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Weekly Economic Index: A crypto tax, fuel scarcity, and more layoffs

Here’s a rundown of some of the biggest stories of the week (November 28th – December 2nd).

FG to tax cryptocurrencies

Zainab Ahmed, minister of finance, budget and national planning, said there is a provision to tax cryptocurrency and other digital assets in the 2022 finance bill. The 2022 Finance Bill would bring all sectors of the economy into the tax net, including capital gains tax from digital assets, cable undertakings, and lottery and gaming businesses.

The government believes taxing digital assets brings Nigeria into the league of countries like the United Kingdom, the United States of America, Australia, India, Kenya, and South Africa, which are currently doing the same. 

The proposed development is somewhat paradoxical because Nigeria frowns on cryptocurrency. On February 5, 2021, the Central Bank of Nigeria (CBN) directed banks to close accounts of persons or entities involved in cryptocurrency transactions within their systems. Despite the ban, the country had the fastest cryptocurrency adoption rate globally last year, driven by peer-2-peer transactions. One can guess this is an unexplored goldmine for the government, especially from the tax viewpoint. 

But why would the government tax what it has banned? Maybe there is some silver lining in the dark cloud which would see the FG lift the ban and regulate cryptocurrencies instead. Time will tell. 

Fuel scarcity again?

Nigeria is presently going through another fuel scarcity saga. The country’s citizens have always experienced an endless chain of fuel scarcity, not just this year but even in previous years. For example, earlier in the year, adulterated fuel was imported into the country, resulting in the destruction of properties like cars and generators, amongst other fuel-consuming machines. 

Now, the country is experiencing yet another fragment of this frequent occurrence. The Independent Petroleum Association of Nigeria (lPMAN) has attributed the current fuel scarcity to the unavailability of petroleum products and the difficulty in accessing foreign exchange by marketers. Nigeria National Petroleum Corporation (NNPC) Ltd., had stopped importing enough petrol to meet demand in the country, and marketers can no longer sell at the regulated price because the unsteady petrol supply had resulted in higher prices at the depots. We can’t say how long this will last, but we hope it ends soon. 

Safe Boda rides away

In recent months, hardly has any week gone without the stories of layoffs in both the global and African tech ecosystems making it to the headlines. It is one of the unprecedented happenings in the tech world this year. In Nigeria, startups like Quidax, Nestcoin, Kuda, etcetera have laid some workers off. Last week, Safe Boda, a Ugandan bike-hailing startup that extended its tentacles of operation to Oyo state, Nigeria, joined the league and exited the west-African market. 

The announcement comes barely three months after the company expanded its service from bike-hailing to include car-hailing. The ride-hailing company, which began operation in Ibadan in 2020, celebrated crossing 4 million rides, and 50,000 deliveries with over 10,000 riders and 100,000 passengers in March 2022. It seems this figure does not really translate into a financial boom for the company, which said the exit is because the Okada (motorcycle) industry “in its current state is not economically viable and unfortunately requires significant investment at this challenging time in the global economic landscape.”

The company’s exit definitely comes at a cost to its riders and drivers, who now have to scramble for jobs in the overwhelmed Nigerian labour market. 

ICYMI: Market Roundup

  • The NGX All-Share Index and Market Capitalization gained 1.26% to close the week at 48,154.65.
  • Top Gainers were Thomas Wyatt Nigeria Plc (+22.22%), P Z Cussons Nigeria Plc. (+14.74%), NPF Microfinance Bank Plc (+14.00%), Wema Bank Plc (+11.73%) and U.A.C of Nigeria Plc (+10.53%). Top decliners were Beta Glass PLC (-9.90%), Scoa Nigeria Plc (-9.40%), Red Star Express Plc (-9.25%), CWG Plc (-8.07%), Honeywell Flour Mills Plc (-7.46%).
  • The Nigerian naira started the week at 444.02 NGN/$1 to close at 444.17 NGN/$1
  • Brent crude closed the week at $85.42, while US West Texas Intermediate (WTI) crude closed at $80.34
  • According to data from Coinmarketcap, the global cryptocurrency market cap stood at $851.87 billion as of 2:25 pm on Sunday, 4th of December- a 0.38% decrease over the previous day. 
  • Bitcoin dropped by 0.4% to trade at $16,958.90, Ethereum gained 0.02% to trade at $1,256.14, while Binance Coin slumped by 0.11% to trade at $289.83.
  • Kenya-based smartphone re-commerce startup, Badili, has secured $2.1 million in pre-seed funding from VCs and angel investors to pursue new growth opportunities in West Africa, where it wants to capitalize on rising demand for low-cost used smartphones.
  • South African early-stage venture capital firm 4Di Capital has announced the second closing of its new $25 million seed fund focus on businesses exhibiting continental or global ambitions and will remain open to new investors until the final close in early 2023.
  • Solarise Africa, a Kenya-based energy leasing company, has raised $33.4 million in debt funding to expand its portfolio in Kenya and other selected African countries.
  • Orda, a Nigerian food tech platform that provides a cloud-based restaurant operating system to solve these issues for small, independent restaurants has secured a $3.4 million seed investment.

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