Daily Watch – World Bank sells FG on betting taxes, Safaricom launches in Ethiopia

Ahead of the presentation of the ₦19.76 trillion budget proposal for 2023 by Nigerian President Muhammadu Buhari on Friday, the House of Representatives has reduced the proposed fiscal deficit of ₦11.3 trillion to ₦10.5 trillion for the next financial year. The reduction is based on the expected savings from the subsidy regime amounting to ₦737.31 billion, as the FG projected that the scheme will last only in the first six months of the year to the tune of ₦3.36 trillion. The adjustment followed the approval of the recommendations of the report of the House Committee on Finance report on the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) at plenary on Thursday. According to the report presented by the deputy chairman of the finance committee Abdullahi Saidu, the House approved ₦9.3 trillion in revenue as a result of the increase in the benchmark as the ceiling oil subsidy of the year in review. This was above the executive’s projected total revenue of ₦8.46 trillion captured in the MTEF/FSP 2023-2025 presentation by Finance Minister Zainab Ahmed to the committee. The House also approved the recommendations of the daily crude oil production of 1.69 million barrels per day, 1.83 million barrels per day, and 1.83 million barrels per day for 2021, 2022 and 2023 respectively and the oil price of $73 per barrel of crude oil that it said will result in saving ₦155 billion.

Geregu Power, chaired by billionaire businessman Femi Otedola, was listed by introduction on the main board of the Nigerian Exchange Limited (NGX), becoming the first power firm to go public almost nine years after the country’s power sector was privatised. A total of 2.5 billion ordinary shares of Geregu Power were listed at ₦100 per share, under the utilities sector and electric power generation sub-sector of the NGX, with the trading symbol GEREGU. The listing of Geregu Power’s shares added ₦250 billion to the market capitalisation of the NGX, further boosting liquidity in the Nigerian capital market. Amid high investors’ demand, the stock gained 10 percent on its first trading day on the NGX to close at ₦110 per share from an opening price of ₦100 per share. The gain pushed its market capitalisation to ₦275 billion from the ₦250 billion it was listed. The firm traded 8.5 million volumes of shares at ₦935 million in one day as its listing further boosted liquidity in the Nigerian capital. Geregu Power is primarily involved in the generation and sale of electric power, transmitted through the national grid to the Nigerian Bulk Electricity Trading Plc for onward delivery to power distribution companies.

The World Bank has proposed that the FG impose an 8 percent ‘ad valorem’ tax on gambling and betting (online betting inclusive) stakes in the country to help generate revenue going forward. Rajul Awasthi, Senior Public Sector Specialist and Co-lead of the Domestic Resource Mobilisation Global Solutions Group at the World Bank proposed this at the stakeholder engagement and consultation forum for the 2023 fiscal year finance bill held virtually on Thursday. Awasthi urged the government to include it in the 2022 Finance Act and projected that if the 8 percent tax is implemented, by 2023 the government will generate at least ₦114 billion in revenue. “In addition to excises on harm goods, an excise on gambling and betting will capture revenue and increase the cost for gamblers; by 2024 the tax can be reviewed to 12 percent which will generate revenue of ₦164 billion,” he said. Making comparisons with other African countries, Awasthi said countries like Cameroon, Gambia, Ghana, Togo, Ethiopia, etc taxed betting and gambling between five percent and as high as 40 percent, especially on winnings. The World Bank executive added that Nigeria has some of the lowest rates of excise tax and low excise collection in sub-Saharan Africa and proposed that excise taxes be increased on tobacco, nicotine products, spirits, wines, cigarettes, non-alcoholic beverages (NAB), etc. He proposed specific, ad valorem and indexed tax rates of an additional 10 to 30 percent on the products as well as an increase in the value per litre of some products.

Kenya’s Safaricom launched its mobile network in Ethiopia on Thursday, becoming the first private operator in one of Africa’s largest telecoms markets. Safaricom Ethiopia switched on its network and services in the capital Addis Ababa on Thursday following network pilots in 10 cities, it said in a statement. Hours later Ethiopia’s finance minister, Ahmed Shide, said his government had granted the company a licence to operate a mobile money service. Safaricom Ethiopia CEO Anwar Soussa said the mobile money service would take two to three months to roll out. Safaricom Ethiopia said it plans a national network rollout to reach 14 additional cities by April 2023. “We are optimistic about how the technology and connectivity we are providing will contribute to a digital future and eventually transform people’s lives,” said Safaricom CEO Peter Ndegwa. Kenyan President William Ruto, who attended the launch, said the mobile money licence had not been agreed when he departed from Nairobi on Thursday morning. Ruto said he “had a mission to come back with a deal.”