African governments are grappling with revenue shortfalls exacerbated by covid-19, and have heavily impacted economic status of many countries. From Nigeria, the largest economy in the continent to Burundi, the smallest, wretched government purses is driving a range of policies aimed at increasing revenue generation.

With gross domestic products (GDP) not in par with population growth, many African states have taken to borrowing, multiple taxation and tax increment as means to upset their revenue shortfalls.

Following this trend, Zimbabwe has introduced a raft of new tax measures, including a 5% levy on imported dairy products, a US$50 levy on all new mobile phones, and an increase in sin taxes on tobacco as well as energy drinks, Innovation Village reports.

The report says Finance Minister Mthuli Ncube is seeking new revenue streams as he nearly doubled the country’s proposed spending in its annual budget this week.

But against government’s push to increase revenue generation through taxation are people crying out from a side of dwindling earnings.

The report said that Zimbabweans have long complained that they are already heavily taxed, while their disposable incomes are shrinking. Labour unions also complain that salaries and wages in Zimbabwe lag behind those of regional peers, even as continued dollarization of the economy and weakness of the local currency drive up the cost of living. It is against this backdrop that the Minister is proposing a raft of tax measures to boost government’s revenue stream in his 2022 budget statement.

Some of the measures – including a 5% levy on dairy product imports – have been criticized for being protectionist against the backdrop of the coming into effect of the Africa Free Continental Trade Area (AfCFTA), the report said.

It also noted that Zimbabwe has also hiked sin taxes, with the excise duty on cigarettes going up from 20% + US$5.00 per 1 000 cigarettes to 25% + US$5.00. A flat excise duty on energy drinks at a rate of US$0.05/litre has also been introduced in the 2022 budget. But where the biggest challenge lies is on mobile phones.

“Other revenue enhancement measures include a new $50 levy on all new smartphones used in Zimbabwe. This is in addition to a 25% customs duty on imported handsets. Ncube said that Zimbabweans have been avoiding this levy through smuggling smartphones into the country,” the report said.

Household average income in Zimbabwe across all provinces range between US$27 and US$45 and US$63 and US$102, according to data published by Zimbabwe Vulnerability Committee (ZimVac). This means the $50 new mobile phone tax has come off as oppressive.

“We just talked about the ridiculous 2% IMTT. Well, compared to the $50 duty, the 2% is the most reasonable tax in the world. The $50 does not take into account the price of the phone being registered. You could buy a $50 phone and the government would still want its $50 cut making for a 100% tax. If you got a bargain for a budget android phone for less than $50, you would pay more in tax than you did for the phone. Ridiculous,” a concerned Zimbabwean said.

The government plans to implement the tax by requiring mobile network operators – including Econet Wireless and NetOne – to collect the $50 levy on each smartphone prior to registration. But that poses a “how would it work?” question that was not answered in the budget. However, the report provided a practical suggestion on how it can be implemented.

It would just be that mobile network operators will have to prevent devices that haven’t been used on their network before from working. Econet, NetOne, and Telecel can tell which device you are using and so it shouldn’t be hard to comply with the new directive.

When you insert an Econet SIM card in your phone, the phone has to communicate with them so that they know which bands it supports, whether it supports 3G, 4G, or 5G, and serve it accordingly. They can get the IMEI, serial number, and device manufacturer this way. So, they could just maintain a database of the devices on their network, something they probably already do.

What this means is that when a device that has never been on their network is detected, they simply withhold service until the user proves they paid duty for the device. For this to work, the mobile network operators would have to share device information in a central database. This is so that if it’s just a case of the user switching sim cards, the user is not denied service.

Telecom giant, MTN Nigeria, announced Tuesday the opening of N97 billion public offer to largely retail investors for the sale of N575 million shares at N169 per share. The offer will close December 14.

Its Chief Executive Officer, Mr Karl Toriola, told newsmen in Abuja that the “Retail Offer’’ which is to be delivered via a digital platform is the first in Nigeria, because the “success and growth of MTN Nigeria are intrinsically linked to that of Nigeria and Nigerians. Therefore, we are very excited to offer Nigerians the opportunity to own shares in MTN Nigeria.”

Toriola said that by using the power of technology, MTN aims to facilitate the maximum possible participation by Nigerian investors, adding that the minimum subscription would be for 20 shares and subsequent subscriptions would be in multiple of 20 shares.

He said the offer was open to retail investors, who bought and held shares allotted to them for at least 12 months post allotment date.

Toriola further explained that the offer is the second stage in a phased programme designed for Nigerians participation in the value creation of MTN Nigeria. He said the company had In May 2019, listed it by introduction, leading to the current offer opening.

According to him, the purpose of the offer was to “really diversify our shareholding, specifically with the focus on retail investors, to bring them into our shareholding base so they can share in the creation of value that we see in the next 20 to 40 years coming of MTN Nigeria in this great country.”

The CEO explained that the offer is a way of giving back to Nigerians for their support over the years that has yielded the company’s massive growth.

“We have a very strong balance sheet. We genuinely want the broad base of retail shareholders in our investor base. And there are lots of shares on offer. I believe everyone should participate and I believe that the majority of people would be able to get some shares in the offer.

“Our journey to becoming the largest network in Nigeria has been humbling but we still have a long way to go. There is much more to do to support the evolution of an inclusive digital economy and we continue to invest as we evolve into a truly digital operator, capable of seamlessly interrogating value across the evolving telecommunications, digital and fintech segments,” he said.

Investors would be able to submit applications through the issuing houses, receiving agents, including authorized stock brokers and Nigerian banks, and online via unique digital application platform primary offer administered by the Nigerian Exchange Limited (NGX).

Speaking on the offer, MTN Group President and Chief Executive Officer, Mr Ralph Mupita, said the offer aligned with MTN Group’s strategic priority to create shared value.

“In the last 20 years, we have worked diligently to connect 68 million subscribers onto voice and data networks and ensure that we deliver the benefits of a modern connected life.

“With this offer, we will contribute to further deepening of Nigeria’s equity capital markets. It is the first in a series of transactions as the MTN Group implements its plan to ensure broad based ownership by reducing its shareholding in MTN Nigeria to 65 per cent over time.

“We thank the Nigerian authorities for the support we, as MTN Group, have received in the various approvals related to this offer and remain committed to play our humble role in digital and financial inclusion across the country over the medium term,” he said.

Chief Financial Officer, MTN Nigeria, Mr. Modupe Kadri, said MTN Group, with its track record of declaring 80% of its profit as dividends, MTN has determined to sell about 14% of its share in MTN Nigeria to Nigerians, giving everyone the opportunity to own a share.

He explained that, starting Tuesday, 90% of the total offer is reserved for retail investors while 10% goes to institutional investors. He said the MTN Group is ready to bring in addition, 15% more shares to the offer in the event the 575 million share were oversubscribed, making the offer to a possible 661 million shares.

Expressing optimism on the offer, The CEO of Nigerian Stock Exchange Ltd., Mr Temi Popoola, said there was no doubt in the success of the transaction, and that it will boost investors’ confidence and increase the number of investors exchange in the capital market and end-to-end digital transactions.

“One of the things that excite us about this is investors’ confidence. This will change the face of the capital market investment of the nation,” he said. “For a long time we have spoken about the absence of retail in our capital market, particularly at the Exchange. We have spoken about the absence of certain demographic and geographic representation of Nigerians.

“This deal will address confidence, financial literacy and a lot of publicity that will come with this will drive this confidence,” he added.

Your business mission is to deliver value to customers. But it is also important that while doing that, you capture value for yourself. Companies which fail to capture value die. It is not just enough to disrupt the sector; you must capture value during the redesign. In Harvard Business Review, I explained how firms can capture that value through new business models like the Double Play Strategy. Simply, you must have a playbook where value, for you, will come even as you deliver value to your customers?

Do not be like Skype which found a way to deliver value for users, destroying aggregated value for telecom firms,  but has struggled to capture any decent value for itself. 

Pick the pencil, look at the business and ask yourself: “value is being created for users here and here but where am I getting my own value as a business?” If you cannot see a clear roadmap, question the hypothesis of that business model. Yes, you cannot make customers super-happy and go out looking at bankruptcy.