23 May

Daily Watch – Banks earn big from ATM & SMS alerts, Unpaid taxes just got more expensive

  • Nigeria will increase the interest rate on unpaid taxes to discourage companies and individuals from paying late and racking up a larger debt, the finance ministry has said. The ministry said the measure will take effect on July 1 and that the rate would be five percent over a central bank rate known as the Minimum Rediscount Rate, a benchmark lending rate. “The review of the interest rates on unpaid taxes was one of the necessary measures adopted by the FG to enhance tax compliance, minimise tax evasion and deter late payments,” the finance ministry said. Economists have long criticised the low levels of tax in the country, and in March the Abuja government laid out plans to increase its overall tax to GDP ratio to 15 percent by 2020 from the current 6 percent. Among plans, it seeks to improve tax collection, targeting an annual tax revenue of ₦350 billion ($1.15 billion) a year and proposes hiking a luxury goods tax to 15 percent from 5 percent.
  • Leading banks in Nigeria have reported a significant rise in income from fees they charge customers for use of their various electronic banking services, principally, transaction alerts, Automatic Teller Machine services and money transfers among others. The Vanguard reported that the country’s top ten banks earned ₦138 billion at the end of 2016, up over 26 percent from ₦109.1 billion in 2015. The total industry figure is expected to be over ₦160 billion, a 30 percent year-on-year rise. Organised labour, in response, has declared the e-transaction charges as not only outrageous but also a corporate extortion, calling on the CBN and other regulatory agencies in the financial sector to intervene. The paper quotes unnamed top executives of banks as saying that the development was not only inevitable given the massive refocusing of business models from interest income to non-interest income by almost all the banks in the past two years, but added that the figures are likely to rise in the future as bank customers continue to increasingly demand for the services. The shift to non-interest income comes as the nation’s Deposit Money Banks suffered a 0.53 percent decline in value by the end of February this year, with the industry’s assets and liabilities settling at ₦32.1 trillion. The lost value, which is about ₦170.2 billion, showed a sharp contrast from about ₦32.29 trillion in January, “according to the CBN’s February report. Within the period under review, the financial institutions sourced funds mainly by drawing down their reserves with the apex bank, as well as frequent patronage of the regulator’s Standing Lending Facility.
  • The National Information Technology Development Agency says Nigeria was largely spared from the monumental ransomware attack that recently affected over 150,000 countries. Director-General Isa Ali Ibrahim Pantami said that the recent WannaCry or WannaCript ransomware attack has been contained and “Nigeria was largely spared from the attack due to the massive enlightenment campaign, awareness and proactive measures put in place to swiftly deal with any reported incident”. Pantami said the efforts of industry stakeholders was highly commendable and appreciated. Computer networks in more than 150 countries and more than 200,000 people had been affected by this attack, considered to be one of the biggest cybersecurity attacks in recent history. “Traces in Nigeria appeared to be isolated cases as no major incident is reported in the country. As IT systems have now become part of our lives, the need for all to be vigilant and proactive as far as security is concerned cannot be overemphasised,” Pantami said.
  • Naspers, parent company of MultiChoice Africa, is having discussions with South African telecommunications giant MTN regarding a possible sale of the company. MultiChoice Africa is the franchise owner of DStv and GOtv, two of the continent’s most profitable and widely used cable offerings. Bloomberg reported that the disposal of MultiChoice Africa will not affect the South African division of the TV network although the plans have not been made public. “A sale is one of a number of options being considered by Africa’s biggest company by market value, and a final decision hasn’t been reached. Naspers and MTN Group have briefly discussed a deal for MultiChoice Africa, but no agreement was reached.” A sale of MultiChoice Africa would mean a shift away from its traditional media business, which includes newspapers and MultiChoice’s main product, the DSTV satellite-TV service by Cape Town-based Naspers. Both companies confirmed last week that they are still in talks about sharing TV content, video-on-demand services, on smartphones. During its November results presentation, Naspers blamed weakening currencies and economies in some African countries for its lower dollar revenue as the company charges customers in local currencies. MultiChoice Africa, founded in 1996, offers entertainment services for subscribers in over 49 countries.
  • Berger Paints has announced that the firm has obtained the ECOWAS Trade Liberalisation Scheme (EETLS) certificate that would enable it promote free trade across sub-Saharan Africa, beginning with Ghana. This comes as shareholders of the company approved ₦144.9 million in dividends, amounting to 50 kobo per share for the 2016 financial year. Addressing shareholders at the company’s general meeting, the firm’s Chairman, Oladimeji Alo said the company has embarked on various initiatives to reinforce its competitive edge and ensure overall growth and profitability. According to him, the company has completed plans to redesign its bucket and cans to increase their aesthetics appeal and increase their security features to make them tamper proof. Furthermore, he said the company would commission its new automated plant, which would help improve product quality and capacity to meet demand. Alo, who reviewed the company’s 2016 performance indicators explained that sales revenue and profit before tax which amounted to ₦2.60 billion and ₦271.8 million respectively were moderated by the economic contraction and high operational costs. The inability of many institutional consumers such as government agencies and corporate customers to meet with obligations affected their demand for paints and allied products, the company said, while low purchasing power and the high cost of basic household needs moderated effective demand at the individual level.