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Building A Sustainable Company: Why Most Companies In Africa Do Not Last Longer Than Expected

December 24, 2019

Over the past months, I have been crunching company data, carrying out extensive reviews, and scheduling series of meetings with executives and officers of companies listed on stock exchanges as well as ordinary going concerns, all in a bid to help them reinforce their board effectiveness.

While profit making remains top on most companies’ priority areas, the final straw that often breaks the camel’s back is the companies’ failure to fulfill the demands of good corporate governance practices. That is, even with the right business strategies, the complex organisational structures of most companies sometimes reach a confusing peak that demands that the company have a rigid wall of governance and culture if it is to still maintain some appreciable level of sanity, survive or continue to make profit or contain losses.

For businesses or people resident in Nigeria, 2019 came with the revelation from Moody’s, the leading credit-rating and financial analysis agency, that the main reason why a foremost commercial bank in the country — Diamond — conceded to a merger with Nigeria’s leading commercial lender — Access Bank — was because of poor corporate governance practices adopted by the former. To quote a portion of Moody’s report, Diamond Bank’s weak governance structure meant:

A highly compromised board

A board with little ability to assess the bank’s risk exposure and;

And a board that failed to rigorously interrogate management over strategy.

Moody’s report is not entirely far from my experience reviewing companies’ board effectiveness. The points made below are meant to serve as a sneak-peek into the damage wreaked by weak corporate governance practices in most companies in Nigeria,and by implication Africa.

Total Absence of Good Succession Strategies and Plans

This is the most obvious emptiness you would find in most Africa n companies. There is often total absence of good succession plans or policies for top executives and senior management of companies. A succession planning policy is a tool that helps a company to be prepared for planned or unplanned absences of a director or other top management, which, among other things, clarifies authority and decision-making, thereby maintaining accountability and ensuring stability within a company.

Furthermore, a good succession planning policy of a company should also be able to predict where the next crop of directors or CEO of the company would come from, in order to avoid a situation where the company is suddenly ambushed by the emergence of little known persons who usually find it difficult gaining grounds within the first few years of takeover from present management.

From Moody’s report on Diamond Bank merger, we were able to glean that sometimes in 2018, there was a letter from Nigeria’s market research and analysis news site Proshare. The content of the letter simply was that a former chairman of Diamond Bank, Seyi Bickerstheth gave some hints on why Diamond Bank’s CEO, Mr. Pascal Dozie, should be replaced. The letter re-echoed the same demand from one of the biggest investors in the bank — Carlyle Group’s Carlyle Sub-Saharan Africa Fund (CSSAF) DBN Holdings — who also wanted Mr. Dozie shown the exit door.

“A key shareholder CSSAF DBN Holdings demanded an immediate removal of management, principally the CEO, but the Board favoured a less drastic approach to minimise disruption and also enable the Board secure new leadership,” Bickerstheth wrote in the letter.
“After several discussions, the CEO of the Bank, who is also a representative of the second largest shareholder Kunoch Ltd agreed to resign effective January 3, 2019, but would not tender his letter to confirm his verbal notification.’’

This is a classic case of a poor succession planning policy in place. With a sound succession planning policy, it would have been easier to find a perfect replacement for the bank’s CEO who, from several reports, had already been compromised.

It is therefore necessary that every company in Africa, whether small or large should draft a detailed succession planning policy and appoint a committee (such as the governance, remuneration or nomination committee) to oversee affairs related to succession planning. Alternatively, the Committee should establish a succession plan that identifies critical executive and management positions, forecasts future vacancies in those positions and identifies potential managers who would fill vacancies. Vacancies will be filled from within or, in the event no viable candidate is available, on an “acting” basis while an external recruitment effort is conducted.

Weak Board Structures and Dynamics

This is unarguably, the strongest force that destroys a company even before it begins to make profit. From my experience, it seems most companies still revolve around powerful, god-like figures, without whom the company would struggle to exist. Truly so, if an individual is the strength of a company, in terms of finance or influence, it would be entirely difficult for the company to look stern when pointing fingers. But this is where the basic definition of a company resurfaces — a company is a person with a separate personality entirely independent of the promoters or the founders. A company with a very strong board structure or dynamics should be able to have these key essential features:

The Chairman of the Board should not double as the MD/CEO of the Board.
The Board shall consist of at least an executive, non-executive and an independent director in such a way that the number of non-executive directors shall be more than that of the executive directors. In fact, there is really no need appointing directors who are out of touch with practices in the relevant sectors the company are competing in. Apart from the fact that persons appointed to the board must be persons of proven integrity, they must also possess acute knowledge required of a person in that industry.
A good succession planning policy should be mindful of the fact that an ideal replacement period for each non-executive director is usually three years, although an executive director could stay on the board for a maximum period of three years of 4 years each, while the maximum period for an independent director should be 3 years of three years each. On their parts, MDs/CEOs’ tenure usually have an ideal maximum period of 10 years, which may be broken into periods, not exceeding five (50 years) after the expiration of his tenure as MD/CEO.
Quite obvious from my experience reviewing a number of companies is the practice of converting an existing non-executive director into an independent non-executive director. This practice is extremely unhealthy if the company is to survive. An independent director, in most cases, does not have any direct material relationship with the company; or in cases where they have some material relationship with the company, their equity interests in the company should not be more than 0.001% of the company.
Another instance of a weak board structure is the practice of filling a substantial portion of the board size with family and friends, who have little or no contribution or experience to bring to the board. A standard practice demands that not more than two members of a family shall be on the board of a company at the same time. The expression ‘family’ includes a director’s spouse, parents, children, siblings, cousins, uncles, aunts, nephews, nieces and in-laws. In the same vein, no two members of a family shall occupy the positions of Chairman and MD/CEO or Executive Director of the company and Chairman or MD/CEO of a company’s subsidiary at the same time.

Moody’s still offers us a classic example from Diamond Bank’s merger with Access Bank in this regard. According to the credit-rating agency, Diamond Bank failed because it did not have enough independent directors (the objective truth tellers) on its board and this resulted in a lack of effective board oversight.

By the end of 2017, only one of Diamond’s 13 board members met the Nigerian SEC’s definition of independent (another had retired in August),” Moody’s noted

“We believe Diamond’s board failed to provide an effective check against the bank’s management team. Board independence is important because it makes it more likely that management strategies are subject to rigorous questioning, reducing the risk of directors ‘rubber stamping’ management decisions.”

The implication of this is not far-fetched. Mr. Dozie, whose family was the second biggest shareholder in the bank, directly controlling 5% and another 9% indirectly through its investment firm, Kunoch Ltd (14% in total) was only 4% off the Bank’s biggest shareholder, Carlyle Fund, which controlled 18%. This meant, of course, a huge overbearing influence of one family over how the business of the bank was run. A striking example was the fact that a member of the founding family held the CEO role between November 2014 and March 2019 when it merged with Access Bank. During this period, profits fell by 78% in 2015 and bank deposits shrank by 22% between year-end 2014 and 2017.

Poor Board Processes And Oversight

From my experience, it appears that most companies do not seem to have a sound grasp of issues surrounding board processes and oversight. To begin with, there are certain committees a company must necessarily form. Chief among them are the risk, audit and corporate governance or remuneration committees. The absence of any of these committees must necessarily lead to a weak governance structure in the company. Consequently, for a company to have effective board processes and adequate oversight, it should be able to have these key essential features:

To make sure that there is some level of independence and checks and balances on the Committees, the Chairman of the Board/company shall not be a member of any of these committees stated above. All the committees must necessarily be headed by a non-executive director. In the same vein, the MD/CEO and other executive directors of the company shall not be members of the audit committee of the board as well as the committees on governance, remuneration or nomination.
Only those knowledgeable in risk management or audit shall be appointed to these committees. And as a matter of good practice, the board shall not replace members of the Board Audit Committees and External Auditors (not internal auditors) of the company at the same time.
The risk and audit committees must necessarily play some oversight functions on the company’s risk officer and internal auditor, and as a matter of good practice, both officers must report directly to the committees on risk management and audit respectively.
Boards of Companies shall ensure that the company’s risk management framework provides for regular and independent reviews of the risk management policies and procedures as well as periodic assessment of the adequacy and effectiveness of the risk management functions.

Moody’s particularly drew out a line here. It said Diamond bank did not attract enough corporate borrowers who are a major moneymaker for banks and that, well, it loaned out more money to the oil and gas sector than the Central Bank of Nigeria thought was prudent (52% versus 20%). So when oil prices fell in 2015 and 2016, the bank came crashing with it. This is purely a case of inadequate oversight over the bank’s risk management department by the bank’s risk committee. This is so because Moody’s noted that Diamond Bank’s weak governance structure necessitated: a highly compromised board; a board with little ability to assess the bank’s risk exposure and; and a board that failed to rigorously interrogate management over strategy.

Little Or No Adherence To Policies on Transparency and Disclosures

Although most companies tout themselves to be pro-transparency and disclosures, this is not often the case in reality. From my experience, a lot of information is still being buried or swept under the carpet by companies’ top management, in connivance, sometimes with the board. This is worsened by occasions of conflict of interests necessitated by the directors’ participation in the equity of the company. A transparent board should be able to disclose information about the each director’s interest or shareholding in the company, as well as his directorship in an another company, if any. It should also be able to disclose the exact cumulative years of service of each director, and that of the external auditor at the end of every financial year.

Again, the most common challenge being faced by most companies on transparency in Nigeria revolves around issues of financial reporting. This is the stage where usually all the books are cooked, especially when the appropriate structures for checks and balances are weak. As a matter of best practices, companies should adopt the following around their financial reporting efforts:

The board committee on audit must necessarily hold a meeting once in every three months of the financial year of the company and deliberations at such meetings must include, at least consideration of the quarterly reports of the internal auditor. The board committee on audit must as a matter of good practice, investigate all audit reports and resolve all issues arising from the reports.
At least once in a financial year, the Board Audit Committee should endeavour to hold a discussion with the head of the internal audit function and the external auditors without the presence of management, to facilitate an exchange of views and concerns that may not be appropriate for open discussion.
As a matter of standard practice, the tenure of an external auditor in a given company shall be for a maximum period of 10 years after which the audit firm shall not be reappointed in the company until after a period of another seven (7) consecutive years.
Recall that it is standard practice that the MD/CEO and all the executive directors of the company should not be members of the Audit Committee. The audit committee of the board should consist only of the Non-executive or independent non-executive director of the company.

A classic example of the effect of a poor governance structure found in a company

One notable abuse of these principles is found in Cadbury Nigeria Plc’s case. In 2006, Cadbury Nigeria filed with Nigeria’s Securities and Exchange Commission its annual report and accounts for years 2002 to 2005 which contained untrue and misleading statements. Investigations revealed that Cadbury Nigeria’s former chief executive officer (CEO), and its former finance executive director, had deliberately made overstatement of the company’s financial position over the course of a few years to the tune of between N13 to N15 billion in connivance with the Company’s heads of accounts, internal audit and sales operation and supported by the company’s board chairman.

Further studies revealed that the Audit Committee of Cadbury Nigeria consisted of 3 executive directors, against the standard practice described above. The head of internal audit and members of Audit Committee also failed in making proper recommendations to the board at meetings. They also failed to examine the auditor’s report to review and make appropriate recommendations on management matters with the external auditors. Luckily enough, the discovery of this fraud has to be the most timely intervention that saved the company from filing for bankruptcy, especially as it had actually made a loss totaling N5 billion during the period.

Failure On Strategy and Planning

Finally, one recurring problem in most companies from my experience is the absence of any formal strategic framework for the companies. In the current era of disruption and innovation, not having any comprehensive policy on strategy is foolhardy. Any company that wishes to survive and adapt must strive to remain relevant through strategies. To this effect, the following best practices must be adopted and reviewed on yearly basis by boards of companies:

The board should adopt a plan detailing the strategic priorities for the company and how it expects this to be actualized.
It must also dedicate enough time to strategy planning and must as a matter of urgency define annually the most significant issues facing the company in order to build extensive regular discussion of these issues into the Board meeting agenda.

When this is done, the company’s performance, relative to the general state of the economy, is bound to improve.

The Bottom Line

Issues around a company’s failure or success is neither here nor there, since there are different economic, social or even political factors that may influence a company’s existence over a period of time, but the principles of building a sustainable company are almost always the same. Some of these principles as discussed above are so important that a company wishing to build a long-lasting legacy cannot do without them.

On the other hand, small companies seem, however, to be having a hard time understanding that a company is a separate legal entity from the owners, an issue which they must quickly address, if the future would be any near brighter for them.

Reviewing the effectiveness of every company’s board is a good way to start towards building a sustainable company in Africa.

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

Charles Udoh has worked with companies in insurance, finance, banking, leasing, investment funds as well as real estate to strengthen their board effectiveness. He could be reached at udohrapulu@gmail.com or charles@teamnominees.com

Nigeria Energy Access Fund Gets $500,000 Grant

September 20, 2019

The Nigeria Energy Access Fund has received a grant worth $500,000 from the Sustainable Energy Fund for Africa (SEFA) for investments in sustainable energy in Nigeria and to support the development and launch of the Nigeria Energy Access Fund (NEAF), a new private equity fund developed by All On, a Nigerian impact investment firm financed by Shell. With the help of this grant, the NEAF will make strategic investments in sustainable energy in Nigeria, particularly in the country’s burgeoning off-grid and mini-grid sectors.

Wale Shonibare, the Acting Vice President for Power, Energy, Climate Change and Green Growth at the African Development Bank

The SEFA which is domiciled at the African Development Bank will support specific workstreams to set NEAF in motion and enhance its engagement with private and public sector investors. NEAF will be a first-of-its-kind facility to provide eligible projects and businesses with equity solutions that are currently unavailable in the market. According to Wale Shonibare, the Acting Vice President for Power, Energy, Climate Change and Green Growth at the African Development Bank, Nigeria requires bespoke and innovative market-based solutions to provide its off-grid population, estimated at 100 million, access to sustainable sources of energy. The SEFA grant he added will be instrumental in the constitution of NEAF, and ultimately, the mobilization of much-needed private sector investment for the sector.

Egyptian Transport Startup Swvl targets Nigeria, Africa And Asia before the end of 2019

September 16, 2019

Barring any last minute changes, Egyptian transport technology startup Swvl will expand into two cities in Pakistan in the next two weeks and begin operations in Nigeria’s commercial capital Lagos before the end of the year, its chief executive.

co-founder and CEO Mostafa Kandil — Co-founder and CEO Mostafa Kandil.

“We will enter Lagos before the end of the year, and our eyes are on Dar es Salaam and Abidjan,” co-founder and CEO Mostafa Kandil told Reuters. ‘‘The firm is also planning to launch in other South East Asian markets, he added.’’

Here Is All You Need To Know

The firm, which operates buses along fixed routes and allows customers to reserve and pay for them using an app, will also expand into Manila in the first half of next year, Kandil added.
Kandil said the company is seeking to raise more than $100 million in a financing round in the first half of next year, and is targeting a $1 billion valuation in the next five years.
Since its launch in April 2017 Swvl has secured the biggest round of funding for a tech start-up in Egypt.

“We were a company worth about $2 million two years ago and our paid-up capital is now $80 million,” he said.

Kandil said he hoped Swvl would eventually go public, but did not say on which stock exchange. He said he would in the longer term also consider a buyout offer from the likes of ride-hailing giant Uber (N:UBER).

Kandil, 25, said the company has been losing money, but expects to turn a profit in two to three years.

“This year we have entered about seven new cities and next year we are targeting another 10 to 20 new big cities,” Kandil said.

The Cairo-based firm, which is due to move its headquarters to Dubai in November, launched in Nairobi about six months ago and began operations in Lahore in July.

“We aim to reach one million trips a day in Egypt over the next five years,” said Kandil.

He and two other young Egyptian co-founders, Mahmoud Nouh and Ahmed Sabbah, own more than 30% of the company, he said.

The rest is held by 17 investment funds, including U.S.-based Autotech Ventures, Sweden’s Vostok New Ventures, Oman’s sovereign wealth fund, the UAE’s BECO Capital and China’s MSA Capital.

The Swvl app, which has fixed bus routes, uses the passenger’s location and destination to determine the shortest possible trip time based on the nearest bus stop.

Uber and regional competitor Careem began operating their own bus services in Egypt in late 2018, competing directly with Swvl.

About Swvl

Founded in 2017, Swvl connects commuters with private buses, allowing them to reserve seats on these buses and pay the fare through company’s mobile app. The buses available on Swvl operate on fixed routes (or lines).
The report by Vostok New Ventures, notes,”Swvl offers a premium on-demand bus service with third party supply. The algorithm
plans the most efficient routes and the most efficient bus stops for peak hours, and more flexibility is possible during off peak hours. Network effects arise through the snowball of the more users that are attracted to the service, the more bus owners will want to offer their supply, the more bus supply the more routes etc., the more customers etc.”
It won’t be a fair comparison but to give you some context, Careem had raised its $60 million round (Series C) at a valuation less than $200 million in November 2015, over three and half years after the company was founded.
Swvl is now in the same territory both in terms of total investment they’ve raised so far and the valuation, in almost two years.
The VC landscape in MENA is entirely different today with a lot more options when it comes to raising Series A/+ rounds so the funding is relatively easier to come by (than it was when Careem raised money) but what Swvl has achieved is still a very big feat.

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

Deploying The Neighbour Principle post-xenophobia attacks

September 14, 2019

By Chido Nwakanma

One of the fallouts of the retribution attacks on South African-owned businesses in Nigeria is an opportunity for greater collaboration and engagement between the Nigerian Police Force and citizens in affected communities to track and contain the looters. The Police would have to drive the engagement for optimal returns to all stakeholders. It is the opportunity for Nigerians to act as one in the matter of crime detection and containment.
The opportunity is the application of the Neighbour Principle. The Neighbour Principle draws from English Law and stipulates that each person should take care to look out for his neighbour and ensure not to cause injury to her. It is a significant pillar of insurance practice.

The heist committed by looters against various shops in malls with Shoprite Stores as anchor tenants is a threat not only to the affected shop owners but to consumers of goods and services stolen from those shops. More people are at risk than is apparent. Make no mistake about it. Thieves used the opportunity of the mob to rob.
They will now attempt to sell off those items in the market. The Nigerian Police has rendered the first public service by warning potential customers against patronising items offered at ridiculously low prices. They need to do more.

The Police should open a register in the stations or District Offices closest to each of the affected shops. Shop owners should collaborate with the Nigerian Police. They would offer a detailed inventory of their stolen stocks such as they would do to their insurance companies. That inventory would include tracking identifiers such as registration or license numbers, product and device IDs for laptops, certificate numbers for Iphones and things like IMEI numbers for every other type of phones. Watches, electronics and most such items have serial numbers.

Citizens have a role to play in collaboration with the Nigerian Police. Blow the whistle communally if someone suddenly has an unexplained device purchase. Look closely and check with the Police if you buy an item at prices that are not congruent with existing market rates.
The Shoprite Heist happened at a time of moral crisis for Nigeria. Recently, the FBI drew up a list of 77 persons wanted for fraud in the United States. Some of those already identified are persons who often made a show of their new money to the applause of many. No one could account for their cash or its source.

Moreover, a central pillar of the allegations by the South Africans is the claim that Nigerians in their country are at the vanguard of criminality in the illicit drug trade and others. Nigerians counter and say, while there may be some criminals, they do not describe our country.

Our country had communal values against theft, unexplained wealth and inventory in homes and on persons. Societies work through collaboration. As an old radio jingle stated, “armed robber no be spirit”. They live in the community.
In a shop at the Sangotedo neighbourhood in the week of the heist, the shop attendant, his friends and his madam were discussing the incident. Their consensus was that those who got the items were “lucky”. I hushed them, pointing out that it was thievery. No, they claimed. They claimed that security personnel including soldiers, allegedly allowed or encouraged the crowd to move in. I said it was untrue and impossible. Even if it were so, the security personnel do not own the shops. We all know right and wrong.

Suddenly Madam Shop Owner agreed. She said her husband took umbrage with her when she regretted to his hearing not being on hand to participate in the bazaar. He condemned the notion.
Citizens are confused as to what moral values to uphold. We must collectively as a society proclaim and defend the correct norms to eliminate that confusion for the average citizen.

Reclaiming the moral virtues of Nigeria would be central and contributory to any effort to reposition our reputation. No amount of news releases or press conferences would make a dent. Actions provide the basis for narratives and repeated narratives establish a reputation. Once the activities of Nigerians change, the stories would change.

Everywhere law enforcement works with citizens to uphold the laws. Laws draw on the moral codes of society. Ultimately, the police can only do so much as citizens empower them to do based on shared values.

The very professional team of the Nigeria Police Communications Division would drive this effort through public service messages that link the public interest with the role of the police. Do the right thing. Do it right.

Kelechi Deca

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

Businesses In Nigeria To Pay Extra Value-Added Tax (VAT) and New Police Fund Levy

September 13, 2019

Apart from the fact that companies in Nigeria pay a 30 percent flat-rate corporate tax and other range of taxes and levies, now added to this list are the new 0.005% police fund levy (N5 per N100,000) to be paid out of the net profits of companies, and a possible increase in VAT by 2.2 percent (now 7.5%), barring any last-minute rejection by Nigeria’s parliament.

Here Is All You Need To Know

The New Police Fund Levy

Companies in Nigeria will now have to pay 0.005% police fund levy (N5 per N100,000) out of their net profits. The Nigerian Police Trust Fund Act (the “Act”) was passed by the National Assembly in April 2019, and signed into law by the President on 2 July 2019. The Act establishes a Fund, proceeds from which will be used to train police personnel and procure security machinery and equipment.

Imposition of a levy: The Act imposes a levy of 0.005% of the “net profit” of companies ‘operating business’ in Nigeria.
Funding from Federation Account and other sources: The Fund will also consist of 0.5% total revenue accruing to the Federation Account, in addition to proceeds from grants, intervention funds, aids, donations, investment income and so on.
Establishment of a Board: The Act establishes a board responsible for administering the Fund, making investment decisions, and fulfilling other objectives of the Act.
Duration of the Fund: The Fund will be wound up 6 years after its establishment. The assets and liabilities will be transferred to the Nigeria Police Force.

The New VAT At 7.2%

Nigeria ’s Federal Executive Council also approved 7.2 per cent as new Value Added Tax rate for the country, up from the current five per cent.

Although a definite decision has yet to be taken as to the effective date of the new rate, Nigeria’s Minister of Finance, Budget and National Planning, Zainab Ahmed, who spoke with State House Correspondents after the FEC meeting in Abuja, said consultations were in process over when the new rate would apply.

However, the first hurdle the new tax regime will face would be in Nigeria’s parliament which is either expected to approve or reject the proposal. Nigeria’s VAT Act would also have to be amended by the National Assembly before the commencement of the new rate. Already, the Ministry of Finance has hinted effective date to be sometime in 2020.

“We are proposing and council has agreed to increase in the VAT rate from five per cent to 7.2 per cent,’’ she said.

“This is important because the Federal Government only retains 15 per cent of the VAT; 85 per cent is actually for the states and local governments.

“The states need additional revenue to be able to meet the obligations of the minimum wage.”

“This process involves extensive consultations that need to be made across the country at various levels and also it will involve the review of the VAT Act. So, it is not going to be implemented immediately until the Act is reviewed, ” she added.

The Implication of This

Of course, once the old VAT Act is amended, and the new rate becomes effective, the new rate will automatically be applicable to online transactions carried out in Nigeria. Nigeria ’s Federal Inland Revenue Service, the national tax agency has recently announced that digital tax will become effective January, 2020. This is expected to discourage online transactions and shrink the purchasing powers of Nigerians in a country where the gdp per capita is still less than $2000 ( one of the lowest in the world) and over 86.9, representing 50% of the population are still living below the global poverty line (the worst in the world).

Read also: 45 Million Nigerians Set To Be Taxed For Every Online Transaction

African countries generally have an average VAT rate of about 15 percent, the Americas and Oceania have an average rate of 13 percent, and Asia has an average VAT rate of 12.3 percent. VATs are as low as 5 percent in countries such as Canada (federal only), Taiwan, and Zambia, to as high as 27 percent in Hungary. The average VAT rate in Europe is 20 percent, about 5 percentage points higher than the global average. However, the average European corporate income tax rate is 18.7 percent, which is lower than the worldwide average of 22.8 percent. From the above facts, Nigeria alone would have the highest corporate rate in Europe were it a European country. In a bit, Europe’s average VAT rate is justifiable because of its low corporate tax regimes. To worsen situation, African countries have one of the lowest industrial outputs across the world.

Again, although the 0.005% (N5 per N100,000) police fund levy on the net profits of companies may not be very significant, it however places additional tax burden on corporate taxpayers.

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.

These Four African Countries Control 60 per cent of Africa ’s Digital Economy, says new report.

September 12, 2019

Africa has 54 countries but only four countries dominate the digital revolution going on in the world. According to the United Nations Conference on Trade and Development (UNCTAD) Kenya, Egypt, Nigeria and South Africa are leveraging data and various platforms to collectively control the lion’s share of the continent’s digital entrepreneurship activities.

Here Is All You Need To Know

Apart from the Kenya, Egypt, Nigeria and South Africa, six second-tier countries — Ghana, Morocco, Senegal, Tunisia, Uganda and Tanzania — make up another 20 per cent, while the remaining 44 countries in Africa account for the remaining 20 per cent.
The UN agency, however, warns that the growing digital wave on the continent could be curtailed, particularly in Kenya where the Government is looking for ways to start taxing mobile applications and internet usage.

‘‘While this kind of taxation may be attractive to governments, it can be counterproductive if it results in a decline in economic activity by reducing the number of active internet users,” says the report.

UCTAD said efforts to grow tax revenues could also hurt the growth of the growing online businesses as well as suppress start-ups.

According to the report entitled Value Creation and Capture: Implications for Developing Countries, numerous developed countries are discussing or implementing interim and permanent measures to tax the digital economy.

Read Also: Tax War On Online Businesses: Nigerian and Kenyan Ecommerce Businesses To Pay VAT

These include Kenya, Uganda, Tanzania and Zambia. In Kenya, the National Treasury has proposed imposing an income tax and value-added tax on items bought on different e-commerce platforms. The proposals, contained in the Finance Bill 2019, are currently being debated in Parliament. This is also the case with Nigeria which has proposed to tax all ecommerce companies.

Commenting on the findings, UN Secretary-General António Guterres said digital advances have generated enormous wealth in record time, but that wealth has been concentrated around a small number of individuals, companies and countries.

There Is Wide Disparity In Digital Revolution Across The World

The report also noted that the world’s top digital firms are highly concentrated geographically . Among the world’s 70 highest valued digital platforms, most are based in the United States, followed by Asia (especially China). Latin American and African digital platforms are only marginal. In terms of market capitalization value, digital platform companies from the United States increased their share in the global total from 65 per cent to 70 per cent. An analysis of web traffic data confirms the dominance of the large United States digital platform companies. The report also noted that the United States hosts more than half of the top 100 websites used in 9 of the world’s 13 subregions shown in the table. Even in Western Europe, the most-used websites are based in the United States.

Challenges Confronting Emerging Economies

The report noted that the some of the problems confronting developing economies and other entrepreneurship ecosystems include the small size and scope of their markets.

It is rare for them to be able to reach international markets. In the diverse sample used in one study on Africa, 117 out of 135 enterprises (87 per cent) targeted their domestic markets. Enterprises typically focused on using digital technologies to cater to a nearby niche market, the report notes.

Indeed, few African digital enterprises reach customers beyond the boundaries of their home city. This is because they have to engage with customers directly, and also because only customers in cities have the minimum necessary infrastructural access or technological readiness to engage with a variety of digital products, the report further notes.

The report further notes that Africa still has fewer capital and other entrepreneurial resources than any other regions in the world to boost its digital economy.

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.

Africa Check in conjunction with Facebook, expands its local language coverage as part of its Third-Party Fact-Checking Programme

August 15, 2019

Africa Check in conjunction with Facebook, expands its local language coverage as part of its Third-Party Fact-Checking Programme.

Facebook’s reality checking project depends on input from the Facebook people group, as one of numerous sign Facebook uses to raise possibly false stories to certainty checkers for survey

Facebook), today with Africa Check reported that it has included new neighborhood language support for a few African dialects as a major aspect of its Third-Party Fact-Checking program – which surveys the exactness of news on Facebook and expects to decrease the spread of deception.

Propelled in 2018 crosswise over five nations in Sub-Saharan Africa, including South Africa, Kenya, Nigeria, Senegal and Cameroon, Facebook has banded together with Africa Check, Africa’s first free certainty checking association, to grow its neighborhood language inclusion over:

Nigeria, in Yoruba and Igbo, adding to Hausa which was at that point bolstered

Swahili in Kenya

Wolof in Senegal

Afrikaans, Zulu, Setswana, Sotho, Northern Sotho and Southern Ndebele in South Africa

As indicated by Kojo Boakye, Facebook Head of Public Policy, Africa, stated: “We keep on trying huge interests in our endeavors to battle the spread of false news on our stage, while building strong, sheltered, educated and comprehensive networks. Our outsider reality checking system is only one of numerous ways we are doing this, and with the extension of neighborhood language inclusion, this will help in further improving the nature of data individuals see on Facebook. We know there is still more to do, and we’re focused on this.”

Remarking, Noko Makgato, official chief of Africa Check, said “We’re excited to grow the munitions stockpile of the dialects we spread in our work on Facebook’s outsider truth checking program. In nations as semantically different as Nigeria, South Africa, Kenya and Senegal, certainty checking in neighborhood dialects is imperative. In addition to the fact that it lets us actuality check increasingly content on Facebook, it likewise implies we’ll be contacting more individuals crosswise over Africa with confirmed, believable data.”

Facebook’s reality checking project depends on criticism from the Facebook people group, as one of numerous sign Facebook uses to raise possibly false stories to certainty checkers for survey. Neighborhood articles will be reality checked close by the confirmation of photographs and recordings. In the event that one of Facebook’s reality checking accomplices distinguishes a story as false, Facebook will demonstrate it lower in News Feed, essentially lessening its dispersion.

Kelechi Deca

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

Facebook: https://web.facebook.com/Afrikanheroes/

TALKING TALENT: HR Experts in Nigeria discuss how to future-proof their business and discover the one thing they desperately need

August 9, 2019

The cost of a bad hire or exit is on average three times the annual salary of that position, once all bottom-line costs are included in calculations. This is an outrageous cost and one of the reasons HR leaders have to ensure that their companies must hire the right fit and effectively plan for succession, at all levels. One pioneering HR consulting company is trailblazing the course to help Nigerian companies achieve this.

On Tuesday, July 30th, 2019, over 50 HR Experts and Top Business professionals gathered at the Radisson Blu Hotel in Lagos Nigeria to discuss human resource management strategies that help organizations plan for the right hire, identify, develop and retain top-performing talent and position teams for seamless succession.

This event, ‘Talking Talent’, is the maiden edition of a series of HR workshops planned to take place across different countries in Africa and is the brainchild of The African Talent Company (TATC), a Pan-African recruitment firm offering ‘Fit-For-Purpose’ HR solutions across Talent Acquisition, HR Technology, Data Analysis, and Consultancy.

Senior HR professionals from a wide range of top companies and industries, such as Nigerian Breweries, Mondelez, Rand Merchant Bank, Rossetti Pivot, were in attendance as speakers, panelists, and workshop participants.

There were presentations and panel discussions, however, the key activity that struck a chord with the participants was the break-away sessions to deep dive on three key HR pain points: ‘Hiring Right’, ‘Managing Talent’ and ‘Succession Planning’. These one-on-one sessions were respectively led by three talent Gurus: Heather O’Shea – Managing Partner, TATC; Martin Sutherland – Global Director, PeopleTree Group and Brett Mulder – COO, PeopleTree Group.

One insight that stood out, was the fact that succession planning was not commonly practiced at Nigerian companies and that implies that teams do not have the required bench strength and had to be reset whenever top performers leave.

It was quite a revelation as HR leaders at the workshop said they faced challenges which varied from the lack of support from team members who refused to mentor designated successors, to HR teams who did not know how to design and implement a succession plan.

Brett Mulder, who led the breakout group on Succession planning, said, “Succession planning is a risk management strategy to ensure leadership continuity, preserve institutional knowledge and, in most cases, develop talent from within the organisation.

Gaining commitment from the executive and creating a structured roadmap to guide your investment in time, is critical in implementing a plan that ensures successors actually succeed.

Identify key roles for succession, adopt an evidence-based approach to assessing readiness, identify pools of talent that could potentially fill these roles and finally develop employees to be ready for advancement into key roles.”

Heather O’Shea, who focused on hiring right, also said, “Top companies all struggle with getting their workforce planning correct, not knowing when to ‘Buy, Borrow, Build or Bind’ the skill. This can be very costly, from a time, money and emotional perspective and we want to make it easy for HR leaders to understand how to choose the right strategy”. To facilitate this learning, participants were given a free workforce planning template and a demonstration on how to use this template at their respective companies.

During the panel discussion, chaired by Jobberman CEO, Hilda Kragha, she mentioned, “When you find good people, as an organization, you need to make your value proposition interesting for them at every stage of their journey with you, so they are motivated to deliver more, for longer”.

The panel was discussing ‘How to identify top performers and how to retain them’ and had Martin Sutherland on the panel, who also said, “Personalising employee engagement is important, anonymous surveys don’t help you tailor custom retention actions for high-value individuals.”

In engagements with TATC clients in 2019, they asked: “How do I future-proof my business to ensure I have the right skills to continue to grow well past 2020?”.

This was the key pain point, and to address this, TATC decided to not hold “‘another conference”‘ but rather to have a workshop, where TATC could share insights and offer their talent specialists who could bring their expertise to share with clients.

Delegates were offered the opportunity to have one-on-one sessions to speak about their challenges because TATC wanted to offer the expertise to clients in an open, yet intimate forum.

The results were intriguing, as key insights around the challenges HR leaders face in succession planning and workforce planning were discovered and discussed. This is a high-impact workshop series that will occur regularly across the different markets that TATC operate.

Kelechi Deca

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

Facebook: https://web.facebook.com/Afrikanheroes/

Nigerian Startup TechAdvance Raises $1m In New Funding To Expand To Emerging Markets

Nigerian startups too are having a field day here. TechAdvance, leading Nigerian payment application development company is the latest to join startup fundraising bandwagon. The payment solution has raised $1m in new funding, putting the startup’s valuation at USD $20M.

Here Is The Deal

The investment was led by the Bahrain-based energy investment company Lamar Holding.
Lamar’s investment will support TechAdvance’s strategy to substantially expand its global expansion.
The move will broaden Lamar’s successful portfolio into the technology industry, and give the company a foothold into the African continent.

‘‘The payments space in emerging markets is buzzing with opportunities but faces a number of major barriers. These funds will allow us to shift our focus to these opportunities — especially the launch of our digital bank, without compromising our existing business lines,” Founder and CEO of TechAdvance, Edmund Olotu said.

A Glance At Lamar Holding

Lamar Holding is an established developer and long-term operator of projects across Saudi Arabia’s national energy infrastructure network. Through a portfolio of companies and strategic joint ventures, Lamar Holding has garnered an unrivaled record of winning and delivering contracts in the Saudi energy market.

Why Lamar Holding Chose To Invest In TechAdvance

On why TechAdvance, Hani Abdulhadi, Vice President at Lamar Holding noted:

“We are delighted to make this investment in one of Nigeria’s most exciting and innovative companies. This is an opportunity for Lamar and TechAdvance to collaborate and distribute its expansive suite of digital solutions to emerging markets in Africa and the Middle East.”

A Glance At TechAdvance

TechAdvance is a payment application development company founded in 2009 with a strategic focus in developing and deploying niche payment companies to serve the needs of large public and private sector organizations in Nigeria. It oversees various niche subsidiaries including GPay Africa, PayElectricityBills, Advance Bancorp Digital Microfinance Bank, and others.
TechAdvance runs a network of subsidiaries, each of which focuses on different verticals in emerging markets including utility bill payments, digital financial services, and transportation software. Earlier this year, the company was highlighted as one of the top companies to Inspire Africa in the London Stock Exchange Group’s Report for 2019.
TechAdvance, through its subsidiaries, recently acquired a microfinance bank and obtained approval in principle for a Payment Solution Service Provider (PSSP) license from the Central Bank of Nigeria. The company also recently received approval from the Central Bank of Bahrain to operate in the country, signaling its intentions to grow beyond Nigeria and Africa.

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.

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The leading Nigerian digital printing company chooses Canon for its digital color printing for maximum versatility

August 8, 2019

KAS Prints will rely on Canon’s innovative technologies to provide its customers with the best innovative printing services.

Canon Central and North Africa (CCNA) world-leader in imaging solutions, is proud to have among its clients KAS Prints, a leading Nigerian digital printing company, and to participate fully in the development of its business objectives.

This collaboration, based on commitment, multi-sector knowledge, secure data management and high value-added solutions that guarantee sustainable innovation, allows them to combine their mutual know-how to provide KAS Prints customers with unique and unmatched services.

Canon’s continued investment in research and development offers KAS Prints confidence that they are using technologies specifically designed to improve their productivity and data security.

Canon appreciates that customer expectations in the digital and printing industries are constantly evolving which has an impact on business models in all imaging sectors. Integrated and intelligent applications allow businesses to reduce the complexity of challenges related to their environment and contribute to positive value creation.

“We have found in Canon a trusted partner with whom we share the same values and is committed to helping us successfully anticipate our customers’ needs especially in our offering of the latest solutions.

Canon’s long-standing experience in the digital and printing world encourages the emergence of innovations that will transform service delivery for our customers. We will be able to quickly adapt to any changes in the printing sector which will enable KAS Prints to maintain its leading position in the digital print market” said Ademola Kasumu – Managing Director and CEO, KAS PRINTS.

Tenaui, the official representative of Canon in Nigeria, was of big support to build this strong relationship between Canon and KAS. “Tenaui is really proud to have a valued partner such Canon and we are working very closely with the team to generate and develop more business in the country” added Yasser Alfara, Managing Director, Tenaui.

“We are very proud to be able to welcome KAS Prints among our customers to whom we have already provided C10000 printers. KAS Prints has a diverse customer portfolio and we are committed to supporting them with increasingly innovative and reliable high-performance state-of-the-art machines.

I am confident that this is the beginning of a mutually beneficial partnership that will last for the foreseeable future, as Canon helps KAS Prints achieve the goal of placing the customer at the heart of service delivery. I would like to take this opportunity to thank Tenaui who continues to support us and have enabled us in recent years to pursue satisfactory growth in Nigeria” concluded Somesh Adukia Regional Sales Office Director, Canon Central and North Africa (CCNA).

Kelechi Deca

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