Good day for South African businesses, bad day for their Nigerian counterparts. This is because there are still so many issues surrounding equity crowdfunding in Nigeria. Below, we discuss the legal implications of crowdfunding in Nigeria more intensely.
Crowdfunding sometimes appears the only alternative for start-ups, in the face of stifling interest rates on loans from banks and financial institutions, and lack of funds from family and friends as well as the absence of venture capitalists and angel investors. Crowdfunding is a way of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet. Here is a quick grasp of reality.
The United States
The United States’ Securities and Exchange Commission has made a lot of rules on Crowdfunding which will enable eligible companies to offer and sell securities through crowdfunding. Thus in the US, all transactions under Regulation Crowdfunding take place online through an SEC-registered intermediary, either a broker-dealer or a funding portal. A company is to raise up to a maximum aggregate amount of $1,070,000 through crowdfunding offerings in a 12-month period. However, there is a limit on the amount individual investors can invest across all crowdfunding offerings in a 12-month period. Securities purchased in a crowdfunding transaction generally cannot be resold for one year.
South Africa.
There is no substantial legislation on crowdfunding in South Africa, except that equity crowdfunding is a form of securities. However, South’s Africa’s first equity crowdfunding platform Uprise.Africa was launched after being told by the Financial Services Board (FSB) that the platform does not fall foul of the Collective Investment Schemes Act, the platform’s founder and COO Patrick Schofield said. Inge Prins, the Chief Marketing Officer Uprise.Africa, had hinted the platform, in one of its numerous success instances, paid out investment funds to a local brewery, Drifter Brewery following a successful campaign that raised R3,889,000 (US$293,000), far exceeding its stated goal by almost R1,000,000.
Understanding How Crowdfunding Works
Crowdfunding refers to raising money from the public (who collectively form the “crowd”) primarily through online forums and social media.
Crowdfunding models include: Donation-based crowdfunding (in which donors are not typically granted anything in return for their donation)
Rewards-based crowdfunding (in which backers contribute funds in exchange for some reward–in many cases the item produced by the campaign)
Equity crowdfunding (Equity crowdfunding refers to raising money from small public investors (who collectively form the “crowd”) primarily through online forums and social media. In exchange for relatively small amounts of cash, investors get a proportionate slice of equity in a business venture).
Debt/lending crowdfunding (in which lenders provide money and expect their loan to be paid back with interest).
Crowdfunding For Private Companies Cannot Work Unless Nigeria’s Companies And Allied Matters Act (Nigeria’s Chief Company Legislation) Is Amended.
The idea of having crowdfunding for companies is that the general public would be allowed to contribute towards the formation of the companies. Now while the public can contribute to an idea, the same is not possible for a company. By section 22(5) of Nigeria’s CAMA, it is impossible for a private company to invite the members of the public to subscribe to its shares. It is also impossible for equity crowdfunding to work because the idea of equity crowdfunding is that the public funds the formation of the company expecting to be repaid their contributions by way of shares in the company.
Again, under Section 22 of CAMA, the maximum number of persons a private company shall have shall not exceed fifty, not including persons who are bona fide in the employment of the company.
Nigeria’s Securities and Exchange Commission and Crowdfunding
The Commission determines governs all company securities in Nigeria. Section 13 of the Investment and Securities Act (the chief Act that regulates securities of companies in Nigeria) empowers the Commission to:
regulate all offers of securities by public companies and entities;
register securities of public companies;
prepare adequate guidelines …necessary for the establishment of securities exchanges and capital trade points.
register and regulate the workings of venture capital funds and collective investments schemes in whatever form;
Consequently, by Section 67(1) of the Act, no person shall make any invitation to the public to acquire or dispose of any securities of a body corporate or to deposit money with anybody corporate for a fixed period or payable at call, whether bearing or not bearing interest unless the body corporate concerned is-(a) a public company, whether quoted or unquoted, and the relevant provisions of Act are duly complied with.
To this effect, the SEC, which was empowered to do so, has gone ahead to give the listing requirements for any company in Nigeria to include that the company must be registered as a public limited company with no restrictions on the transfer of fully paid shares; have a minimum of three (3) years operating track record; have a pre-tax profit from continuing operation of not less than N300million cumulatively for the last three (3) fiscal years and a minimum of N100 million in two (2) of these years. Hence, since equity crowdfunding is ideally a thing for new, mostly private companies limited by shares, there is no way any of them would be able to fulfill the listing requirements, to be able to offer their securities to the public.
The continued ban on equity crowdfunding in Nigeria by SEC, therefore, is not a surprise, even though the Commission said it is looking at the crowdfunding rules in the US and Canada.
The SEC believes that crowdfunding cannot be effective in Nigeria in the meantime because of a lack of rules.
Bottom Line
While equity crowdfunding remains banned in Nigeria, donation and reward-based crowdfunding are however excluded from the SEC’s regulatory remit. This explains why there are a number of donation crowdfunding platforms, and not one for equity crowdfunding. Nigeria’s first equity-based crowdfunding platform, Malaik, launched in 2015 is now down and is up for sale at $3795 on HugeDomains.com, while other donation-based platforms such as Donate-ng.com, and Imeela have since carried on.
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.
Startups who raise funds have to work really hard to justify each of the equity investment that flows into their businesses. One thing is to be surrounded by funds, another thing is to use the funds to run a profitable business. Knowing the best ways to stay afloat in tough times by making profit could be the only lifeline that saves you and your business. Below, we discuss various tested ways of remaining profitable.
Why Does Profitability Matter If You Are Already Passionate?
The owner of Nigeria’s irokoTV believes profitability is important but equally very important is cash flow.
‘‘Revenue is vanity. Profits are sanity. Cashflow is King. A lack of profits is like cancer. It will kill you slowly. A lack of cash flow is like a heart attack. You die there and then. As the bank empties. So does your dreams of startup Nirvana,’’ he says. ‘‘ Profits. There are various versions of this. You can be very ‘profitable’ and still need money to operate your organisation day-to-day. Cash flow positivity is more important.’’
According to Steven Hess a trustee and program lead at global entrepreneur network The Startup Leadership Program, ‘‘for a business to be sustainable, it must ultimately make a profit at the operating level, otherwise, it’s just a house of cards. Maybe you need a critical mass of customers to achieve supply-side economics, but it’s still a path to profit that increasingly is growing in importance.”
At What Stage Does Your Startup Really Need The Profit?
Knowing his would not only save you the stress of anxiety associated with returning an unprofitable business but will help your startup endure, gain traction and succeed with time. Jason Njoku, Nigeria’s co-founder of IrokoTV says most companies in the growth stage are unprofitable.
‘‘That’s by design,’’ he says. ‘‘It’s the way the VC-backed system works. It attempts to accelerate everything, which leads to mistakes, which leads to money wasted. That’s the downside. On the plus side, it leads to unnatural growth. Like the viral kind. Something which would ordinarily take 10 years is accelerated to 4–5 years in the VC system. The aim is to build big companies. When I mean big. I mean $100m in revenue per year big. That takes bucket loads of capital. iROKO 2011 (pre-VC) — profitable. 2012 — today (post-VC — unprofitable by design.) 2016 and beyond — we aim for cashflow positivity (not necessarily profitability).
Njoku says when startups invest for growth, it’s rarely possible in consumer or enterprise internet to do that profitably.
‘‘Building a core team, building out engineering, customer acquisition, support, brand — very few (~1–2%) major consumer internet companies managed it over the last 20 years (the history of the internet). Of the largest ones we know today, 0% were profitable in the first 5 years+. You lose a bunch of money. Until you don’t. In Nigeria, at a relatively low scale, it begins to break down quickly. You just need cash for ‘stuff’. The whole, ‘get customers’ doesn’t really go down too well as because: 1. they aren’t that many.
2. to get them it’s like breaking rocks.
3. government-related work will kill you,’’ he says.
He says the best ways to stay afloat during this period is that a ‘‘10 person team should definitely focus on cash flow and profits.’’ Internet investors are few and far between, he says, and learning the discipline to actually run a cash flow positive business is a great life skill. ‘[This is] one I strongly recommend to all young guns of today,’ he says.
The Focus Should Be On The Customer
Focusing on the customers is unarguably the easiest way of remaining profitable. “(T)he №1 thing that has made us successful by far is an obsessive-compulsive focus on the customer as opposed to obsession over the competitor,” Bezos said in a talk at the Economic Club of Washington.
“Our profitability is not our customer’s problem. We don’t take the point of view that we’re going to price products at a particular margin. We price products competitively and if that means [that] on that product that we lose money that’s ok. We need to take care of the customer and earn trust and we’ll figure out over time if we can or if we can’t ever make money with that product. If we can’t we’ll stop selling it but we’re not going to make customers pay for any of our inefficiencies.” — Jeff Bezos said.
Turning attention on what customers want or need has inspired many of Amazon’s most profitable business moves.
For example Amazon Prime. Bezos said at the talk that Amazon developed Prime, a paid subscription service for free two-day delivery because he knew consumers love free shipping. Introduced in 2005, the service drew anger for being “too good to be true” and helped underline the idea that Amazon is too inexpensive to be profitable. The message was clear: Prime is draining Amazon’s profits and its stock.
But it’s clear now that pleasing its customers, rather than bumping Amazon’s short-term bottom line, has been a shrewd business move. Amazon Prime customers spend an average of $1,300 in a year, nearly twice that of non-members. More than 100 million people globally are Prime members.
“There are two ways to build a successful company,’’ Bezos said. ‘‘One is to work very, very hard to convince customers to pay high margins [think Coca-Cola model]. The other is to work very, very hard to be able to offer customers low margins [think Costco, Amazon]. They both work. We’re firmly in the second camp. It’s difficult — you have to eliminate defects and be very efficient. But it’s also a point of view. We’d rather have a very large customer base and low margins than a small customer base and higher margins.”
With business going, comes the hard part of the truth: actually making sales, because it is the sales that would mean profitability.
Lee Reams II, CEO, CountingWorks says that most small businesses get bogged down in tasks that have nothing to do with driving profits.
‘‘One of the easiest ways to increase profits is focusing on sales from the start,’’ he says. ‘‘The most cost-effective way to turbocharge more transactions is by going all in on using social proof to grow your business. Attracting five-star reviews, using case studies, getting your brand mentioned by bloggers and news media, are all forms of social proof that do the selling for you. Much of the buying process is now done online. If you have not maximized your digital footprint, you are not even in the game as consumers start researching product and services. Your brand needs to be present from the discovery through the intent phase of the buying process. Making social proof an integral part of your marketing plan will drive revenue growth faster than any other change.’’
Coupled with this is the need to build a sound online reputation. Denise Hilton, Founder, WebEmployed.com says that whether your business is big or small, your online reputation matters a lot.
‘‘It not only adds credibility to your business but also tells consumers and other businesses that you care about them and not just the business,’’ he says. ‘‘You need to be active on social media platforms and interact with the visitors regularly. You also need to add call-to-actions on your website and let the visitors contact you easily through web forms, landing pages, etc. Adding a blog to your website and building strategic alliances through joint venturing or cross-promotion is another effective way to build an online reputation. It could help you boost your profits a great deal. The results will slowly but surely be visible in the long term.’’
One way Ford Motor Company remains competitive with its sales is to approach price fixing more fiercely.
“Our policy is to reduce the price, extend the operations, and improve the article. The reduction in price comes first…the low price makes everybody dig for profits”. – said Henry Ford
And you could see the power of it in Ford Motor Company’s numbers:
‘‘in the UK, they have Value Added Tax (VAT), at that time it was 20%, so over and above the cost of the equipment I had to pay VAT in the UK,’’ he says. ‘‘That’s fine, using the Apple bulk importation as an example, upon reaching our beloved Murtala Muhammed International Airport (MMA) the Nigerian customs officials took a particular liking to my ten (10) carefully wrapped and gloriously white ‘packages’. After a 6 hour flight I then proceeded to spend the next 4 hours arguing and debating the importation tax duties required to bring this equipment into Nigeria. All manner of calculations were initially argued amongst the customs officials themselves, then when it was looking increasingly extortionate I thought I would pitch in myself to try and not get totally screwed without at least some resistance. In the end I ended up paying, if my memory serves me right, around N700,000 ($4,600). And guess what, just to twist the knife, they were seizing my goods unless I paid there and then. I have the payment receipt of this somewhere; it’s too late for me to dig it out.’’
This is one of the several ways taxation can stifle your startup directly or indirectly. So, getting a sound tax practitioner or lawyer can be the safest way to escape the burden of over taxation.
Auditing Is The Best Strategy For Tracking Your Finance and Making Adjustment
The best way to always track your finance and expenditure is to go by auditing. Auditing will make it possible for business owners to make more effective decisions, and channel their investment appropriately. Any accounting errors would usually be bad for the future of the company.
Moira Vetter, Founder & CEO of Modo Modo Agency, a strategic marketing firm, that was recognized as a 2018 & 2017 Inc. 5000 company and a 2017 Best Places To Work, advises startups to:
Formalize monthly financial statement review with their team — Awareness is the first step to managing budgets frugally. When the person charged with keeping the books closes the books each month, schedule a meeting to sit down and review the financial statement as a group. Ask questions about line items that are going up. Look for line items that are larger than you imagined and ask questions about why.
Reinvest Profit
Knowing when to reinvest profit into the business is equally important to avoid being an all-time loser.
“Ninety percent of the time a founder should reinvest their profits back into their business because it helps them grow and means they won’t stagnate,” says Matt Jonns, founder of ucreate, a co-creator of software startups. “However, the unpredictability of startup life can make the use of profits to shore up cash flow a smart decision. Keeping this money aside for a rainy day is often just as important as reinvesting and could be the difference between survival and extinction when times are at their hardest.”
Varun Bhanot, head of business development at flexible office marketplace Hubble, shares a similar view in prioritizing growth over pocketing profits. “This enables us to grow faster than our competitors,” he says. “By plowing everything back into the business, it also means the pie is overall bigger in the end. When profits are eventually returned, they are much bigger and substantial than if dividends were given to shareholders in the earlier stages.
However, to create a balance, Matt Jonns advocates founders paying themselves a small minimum wage and using excess profits to support their lifestyle when needed.
“As long as you don’t put your cash flow at risk, spending profits in moderation is essential for your own wellbeing,” he says. “It’s something many founders struggle with, but not something they should feel guilty about.”
Patience
While it may take a long time for startups to break even, remaining patient during the first few years of this period would really be some remarkable feat startups can accomplish.
Dillon Kivo Founder and CEO of Kivo Media Group advises that success certainly won’t happen overnight, and it probably won’t happen for a couple of years.
‘‘Companies that are investing in themselves and carefully and strategically planning ahead for continued efficiency can expect to achieve profitability around their third year in business. But every company is different, and true success may take decades. Steve Jobs established Apple in 1976, but it wasn’t until 1984 that Apple got on the map with the advent of the Macintosh computer. And even then, Apple struggled until the arrival of the iMac and consumer products in the late 90s. As an entrepreneur, as a leader and as a startup founder, it’s critical to know the difference between a great idea and great company. So decide now that you’re all in, and don’t give up when the going gets tough,’’ he says.
Bottom Line
Every year, many startups take off, but only a few remain after long torturous journeys. Most of them die, of course, because they were unable to raise more funds or turn profitable. Knowing how to stay ahead of this by exploring many strategic ways of remaining profitable would be the deciding force for most startups.
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 looking for funding, Antler VC appears undeterred in its quest to invest in as many new global startups as possible. In fact, the VC has set a goal to generate a total of 100 to 150 new startups around the world by the end of the year.
Since the end of 2018, the startup generator and early-stage VC has invested €5.4 million into launching 44 global startups. After receiving 13,000 applications for its programme, Antler selected over 450 individuals to participate and become startup founders.
A Look At Antler Venture Capital Firm
Since launching its first program in Singapore in 2018, Antler has expanded to eight locations, including Stockholm, New York, London, Amsterdam, Oslo, Sydney, Nairobi, and Addis Ababa.
Two programmes take place annually in each city, and in the first phase, successful startups receive $100k to $150k in funding from Antler for a minority equity stake.
Startups then leverage Antler’s global platform to expand and easily scale into other markets.
Aspiring entrepreneurs can apply now to join cohorts in Amsterdam, London, Oslo, Stockholm, Singapore, Sydney, New York, and Nairobi.
“In just six months, Antler has enabled hundreds of entrepreneurs from diverse backgrounds to create outstanding companies that are already positively impacting global and local economies with the next wave of technology,” said Magnus Grimeland, founder and CEO of Antler. “What can take a young startup months and years to accomplish in a new market we can accelerate significantly with our experienced team and advisers. We are well on our way to becoming the number one platform for entrepreneurs globally by becoming a truly global company ourselves, however, our journey is only just beginning.”
SkyQraft, a system providing affordable and safe infrastructure inspections using drones and AI to detect risks to power lines. These risks are increasing because of the impact of global warming which has resulted in more forest fires and power outages around the world.
Sampingan, a task-based workforce platform connecting organizations with freelance employees in Indonesia. The startup recently secured $500k from Golden Gate Ventures. Since it was founded, the company has on-boarded 20,000 agents across 140,000 projects. As well, in seven months, the company’s value has gone up ten times.
Soma Sketch, a health tech app that allows patients to communicate mental and physical health symptoms by writing and drawing how their body feels. The app will help identify risks, educate users on their health and generate anonymous data for research.
One of Antler’s key missions is to break the barriers to entrepreneurship. Antler’s founders range from Cambridge graduates to self-made geniuses because, rather than focusing on individuals’ backgrounds, the team looks for applicants with spike, inner-drive and grit.
With programmes operating across five continents, Antler has already attracted an incredibly diverse range of people, with founding teams comprising over 50 nationalities.
The recruitment process has also generated strong female representation, particularly in the first European programme where 64% of the entrepreneurs presenting at the local demo day in June 2019 were women.
“In just three months, the Antler program has enabled Shamba to put together a team working across three continents by providing invaluable advice and pre-seed investment to our company in its early stages,” said Michael Wallis-Brown, founder and CEO of Shamba, a startup that is fighting world hunger by optimizing farming in Africa. “We simply could not have launched our platform in Kenya without the support of the Antler teams in Stockholm and Nairobi, under the guidance of the Antler Global team. With this support, together with introductions to key investors both in Europe and Kenya, we are set to grow exponentially, working collaboratively with local farmers to solve inequality and hunger on the African continent.”
How To Be Part of Antler’s Funded Startup Network
Since launching its first program in Singapore in 2018, Antler has expanded to eight locations, including Stockholm, New York, London, Amsterdam, Oslo, Sydney, Nairobi, and Addis Ababa.
Antler’s successful startups now operate across 15 different industries including fintech, space-tech, robotics, and health tech
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.
Zambian startup, Rent to Own (RTO) is determined to achieve its goal of providing productive-use assets to rural SMEs in Zambia. The startup has just raised a EURO 1 Mn (USD 1,121,849) in a new round of funding from the Seed Capital and Business Development facility of the Dutch Good Growth Fund (DGGF).
DGGF, managed by Triple Jump BV is a fund of funds investment initiative from the Dutch Ministry of Foreign Affairs that invests in funds and financial intermediaries that provide capital to SMEs.
Through its seed investment in RTO, DGGF will help support rural SMEs to improve livelihoods and develop sustainable income sources.
According to an official disclosure, Rent To Own engaged Open Capital Advisors, a management consulting and financial advisory firm based in Africa, to provide investment-readiness and transaction advisory support for this deal.
Own To Rent intends to use the funds primarily as working capital to double the company’s portfolio for rural Zambian entrepreneurs.
Building upon convertible notes, Rent To Own provides high-impact assets to rural entrepreneurs and smallholder farmers in Zambia.
Offering a unique “all-in-one” package of uncollateralized financing, delivery, installation, and equipment training, the startup empowers its clients to grow their businesses and improve their quality of life. RTO’s flexible, tech-enabled platform also provides a route-to-market for equipment suppliers and supports the rapid adoption of innovative assets, such as solar-powered irrigation pumps.
“We are extremely excited by the opportunity provided by DGGF to continue to focus on this mission and rapidly grow our loan book despite the harsh economic conditions we are currently experiencing in Zambia”, says Jeffrey Scheidegger, CEO.
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.
Recall that the Nigerian Central Bank (CBN) in collaboration with the Bankers’ Committee recently introduced the Creative Industry Financing Initiative (CIFI) to improve access to long-term low-cost financing for entrepreneurs and investors in the Nigerian creative and information technology (IT) sub-sectors, as part of efforts to boost job creation in Nigeria, particularly among the youth.
The Bank has gone ahead to announce the modalities for the implementation of the initiative.
In Summary, The Procedure For Accessing The Loan Is As Follows:
Any person interested in accessing the loan should:
Approach any bank of his/her choice with a business plan or statement detailing how much is needed for his/her business.
The bank provides an applicant with the documentation requirements for accessing any of the loan types.
The documentation requirement shall be acceptable by the respective bank for credit requests for its customers.
The bank carries out due diligence of the application and documentation submitted.
Successful applications are issued offer letters, which shall have therewith repayment schedules in accordance with the business dynamics
The successful applicants shall accept the offer as well as meeting all the conditions specified in the offer letter precedent to draw down.
The bank forwards successful application with copies of the offer letter to the Director, Development Finance Department, Central Bank of Nigeria for consideration and release of an aggregate of the facility amount to the bank for lending to a successful application.
The bank disburses funds to successful applicants within ten days of receipt from the CBN
The bank bears the credit risk and shall be responsible for the performance of the facility.
Where Could The Loan Be Accessed From?
Interested persons should visit any money deposit bank in Nigeria — commercial, micro-finance bank, etc.
Nigeria’s Access Bank has already commenced disbursement of loans to beneficiaries in the entertainment industry, under this Creative Industry Financing Initiative of the Central Bank of Nigeria.
The bank said the first tranche of the CIFI loans worth N20bn, would be made easily accessible to the borrowers in the sector.
Other banks are also ready to disburse the loan to prospective applicants.
What Businesses Are Covered And How Much
The businesses that are covered are existing enterprises, startups and students of higher institutions engaged in software development.
Creative Industries Covered are:
Businesses in the fashion (including designing) industry
Businesses in the Information Technology (including e-commerce, online payment solutions, software engineering, etc.)
Businesses in the Nigerian movie industry (including movie producers, movie distributors)
Business in the Nigerian music industry (whether as record labels, music artists, etc.)
Terms & Conditions
For these businesses, the terms and conditions are as follows:
SN
BUSINESS TYPE
MAXIMUM AMOUNT Per
Applicant (₦
Interest Rate/ Length of Year Before Repayment
1
Student Studying Software Development
3 million
9% per annum/
3 years (monthly repayment)
2
IT Businesses
Payment For Equipment Purchase/ Rental Fees
9% per annum;
10 years (quarterly repayment)
3
Movie Production
50 million
9% per annum;
10 years (quarterly repayment)
4
Movie Equipment Financing
50 million
9% per annum;
10 years (quarterly repayment)
5
Movie Distribution
500 million
9% per annum;
10 years (quarterly repayment)
6
Music
Payment For Equipment Purchase/ Rental Fees
9% per annum;
10 years (quarterly repayment)
7
Fashion
Payment For Equipment Purchase/ Rental Fees
9% per annum;
10 years (quarterly repayment)
For further terms and conditions, including guarantors and securities, download, open and read the CBN modalities by clicking on this link
Further inquiries on the modalities may be referred to the Director, Development Finance Department, Central Bank of Nigeria, Abuja.
Why Focus Is On the Creative Industry
The CBN appears to have focused on the creative industry for the following strategic reasons:
The film industry sector contributed 2.3 percent (N239 billion) of Nigeria’s Gross Domestic Product (GDP) in 2016 alone.
In the same year, Nigeria’s music industry grew by 9 percent to reach a value of 39 million dollars and is set to grow by 13.4 percent CAGR by 2021, with an estimated worth of about 73 million dollars.
Information Technology: The gaming industry in Nigeria, according to a PwC study on gaming, benefited from a broadening customer base, mostly the large and youthful population, with Nigeria’s video game industry’s value put at $150 million USD as at 2016. It is also estimated that mobile gaming in Nigeria would surpass $147 million USD by 2020
This writer advises that you check out your local banker in Nigeria for more information on how to access the loan.
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.
Newly launched zero-equity Moroccan Impulse Accelerator is looking to offer tech startups that pitch at its demo day a share of $250 000 in cash prizes.
Impulse Accelerator At A Glance
The accelerator is located in El Kelaa of Sraghna, about 100km from Marrakesh, Western Morocco.
The accelerator was launched last month by University Mohammed VI Polytechnique (UM6P) in partnership with the OCP Group and its subsidiary OCP Africa.
The accelerator’s 12-week program was designed by global accelerator organization MassChallenge.
The program is aimed at startups in the agritech, biotech, mining tech, materials science and nanoengineering verticals that have a proof of concept or a minimum viable product (MVP).
How To Obtain The Funding
Interested persons desirous of participating in the program can do so by applying to through the investor’s online portal.
Applications for the accelerator program opened last week and will close on 1 October.
Startups from around the world are eligible to enter
What The Startups Stand To Benefit
In a statement on the Moroccan Impulse Accelerators’ website last month, UM6P successful startups stand to benefit from access to financing through a set of national and international investment funds and business angels.
Startups that take part in the program will also have access to UM6P’s infrastructure and laboratories, study trips to Boston in the US and Lausanne, Switzerland, as well as a 430m² co-working space.
In addition, the startups will also benefit from mentorship and coaching from OCP experts UM6P professors and doctoral students, as well as mentors of the MassChallenge network.
Additional benefits include access to business opportunities via OCP Group, OCP Africa and UM6P networks.
OCP Group and Mohammed VI Polytechnic University will help successful companies obtain visas for the duration of the programme.
Between now and September, the accelerator will hold an Africa roadshow during which it will hold information sessions in Ethiopia, Ivory Coast, and Nigeria.
Thereafter startups selected to join the accelerator will be announced in November, with the accelerator set to start on 15 January.
Impulse Accelerator will hold its US and Switzerland boot camps in March next year, with a demo day and awards ceremony set to take place in April.
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.
Liberia is shooting to loosen up its business environment for investors and businesses. Unlike what used to be the case in the past where all registration of businesses has to be done online, the Liberia Business Registry (LBR) has launched a website which has an online application for effective and efficient service delivery to the business community. The service became effective Wednesday, July 3.
What The Liberian Online Business Registration Looks Like
With the new online platform, the time limit for establishing a business in the country would be significantly reduced.
“People from Pleebo, Nimba, Lofa and all far-to-reach areas will no longer have to commute to Monrovia, and bear the cost of transportation and accommodation just to get registered or obtain Articles of Incorporation, said Mr. Dee, Registrar General of the Liberia Business Registry.
The website also will provide different kinds of corporate registration information and will help taxpayers directly apply for certificates and Articles of Incorporation with a user account, according to Registrar General Samson Dee.
The reform is coming after Liberia’s President George Weah established the “Business Climate Working Group” which informed the establishment of the Website and online Application.
The Challenges Of Setting Up Business In Liberia Is Noted In This Statement From Mr. Dee
“There have been series of challenges, in fact the last rating that came up from the World Bank, said it was taking Liberia 18 days to register a business in the Country and I think we all know that this is highly unfriendly when it comes to the business sector. So, on that basis President George M. Weah, set up a Business Climate Working Group, of which we are member and we were tasked with the singular responsibility to turn the picture around to improve the business climate and ensure that we attract investors from every part of the world,” he said.
“We heard the Registrar General say there are foreign entrepreneurs who may come to Liberia and may like to have information of doing business in the Country, and this development will undoubtedly help in the process.” Acting Commerce and Industry Minister Mr. Wilfred N. Bangura observed.
Under Liberian corporate law, all businesses are required to register or apply for a Business Registration Certificate to authorize doing business or providing services in Liberia.
The Liberia Business Registry (LBR) under the Ministry of Commerce and Industry (MOCI) handles the applications and business registration processes. The fee structure for registration varies depending on whether a business is local, foreign, a sole proprietorship, a partnership, or a corporation. The standard steps to follow in establishing a local business office are noted below:
Reserve a unique company name with LBR: an applicant can do a name search online or at the LBR helpdesk; business names can be reserved for up to 120 days.
Register the company using the registration application form (RF-001), and submit the completed application with the company’s articles of incorporation, proof of identification, empowered person’s or registered agent’s form, incorporator’s form, shares and shareholders’ form, and information for tax authority form.
LBR will review the application package and request a Tax Identification Number (TIN) and bank payment slip (BPS) on behalf of the business in question; all businesses operating in Liberia must have a TIN, which is obtained free of charge from Ministry of Finance and Development Planning.
Once a TIN has been obtained, pay associated business registration fees at the Central Bank of Liberia (CBL)’s window at LBR or use the mobile money payment system; mobile money services are provided by the two leading mobile network operators, Lonestar MTN and Orange Liberia.
Present the proof of payment to the LBR registrar where the process is completed.
The entire process takes one to four weeks. Registration of business is valid for 12 calendar months from the date of registration. Conducting commercial activities in Liberia without being registered will result in penalties. The LBR publishes a fee schedule for new enterprise registrations applicable to different types of legal entities.
All that will now have to be done online with this new move.
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 not leaving anything behind as it begins a major clampdown on foreign funds flowing into the country. Here is the latest on the new tax reform initiated by the Mauritian government: The country’s financial services regulator Financial Services Commission (FSC) has said it would process all applications submitted to it for the purposes of determining whether a business is qualified to benefit from any tax treaties entered into between Mauritius and other countries within two months, provided the applicants fulfill all legislative obligations that include meeting know-your-customer (KYC), anti-money laundering, counter-terrorist financing, and substance requirements, among other things.
“FSC is emboldening its commitment to be a progressive and transparent regulator by fixing a shorter time frame for its own internal processes,” said Neha Malviya, director, Wilson Financial Services.
Mauritius has always been faulted for operating a tax haven economy where foreign companies flock to in order to avoid tax in their home countries. But all that is about to stop, at least to a larger percentage. Going forward, Mauritius foreign businesses coming into Mauritius would be required to comply with the new tax reform.
‘‘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.
Many of the business structures currently in place for international companies may be reviewed by Mauritius itself following the tax reform. Other existing structures will be forced to increase the substance requirements within Mauritius for them to continue getting the tax benefits.
“It is a significant change and the way they look at it will be different and may have new test to figure out whether these companies are complying with the new norms. It needs to figured out what are the tests they are going to lay out,” Suresh Swamy, Partner, PwC told Asian Age.
This change would hit hundreds of offshore funds operating out of the island nation and investing in their countries to take advantage of the double taxation treaties between their countries and Mauritius.
As An Example
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.
Being in business is one, remaining in business is another. Startups who follow the one-dimensional approach to revenue generation may soon find themselves stuck halfway into the business. Of course, the revenue streams may remain stable in the first few years of the business, but in most cases, revenues from a particular line may just hit the rock bottom. To some extent, diversification may just be a way of relaunching and innovating.
How Big Is The Deal That Decades-Old Companies Are Choosing Diversification Strategy Instead?
Starbucks
Quite unexpected, Starbucks took to the media to announce it was no longer retaining coffee-making as its sole business driver, and for which it had been known for more than 43 years coffee. In addition to the coffee, the company had rolled out a chain of products from its brand-building strategy centered on portfolio diversification. The products featured juice, tea, baked goods, foods and more. One expert, Jason Moser, a senior analyst with Motley Fool One, a finance solutions advisory service, said the diversification was the best bargain Starbucks could ever get.
Moser said diversification is serving Starbucks well and has even brought the brand back to its former glory, undoing the financial troubles it faced less than a decade ago when Schultz stepped down from his position as CEO. At that time, the company’s strategy revolved heavily around growth at the unit level.
“There was a joke about Starbucks stores being opened in the bathrooms of Starbucks stores. It felt like at that point the growth story had played out,” Moser says. “What it took was getting Howard Schultz back on board to lead the way, focusing on trimming the fat of the operation, becoming more operationally sound, honing the supply chain, and diversifying the menu by offering more items.”
These positive financial trends span back across the past few years and coincide with the diversification strategy that allowed Starbucks to bounce back after the financial troubles it faced in the mid-to-late 2000s.
While diversification added extra pecks to Starbucks’ earnings, it furthered opened up the decades-old company for profitability.
Is Diversification for Startups Necessary?
Dj Vallauri is the Founder and CEO of Lodging Interactive, a New Jersey-based global digital marketing, and social media engagement agency, who ] first launched hospitality-focused digital marketing agency after spending nearly 25 years in the hotel sales and marketing business. The business became so successful that 90% of his revenue base came from one customer.
‘‘While it’s easier said than done, the idea “don’t put all your eggs in one basket” definitely holds true in business,’’ he said. ‘‘ It’s just too risky and too irresponsible for any entrepreneur to operate in this manner.’’
He narrated why he had taken the route of diversification.
‘‘Within just two weeks, I was fortunate enough to land a whale of a customer as my first client. This client was in growth mode and would take us with them every step of the way up. The business started small enough for us to handle and grew organically, as we also grew organically. Life was good then; this one customer generated nearly 90% of our revenue. But deep down, every time they gave us more business, I had a sinking feeling that the hole I was in was getting deeper with every new dollar this customer spent with us. The fear, of course, is that your one large customer files for bankruptcy and goes out — taking you out with them,’’ he said.
Ways Startups Can Diversify
New Products And Services Development
One way startups can diversify is by investing in product research and development. Doing so will open the possibilities of extra revenue generation for the startup.
‘‘Invest in research and development, and create new products and services that will present new revenue generation opportunities for your company. R&D is not just for large consumer brands; even small startups need to focus on this area. And no significant budgets are required; when you’re starting your business, you don’t have a lot of cash for R&D. Start by creating a SWOT analysis and a mind map to get you started in the thinking process,’’ Vallauri said.
Acquire New Customers
Acquiring new customers is the best way of steering away from a poorly performing business model. Asking questions on customer acquisitions for your startup is the best way of staying ahead of the game.
‘‘Be in constant sales mode. Increase all your sales efforts by 10 times,’’ Vallauri said. ‘‘Look at your fixed costs, such as your personnel. Can your company take on more business without having to hire new people? If the answer is yes, you’re halfway through your diversification efforts. You are already paying your team members to handle your current customer base, which is what I call the “sunk costs” of doing business. So if you can add more customers without having to add more people, this means you can aggressively price your services to win the business, thus giving you an edge towards your diversification process.’’
Vallauri said the more you can diversify your agency business, the better you would sleep.
‘‘My agency now has two operational divisions to ensure our business and revenue diversification. One division is dedicated to traditional digital marketing agency services and the other is dedicated to more emerging marketing practices related to reputation management and social media marketing. Should any one area of the business become commoditized, we have the ability to leverage our other service offerings. Today, my digital agency is fully diversified and can weather any storm. And as a result, I’m sleeping very well,’’ he said.
‘‘Never forget to preserve the core while stimulating evolutionary progress. Keep in mind that evolution involves both variation and selection….selection involves two set of key questions,’’ writes Jim Collins, author of Built To Last. ‘‘The first is simply pragmatic: does it work? But as important is the second question: Does it fit with our core ideology? The variation… must be useful new, useful and reliable…in order to stand a good chance of being selected.’’
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.
Fish accounts for more than one-fifth of the protein intake of African south of the Sahara and provides a livelihood to millions of people.
Africa’s small-scale fisheries play a critical role in global food security and must be supported with greater research and investment, say international and African experts. Industry, NGO, government and academic representatives attended Murdoch University’s second Blue Economy Symposium in Tunis last week as part of the Africa Blue Economy Forum (ABEF) 2019 and Murdoch University’s Third Commission, a research investigation focusing on issues of public concern to Africa. Fish accounts for more than one-fifth of the protein intake of African south of the Sahara and provides a livelihood to millions of people.
Murdoch University Adjunct Professor, Dr. Jeremy Prince, who attended the symposium and is contributing to the work the Third Commission in this area, said the collective value of the small scale fisheries of Africa was too big to ignore. “It is critical that we stabilize and rebuild these fisheries to ensure both food security and the future of the blue economy,” Dr. Prince said. “The time to act is now.”
Discussions at the Tunis symposium provided useful insights and contributions to the fine-tuning of the focus and narrative of the Blue Economy chapter of the Third Commission’s report. A strong emphasis was placed on the need to highlight clear and innovative actions to effect a lasting transformation of the blue economy in Africa. Participants in the symposium called on all nations and international institutions to recognize the value and economic impact of small-scale fisheries in Africa.
Their recommendations included increasing investment to allow fishing communities to be more involved in the co-management of fisheries; directly engaging with fishing communities to collect and share relevant data regarding the state and economic value of small-scale coastal fisheries.
In keeping with Murdoch University’s commitment to quality research and teaching in public policy at both the national and international levels, Murdoch Commissions are exercises in applied public policy informed by rigorous scholarly research and analytical thinking. They bring together senior practitioners, international experts and thought leaders from Australia and around the world to work on pressing problems and issues of public concern.
The first Murdoch Commission, “Western Australia and the evolving regional order: challenges and opportunities” published its final report in November 2013 and the second Murdoch Commission, “Food security, trade, and partnerships: Towards resilient regional food systems in Asia” released its report in December 2015.
Murdoch’s Third Commission commenced in June of 2018 and is focused on six themes firmly rooted in the agenda for action identified by the Africa Progress Panel (APP) as being in need of more significant research attention, bolder policy innovation, faster implementation on the ground, enhanced political leadership and the conceptualisation and roll out of innovative research solutions.
These themes are Promoting Equity in the Extractive Industries: Managing the Extractives Industry in a more equitable, transformative and sustainable; Boosting the Blue Economy: Better Monitoring, Governing and Harnessing of the Blue Economy; Promoting Sustainable Agriculture and Food Production: Enhancing Sustainable Farming and Food Production and Nutritional Security; Increasing Power and Light: Creating greater and more innovative access to Modern Energy (Electricity and Light) Fast; and Cross-cutting themes of Women & Youth and Climate Change.
An overarching focus of the Third Commission is identifying small scale policy interventions that have the potential to make big impacts. Additionally, it seeks to enhance Murdoch University’s links with Africa in areas of the university’s comparative advantage, including research and innovation expertise, strategic interest and networking capabilities within Australia, in Africa and globally. The Third Commission report is due to be published in 2020.
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.
