Airtel’s stocks on the London Stock Exchange fell as much as 15 percent to 68p after Africa’s second-largest mobile operator listed on the London Stock Exchange, knocking £500m off its opening valuation to give it a market capitalization of around £2.6bn.
Here Are The Facts
The IPO is for institutional investors and high net worth individuals only
The general public may be able to deal in Airtel’s shares by July 4.
For the IPO, Airtel is backed by SoftBank an issuing house and had priced its initial offering at 80p per share, but this poor IPO in London saw the company perform below what it secured in two recent private funding rounds.
The African subsidiary of Indian telecoms giant Bharti Airtel had priced its shares at 80p, at the bottom of its previously announced 80–100p price range.
This means that its current valuation now stands at around £3.1bn (NGN 1.4 trillion or $3.9 billion). This is already significantly below the valuations implied by earlier funding rounds.
Airtel Africa secured $1.25bn from a consortium of investors including private equity house Warburg Pincus, Singapore’s Temasek, SoftBank and Singapore Telecommunications at a valuation of around $4.4bn, in October last year.
A $200m investment by the Qatar Investment Authority earlier this year put its valuation closer to $5bn.
From the combined Nigerian and London IPO, Airtel Africa — which operates a telecoms and mobile money business across 14 African countries — raised £595m.
The whole of the shares issued in the IPO represented 19 percent of Airtel’s total stock.
“This is a proud moment for the team that has built Airtel Africa into the second-largest mobile operator in Africa. We are now the first telecom company to simultaneously list on the Premium segment of the London Stock Exchange and Nigerian Stock Exchange through an IPO.”
Airtel’s IPO is For Institutional Investors. Ordinary Nigerians and the General Public Can Begin To Trade In Airtel’s Shares By July 4 On Both The London And The Nigerian Stock Exchanges
Why The Nigerian Stock Exchange and Not The Johannesburg Stock Exchange, Which Is The Largest In Africa, Was Chosen For The African Listing
According to the prospectus of the offer, Nigeria represents the Airtel’s largest single country subscriber base, comprising 37.6 percent of the Group’s total subscribers as at 31 March 2019, with 43.4 percent of subscribers in East Africa and the remaining 19.1 percent in the Group’s Rest of Africa segment.
In the year ended 31st March 2019, revenue in Nigeria was $1.1 billion (representing 35.9 percent of the Group’s revenue in the year) and the underlying Earnings Before Interest Tax Depreciation and Amortisation, EBITDA was $550 million.
In Nigeria, revenue attributable to mobile voice services in the year ended 31st March 2019 was $739.8 million
The prospectus said the company wants to raise money so it can use it to pay down some of its crushing debts.
Why Airtel’s Shares Are Worthy Of Public Subscription
Airtel reported revenues of $3 billion for the year ended March 2019 compared to $2.9 billion the year before.
The company also reported a profit of $450 million in 2019.
Airtel posted losses of $134 million and $769 million in 2016 and 2017 respectively.
Timelines For The Offer
The offer closes June 28 and allotment of new ordinary shares to the shareholders begins June 29, 2019, while the crediting of ordinary shares to accounts start July 3, 2019.
The Nigerian admission and start of unconditional dealings on the Nigerian Stock Exchange, NSE is expected from July 4, 2019
Click here to download and read Airtel Africa ’s IPO prospectus.
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
China’s investment in Africa is reaching an all-time high. Businessmen from Ghana will now have reduced stress. This is because both countries have taken their trade relationship to a new level. Apart from Ghana’s Embassy office in Beijing, today, Ghana opened its Consulate General office in China ‘s commercial city of Guangzhou.
China’s City By GDP
A Look At The New Consulate Office
The Consulate General in Guangzhou is the first of its kind to be opened in Asia and the Far East, indicating the importance Ghana attaches to its relationship with China.
With the opening of the office, Ghana joins 65 other countries with the consulate in Guangzhou.
The Guangzhou Consulate-General of the Republic of Ghana, according to the Foreign Minister, has its Consular District covering the Guangdong, Fujian and Hainan Provinces and the Guangxi Zhuang Autonomous Region of China.
The new consulate office in Guangzhou in the Province of Guangdong has now been opened to the public and will provide consular services similar to the services provided by the Embassy office in Beijing.
“From today, the long journey these businessmen and women had to endure to go to Beijing for visas and other trade facilitation processes would be over since the Consulate-General is here to manage all these concerns,” the minister said.
“I believe this office is a good venue where business from Southern China and Ghanaian companies could meet. It is also to be used to promote a crucial agenda for foreign investments and international trade which face a fair amount of challenges,” Ghana’s Minister of Foreign Affairs and Regional Integration, Shirley Ayorkor Botchway said.
The Guangdong Province is the economic hub of China with a population of over 106 million.
Ms. Botchway explained that Ghana is opening the office to support Ghanaian and Chinese businesses, to provide them with expeditious consular services and facilitate trade and investment promotion between the two countries.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Health tech startups in Africa have got another pool of funds to tap from. Founders Factory Africa and South African healthcare company Netcare are looking to select 35 African health-tech startups for an acceleration and incubation program.
Here Are Details Of The Fund
Founders Factory Africa is looking to commit a minimum of a £30,000 cash investment in accelerated startups as well as £220,000 in support services each. Incubator health-tech ventures will receive £60K cash and £100K toward support.
Founders Factory Africa and Netcare will then both retain a 5 to 10 percent equity stake in each startup accepted into the program.
The program will accelerate 5 startups a year and incubate 2, FFA CEO Roo Rogers.
Criteria for the accelerator startups include that they have a healthcare focus, be post-revenue, and have a Pan-African scope.
Startups aiming to pursue those objectives through Founders Factory Africa’s new accelerator program have until September 6 to apply
This is the first big foray into tech funding for Netcare, which operates South Africa’s largest private hospital network, according to CEO, Dr. Richard Friedland.
The partnership includes an investment (of an undisclosed amount) by Netcare in Founder’s Factory Africa, or FFA. The Johannesburg-located organization was formed in 2018 as an extension of Founders Factory in London — an accelerator that has graduated 122 startups.
How Startups Can Access The Funds
Interested startups who render health-tech services in Africa can forward all their applications to Founders Factory’s Online Portal for the FFA’s new Africa health-tech program.
There Are Huge Opportunities And Gaps In The African Health Sector
“There are so many issues in terms of healthcare delivery in Africa that can benefit from technological solutions,” Netcare CEO Richard Friedland said.
“I think the old bricks and mortar model of delivering healthcare in South Africa, in a private insurance or public setting, is archaic, it’s limited, it’s capital intensive and I think health-tech solutions can break that down,” he added.
Overall, Founders Factory’s move into Africa and healthcare (through FFA) raises several compelling things to watch.
One is the rise in African health-tech as a sector and the need for more capital. Formation of healthcare-focused African startups has picked up but investment into these ventures is relatively low compared to annual VC: only $19 million of roughly $1 billion (using Briter Bridges and Partech numbers).
This is also particularly meager given the potential impact of health-focused startups on a continent that still posts dismal stats comparatively. World Bank life expectancy rates, which on average place Africa last, are just one indicator. So the FFA initiative could serve as a needed boost for African health-tech
“The way we deliver healthcare in South Africa, Africa, and perhaps internationally…is in many cases broken,” he said, adding there’s a crisis of affordability and access to healthcare in Africa.
“I believe healthcare is ripe for disruption and innovation and that couldn’t be more true than it is here in South Africa and the rest of the continent,” Friedland said.
He named the FFA partnership as a way to increase the quality of healthcare in Africa. “We think the…continent and even our own business in South Africa can benefit,” he said.
Netcare’s interest in partnering with Founders Factory Africa to support startups comes down to multiplying healthcare solutions across the continent and shaking up the healthcare industry, according to Friedland.
Though a value wasn’t named for the Netcare round, it’s Founders Factory Africa’s second investment raise and collaboration.
Founders Factory entered Africa in 2018 through a partnership with Standard Bank (the continent’s largest bank), which a release said included a “multi-million-pound investment.” Founders Factory Africa selected the first five startups for its fintech accelerator track in April 2019.
Founders Factory Africa and Netcare’s investment in health-tech could produce innovation models with use-cases beyond Africa. Zipline and the rest have already given African health startups the green light.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
For startups venturing out into the unknown territories of a tech startup business, here a few tips shared by Wiza Jalakasi, head of international expansion at Africa’s Talking on how to build a successful tech company at the just-concluded third Google Launchpad Accelerator Africa program held in Lagos Nigeria. Wiza runs Africa’s Talking which raised $8.6m from the IFC, Orange Digital Ventures and other partners. Africa’s Talking is on its international expansion efforts as it scales APIs for infrastructure (SMS, USSD, voice, airtime, banking, and mobile money) across Africa
Patience And Passion
Building a business takes time, for most, it takes four to five years. There is a process that is involved and it’s not always colorful. It’s day-to-day grinds, doing seemingly mundane things and you need to get it in your head that that’s the only way for you to get where you’re going. Fall in love with the process.
Focus
You need to focus on your business. It’s very easy for you to get distracted by ecosystem events. Don’t be your start-ups. Spend your time and energy on things that are directly related to the outcomes of your business. Mind your own business, drink water. Remain teachable. Check your psychology as grow, especially when people start talking about you. Don’t let that get into your head, tomorrow is another day and you still need to pay your bills.
Customer Care
Spend time with your customers. If as an entrepreneur you’re not willing to get your hands dirty, it’s not going to work out for you. Do not fall in love with this notion that you can sit on your high table with a laptop on your lap and think this is how you’ll build your business. Sometimes you need to sit down and talk to someone to get things done. That’s how you build a technology company.
Be Stable In Competition
When you see similar business pop up, that’s a good thing. It validates that there’s value in the space that you’re creating and it’s important for you to be aware of what’s happening in the industry. Don’t be scared when you see the competition and don’t double down on trying to beat the competition directly. Focus on your customers.
Be Accountable
If you’re trying to run a business and you’re trying to avoid accounting, it’s not going to work. You need to get comfortable with basic administration. You need to be running a profit and loss from day one.
Loss Will Come Anyway
Don’t have a goal of making a profit immediately. You’ll make a loss for many years. What’s important is keeping those records so when the time comes for fundraising, you have your ducks in order.
You may think investors don’t want to see losses on your books but what investors are looking for is a consistent attitude towards record-keeping and responsibility, you must build that from day one.
Get Some Culture For Your Startup
The company culture is what you as the founder do on a day-to-day basis. You can’t build culture through writing nice bullet points. It’s what you do on a day-to-day basis and you can only lead by example. Be deliberate about the culture from day one.
Fundraising Is About Story-telling
Fundraising is about telling a good story. The market doesn’t always reward great ideas, if you fail to tell a good story you might not have access to capital. Be good at storytelling. If as a founder you are not good at storytelling, find someone who can do it for you.
If you’re not good at storytelling, start building relationships early. Some investors will back you simply because you’re consistent with the information and they’ve seen you grow.
Think Twice Before Expanding
Expansion is extremely difficult. You’ll spend twice your budget. I don’t recommend that tech startup jumps into expansion from day one. Stop and validate your idea in your home market and respect that base.
See Yourself As A Different Person From Your Startup And Respect Partners And Staff
Kindness is an important tool that you can leverage to build your tech startup. Be kind to yourself as a founder. Separate yourself as a founder from your tech startup. The success or failure of your start-ups will never be tied to the success or failure of you as a person.
Your business partner will more likely become one of the most important people in your life. Have empathy for who they are — their strengths and weaknesses. Take time to cultivate an authentic relationship in which you as co-founders can have extremely difficult conversations on a day to day basis without breaking the company.
Take care of yourself. You can be a start-up founder and live a normal life. This idea that you need to be breaking your back to make your start-up work is not true. Let it go.
Be kind to your staff. The people working for you are going to make a pass on opportunities that they could take advantage of elsewhere. If you treat your staff members as your first customers and your job as the CEO is to make sure your customer is happy, they will actually build the business for you.
Reputation Opens Doors
Be guarded about your reputation and integrity, people will use it to decide on whether to work with you.
You don’t get what you don’t ask for. Speak to people and share your progress and struggles.
Launchpad Accelerator Africa Class 3 comprised of 12 startups from six African countries — Egypt, Kenya, Nigeria, Senegal, South Africa, and Uganda. 58% of co-founders were female.
Teams who graduated were trained in machine-learning technologies and implemented AI in their product as a result. The startups in this class raised about R129 million in funding, created more than 120 jobs and accumulated over 270,000 users on their services.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Morocco’s Tanger-Med container port will be opened for public use today. It would also, by far become the biggest container port in the whole of the Mediterranean region.
Surpassing the Mediterranean’s largest ports Algeciras and Valencia in terms of container capacity, and drive more investment and manufacturing to the country.
Here Is Why The New Tanger Med Port Is Important For African Businesses.
Main Shipping Route of Mediterranean Container Ports
Tanger-Med Port is the closest for containers coming into Africa from Europe.
About 90 percent of container volumes passing through the ports are transiting to other destinations
Some 20 percent will go to Europe and 10 percent to the Americas.
Tangier also has a ferry terminal carrying some 40,000 people per day in the summer peak season as Moroccans living in Europe cross the Mediterranean.
The terminals are operated by APM Terminal and owned by Denmark’s Maersk, Germany’s Eurogate and a local firm.
The port is about 50 kilometers west of Tangier, the main city in northern Morocco, allowing space for expansion.
Tanger Med, the biggest port in Africa with an annual volume of 3.5 million 20-foot equivalent units (TEU) in 2018, will add six million in capacity after its extension worth 1.3 billion euros, port director Rachid Houari said in an interview.
The Difference This Opening of The Port Is Bringing To The Table
Morocco is hoping that the port, which offers a platform for exports by local production plants of French car makers such as Renault SA and Peugeot SA, will reach volumes of 4.5 million TEU by this year’s end like Algeciras in southern Spain.
“I hope we will add one million TEU of containers every year,” said Houari. He declined to estimate future volumes, saying only the original terminal had reached 3.5 million TEU in just six years. “Fingers crossed we will fill it up in six years,” he said. , he said.
Authorities at the port on the western tip of the Mediterranean, just across from the Spanish coast, hope it can build on its role as a calling point for container shipping firms, especially between Asia, Africa, and Europe.
Morocco invested 1 billion euros in the first terminal which has created some 6,000 jobs at the port and 70,000 others in a trade zone in the area, he said.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
By October 2019 you would need an e-visa if you are interested in traveling to South Africa. This is because South Africa has concluded all plans to reform its current visa regime.
“We’re now at the stage where we’re doing functional testing, once that’s done we’ll do a proper pilot with a few countries,” said South Africa’s Home Affairs acting director-general Thulani Mavuso.“Once that’s completed we’ll go into production.”
With this, South Africa said it is targeting people with highly sought after skills who will boost investment in the country.
“They [e-Visas] provide predictability, people will be able to stay longer in South Africa; people will be able to study etc. The realisation of the visa regime will literally allow us to double our tourism numbers internationally,” said South Africa’s Department of Tourism spokesperson Blessing Manale.
The Implication of This
Currently, all visitors to South Africa have to spend several hours or days at several South African missions overseas in order to get visas or at the port of entry into South Africa. This is even made worse because the port of entry visas are not issued on arrival at South African ports of entry to foreigners who are subject to South African visa control — such foreigners arriving without visas shall be refused entry into the Republic of South Africa and placed on return flights.
South Africa Grows Tourist Arrivals for 2018
But all that is about to change. With an e-Visa which can, of course, be obtained easily anywhere with an internet connection and which saves time that you would otherwise spend on visa applications at South African foreign missions or at the ports of entry into South Africa (if you are eligible), access to South or denial from visiting South Africa can be stamped right from the comfort of your home.
Manale was merely saying what was obvious. South Africa’s visa regime had previously been one of the constraints for tourism, and the roll-out of the e-visas will be beneficial for both tourists and for the local economy. The system will also save people a lot of time as they spend much less time at airports and waiting for administration approval.
South Africa Tourist Arrivals
It Doesn’t Stop At e-VISA, New e-Gates Are Coming
With e-Visa follows e-gates. South Africa’s Home Affairs is also planning to pilot new e-gates at a number of South African airports in 2019. The gates will first be piloted at Cape Town International Airport and will form part of the implementation of the Biometric Movement Control System (BMCS). A further rollout will be done in a phased approach, with OR Tambo, and King Shaka International airports to follow.
Eight of the top ten countries who visit South Africa come from states that don’t need visas to enter the country. More than two-thirds of all the country’s visitors come from these ten countries. Source: Statistics South Africa
“The broad objective of the project is the facilitation of movement of low-risk travellers through a self-service solution, hence freeing capacity for the assessment of high-risk categories by an immigration officer,” the spokesperson said.
“In line with the risk-based approach to managing migration, the first phase will focus on South African passport holders (excluding minors).”
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
“References to the currency of Zimbabwe shall, with effect from the 24th of June 2019 be construed as references to the form of legal tender and the electronic currency with which the term Zimbabwe dollar is.’’
The above statement is from the Zimbabwean government as the country begins a new journey to reshape its bad currency.
Henceforth, international and regional currencies such as the rand, US Dollar, Botswana Pula, and British Pound will no longer be acceptable in Zimbabwe as legal tender. Zimbabwean Finance Minister has gazetted mandatory and sole usage of the Zimbabwe Dollar for all local transactions.
‘It is hereby notified that the Minister of Finance … has made the following regulations; Zimbabwe dollar to be the sole currency for legal tender purposes,” reads a part of the Statutory Instrument issued today.
“With effect from the 24th June 2019, the British pound, United States Dollar, South Africa rand, Botswana Pula and any other foreign currency whatsoever shall no longer be legal tender alongside the Zimbabwe dollar in any transactions in Zimbabwe.”
The Statutory Instrument states that “references to the Zimbabwe dollar are coterminous with references to the following and to no other forms of legal tender or currency — (1) the bond notes and coins, 2.) the electronic currency that is to say the RTGS$”.
Zimbabwe has been using multiple currencies since 2009 when hyper-inflation ravaged the country’s local unit.
In 2016, the central bank of Zimbabwe introduced bond notes which traded at par with the US Dollar but have quickly been losing value.
Zimbabwe Is Poised To Have Its New Currency Now Or Never
Earlier this year, Zimbabwe introduced a new currency, the RTGS$ with President Emerson Mnangagwa and the Finance Minister, Mthuli Ncube, saying in the past few months that Zimbabwe was set to have a substantive currency of its own.
It also says the current bond notes and RTGS$ are at par with the Zimbabwe dollar. This has been viewed as an effective introduction of a new currency for Zimbabwe, which is currently battling a severe financial crisis.
Free For All
Companies such as Old Mutual have been accused by allies of President Mnangagwa for fueling informal market currency rates which have spiked out of control. Early Monday morning, the bond notes were trading around 1:10 against the US Dollar while the official interbank market rate is around 1:6.2.
Other listed companies in Zimbabwe have been facing accounting challenges and several have sought permission from the Zimbabwe Stock Exchange to delay financials following the introduction of the RTGS$ in February this year.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Mauritius is preparing for some radical reforms to its current tax regime. Its 2019–2020 budget proposal is saying so. Changes range from international tax reforms; value-added tax changes; new corporate tax relief measures, including a new patent box regime; a regime for peer-to-peer lending; individual tax breaks; and a tax amnesty scheme.
Below are some of the changes.
Companies or Startups Involved In Innovation Activities Would Get An Eight-Year Tax Holiday
Mauritian 2019–2020 budget is proposing a big incentive for highly innovative companies and startups. For newly established startups and companies, in innovation-driven activities, they stand a greater chance of benefiting from an eight-year tax holiday on income derived from their intellectual property assets which were developed in Mauritius. For existing startups or companies, the eight-year tax holiday would be on income derived from intellectual property assets developed in Mauritius after June 10, 2019.
The Budget also makes changes concerning loss carryforwards for companies. Presently, in Mauritius, the accumulated losses of a company lapse if there is a change in the ownership of the company. However, in the case of a manufacturing company, the Minister may allow the carry forward of the losses if he is satisfied that it is in the public interest to do so and provided conditions relating to the safeguarding of employment are complied with. This derogation will be extended, under the new rule, to any company facing the financial difficulty that is taken over by another shareholder provided conditions imposed by the minister are met. This amendment will be deemed to be effective as from July 1, 2018.
A Five-Year Tax Holiday For E-commerce Startups, Peer-To-Peer Lending
The Budget also proposes a five-year tax holiday for a startup or company setting up an e-commerce platform provided the company is incorporated in Mauritius before June 30, 2025.
Also within the five-year bracket are peer-to-peer lending operators, provided the company starts its operation prior to December 31, 2020.
All interest income received by an individual from peer-to-peer lending will be subject to income tax at the rate of three percent (3%). Any bad debt and fees payable to the peer-to-peer operator will be deductible from taxable interest income. No tax deduction at source will be applied to peer-to-peer interest income.
Also, Mauritian businesses spending on capital goods, which are goods that are used in producing other goods, rather than being bought by consumers, would now breathe some relief. This is because the Budget also improves tax relief for expending on capital goods. Presently, capital expenditure incurred on plant or machinery may be fully expensed in the year incurred if the amount does not exceed MUR30,000 (USD835). The threshold will be raised to MUR60,000 under the new regime.
Four Year Tax Holiday For Oil Bunkering
The new budget also places a four-year tax holiday on all income derived from bunkering of low Sulphur Heavy Fuel Oil.
Under Its Tax Amnesty Rule, Small and Medium Enterprises Will Be Given An Opportunity To Regularize Their Tax Default
To this effect, Small and medium enterprises (with a turnover not exceeding MUR50m) will be given the opportunity to regularize any undeclared or underdeclared income with the Mauritian Revenue Authority free from penalty and interest, provided payment is made on or before March 31, 2020.
The proposed tax amnesty scheme also allows a person making a voluntary disclosure on or before March 31, 2020, to be subject to tax on the disclosed chargeable income at a rate of 15 percent, free from any penalty and interest. However, criminal proceeds are excluded from this grace.
The GDP in Mauritius expanded 4.1 percent year-on-year in the last quarter of 2018, following a 3.3 percent growth in the previous period. Manufacturing rebounded (2.3 percent compared to -1.2 percent) and faster increases were seen in financial and insurance activities (5.2 percent compared to 5.1 percent); real estate (3.1 percent compared to 2.6 percent); and construction (10.1 percent compared to 6.8 percent). Wholesale rose 3.7 percent, the same as in Q3 and agriculture went up 1.7 percent, also the same as in Q3. Considering full 2018, the economy expanded 3.8 percent, the same as in 2017. GDP Annual Growth Rate in Mauritius averaged 3.89 percent from 2001 until 2018, reaching an all-time high of 9.80 percent in the first quarter of 2003 and a record low of -0.80 percent in the first quarter of 2005.
Value-Added Tax (VAT) Also Saw The Greatest Reforms
Under the new VAT regime, cooking gas for domestic use by households in cylinders of up to 12 kg is being made zero-rated for VAT, and certain foodstuffs, including bread, will be newly exempt.
The Budget also says that a wholesale dealer in liquor and alcoholic products will have to be registered with the Mauritian Revenue Authority as a VAT-registered person. The Budget also provides that where there is a splitting of a business entity into different entities to avoid registration for VAT purposes, each entity will be required to be compulsorily registered for VAT.
Consequently, with a view to expediting the processing of VAT refunds, all VAT-registered persons will have to file their VAT return and pay VAT electronically as from March 1, 2020.
As it stands now, a VAT-registered person in Mauritius may claim repayment of input tax in respect of capital goods such as building, plant, machinery, or equipment. The Budget also proposes for provisions to be made to allow repayment of VAT paid on goodwill on acquisition of a business; and the acquisition of intangible assets such as software, patents, or franchise agreements.
Mauritian Banks Who Grant Loans And Other Credit Facilities To Startups, Agric and Renewable Energy Businesses Would Receive 5% Less Tax On Their Taxable Income
Under the new arrangement, a reduced tax rate of five percent (5%) is applicable on the chargeable income of a bank in excess of its chargeable income in the base year (year of assessment 2017/2018) if the bank grants at least five percent of its new banking facilities to any of the following categories of businesses: SMEs in Mauritius; enterprises engaged in agriculture, manufacturing, or production of renewable energy in Mauritius; or operators in African or Asian countries.
Generally, a new taxation system for banks will be re-modeled as follows:
income derived by banks from Global Business Companies will be exempted from the levy under the Value Added Tax Act;
The rate of the levy will be increased from four percent to 4.5 percent of operating income for banks having operating income exceeding MUR1.2bn in a year;
a cap will apply on the increase in levy payable by a bank in order to ensure that no bank is burdened by an excessive levy amount;
it will be clarified that the levy is not a deductible expense under corporate tax; and
no foreign tax credit will be allowed.
Mauritians Will Become Increasingly Tax-Free Under The New Proposal
The new tax regime also sees major changes to personal income tax, including increases to tax-exempt allowances and relief for carers for persons with disabilities.
The Budget that as it concerns inheritance tax, the lump-sum income received by a person by way of payment of pension before the legal due age, death gratuity, or as compensation for death or injury will be excluded from the computation of the solidarity levy. This change will be backdated to take effect as from July 1, 2017, the date the solidarity levy was introduced.
The law will, however, be amended to clarify that an individual’s share of income in a society or succession will be taken into account in the computation of the solidarity levy.
There Would Be Major Changes In The Way International Taxes And Transfer Pricing Are Done In Mauritius
The budget also seeks to amend the Income Tax Act of Mauritius. The amendment of the Income Tax Act would be to implement the recommendation of industry stakeholders regarding the determination of tax residency for companies so that a company will not be considered as tax resident in Mauritius if it is centrally managed and controlled outside Mauritius.
The budget will also address the deficiencies identified by the EU in the territory’s partial exemption regimes.
To this effect, the Income Tax Regulations 1996 will be amended to:
define the detailed substance requirements that must be met in order for a taxpayer to enjoy the partial exemption benefit; and
lay down the conditions that must be satisfied where a company outsources its core income generating activities — namely:
the company must be able to demonstrate adequate monitoring of the outsourced activities;
the outsourced activities must be conducted in Mauritius; and
the economic substance of service providers must not be counted multiple times by multiple companies when evidencing their own substance in Mauritius.
Mauritius also intends to introduce controlled foreign company rules, and the legal provisions relating to the arm’s length test for transfer pricing purposes will be fine-tuned, the Budget says, “to remove any doubt or uncertainty about its application.”
Mauritius is ranked 20 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Mauritius improved to 20 in 2018 from 25 in 2017
Mauritius Would Soon Be A Regional Hub For Fintech
The budgets are not taking the disruptive and profitable nature of Fintech for granted. It sets out measures the territory will take to establish Mauritius as a hub for Fintech in the region. Accordingly, the Financial Services Commission will:
establish a regime for Robotics and AI enabled financial advisory services;
introduce a new license for Fintech Service providers;
encourage self-regulation for Fintech activities in consultation with the United Nations Office on Drugs and Crime;
introduce the use of e-signatures and e-licenses on a pilot basis; and
create crowdfunding as a new licensable activity.
Development of Real Estate Investment Trusts
The Budget announces proposals for new rules and an attractive tax regime to promote the development of Real Estate Investment Trusts (REITs); an “umbrella license” for wealth management activities; and a scheme for headquartering of “e-commerce” activities.
Tax Break For Electric vehicles
The Budget proposes improvements to tax breaks for electric vehicles, including a double deduction for businesses investing in a fleet of eco-friendly cars.
The Gross Domestic Product per capita in Mauritius was last recorded at 10186.10 US dollars in 2017. The GDP per Capita in Mauritius is equivalent to 81 percent of the world’s average.
Gaming Tax Enforcement
The Budget says appropriate amendments will be made to the Income Tax Act to reduce the possibility for a casino or a gaming house to split payment to winners in order to avoid the 10 percent tax on winnings exceeding MUR100,000.
Tax Perks For Marinas
The Government has announced incentives for the development of marina, including new regulations for marinas and a yacht code; an eight-year income tax holiday for a newly set-up company developing a marina; and a VAT exemption will be provided on the construction of marinas.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Until recently, Mauritius used to be the tax haven where all businesses flock to. But that is about to change. The Mauritius government’s proposal to amend tax residency rules for companies is giving jitters to foreign funds operating from the tax haven. The current order is that companies set up their corporate offices in Mauritius while having their business operations overseas, in other countries.
The new proposal by the Mauritius government is that any moment from now, a company will not be considered tax resident in the country if it is centrally managed and controlled outside Mauritius. In other words, the era of tax haven in Mauritius is crawling to an end. Consequently, funds may lose tax benefit after the rule amendment.
To Understand The Implication of This, Here Is A Quick Recap of Ways of Taxing Foreign Companies In Mauritius
Under the Mauritian Global Business sector, a foreign company can fall in either one of two categories: GBC1 or GBC2.
A Global Business Company (GBC 2)
A Global Business Company (GBC 2) is a company that has its office in Mauritius but does business outside Mauritius. At all times, the company has the Management Company acting as Registered Agent in Mauritius. The GBC 2 is non-resident for tax purposes and therefore is a tax-exempt entity and cannot avail itself of the relief under the Double Taxation Treaty in force in Mauritius. Thus, a GBC2 company pays no corporate tax; no withholding tax on dividends; no interest and royalties; no Capital Gains tax; and has no access to the Double Taxation Avoidance Treaty.
The proposed amendment announced in the latest budget said that the Partial Exemption Regime under the Income Tax Regulations 1996 will be amended to define the detailed substance requirements that must be met in order for a taxpayer to enjoy the partial exemption benefit.
A Global Business Company 1(GBC 1)
A Global Business Company 1(GBC 1) can be in the form of a Trust, Sociéty and Partnership. This includes small and medium scale businesses. A GBC 1 is considered to be tax resident in Mauritius and is subject to corporate tax at 15%. Tax advantages for GBC 1 in Mauritius are that there is no capital gains tax and also no withholding tax on dividends, interest, and royalties paid or estate duties.
The expanding network of Double Taxation Treaties has further reinforced Mauritius as a tax efficient jurisdiction and is also one of the prime reasons explaining the growing investment in GBC 1. Activities commonly undertaken by a GBC 1 requiring no specialized license are Investment Holding, Trading and International Consultancy and it normally takes an average of 3–4 weeks to incorporate a GBC 1 with such standard activities.
Interpretation of The Intended New Rule
From the above, only the GBC 1 has access to Double Taxation Treaties between their countries and Mauritius. That is, where the business is run in South Africa and Mauritius at the same time. South Africa is a party to a Double Taxation Treaty with Mauritius. And as such, the business in Mauritius would be considered tax resident in Mauritius and is subject to corporate tax at 15%. Tax advantages for GBC 1 in Mauritius are that there is no capital gains tax and also no withholding tax on dividends, interest, and royalties paid or estate duties.
Example of the benefits derivable from a double taxation treaty arrangement
Should this new rule come into effect, hundreds of similar offshore funds operating out of the island nation would be heavily hit.
The question now, therefore, will be what operations are centrally managed and controlled?
The general rule is that a company will have to demonstrate that its entire management resides in Mauritius and if it is centrally managed and controlled outside, then it may not be entitled to it.
“If the authorities find that it is not in Mauritius, then the entity is not a tax resident at all, and if it’s not a tax resident, then the treaty benefits it gets with other countries will not be available to it,” experts said.
This change would hit hundreds of offshore funds operating out of the island nation and invest in their countries to take advantage of the double taxation treaties between their countries and Mauritius.
As An Example
In determining what operations of a company are centrally managed and controlled, let’s study this scenario.
A South African company may have its board of directors in Mauritius while it is managed from South Africa. In this case, the authorities could say the company is not eligible for tax residency. They will now look at the substance on the ground in Mauritius.
In many cases, the board meetings happen in Mauritius, directors are in Mauritius but the control and management are actually not in Mauritius. This would no longer be the case under the new arrangement.
The fallout of this move will be that many of the structures currently set up in Mauritius and claiming treaty benefits on the basis that they have tax residency certificates may now have to take a look at the structures again.
So, many of the Mauritius structures may get challenged in Mauritius itself and several existing structures will be forced to increase the substance requirements within Mauritius for them to continue getting the tax benefits, experts said.
In simple terms, the consequence of not being considered tax resident in Mauritius is that the company would not benefit from the numerous tax advantages that obtainable from running its business in Mauritius. So, it is not a case of claim benefit from Mauritius, but do business in your home country. You have to manage your business in Mauritius before you claim the benefits.
Mauritius is a tax treaty jurisdiction and has so far concluded more than 42 tax treaties which are in force with the countries listed above.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Airtel Africa Plc is preparing to list (IPO) on the Nigerian Stock Exchange and on the London Stock Exchange at the same time. This is another chance for investors in stocks or shares of companies to cash out big time.
Here Is The Timeline For The Nigerian Offer
Announcement of the offer price, offer size, the publication of the pricing statement and allocation of ordinary shares — 28 July 2019.
Allotment of new ordinary shares to the shareholders — 29-Jun-19
Crediting of ordinary shares to accounts — 3-Jul-19
Nigerian listing and start of unconditional dealings on the NSE — 4-Jul-19
The Amount Of Offer And Share Price
In a prospectus released by Airtel Africa Plc (“the Company”), the global Initial Public Offer ( IPO ) would put ordinary shares worth $750mn (or N270.0bn) out for public subscription.
Airtel Africa says the price for each of the shares is at a range of 80 pence and 100 pence/share or (£0.8-£1.0/share) for the London issue.
The Nigerian offer of the issue is opened at an offer price expected to be between N363 and N454/share (technically a naira conversion of the pounds sterling expected price per share) which will be followed with a secondary market listing on The Nigerian Stock Exchange (NSE).
The price range stated above (between N363 — N454/share) is indicative only and may change in the course of The Offer or be set within, above or below the price range.
The Company is expected to be admitted to the premium listing segment of the main board of the London Stock Exchange (LSE) at the end of the transaction.
Application has been made to the Nigerian SEC for the registration of all of the ordinary shares to be issued in connection with The Offer and to the council of the NSE, to be listed and admitted to the official trading list of the NSE.
Analysis of Airtel’s Intended IPO
The amount Airtel Africa intends to raise is $750mn. This is adding the London and the Nigerian IPO together. This offer is 14.0% and 18.9% of Airtel’s issued ordinary share capital, depending on the offer price.
Airtel, from their prospectus, would be allowing 10% of the issue to be ordinary. This is in accordance with the over-allotment option described in the company’s prospectus.
Airtel is looking at using the proceeds from the issue to reduce the level of their indebtedness on their balance sheet, particularly to achieve a targeted leverage ratio of 2.5x.
Airtel is being strategic about the Nigerian offering. It is planning that the Nigerian IPO (or ‘The Offer’) will be offered through a ‘book-building’ exercise pursuant to Rules 320 to 323 of the Nigerian SEC Rules, to determine the issue price and the level of demand. That is, the price may be readjusted according to the demand and response from the public about the offerings.
All ordinary shares subject to The Offer will be issued or sold at the offer price, which will be determined by the Company, following a book building process and in consultation with the Joint Global Co-ordinators.
From the prospectus, interested individual in the Nigerian offer will be deemed to have represented and agreed that it is either a ‘High Net Worth Investor (HNI)’ or a ‘Qualified Institutional Investor (QII)’ as such terms are defined in Rule 321 of the Nigerian SEC Rules.
Airtel may have to consider a number of factors in determining the Offer price, share size and the basis of allocation. This will include the level and nature of the demand for The Offer during the book-building process and prevailing market conditions. In simple terms, it is most likely the share prices will fluctuate.
From the prospectus, there are no restrictions on the free transferability of the Nigerian Offer Shares, meaning that prospective investors may buy and resell their shares at will. This is expected to lead to fluctuation in share prices. Most times, first to buy always win in this kind of situation.
Caveat
The Nigerian Offer is not underwritten, meaning that the consequences of the customer’s actions on the IPO day are not insured.
From the prospectus, it does appear that if UK Admission does not occur or unsuccessful, all conditional dealings will be of no effect and any such dealings will be at the sole risk of the parties concerned. Temporary documents of title will not be issued. UK Admission shall not be conditional on Nigerian Admission, but the Nigerian Admission shall be conditional upon the UK Admission. There can be no assurance that Nigerian Admission will occur on the date indicated above or at all.
Issuing Houses
In relation to the Nigerian Offer and the listing on the NSE, Barclays Securities Nigeria Limited and Quantum Zenith Capital & Investments Limited have been appointed as Nigerian joint issuing houses. Greenwich Securities Limited and Chapel Hill Denham Advisory Limited have been appointed as Nigerian receiving agents.
Points To Have In Mind When Investing In Stocks of Companies
Own at least 10–30 different stocks, preferably in different industries:Don’t put all your money in one company/mutual fund/industry and invest in a wide variety of them.
Invest in established leaders in the industry, preferably companies in the top 25% or 30%: Choose great and stable companies. Remember: We’re investing in businesses, not gambling on racehorses.
The Company you’re buying should have a Long, Unbroken Record of Dividend Payments: If a company gives good dividends to their stockholders, it means it has actual earnings to pay it.
Choose companies with a 7-year Price-to-Earnings (P/E) Ratio of Less than 25 (and less than 20 in the past 12 months): Choose good companies with a moderately low P/E Ratio (less than 25).
Raghunath Mandava, MD and CEO, Africa, said: “Airtel Africa’s Gross Revenue grew by 11.2 percent on a YoY basis. Data traffic grew by 61 percent, voice minutes increased by 25 percent and Airtel Money throughput grew by 29 percent on a YoY basis.
NB: These points were postulated by Benjamin Graham, author of the classic “The Intelligent Investor
Additionally,
Set a minimum limit of the amount you can invest in companies.
Invest in companies that are making profit or has all the metrics to make profit.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
