I have explained Conglomerate Tax using Dangote Group: governments pay taxes to conglomerates to have them in their domains. Simply, with the power vested on conglomerates by markets, they get governments to support their future ambitions in ways no other entity could. They have that ability because they focus on fixing the upstream challenges in economies where they operate because they have accumulated more capabilities than anyone. Yes, as Dangote Group builds a refinery, it could extract more goodies from governments than a man building petrol filling stations since government can easily find builders of petrol filing stations over people with capacity to invest billions of dollars on refineries.

The Kogi state scheme will be launched in more states soon. As noted in the press release, the Basing Authority will provide the land. That means Dangote Group will not have to pay for it. There is nothing wrong with that. He is investing to provide food security, provide youth employment and also improve the communities. That is what conglomerates do because they are the best creators of jobs, at least in short terms. While the state can plan to sell the land and invest the proceeds in startups, it may take years before those startups can generate the kind of employment and economic activity a conglomerate like Dangote can deliver in a year. For having that capacity, conglomerates tax nations. In other words, you have to subsidize their businesses through government supports for them to help you fix your pain points like unemployment as a government. They operate at the upstream level where the pain points are massive in the operations of governments. Their reward is Conglomerate Tax: the subsidization of their business operations due to their capabilities to help support government initiatives at scale.

Amazon with the selection of its HQ2 has proven that Conglomerate Tax is global: US cities are going to pay Amazon to come and stay in their communities. You cannot get the deal they are giving Amazon because you are not a conglomerate. Irrespective of what people may write about Amazon, Amazon has not invented anything new: the world has been like that for ages. You cannot expect a firm to put $5 billion in a place without expecting governments to give incentives in a world where cities compete against one another. If a businessman does not understand that, it means it is not handling its fiduciary responsibility very well.

Shieber sees essentially three problems with Amazon’s  HQ2 process and announcement:

1. Amazon’s wealth drives its corporate power, which forces governments to do its bidding by applying to its reverse RFP process.

2. The incentive packages lined up by NYC and Northern Virginia are a form of corporate welfare that would be better used for everyday citizens, plus Amazon would have come anyway.

3. Amazon is not-transparent about its data or process, even while it collected data from hundreds of city governments.

Do not cry about it when your government is giving out incentives to conglomerates; they have reversed many things as the quoted TechCrunch article brilliantly noted thus: ‘Increasingly though, companies have learned that cities will come far and wide to fight for jobs. In fact, rather than bidding for projects and having city governments or their economic development agencies select winners, companies can propose projects, have cities bid and then the CEO can make the call. I call this a “reverse RFP.”’

Before the golden decade (1990s) of Nigerian entrepreneurship, there were banks. Those banks became known as old generation banks because new ones emerged in 1990s, disrupting the then banking order with superior customer experiences. During the 1990s, some of the elite banking institutions we have in Nigeria today were established, from Zenith Bank to GT Bank to UBA (nee Standard Trust Bank).

Unlike the golden decade (the 1990s) of Nigerian entrepreneurship when amalgams of new generation banks were born, seeding a new age in the nation’s financial system, this moment cuts across sectors.

The old generation banks made up Banking 1.0 era for Nigeria; the new generation banks gave us Banking 2.0. Now, the Banking 3.0 era is here as MTN pursues a Mobile Banking license. This is a very huge redesign in the industry as if you have telcos like MTN coming into the financial sector when fintechs in all different forms are already enabling dislocations, new bases would be established. Flutterwave and Paystack are threats because most fees earned by the fintechs are largely lost revenues to the banks. I make this statement since the fintechs are not necessarily expanding the customer base by going to the unbanked or underbanked. Yes, they are focusing on the upper middle class which has been the engine that supports the fat bank profits for years.

MTN Group will apply for a mobile banking license in Nigeria and launch a service there next year, its CEO said on Tuesday, further embedding the South African telecoms company in its biggest but increasingly problematic market.

“We will be applying for a payment service banking license in Nigeria in the next month or so, and if all goes according to plan, we will also be launching Mobile Money in Nigeria probably around Q2 of 2019,” Rob Shuter told a telecoms conference in Cape Town.

Yet, even in this notice, we can see a glimmer of positives: MTN Group remains committed to Nigeria despite the recent challenges. By next year when MTN Nigeria launches the mobile banking service, it would be the largest “banking institution” in Nigeria by customer base since on day one, MTN Nigeria may have excess of 55 million “banking” customers compared with about 15 million First Bank, the largest in that category, commands. This is not a surprise: I have noted that 2022 would be the year of convergence (see video above) in Nigeria. We are going to see all kinds of redesigns as our Cambrian Moment elevates.

1990s was the decade of banking.

2000s was the decade of voice telephony.

2010s is the decade of broadband.

2020s would be awesome. From technology to agriculture, finance to entertainment, entrepreneurs would hit it big. There is a convergence happening right now and most of the pieces would sync. Our payment infrastructure would mature, the connectivity would improve and investors would come to party.

Payment Service Banks

MTN Nigeria is taking advantage of the new CBN policy: Payment Service Banks.