, a subsidiary of Banque Misr. This entity is responsible for launching the first digital bank in Egypt, ensuring a powerful and seamless electronic banking experience while providing advanced banking services through alternative channels.

The introduction of digital banks is expected to attract new customer segments, particularly the youth, marking a significant advancement in banking services provided by Banque Misr, a pioneer in banking services not only in Egypt but also in the wider Arab region.

Opay, a leading African fintech company, recently expressed intentions to to join the competition for the digital banking license in Egypt. Opay has gained significant traction in various African markets with its digital payment solutions, and now, it sets its sights on Egypt to offer innovative digital banking services. Opay aims to leverage its experience and technology to cater to the diverse financial needs of Egyptian consumers.

African Fintech and Web3 Leaders to Convene at the Africa Money and DeFi Summit in Ghana

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Establishing Your Business in Singapore as a Foreigner: Experience as a Startup Lawyer Bridging Africa and Asia

August 3, 2023

2.00 AM, amidst a yawning time difference, I found myself staring into the stern eyes of the bank compliance officer on the other end of the video conference call. The pressure of ensuring a seamless Know Your Customer (KYC) documentation process for my client’s startup in Singapore weighed heavily on my shoulders. One small error, and our efforts would be sunk into a deep, bottomless hole.

As the compliance officer began speaking, I couldn’t help but notice a sudden calmness in their tone, a reassuring coolness that eased the tension in the room. It was evident that they were well-versed in the intricacies of Singapore’s regulatory landscape and that our diligent efforts to comply with all requirements were appreciated.

Indeed, the time zone differences were challenging, but I was determined to facilitate the bank account opening for my clients, which included investment funds and promising African startups. The rigorous KYC documentation process demanded an unwavering focus on details, leaving no room for errors. However, I knew that the credibility and reputation of Singapore’s financial system would ultimately work in our favor.

This is just one case among many so far, and through them, I have learned that navigating the intricate pathways of Singapore’s business ecosystem can be both daunting and exhilarating.

One of the key reasons entrepreneurs and investors alike are drawn to Singapore is the government’s policy of allowing foreigners to own 100% of the stock of a company without the need for local partners or shareholders. This level of openness and flexibility in ownership is rare and makes Singapore an attractive destination for startups looking to establish a global presence.

The allure of Singapore’s startup ecosystem is undeniable. Its estimated value of $25 billion dwarfs the global average of $5 billion, cementing its reputation as a hotbed for innovation and growth. To encourage entrepreneurship and foster growth in the country, the Singaporean government offers a Startup Tax Exemption Scheme (SUTE).

Under the SUTE, qualifying startups enjoy a 75% tax exemption on the first SGD 100,000 of chargeable income and an additional 50% exemption on the next SGD 100,000 for their first three tax years of operation. This tax incentive serves as a crucial lifeline for budding businesses, providing the financial support they need to weather the initial stages of operation.

For some clients whose activities do not align with the SUTE criteria, securing the Partial Tax Exemption (PTE) becomes imperative. Navigating this complex landscape requires in-depth knowledge of the local regulations and expertise in tax planning. Thankfully, I have a strong local network that offers invaluable insights, making it possible to tailor tax strategies that best suit my clients’ specific needs.

Singapore business lawyer Africa — *The Merlion, Singapore City, Singapore. Credits: Viator*

One of the most demanding aspects of the process is usually the Know Your Customer (KYC) documentation. Local banks in Singapore have stringent compliance practices, necessitating meticulous attention to detail. However, I find that clients with a solid reputation and credibility encounter minimal rejections, further highlighting the importance of maintaining a pristine track record.

To streamline the incorporation process, I also assist my clients with procuring employee pass applications. The efficient handling of employee pass applications is critical to ensuring a smooth transition for their workforce to Singapore. With the right connections on the ground, we are able to navigate the bureaucracy seamlessly, saving valuable time and resources.

Again, navigating the local corporate and compliance ecosystem has been seamless so far. The corporate ecosystem in Singapore is governed by the Singapore Companies Act, which covers all aspects of a business’s life cycle, from incorporation to winding up. Compliance with this act is non-negotiable, and I leave no stone unturned to ensure that my clients adhere to all regulatory requirements to avoid any legal repercussions.

Maintaining compliance with the Accounting and Corporate Regulatory Authority (ACRA) requirements is essential for the smooth functioning of a Singapore company. Under the Companies Act, businesses are required to hold an Annual General Meeting (AGM) once a year, where shareholders, directors, and officers gather to review the company’s financial statements and discuss key matters. Private companies are now automatically excused from holding AGMs if they submit their financial statements to members within five months of the fiscal year-end, streamlining compliance for many startups.

The role of the corporate secretary is pivotal in ensuring legal compliance. Acting as the backbone of the organization, the corporate secretary is responsible for efficiently running the company’s administration and acting as a mediator between shareholders and directors. I rely on the expertise of a licensed and trusted local corporate secretary to handle all regulatory obligations and keep the companies on the right side of the law

Directors play a significant role in overseeing company operations and making crucial decisions. The Companies Act mandates that a minimum of one local resident director is necessary for companies in Singapore. These directors are required to act with honesty, transparency, and a duty of care towards the company’s best interests, ensuring a high standard of corporate governance.

The 2017 amendments to the Companies Act introduced significant improvements, simplifying debt restructuring processes and enhancing transparency regarding a company’s ownership and control. Notably, small businesses meeting specific criteria are exempted from audits, reducing compliance burdens and promoting a more conducive business environment.

As I wrapped up the video conference with the compliance officer, a sense of accomplishment washed over me. Navigating the Singapore business landscape has been a journey filled with challenges, learning opportunities, and moments of triumph. I feel immensely grateful for the experience, knowing that my efforts have contributed to expanding my clients’ businesses and tapping into the boundless opportunities that Singapore has to offer.

The vibrancy of Singapore’s startup ecosystem and its unwavering support for entrepreneurs makes it a place where dreams could take flight and ambitions could be realized. The generous tax benefits, supportive government policies, and access to a thriving global market make Singapore an attractive destination for startups seeking growth and success. As I look ahead, I am eager to continue exploring the endless possibilities and unlocking the potential for my clients’ businesses in this dynamic city-state. The journey has only just begun, and I am ready to embrace the challenges that lies ahead, armed with the invaluable knowledge and experience gained from my foray into the world of doing business on behalf of clients in Singapore.

Charles Rapulu Udoh is a lawyer based in Lagos, Nigeria. He may be reached on LinkedIn: https://www.linkedin.com/in/udohcharlesrapulu/

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Digital Payment Service PayShap Closes in on a Million Transactions

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Why is Tunisia Dumping its Startup Act? Proposed New Law Holds Some Answers

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In a bid to revitalize its entrepreneurial landscape and accelerate its transition to an information economy, Tunisia has embarked on a significant endeavor — the launch of the Startup Act 2.0. Building upon the successes and lessons from the original Startup Act, which was passed in 2018, the Tunisian government, led by Prime Minister Najla Bouden, recently held a crucial ministerial working session at the Government Palace in La Kasbah. During this meeting, senior government officials unanimously emphasized the pivotal importance of finalizing the definitive version of the new bill. Their goal is to align it with ongoing legislative initiatives and to provide a robust legal framework to bolster the country’s burgeoning startup ecosystem.

A Collaborative Approach to Legislative Renewal:

The meeting underscored the government’s strong commitment to the new Startup Act, recognizing its vital role in fostering the development of the entrepreneurial sector and driving innovation within the country. Aware of the urgency to empower startups with a solid legal foundation, the participants agreed to expedite the legislative process, signaling the government’s determination to enact the new Act efficiently.

The Startup Act 2.0 has been subject to thorough consultations with various stakeholders, including representatives from the Ministry of Communication Technologies, the Ministry of Economy, the Ministry of Vocational Training and Employment, the Ministry of Education and Scientific Research, startups themselves, and civil society components. This collaborative approach aims to incorporate diverse perspectives and ensure that the Act addresses the unique needs and challenges faced by the startup community.

Learning from Past Experiences:

The original Startup Act, enacted in 2018, laid the foundation for Tunisia’s innovation ecosystem, contributing to the establishment of a stable platform for startups and aiding their market penetration. However, over the years, the Act exposed certain inefficiencies and challenges, some of which the proposed law intends to correct. They are summarized below:

Addressing Financing Challenges: One of the most pressing issues faced by Tunisian start-ups is the lack of adequate financing options. Despite the success of the first Startup Act in fostering a stable ecosystem and market penetration, the funding gaps have become evident barriers to the growth and sustainability of many promising start-ups. The government aims to accelerate funding opportunities for these start-ups, making it a top priority for the new legislation.
Fostering Collaboration Between Start-ups and the State: While the initial Startup Act facilitated collaboration between the public and private sectors, there still exists untapped potential for closer cooperation between start-ups and the government. By encouraging start-ups to work more closely with the state, there is an opportunity to leverage their innovative solutions to improve public services and address societal challenges. The new Startup Act seeks to incentivize such partnerships.
Retaining Start-ups Locally: A significant concern for the Tunisian government is the trend of successful start-ups leaving the country in search of better funding opportunities and more supportive ecosystems. This “brain drain” not only affects the local entrepreneurial landscape but also hampers the country’s economic development. The new legislation aims to create an environment that encourages start-ups to remain in Tunisia by offering attractive incentives and support.
Adapting to a Changing Economic Landscape: The world is rapidly evolving, and the economic landscape is transforming due to technological advancements. To remain competitive and seize the opportunities presented by the digital era, Tunisia recognizes the importance of revising its Startup Act. The new version, Start-up Act 2.0, aims to be more adaptive and forward-looking, aligning itself with the country’s vision for 2035 and the transition to the information economy.
Overcoming Regulatory Challenges: The successful implementation of any legislation requires an efficient regulatory framework that allows for flexibility and agility in responding to evolving market dynamics. The Tunisian government acknowledges the need to improve the regulatory framework to facilitate innovation, remove bureaucratic hurdles, and create an environment conducive to start-up growth.
Building on Past Experiences: The initial Startup Act revealed valuable insights into the strengths and weaknesses of Tunisia’s innovation ecosystem. Learning from past experiences, the new legislation, Start-up Act 2.0, aims to build upon the collaborative spirit of its predecessor while addressing the identified shortcomings to create a more comprehensive and effective legal framework.

So far, the success of Tunisia’s initial Startup Act can be attributed to the collaboration between the public and private sectors. The involvement of Smart Capital, a privately managed company with public shareholding, in administering the Startup Act has proven beneficial in avoiding bureaucracy and inefficiencies that often plague government agencies in Africa. Smart Capital has been actively promoting Tunisian start-ups and planning various fund launches to support their growth.

Tunisia startup Act Tunisia startup Act

Medius Successfully Completes Acquisition of Tunisia’s Expensya

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Nigeria’s Unstable Regulatory Actions: Tech Startups’ Accounts Unfrozen Amid Reforms

July 26, 2023

In a move to mitigate the adverse effects of Nigeria’s unpredictable regulatory landscape on the burgeoning tech sector, the Central Bank of Nigeria (CBN) has announced the immediate unfreezing of bank accounts belonging to multiple tech startups and companies. This pivotal development follows a series of regulatory actions taken in 2021, which significantly hampered these businesses’ operations and stifled growth prospects.

In a circular issued by A.M. Barau, acting on behalf of the CBN’s director of banking supervision, the apex bank directed all financial institutions to lift the post-no-debit restrictions on the accounts of 440 individuals and companies. The post-no-debit restriction had previously paralyzed vital debit transactions, including ATM withdrawals and check payments, while still permitting incoming funds. Surprisingly, the circular did not provide any explicit reasoning for the initial imposition of restrictions.

The list of affected companies reads like a who’s who of Nigeria’s thriving tech startup ecosystem. Bamboo Systems Technology Limited, Escale Oil & Gas Limited, Rise Vest Technologies Limited, Chaka Technologies Limited, abokiFX Limited, Nairabet International, Northwood Energy Services, Proport Marine Limited, and others found their operations grinding to a halt due to the financial constraints imposed.

The repercussions of these unstable regulatory actions resonate from a tumultuous past in 2021 when the CBN instructed banks to freeze the accounts of 18 diverse companies spanning bureaux de change, construction firms, investment companies, laundering services, and property developers. This prior freeze of accounts presented a significant setback to the affected companies, dampening investor confidence and causing disruptions across various sectors.

However, as part of the CBN’s current reforms, the freeze order on all 18 companies’ accounts has now been lifted, signaling an apparent shift towards rectifying the tumultuous regulatory environment that has plagued the Nigerian business landscape. The recent decision aims to restore normalcy and foster an enabling environment for businesses to thrive.

Yet, challenges remain for the Nigerian tech ecosystem, as the sector has also endured other turbulent regulatory encounters. In 2021, foreign stock-trading startups were caught in the crosshairs, facing allegations of “illegal foreign exchange transactions.” As a result, a court-ordered freezing of their bank accounts for 180 days ensued, casting a cloud of uncertainty over their operations.

While the CBN’s latest reforms represent a positive step towards streamlining regulatory practices, industry stakeholders remain cautiously optimistic. As Nigeria seeks to harness its digital potential and encourage innovation in the tech sector, a consistent and stable regulatory framework becomes paramount for the sustained growth of startups.

As the unfrozen tech startups begin to regain their financial footing, analysts eagerly await further clarifications and updates from regulatory authorities. These critical developments will determine the trajectory of Nigeria’s tech landscape, either propelling it to new heights or once again grappling with the consequences of an unstable regulatory climate.

Accounts Unfrozen Nigeria Accounts Unfrozen Nigeria

Barrage Of Sanctions In Nigeria: CBN Freezes Accounts Of Foreign Stock-trading Startups, NITDA Fines Soko Loan $24k

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

$64 Million to Land a Digital Bank License in Egypt under New Rules: Here’s a Checklist of Requirements

July 15, 2023

Introducing Egypt’s digital banking landscape: With new regulations in place, acquiring a digital bank license in Egypt requires a significant investment of $64 million. Alongside the financial commitment, there are several other essential requirements to fulfill. Here’s a concise checklist of what you need to consider when aiming to obtain a digital bank license in Egypt.

Requirement	Description

Capital Requirements	– Issued and paid-up capital: – EGP 2 billion ($64M) for digital banks, except when financing large companies. – EGP 4 billion ($129.6M) for digital banks involved in financing large companies.
Shareholder Composition and Ownership Structure	– The largest shareholder should be a financial institution. – The financial institution should own a minimum of 30% of the total capital. – The financial institution should have previous experience in similar activities.
Shareholders’ Information	– Essential information about shareholders: – Names – Nationalities – Addresses – Capital shares – Copies of articles of association for legal entity founders.
Founder Shareholding and Sanctions	– Disclose the shareholding percentage of each founder. – Check for associations with other financial institutions. – Ensure founders, main shareholders, final beneficiaries, and board members are not included in any domestic or international sanctions lists.
Bank Information	– Detailed information about the establishment, services, and target market. – Business plan covering at least a five-year period. – Market studies demonstrating the ability to mobilize and utilize savings. – Estimated budgets and plans for business expansion. – Policies on credit, investment, anti-fraud, anti-money laundering, and combating terrorist financing.
IT Infrastructure and Cybersecurity	– Information technology and cybersecurity strategic plan: – Organizational structure for information technology. – Qualified personnel and governance mechanisms. Risk management strategies and policies. – Controls against cyber threats and fraud. – Address data confidentiality, integrity, availability, and compliance with cybersecurity frameworks.
Outsourcing and Security Controls	– Comprehensive outsourcing plan: – List of service providers and their roles. – Use of cloud computing technology and types of cloud services utilized (e.g., SaaS, PaaS, IaaS). – Applications hosted in the cloud and data associated with those applications. – Locations where data will be stored and processed. – Governance mechanisms and risk management protocols. – Measures to ensure data confidentiality, integrity, and non-interruption of services.
Cybersecurity Measures	– Roles and responsibilities of employees responsible for cybersecurity. – Security controls to control authorized access to the bank’s systems. – Comprehensive cybersecurity management plan: – Risk levels and vulnerability testing. Incident monitoring and response procedures. Mechanisms for continuous improvement. – Training programs for employees and customer awareness initiatives.
Digital Channels and Payment Tools	Clear overview of the digital channels and banking services offered: – Traditional and interactive ATMs. Internet and mobile banking services. – Interactive voice call centers and other digital platforms. Electronic payment tools such as prepaid cards, credit cards, direct debit cards, electronic wallets. Acceptance of transactions through electronic points of sale or digital payment portals. Outline customer identification and verification procedures.
Internal Control and Governance	– Effective internal control mechanisms and risk management strategies. – Appropriate work systems and clear governance structure. – Plans for sustainable financing and strategies/policies for managing bank operations. – Business continuity plan to ensure uninterrupted service provision.
Foreign Bank Branch (if applicable)	– Approval from the foreign bank’s main center to establish a branch in Egypt. – Compliance with Egyptian laws, regulations, and instructions issued by the Central Bank. – Financial statements, auditors’ reports, and certified copy of the main center’s articles of association. – Detail services, applications, and systems related to compliance with local and international regulations. – The main center of the foreign bank should have a specified nationality and be subject to supervision by the corresponding supervisory authority in its home country. – The foreign bank’s allocated capital for the digital bank branch in Egypt should be at least $60 million or its equivalent in free currencies. – The corresponding supervisory authority should apply combined supervision and express no objection to joint supervision with the Central Bank of Egypt. – The main center of the foreign bank should have policies to combat corruption, bribery, fraud, money laundering, and terrorist financing. – If applicable, evidence of a credit rating from international credit rating agencies such as S&P, Fitch Ratings, or Moody’s should be submitted by the foreign bank or financial institution.

Adapted from the official guidelines and regulations provided by the Central Bank of Egypt.
Disclaimer: Exchange rates are subject to volatility and may fluctuate.

Digital Bank: Egypt Central Bank Unveils Exorbitant License Fees and a Restrictive 30% Ownership Rule. Here’s What You Need to Know

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Algeria Approves New Law, Permitting FinTech and Digital Banks for the First Time. Here’s What It Says

July 7, 2023

Algeria has taken a significant step forward in its monetary and banking regulations with the recent enactment of Law №23–09 on June 21, 2023. This new law introduces important provisions specifically addressing the operations of fintech, digital banks, and payment service providers in the North African country. This marks a pivotal moment as the Algerian government recognizes the evolving landscape of financial technology and the need for a comprehensive regulatory framework.

Authorization and Operations

The law clearly stipulates that only banks are authorized to engage in traditional banking operations. However, payment services, which were previously exclusive to banks, can now be provided by duly approved payment service providers. The specific list of payment services and the criteria for approving these providers will be established by a regulation issued by the Algerian Council of State. This development opens up opportunities for non-bank entities to participate in the payment services industry, fostering competition and innovation.

Financial institutions, on the other hand, are restricted from receiving funds from the public or managing means of payment. However, they are permitted to undertake all other operations apart from these two activities. This limitation ensures that banks maintain their crucial role as custodians of public funds and gatekeepers of payment mechanisms, while allowing financial institutions to contribute to the financial sector in other ways.

Expanded Operations

Banks and financial institutions in Algeria now have the authority to engage in several related operations beyond traditional banking activities. These expanded operations include foreign exchange transactions, transactions involving gold, precious metals, and precious coins, as well as investments, subscriptions, purchases, management, custody, and sale of securities and various financial products. This broader scope of operations enables banks and financial institutions to adapt to changing market demands and provide a more diverse range of services to their customers.

Establishment and Regulatory Approval

To establish a bank, financial institution, independent brokerage intermediary, foreign exchange office, or payment service provider in Algeria, the Council’s authorization is required. The authorization process entails submitting a comprehensive application file, which includes an investigation report assessing compliance with the relevant regulatory provisions, particularly those outlined in Article 87. The Council will provide a separate regulation specifying the requirements for updating the application file periodically. This ensures that authorized entities continuously adhere to regulatory standards and remain accountable.

Emergence of Investment Banks and Digital Banks

The law further paves the way for the establishment of investment banks and digital banks in Algeria. Investment banks play a vital role in facilitating investment activities and providing specialized financial services. Digital banks, on the other hand, leverage technology to offer innovative and convenient banking solutions to customers. These new types of institutions reflect the government’s recognition of the importance of embracing digitalization and catering to the evolving needs of Algerian consumers.

Legal Forms and Capital Requirements

Payment service providers, independent brokerage intermediaries, and exchange offices can be established as joint stock companies, simplified joint stock companies, or limited liability companies. This flexibility in legal forms provides entrepreneurs with options that suit their specific business models and preferences.

Banks and financial institutions, regardless of their legal form, must have fully paid-up capital in cash, meeting the minimum amount specified by a regulation issued by the Council. This requirement ensures the financial stability and resilience of these institutions, safeguarding the interests of depositors and stakeholders.

International Institutions and Resident Representation

Foreign banks and financial institutions intending to operate in Algeria must allocate capital to their branches in the country, meeting or exceeding the minimum capital requirements applicable to Algerian banks and financial institutions. This ensures that foreign entities maintain financial strength and accountability within the Algerian market.

Additionally, these foreign entities must appoint at least two senior executives residing in Algeria who hold positions of significant authority and responsibility. These executives will be entrusted with the determination of the entity’s activities and the management of its branches in Algeria. This provision strengthens the local presence and commitment of international institutions, promoting effective governance and decision-making within the country.

Algeria’s recent monetary and banking law, Law №23–09, signifies the government’s proactive approach to adapting to the changing financial landscape and embracing the potential of fintechs, digital banks, and payment service providers. The law opens up opportunities for innovation and competition while ensuring the stability and integrity of the financial sector. By allowing non-bank entities to provide approved payment services, expanding the operations of banks and financial institutions, and facilitating the establishment of investment banks and digital banks, Algeria is poised to create a robust and inclusive financial ecosystem. These regulatory advancements will undoubtedly contribute to the country’s economic growth and enhance financial services for Algerian citizens.

DOWNLOAD THE NEW LAW HERE (PDF)

Fintech digital banks law Algeria Fintech digital banks law Algeria

Moroccan Proptech Agenz Raises $1.3M to Scale its AI-Powered Real Estate Platform

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Egypt Unveils 5-Year Tax Exemption for Startups, with Conditions

June 21, 2023

Egypt’s commitment to nurturing entrepreneurship and fostering innovation has reached new heights with the recent announcement by President Abdel Fattah El-Sisi. The government has unveiled a comprehensive plan designed to propel startups in the country, offering them a generous 5-year tax exemption. This groundbreaking initiative is expected to provide a significant boost to Egypt’s startup ecosystem. However, it is essential to note that certain conditions are attached to this tax incentive.

In light of this, Dr. Hala Abu Al-Saad, the Undersecretary of the Small and Medium Enterprises Committee in the House of Representatives, has highlighted the anticipation of significant legislative amendments to the existing Small and Medium Enterprises Law (Law №152 of 2020). Dr. Al-Saad intends to present a draft law to the House of Representatives, aiming to revise specific provisions that will better accommodate startups. These proposed amendments seek to introduce special facilities, including a 5-year tax exemption period, while simultaneously implementing a flat tax rate structure for these projects. A flat rate tax for startups is a simplified tax system where all startups, regardless of their size or financial performance, pay the same fixed tax rate or amount. This eliminates complex calculations based on profits or revenue, providing a level playing field and allowing startups to anticipate and plan for a consistent tax obligation. The goal is to simplify the tax process and promote fairness among startups.

5-year tax startups Egypt — *Dr. Hala Abu Al-Saad is Egypt’s Undersecretary of the Small and Medium Enterprises Committee in the House of Representatives. Image credits: almasryalyoum*

Moreover, the proposed amendments, according to Dr. Al-Saad will address other critical aspects, such as providing lands for small projects through the usufruct system. This move will effectively reduce additional financial burdens on startups, allowing them to focus on growth and development.

Acknowledging the vital role startups play in driving economic growth, the Egyptian government has also allocated a substantial budget of EGP 1.5 billion ($48M) to support medium and small projects in the upcoming fiscal year. Dr. Al-Saad equally confirmed this financial commitment, emphasizing the government’s objective of fortifying the startup sector. Currently, startups already contribute over 40% to Egypt’s gross domestic product, making them a crucial driver of the economy.

The Egyptian Ministry of Planning projects a remarkable gross domestic product of 11.8 trillion pounds for the next fiscal year, a significant increase from the current fiscal year’s 9.8 trillion pounds. This ambitious target demonstrates the government’s unwavering determination to drive economic expansion through the promotion of startups.

Sherif Lokman, the Deputy Governor of the Central Bank of Egypt for Financial Inclusion, has emphasized the dominance of medium, small, and micro companies in the private sector, accounting for an impressive 98% of all economic activity in Egypt. These enterprises play a vital role in the country’s economy, contributing approximately 43% to the gross domestic product. Egypt boasts an impressive entrepreneurial landscape, with 3.4 million micro-enterprises, 2,200 medium-sized enterprises, and 217,000 small enterprises.

Despite a slightly lower growth rate projection for the next fiscal year (4.1% compared to the expected growth of 4.2% in the current fiscal year), the Egyptian government firmly believes that medium, small, and micro enterprises hold the key to boosting growth rates and generating employment opportunities. These enterprises solidify their importance in the national economy, showcasing the government’s commitment to their success.

Egypt’s unveiling of a 5-year tax exemption program for startups with certain conditions represents a significant milestone in the country’s journey towards fostering entrepreneurship and innovation. With strategic legislative amendments, financial support, and a steadfast focus on the growth potential of startups, Egypt is set to position itself as a thriving hub for entrepreneurial endeavors in the coming years.

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How Africa-Focused Insurtech Startup Turaco Attained 1M Active Customers in 4 Years

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Has Nigeria Legalized Crypto? In 7 Points, Here’s a Summary of the New Finance Law

June 8, 2023

The Nigerian government recently enacted the Finance Act of 2023, introducing several significant changes to the country’s financial landscape. From the taxation of digital assets to enhanced reporting requirements, the Act aims to streamline the economic framework and promote transparency. In this summary, we explore five crucial points outlined in the new legislation, shedding light on the taxation of digital assets, reporting obligations for companies, deductions for specific industries, levies on imported goods, tax benefits of insurance, and penalties for non-compliance. Understanding these key provisions is essential for individuals and businesses operating within Nigeria’s evolving financial landscape. Let’s delve into the details.

A New Digital Asset Tax of 10%

The Nigeria Finance Act of 2023 has introduced a 10% capital gains tax on digital assets. This tax applies when you sell or dispose of valuable digital items and make a profit. The tax is calculated by subtracting allowable deductions from your total earnings in a specific assessment year. It applies to various types of property, including options, debts, and intangible assets, regardless of their location. The tax also includes foreign currencies, except the Nigerian currency. Any property you create or acquire without buying it is considered an asset for tax purposes. The law however failed to define what a digital asset is, raising controversies as to its intentions.

Companies Must Now Share Detailed Revenue for Operations in Nigeria

The new law also says that if a company files tax returns and doesn’t give a separate financial statement for its operations in Nigeria, the company must provide detailed statements of the total revenue earned during that time from its Nigerian operations. These statements should be certified by one of the company’s directors and their external auditor, and should include all invoices issued to the customers.

Saving on Taxes: How Companies Can Now Deduct Expenses to Lower Their Tax Bill

When a company calculates how much profit it made for a specific year, it can deduct a certain percentage called “capital allowances” from that profit to reduce the amount of tax it has to pay.

Usually, the maximum percentage that can be deducted is 66.67% of the company’s profit. But there are now some exceptions for specific types of companies, under the new law.

For example, companies involved in gas operations or the agro-allied industry (which means they work with agriculture and farming) or those in the manufacturing business are not limited by this rule. They can deduct more than 66.67% if they qualify.

However, if a company wants to claim these deductions, they have to reduce the value of the asset they bought by the amount of any other deduction they might claim for that asset. This is called an “investment allowance.” It’s important to subtract this investment allowance from the value of the asset before calculating the capital allowances.

Contributing to Africa: New 0.5% Levy on Imported Goods

When goods are brought into Nigeria from countries outside of Africa, there is a special fee called a levy that needs to be paid under the law. This levy is 0.5% of the value of the goods. The purpose of this fee is to help Nigeria make financial contributions to different organizations like the African Union, the African Development Bank, and other groups that work together with many countries. These organizations help with things like development projects, trade, and cooperation among nations. The money from this fee is used to support these efforts and fulfill Nigeria’s financial obligations to these organizations.

Tax Benefits of Insurance: How to Use Premium Payments to Lower Your Tax Bill

Sometimes, people pay money to an insurance company to protect themselves or their loved ones. This is called a premium. When a person pays this premium, the new law says they can get a deduction, which means they can subtract that amount of money from the total amount of money they earned for the year.

The deduction is allowed for two types of insurance:

If someone pays for insurance on their own life or the life of their husband or wife.
If someone pays for a special kind of plan called a deferred annuity. This is like a savings plan that gives you money in the future. It’s based on your own life or the life of your husband or wife.

But there’s a rule: If someone takes out some of the money from the deferred annuity before five years have passed since they paid the premium, then they have to pay taxes on that money when they take it out. It’s important to wait for at least five years before taking out any money from the deferred annuity to avoid extra taxes.

Reduced Tertiary Institution Trust Fund Tax: New Rate Set at 2.5%

The Tertiary institution trust fund tax has been reviewed downward to 2.5% from its previous 3% under the new law.

Consequences of Breaking the New Law: Understanding Tax Penalties and Offenses

Penalties for Not Following the Law: If you don’t obey the law or regulations, you might have to pay a big amount of money called an administrative penalty. It’s N10,000,000.
Extended Penalties: If you keep breaking the rules for a long time, you could face an extra penalty. It’s N2,000,000 for each day you keep breaking the rules, or another amount decided by the Minister of Finance.
Penalties if Found Guilty: If you’re found by the court to have done something wrong under the law or related regulations, you might have to pay a big fine. It’s N20,000,000.
Imprisonment: Along with the fine, you might also have to go to jail for six months if you’re found guilty.
Penalties for Specific Violations: There are different specific things you can do wrong, like not following notices, not answering questions, or not submitting required forms. If you do any of these, you’ll get penalties according to what the law says.
Penalty for Incorrect Accounts: If you make up fake accounts, prepare false schedules or statements, or give wrong or misleading information about how much tax you owe, you’ll get a penalty. The penalty is either N15,000,000 or 1% of the tax you didn’t pay correctly, whichever is higher. And you still have to pay the right amount of tax.
Fine for False or Misleading Information: If you give false or misleading information about how much tax you owe, you’ll get a fine. The fine is either N15,000,000 or 1% of the tax you didn’t pay correctly, whichever is higher. You also still have to pay the right amount of tax.
Compounding Offenses: The tax service has the power to settle offenses by accepting money instead of giving more punishment. The money you pay can’t be more than the maximum fine allowed. They’ll give you an official receipt for the money you give them this way.

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Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Ivory Coast Startup Bill Successfully Nears Passage after Clearing Vital Final Stage

June 5, 2023

On May 31st, Ivory Coast Minister of Communication and Digital Economy appeared before the National Assembly’s Commission on Research, Science, Technology, and Environment. The members of the Commission unanimously adopted the bill promoting digital startups, with all present members voting in favor. The parliamentary groups representing the nation, namely the Rhdp, Ppa-CI, and Pdci-Rda, expressed their agreement with the bill during the committee meeting at the Abidjan-Plateau chamber. They were convinced by the presentation given by the government commissioner.

The Minister of Communication and Digital Economy, Amadou Coulibaly, stated that this legislation aims to establish a specific incentive framework for the creation and promotion of digital startups in Côte d’Ivoire. It is part of a consultative and inclusive approach, intending to provide appropriate support to these startups. Coulibaly explained that the bill will foster innovation and enable digital startups to be more competitive in the international market, facilitating their fundraising efforts. He also noted that out of approximately a hundred startups in Côte d’Ivoire, only about fifteen are considered dynamic.

The bill includes provisions to boost the development of newly created or early-stage digital startups by establishing an appropriate legal framework for their registration and labeling. Labeled digital startups, meeting certain conditions, can benefit from incentives, exemptions, support, guarantees, and accompanying measures provided by the government for a period of up to five years. These measures aim to overcome obstacles and facilitate the growth of startups.

Additionally, the bill creates a specific framework for supporting and governing Ivorian digital startups, with the primary goal of accelerating socio-economic growth. It seeks to increase the number of digital startups in the entire digital economy sector and define support and assistance measures for labeled startups, enabling them to contribute to the national economy.

Minister Coulibaly emphasized that this bill proposes means to accelerate the success of digital startups and their role in transforming the national economy. After the bill’s adoption, the President of the Commission on Research, Science, Technology, and Environment, Émile Guiriéoulou, congratulated Minister Coulibaly for the clarity of his explanations. He acknowledged the project’s potential to usher in a new era in Côte d’Ivoire’s digitalization policy.

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Investisseurs & Partenaires Launches An Accelerator Program For Startups In Ghana, Senegal And Others

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

What Does Nigeria’s New SEC Regulatory Incubation Program Mean for Fintech Startups?

May 2, 2023

The Securities and Exchange Commission (SEC) has initiated the Regulatory Incubation (RI) programme, which is aimed at assisting Fintech firms that are currently operating or planning to operate in the capital market of the country. According to a circular released by the Commission in Abuja, the RI portal will be available to registered capital market operators and unregistered Fintech innovators who require regulation from April 28 to May 26. The circular stated that Cohort 001/23 can now submit their applications through the portal, and cohorts will be announced at specific times.

The circular identified the applicants that can apply, including registered Capital Market Operators, unregistered Fintech innovators that require regulation, firms of all sizes, and firms that want to enhance investor participation in the country’s capital market. To participate in the RI Programme, companies must meet five eligibility criteria outlined by the SEC. These criteria include ensuring that the product or process is safe for investors, presenting genuine innovation that offers a new product or process to meet specific investor needs, and the ability to solve existing compliance or supervisory issues.

The SEC advised applicants to provide as much information as possible when submitting their applications about how they meet the eligibility criteria. The circular also stated that if an applicant wishes to test their proposition, they may apply for an engagement session. The SEC further stated that Fintechs operating in crowdfunding, robo-advisory/digital investment advisory, and sub-broker serving multiple brokers using a digital platform would not be eligible to apply as they are already regulated.

The RI programme is designed to address the needs of new business models and processes that require regulatory authorisation to continue carrying out full or ancillary technology-driven capital market activities.

The Regulatory Incubation (RI) programme by the Securities and Exchange Commission (SEC) will assist startups in the following ways:

Regulatory Support: The RI programme provides regulatory support to startups that require regulation to operate in the capital market. This programme will assist startups to meet regulatory requirements and obtain the necessary authorisation to continue carrying out technology-driven capital market activities.
Innovation: The RI programme promotes genuine innovation that introduces new products or processes to meet specific investor needs. This will encourage startups to come up with innovative solutions that solve real problems and provide value to investors.
Compliance: The RI programme assists startups in complying with existing compliance or supervisory issues. This will enable startups to operate within the regulatory framework and ensure that they comply with the rules and regulations governing the capital market.
Investor Confidence: The RI programme ensures that startups that participate in the programme meet the eligibility criteria, including safety for investors. This will help to enhance investor confidence in startups and encourage more investors to participate in the capital market.
Engagement Sessions: The RI programme allows startups to apply for engagement sessions, which will enable them to test their propositions. This will provide startups with the opportunity to receive feedback and improve their products or processes before launching them to the market, which can increase the chances of success.

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Africa Must Leverage Big Data to Accelerate Growth

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard