Weekly Economic Index: Nigeria taxes its informal sector, suspends 5% excise duty on telecom, and Meta unveils Threads

Here are three big stories from Africa’s business landscape you (probably) didn’t miss but should keep in mind this week:

Meta unveils Threads

Last week was not a regular week for Netizens globally. Facebook‘s parent company, Meta, finally unveiled Threads, a highly anticipated alternative to Twitter. Meta CEO Mark Zuckerberg describes Threads as a “friendly” app that aims to address the reputation challenges faced by Twitter since its takeover by controversial tech billionaire Elon Musk last year.

Threads gained over 50 million users on its first day, signalling that many people are excited about its launch. For context, that’s almost 20 per cent of Twitter’s 259.4 million daily active users. Before now, many other digital platforms including Donald Trump’s Truth Social have tried to battle Twitter yet none have come as close to challenging its dominance as Threads. Now, Twitter threatens legal action over Meta’s new app. But Will Meta’s Threads rule over Twitter? Only time will tell. 

Tax for Nigeria’s informal sector 

Nigeria wants to tax its market women and the informal sector. The Federal Inland Revenue Service (FIRS) recently introduced the VAT Direct Initiative, a first-of-its-kind scheme that will foster collaboration between FIRS and the Market Traders Association of Nigeria to collect & remit VAT from their members—especially those in the informal sector—using a unified systems technology.  

Given Nigeria’s current economic challenges, including a significant debt burden, it is understandable that the country is seeking to expand its tax base to generate increased revenue. The initiative presents several appealing benefits, including the elimination of multiple taxes and extortions imposed by state actors.  But there are also concerns about exploitation.

The coming months will be eagerly anticipated as we observe how this new tax initiative unfolds and its potential impact on the country’s economic landscape.

Tinubu halts 5% excise tax on telecoms.

In response to concerns raised by Nigerians and the business community regarding multiple taxations, President Bola Tinubu has taken decisive action by signing four Executive Orders, including the suspension of the five per cent Excise Tax on telecommunication services and the escalation of Excise Duty on locally manufactured products. 

The telecoms sector has continued to be a major contributor to the Nigerian economy in terms of Gross Domestic Product Contribution (GDP). Still, operators in the telecoms sub-sector make a payment of no fewer than 41 different categories of taxes, levies and charges. 

In addition to the telecoms tax, there are other tax exemptions including, Corporate Income tax, Import duties, Export duties, Capital Gains Tax, Personal Income tax, and the new NYSC levy.

The new tax exemptions demonstrate the government’s commitment to creating a more conducive environment for businesses and alleviating the burden of excessive taxation.

ICYMI: Market roundup

• The Nigerian Exchange Group opened trading on the stock market on Monday 3 May. The NGX All-Share Index appreciated by 3.40% to close the week at 63,040.41. 
• The top gainers were Japaul Gold & Ventures PLC (58.57%), Consolidated Hallmark Insurance Plc (57.32%), Chams Holding Company Plc (56.76%), OMATEK Ventures Plc (52.78%), and Veritas Kapital Assurance PLC (47.83%). The top losers were Coronation Insurance Plc. (-26.51%), Tripple Gee & Company Plc (-26.40), Ikeja Hotel PLC (-21.05%), Lasaco Assurance Plc (-21.05%), and Champion Breweries Plc (-14.50%)
• The naira closed the week at $1/₦776.90 against the dollar at the Investors’ and Exporters‘ window. 
• Brent crude closed the week at $78.47, while US West Texas Intermediate (WTI) crude closed at $73.86.
• The global cryptocurrency market cap stood at $1.18 trillion, at 6.44 pm on the 9th of July, 2023. Bitcoin stood at $30,277.81 (a 0.78% decrease in 7 days), Ethereum stood at $1,866.02 (a 2.48% decrease in 7 days), and Binance coin stood at $234.58 (a 3.89% decrease in 7 days).
• MYDAWA, a Kenya-based health-tech startup operating an online pharmacy, has raised $20 million marking its entry into Eastern Africa’s digital healthcare space.
• Nuru, a startup based in the Democratic Republic of Congo (DRC) that focuses on solar energy, has successfully raised $40 million in equity funding for its Series B round.
• Egypt-based fintech Masroofi has closed a $1.5 million investment round to expand it’s customer base and cover its evolving needs in various segments of the market.
• Morocco-based proptech Agenz, has raised $1.3 million in a pre-Series A financing round to accelerate its growth and enhance its service offerings.