The Nigeria’s New “0.005” Electronic Transaction Levy

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May 25, 2018

South Africa wants to regulate Showmax; Naspers, the owners of Showmax, also wants the country to regulate Netflix. Where South Africa cannot regulate Netflix, then Showmax should be left alone, Naspers maintains. Naspers sees Netflix as a mortal threat since South Africans can use their credit cards and subscribe to Netflix with no stress. So, if you cage Showmax in South Africa with regulation, it would die because South Africans will switch to the world of Netflix.

Through DStv, MultiChoice has been the dominant player on African television screens in the last decade, available in 48 African countries. Yet, in the last week, the Naspers-owned media giant has been appealing to South African regulators, trying to make a case for why it could not survive any regulation in the face of streaming.

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To it’s advantage, Netflix’s standard $11.99 monthly subscription has made it more attractive than DStv’s satellite services that cost more than $40 in Nigeria and nearly $65 in South Africa for all-access subscriptions. MutliChoice is clear, though, that it wants all streaming services regulated.

The Central Bank of Nigeria (CBN) as part of the implementation of a certain section of the Cybercrime Act 2015 would be collecting a new levy on all electronic transactions into a National Cyber Security Fund account with the CBN. The Association of Telecommunications Companies of Nigeria (ATCON) hates that because it would make your phone calls and browsing more expensive since telcos would pass the costs to you. Banks, insurers and fintechs would also help to collect the new levies since anything electronic transaction would be levied the 0.005%. Unfortunately, WhatsApp, Skype, Instagram etc would not be in that list. And that is the problem.

The Association of Telecommunications Companies of Nigeria (ATCON) has rejected the move of the Central Bank of Nigeria (CBN) to start the implementation of a certain section of the Cybercrime Act 2015. The section provides for the collection of ‘0.005’ levy on all electronic transactions into a National Cyber Security Fund account with the CBN.

Its National President, Mr. Olusola Teniola, warned yesterday in Lagos that the collection of the levy would inevitably lead to a sharp increase in ‘charges paid by customers’ for telecoms services. He said tariff on voice calls and data cost would certainly go up because the impact of the levy would be passed on to the end user of telecoms services.

The businesses which are to be affected by the levy include telcos, Internet Service Providers (ISPs); banks and other financial institutions; insurance companies and Nigerian Stock Exchange.

Africa’s Web Regulatory Challenge

I have noted that Internet would destroy value; it would also create new value. However, the translation of that value may not necessarily go to government, immediately. If government loses taxes on SMS and phone calls because people are using WhatsApp and Skype, the citizens have saved money but government has lost that tax revenue since the telcos cannot pay for them. Any government that is pushing to recover the bulk of that value destruction and shifting will end up hurting its local companies. In other words, if Nigeria wants to tax more on SMS in order to recover lost revenues because of WhatsApp, it would be making a big mistake. This new levy for cybercrime in Nigeria will be a burden on local companies; the foreign ones will not be part of it. Yes, the local companies have paid their usual corporate taxes which ordinarily should be used by government to protect those companies in any way possible from cybercrimes.

Nigeria is not paying attention to the potential risks of value destruction to the economy which Internet will bring to the nation. We will continue to see the erosion of tax Naira as more industries are disrupted. The telcos are first, but our banks are not immune. If the banks face this problem and fail to compete, the tax Naira will go as more value will be destroyed.. The challenge is that value is destroyed, and our local digital companies do not actually drive the destroying process – most times, foreign firms do and get the value. I project that Internet will erode more than 17% of Nigeria’s total tax revenue over the next decade. This does not mean that the absolute tax revenue will drop, rather, some sectors where government makes money, via tax, will earn less. If the telcos earn less because of OTT, they will pay lesser tax. Period. But government can still get more artisans and farmers to pay tax (I want to make that clear – my prediction is not the absolute tax which can be compensated if more people join the tax paying base. I am focusing on taxes from those paying tax right now. While those paying now can drop, proportional to growth, the total absolute tax could be higher because of bringing more informal sector participants into formal sector).

Our digital companies are supposed to help us cushion the impact from this Internet-enabled value destruction. Yes, but they will need to grow and blossom first. I will explain how they can do this.

All Together

In the age of unconstrained and unbounded internet, distribution is no more what it used to be. That is a very important element African regulators must consider. If you continue to pile fees on telcos, you are simply making it easier for more people to be pushed to WhatsApp since SMS would become more expensive as the telcos would certainly increase prices to recover their costs. And when you think your indigenous streaming company is dominant, you have forgotten that it is competing with extremely more dominant global empires. The old adage that business is local remains, but for internet companies, local means everywhere. Yes, everyone on the web is local to all!

Specifically for Nigeria, the push to digital & cashless society should not be seen as an avenue to make more money from the citizens. We already pay stamp duty on electronic transactions. This new levy needs to be revisited.

Thank You, Members of House, James Faleke (APC, Lagos) on JAMB Fee Resolution

By

Ndubuisi Ekekwe

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May 24, 2018

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Let me begin by thanking the Members of House of Representatives, Federal Republic of Nigeria, for leading on the price of JAMB fees. Special thanks to James Faleke (APC, Lagos) for a strong speech on the Floor. I have noted (here, here and here) that it was unethical for JAMB to become a profit-center for the Nigerian government. Simply, JAMB has to charge what it needs – Nigeria does not need any remittance from JAMB. NNPC, CAC and other agencies will continue to fund Nigerian budget; JAMB should focus on helping our young people to enjoy the only benefit of being a Nigerian: subsidized public university education.

As I have noted, I do not expect JAMB to be revenue generating for the federal government. Let it just charge enough to cover its expenses. Anything more would be troubling. Yes, JAMB should not be NNPC or Corporate Affairs Commission which are expected to generate revenue for the federal government.

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We know that Nigeria does not have cash. But the revenue from JAMB will not fix anything. We know where to go for revenue: we have NNPC, LNG, and other entities structured to generate revenues for Nigeria. JAMB is not supposed to be one. And government should make it clear to JAMB that it does not need its money. Let the exams be affordable, accessible and revenue-neutral. Set the fees to the extent that you can cover all your expenses. Do not wire anything to CBN.

The Members of House have taken action and they want JAMB to reduce the cost of JAMB exams (pardon me for this extensive reproduction).

Members of the House of Representatives on Thursday urged the Federal Ministry of Education to cut the cost of Joint Admissions and Matriculation Board (JAMB) application forms.

The House also proposed that the cost be reviewed downward to about 50 per cent from the current N7000.

The House, while adopting a motion by James Faleke (APC, Lagos) urged the Federal Ministry of Education to ensure that the cost of the other ‘ancillary forms’ for changes must be free or at the very barest minimum of N500.

Moving the motion, Mr Faleke noted that the JAMB remitted N7.8 billion to the Federal Government being excess of the N12 billion made from sales of Unified Tertiary Examinations (UTME) application forms for University Admission in 2017 at the rate of N7,500.

”This excludes incomes from the sales of other forms such as Change of Course Forms and Change of University Forms at the rate of N5, 000.00 each,” he said.

He said an estimated 250,000 candidates purchased the UTME forms, bringing the income from sales of the forms to about N2.4 billion per year.

“The cost does not include the Post-UMTE Examinations that are conducted by Universities at an average cost of N2, 500 per candidate excluding the expenses made on logistics,” he added.

He said thus JAMB had a surplus of N7 billion budget in 2017, ”meaning that the sum under consideration is from sales of forms only, making the Board a profit making venture to the detriment of educational and social development of the country”.

He also noted the increase in the number of universities from 12 at inception of JAMB in 1798, with less than 50,000 candidates to over 400 Tertiary Institutions with more than 1.7 million candidates writing the exams. He said indices show only about 50 per cent of those who wrote the examinations were admitted in the universities as at 2017.

He reminded the parliament that JAMB as a government agency is not set up for profit making but ”to promote educational development of the young citizens in pursuit of their professional careers”.

We would continue to write here. I know many are reading.

Trump Signals – North Korea’s Noisy Gains

By

Ndubuisi Ekekwe

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May 24, 2018

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One of the most exciting areas in electrical engineering is neuromorphics engineering. In this sub-engineering area, you study human biology in order to get inspiration from nature towards creating systems that emulate the central nervous system. Here, neurons and synapses are the engines that anchor the solutions. And to make them, you have to bias the transistor (the fundamental unit of microprocessors or microchips developments) in weak inversion. In that region, the current-voltage relationship becomes exponential unlike the quadratic relationship in the strong inversion operating mode.

But there is a problem: besides the high gain you get, managing noise becomes very challenging. That affects the stability of the electrical system. Handling such elements is one of the reasons why most of the neuromorphics-engineered products are not prime-time for you to buy them in the market.

President Trump is going through a similar issue, politically: dealing with North Korea means he needs to balance stability of South Korea with the noise from North Korea. If North Korea has been located in most other places in the world, U.S. would have taken care of that nation many years ago. But hit North Korea, South Korea will experience avalanche from North Korea. Yes, North Korea will go down but South Korea will join too. Doing that would be a very lousy engineering design: noise and signal cannot be at parity for any meaningful product use.

So, the news that President Trump has cancelled the summit with North Korea is expected: there is no other solution than to allow North Korea to be normalized unless you want to wipe out South Korea to deal with North Korea [where military option is chosen]. Indeed, you cannot afford to improve the signal gain, and also ramp up at parity the noise. That is a big issue in electrical engineering and that is also a big one in dealing with a noisy country like North Korea.

President Donald Trump has called off a planned historic meeting with North Korea.

The cancellation was contained in a May 24 letter which the U.S. president wrote to Kim Jong-un, informing him that the meeting could not go on due to the recent verbal confrontation between the two parties.

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“We greatly appreciate your time, patience, and effort with respect to our recent negotiations and discussions relative to a summit long sought by both parties, which was scheduled to take place on June 12 in Singapore.

“We were informed that the meeting wwas requested by North Korea, but that to us is totally irrelevant. I was very much looking forward to being there with you. Sadly, based on the tremendous anger and open hostility displayed in your most recent statement, I feel it is inappropriate, at this time, to have this long-planned meeting.

“Therefore, please let this letter serve to represent that the Singapore summit, for the good of both parties, but to the detriment of the world, will not take place. You talk about your nuclear capabilities, but ours are so massive, powerful that I pray to God they will never have to be used,” Mr Trump said.

Sure – U.S. has “massive” bombs. We pray no one ever uses them. Yet, you do not really need “massive” ones to destroy nations when they are nuclear. We must remember that and that is why South Korea would never want wars. Indeed, you cannot amplify the stability of South Korea without ramping up noise from North Korea.

Expect Major Investment Exits for Nigerian Startups from 2022

By

Ndubuisi Ekekwe

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May 24, 2018

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The season of investment exits for many Nigerian startups is just around the corner. Yes, there is an emerging trajectory which I expect to cement in 4-5 years: foreign companies acquiring indigenous African startups to have their feet on the ground in Africa. I have noticed that in the last 18 months, most South African ventures have exited through such acquisitions. If you are paying attention, most edutech (educational technology) startups in South Africa have sold to American bigger companies. South Africa seems to know how to build great edutech companies.

In a week full of surprises to the online education world, 2U announced it is acquiring GetSmarter, a South African startup that delivers short-term online certification courses to distance-learning students in partnership with many of the world’s top-tier universities. The price tag for the deal is $103 million in cash plus an earn-out provision of as much as $20 million in cash.

Today, Uber has joined the party, buying South Africa’s orderTalk via its UberEats brand.

Uber Eats, the food delivery business of ride-hailing giant Uber, has acquired South African-owned restaurant technology company orderTalk in what is being billed as a significant exit for Cape Town-based venture capital firm Knife Capital.

The deal, the terms of which have not been disclosed, will allow Uber Eats “to streamline workflows by directly integrating with leading point-of-sale systems”.

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The company offers online ordering software solutions using proprietary remote-ordering software and mobile and social media applications. Proprietary software is integrated with leading point-of-sale systems.

In my model, the diffusion latency from South Africa to most parts of Sub-Saharan Africa is about 4 years. In other words, South Africa experiences most services ahead by four years, before big global firms begin to roll out such in other parts of sub-Saharan Africa. If they start buying these South African startups and they like what they have gotten, in 4-5 years, many Nigerian startups will be hitting exits through such ways.

Yes, I understand the challenges of infrastructures which affect business scalability and how we have not fixed them in Nigeria. Unequivocally, top-grade infrastructures matter in big ways. However, lack of infrastructures would not affect the promising trajectories of companies like Paystack and Cellulant if they seek to exit. Nigeria remains the crown jewel of Africa: our population and business laws make it easy for anyone to come in and make money. Foreign brands understand our positioning, and would certainly balance the challenges with the global transitional opportunities some startups in Nigeria would provide to them, to deepen their footprints in West Africa and beyond.

So, go out there and begin to take action, the opportunities are ahead. And when they start buying the bigger well-funded Nigerian companies, those founders would have money to invest in new generation of startups. That is how an ecosystem evolves. We are getting closer daily, just as I have already noted that 2022 is the magic year.

Simply, we’re entering the real ecosystem era – call it a virtuoso period where exited founders have cash to seed new generation startups.

Nigerian Universities Approved by NUC for Postgraduate Studies

By

Ndubuisi Ekekwe

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May 24, 2018

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The National Universities Commission (NUC), Nigerian university system regulator, has released a list of approved postgraduate awarding schools, Premium Times reports.

“The commission hereby notifies the general public that only the following universities have approval to offer postgraduate programmes at the Masters’ and Ph.D levels in Nigeria as of July 30,2012,” the bulletin said .

According to the bulletin, Nigeria has 162 universities: 41 are federal, 47 are state owned while 74 are privately owned institutions.

Under the different classes, here are the schools.

Federal Universities

1. Abubakar Tafawa Balewa University, Bauchi

2. Ahmadu Bello University, Zaria

3. Bayero University, Kano

4. Federal University of Technology, Akure

5. Federal University of Technology, Minna

6. Federal University of Technology, Owerri

7. Micheal Okpara University of Agriculture, Umudike

8. Modibbo Adama University of Technology, Yola

9. National Open University of Nigeria, Lagos

10. Nigeria Defence Academy, Kaduna

11. Nnamdi Azikwe University, Akwa

12. Obafemi Awolowo University, Ile Ife

13. University of Abuja, Gwagwalada

14. University of Agriculture, Abeokuta

15. University of Agriculture, Makurdi

16. University of Benin, Benin City

17. University of Calabar, Calabar

18. University of Ibadan, Ibadan

19. University of Ilorin, Ilorin

20. University of Jos, Jos

21. University of Lagos, Akoka

22. University of Maiduguri, Maiduguri

23. University of Nigeria, Nsukka

24. University of Port Harcourt, Port Harcourt

25. University of Uyo, Uyo

26. Usmanu Dan Fodio University, Sokoto

State Universities

1. Abia State University, Uturu

2. Adamawa State University, Mubi

3. Adekunle Ajasin University, Akungba Akoko

4. Ambrose Alli University, Ekpoma

5. Anambra University, Uli

6. Benue State University, Makurdi

7. Cross River University of Technology, Calabar

8. Delta State University, Abraka

9. Ebonyi State University, Abakaliki

10. Ekiti State University, Ado Ekiti

11. Enugu State University of Science and Technology, Enugu

12. Imo State University, Owerri

13. Kogi State University, Anyigba

14. Ladoke Akintola University of Technology, Ogbomoso

15. Lagos State University, Ojo

16. Nasarawa State University, Keffi

17. Niger Delta University, Wilberforce Island

18. Olabisi Onabanjo University, Ago Iwoye

19. Rivers State University of Science and Technology

20. Umar Musa Yar’Adua University, Katsina

21. Gombe State University, Gombe

22. Ibrahim Babangida University, Lapai

23. Kano State University of Science and Technology

24. Kebbi State University of Science and Technology

25. Kwara State University, Malete

Private Universities

1. African University of Science and Technology, Abuja

2. American University of Nigeria, Yola

3. Babcock University, Ilishan Remo

4. Benson Idahosa University, Benin City

5. Bowen University, Iwo

6. Covenant University, Ota

7. Igbinedion University, Okada

8. Pan-Atlantic University, Lekki

9. Redeemer’s University, Mowe, Ogun State

10. Caleb University, Lagos

11. Joseph Ayo Babalola University, Ikeji-Arakeji

12. Nigerian Turkish Nile University, Abuja

13. Afe Babalola University, Ado Ekiti, Ekiti State

14. Lead City University, Ibadan (MSc. Only)

15. University of Mkar, Mkar (MSc. Only)

16. Madona University, Okija

17. Al-hikmah University, Ilorin (MSc. Only)

18. Godfrey Okoye University, Ugwuomu-Nike , Enugu state.

Also, NUC noted that “Employers of labour, educational institutions and other stakeholders are to note that only certificates issued by these universities for their approved programmes, are valid for employment, further studies and other purposes,” according to the Premium Times report.

As you decide to apply in any of these schools, NUC has also provided the official ranking of Nigerian universities.