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Obafemi Awolowo University Shut for Alleged Tax Default

By
Ndubuisi Ekekwe
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0

According to Premium Times, Obafemi Awolowo University has been shut down for alleged tax default. This is very interesting. It shows a new Nigeria is coming up. First, OAU is a quasi non-profit and second, it is a federal university. That Osun State can close it for tax purposes is an indication that internally generated revenue (IGR) is now a hardball. Any state that cannot improve its IGR will certainly struggle.

The Osun State Internal Revenue Service has closed down the Obafemi Awolowo University, Ile Ife, over alleged N1.8 billion tax debt to the state government.

The institution was shut down Wednesday morning by the officials of the state revenue (IRS) led by Oladipo Babatunde after obtaining a court order to seal the school.

Mr. Babatunde has, however, said that the institution will be reopened when the management is ready to pay its tax debt.

The IRS sealed the university Senate building, administrative block, the bursary department and the university main gate which interrupted easy flow of vehicles and registration of fresh students who resumed on Sunday.

The state government had earlier issued seven days ultimatum to the companies accused of owing the state well over N12.5 billion as un-remitted taxes.

As I noted few days ago, the central purse is shrinking which means states cannot depend on the federal government to run their services. They need to invent new ways to ensure companies pay taxes. I expect states to develop better ways of collecting taxes from the informal sector which remains largely out of the tax system.

IGR includes Pay-As-You-Earn Tax (PAYE), Direct Assessment, Road Taxes, and revenues from Ministries, Departments and Agencies (MDA)s. In coming months, for the sake of survival, state governments would deploy arsenals to deepen the efficiency of collecting these taxes and fees. You do not close OAU if you are not serious in improving IGR.

Meanwhile, if you are paying attention, you would have noticed that Nigeria’s federal, state and LGAs governments increasingly have lesser to sharefrom NNPC generated revenue from crude oil business.

The federal government, states and local governments shared N626.8 billion for the month of April. …Giving a breakdown of the revenue accrued in March, Mr Idris said N480.59 billion was received as gross statutory revenue, lower than N557.94 billion received in March by N77.34 billion

Non-Economically Viable States

We do note that many states are not economically viable. Now that depending on the federal government will not cover their financial obligations, things will change.

Economic Confidential noted few days ago that about 17 states in Nigeria cannot really open doors for business without the federal government support. This clearly shows that states must innovate to diversify their sources of revenues. And as they do, they must ensure that the quest for revenues would not cripple the few companies that operate in the locations. Where the balance is not optimal, most of the companies will depart triggering more challenges for the states. Yes, collect only taxes and fees backed by the law and do not exploit companies.

The Economic Confidential has released its Annual States Viability Index (ASVI) which shows that 17 states are insolvent as their Internally Generated Revenues (IGR) in 2017 were far below 10 per cent of their receipts from the Federation Account Allocations (FAA) in the same year.

The index proved that without the monthly disbursement from the Federation Account Allocation Committee (FAAC), many states remain unviable, and cannot survive without the federally collected revenue, mostly from the oil sector.

Economic Confidential Annual State Viability Index (ASVI) 2017 
Ranking of States by Internally Generated Revenue (IGR) Compared to Federation Account Allocation (FAA) in 2017

Source: www.EconomicConfidential.com

The Economic Confidential ASVI further showed that only three states in the entire Northern region have IGR above 20 per cent. They are Kwara, Kano, and Kaduna States. Meanwhile ten states in the South recorded over 20 per cent IGR in 2017. They are Lagos, Ogun, Rivers, Edo, Enugu, Delta, Cross River, Anambra, Oyo and Abia States.

Business Idea #10: Aggregation Marketplace for Car Services and Repairs

By
Ndubuisi Ekekwe
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0

This daily series focuses on business ideas for those looking to launch new ventures in Nigeria (and Africa in general). The short ideas are archived here.

The Problem

Cars break and they have to be fixed by mechanics. If your car stays in some mechanic workshops overnight, that car is largely gone. Most would use parts from your car and fix another car. It is a huge problem and many people do all to avoid being in that position where they would keep their cars with mechanics. Unfortunately, it is one of those things you cannot easily avoid especially when we drive cars with average age in excess of 15 years in Nigeria.

The Opportunity

An aggregator with “angel network” that will screen very well trusted people. Those people pick the cars, take them to mechanics, and afterwards return them to the owners. The aggregator would have to work with networks of mechanics with stated pricing model which it would communicate to car owners in its network. The goal is that someone can be at work while trusted people are helping to fix his/her car. If there is anything that is to be purchased, the people will communicate via app or SMS to the car owner for necessary approval.

Action Roadmap

Build an app that can bring a network of mechanics (on one side), car owners (on another side) and link them together in a two-sided business. Then have trusted agents. Part of this business could also include providing drivers on-demand in major cities in Nigeria. You do not need to be a mechanic to build a business making money from fixing cars. Think of this as a marketplace that delivers value to car owners even when expanding networks for mechanics.

Active Investor #3 – Singularity Investments

By
Ndubuisi Ekekwe
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0

This daily series focuses on active investors who are investing on African entrepreneurs and their startups/businesses. To qualify, the investor must have done a deal within the last 24 months in continental Africa. The daily entries are archived here.

Business Name: Singularity Investments

Business Description: Singularity Investments is dedicated to accelerating the growth of early-stage companies in Africa and North America. We focus on scaling businesses and leveraging our team’s network to build market-leading portfolio companies.

Business Focus: Multi-sector

Location: Lagos

Selected Recent African Deals: Paystack, Flutterwave, Sliide Airtime, Asoko Insight

Website: singularityinvest.com

Contact: InfoAfrica @ singularityinvest.com

Factor:This firm is led by Sam Darwish, Founder, Executive Vice Chairman and CEO of IHS Towers, the telecom operating company.

What We Can Learn on Communicating Vision from Kids’ Relay Race [Video]

By
Ndubuisi Ekekwe
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0

I ran a leadership class early this morning. I played this video [below]. The setting was a primary school – kids were running an athletics relay race. One child runs and passes the baton to the next person. One team was clearly winning – until the baton was handed over to the last kid in the team. Then the problem started.

Instead of the kid continuing to run to the finish line [by maintaining the direction of the race], he ran the other way. In other words, he practically erased the progress made by the earlier runners. As you watch the video, you will see the coach shouting at the kid to turn around, and run in the appropriate direction. Unfortunately, the kid did not hear him well. By then, the previously losing team had overtaken his team,

As the kid ran the wrong direction, I paused the video, and asked my audience: “Do you think you have in your team people that run the wrong direction?” These are team members who just erase progress made by others.

Yet, we expanded the conversation looking at if those “problem team members” know the vision. In other words, has someone communicated the vision to them? For the kid running the wrong direction, it is possible the coach has not explained the purpose of the race and how winning could be ascertained. For the kid, innocently, he thought, the deal was likely to get the baton and start running, irrespective of the direction. He ran very well, but was simply erasing progress made by others.

Unfortunately, the efforts resulted in one thing: his team lost the race. Make efforts to communicate vision and what WINNING really means.

Business Idea #10: Agro-Marketplace To Reduce Price Asymmetry

By
Ndubuisi Ekekwe
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2
A farmer prepares water channels in his maize field in Ngiresi near the Tanzanian town of Arusha on Tuesday, July 17, 2007. Millions of farmers around the world will be affected by a growing movement to change one of the biggest forces shaping the complex global food market: subsidies. Many experts agree farmers need help to grow food year in and year out, but Western farmers may get too much and African farmers too little. (AP Photo/Karel Prinsloo)

This daily series focuses on business ideas for those looking to launch new ventures in Nigeria (and Africa in general). The short ideas are archived here.

The Problem

The price asymmetry between prices of produce in rural and urban areas in Africa remains a big challenge. Farmers who do the hard work of farming largely sell for nothing to middlemen (or merchants) who then re-sell in urban areas. Those middlemen mop up more than 40% of the profit in the value chain. In other words, if the farmer makes 10%, the middlemen make 60% while the end-resellers make 30%. The nexus is possible because the farmers do not have clear ideas what the items which they have produced are sold in cities.

The Opportunity

This is a data business which is certainly huge. If farmers have the real-time data of what produce goes for in big cities, they would bargain better with middlemen and merchants when they come to buy produce from them. A top-grade system will support not just farmers but also merchants and commodity traders who can feed into the system to have real-time insights on pricing. There are opportunities to sell subscriptions, comprehensive market reports, and more to clusters of market makers. This is nothing but a marketplace which can be structured to be an aggregation system with data coming from farmers, merchants and even end-users.

Action Roadmap

Build SMS, chatbot or web app that can deliver a marketplace for farmers, merchants, traders and end-customers in the agro value chain. The system should offer value to all participants in the marketplace. It must deliver supply chain pricing transparency to unite all players and then deliver equilibrium that is possible due to lack of any asymmetry on pricing.

Comments from LinkedIn

Ndubuisi Ekekwe, this is a very important issue to tackle and the potential solutions you are opening up to building a real market in which producers have a view of the market and can operate around that knowledge is great. Depending on the African country concerned, there might be different barriers to building such integrated network, which allows for the producers to access a fair share of the revenues, better than what they get. One aspect could be to help producers organize along the value chain and create there own logistics if they are able to regroup as coop or something similar. All the technologies available to helping hem to that end should be taught to them. There is certainly a lot to do around the idea put forth here. As usual, I appreciate your analysis about these issues and the founding solutions you provide.

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