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Nigeria’s economy witnessed a broad-scale rebound from the slump of the previous year. There was some good news to cheer—new startups breaking into the limelight, existing ones securing funding to expand, and physical infrastructure being built to support the country’s revenue diversification efforts. There have also been major changes to the rules governing segments of the economy. These revisions, some hotly debated, could have a significant impact on commerce over the coming years. This article notes some of the top business highlights of 2021. Here they are, discussed in no particular order.
The Petroleum Industry Bill Passed Into Law
In August, the Petroleum Industry Bill became an act of the Federal Republic. This long-sought piece of legislation provides legal and regulatory guidance for Nigeria’s petroleum industry. Some of the key contents of the act are the replacement of the state-owned Nigerian National Petroleum Corporation (NNPC) by NNPC Limited, and the allocation of 30% of oil and gas profits to finance oil exploration in the Chad Basin, Sokoto Basin, and Benue Trough. It also includes a development fund for host communities, to be financed by contributions from oil companiesThe Finance Act 2020 Came Into Effect
The Finance Act, which was signed into law in December 2020, came into effect in January. The act presents more than 80 changes to various laws governing taxation in Nigeria. Notable amendments include the exclusion of low-income earners (people with monthly incomes of ₦30,000 or less) from paying Personal Income Tax; the use of funds in dormant accounts by the government; the introduction of Electronic Money Transfer (EMT) levy on bank transfers of ₦10,000 or more; and tax holidays for agricultural SMEs.Nigeria Launched The eNaira
After a bit of delay, Nigeria launched its eNaira late in October. Built as Africa’s first digital currency, the eNaira is a brainchild of the CBN, which has developed it in partnership with Bitt Inc, a financial technology company based in Barbados. Banks have been placed in charge of rolling out digital currency. Members of the public who want to hold and transact with the eNaira can access it through their local banks. They can also hold it in a digital wallet. The CBN says that the eNaira will drive financial inclusion, improve the efficiency of payments, and enable better tax and revenue collection.Flutterwave Became A Unicorn
Flutterwave, a FinTech startup founded in 2016, announced in March that it had raised $170 million in its Series C funding round. That round valued it at over $1 billion, meaning that it had become Nigeria’s latest unicorn. To put this in perspective, its current valuation exceeds those of traditional banks like First Bank, UBA, and Stanbic IBTC. Flutterwave is only the second Nigerian startup to have achieved unicorn status. Interswitch did so in 2019. Later in 2021, Andela and OPay—both of which started off in Nigeria –also became unicorns.Find our comprehensive listings of businesses in Nigeria here https://businesses.connectnigeria.com/
Impressive Funding Rounds For Nigerian Startups
Besides the startups mentioned above, there were myriad others that secured significant funding from local and foreign investors. Cowrywise scooped $3 million in a Pre-Series A funding round; Autocheck took $13.1 million in seed funding; Sparkle raised $3.1 million; Releaf announced that it had gotten $4.2 million in seed funding. In August, news broke that Kuda, a Nigerian digital bank, had clinched $55 million in its Series B funding round. This put its value at about $500 million—higher than several traditional banks in the country. Other businesses which secured investments and grants in 2021 include ReelFruit, Tomato Jos, Mono, Plentywaka, and Payhippo, among others.Nigeria’s Rebound From The 2020 Recession
Nigeria officially exited recession in the final quarter of 2020. In the following months, its recovery was strengthened by the rebound of various segments of the economy. While the country’s GDP inched up 0.51% in the first quarter of 2021, it accelerated 5.01% between April and June. Further growth was recorded in the third quarter, with the value of economic output expanding 4.03% within that period. Leading the growing pack in the third quarter were rail transport and pipeline, metal ores, air transport, financial institutions, road transport, trade, and telecommunications.The CBN’s Ban On Cryptocurrency-Linked Bank Accounts
In the last few years, Nigerians have become increasingly interested in cryptocurrencies. They have gone from being peripheral members of the global crypto-trading community to being among the largest communities of investors in digital currencies. But the CBN, which oversees monetary policy affairs in Nigeria, has moved to stifle this burgeoning segment. In February, it issued circular directing banks and non-bank financial institutions to close accounts connected to people or organizations that traded cryptocurrencies. Since the announcement of the ban, Nigerians have sought to bypass the CBN’s restriction by engaging in Peer-to-Peer (P2P) crypto transactions. Available evidence suggests that they remain enthusiastic about cryptocurrencies, and are making more forays into the ever-expanding market for digital currencies.FG Vs States On Value Added Tax (VAT)
Dwindling oil revenues and rising public debt have caused rumblings of discontent within the government at both the federal and state levels. One episode that’s been fueled by these factors is the battle for control of Value Added Tax (VAT). State governments, including those of Rivers and Lagos States, have challenged the collection of VAT by the Federal Inland Revenue Service (FIRS). If the status quo is maintained and the Federal Government carries on collecting VAT, we’ll probably see little or no changes on this front for a while. But if states assume responsibility for collecting this tax, there could be repercussions for businesses from which it’s taken, and for states which rely on the government for a greater part of the funds with which they finance their operations.Airtel And MTN Secure Initial Approval To Run Payment Service Banks (PSB)
Telecoms companies Airtel Africa and MTN have both announced that they have received approval-in-principle to launch Payment Service Banks (PSBs). Both will be using these vehicles to provide basic banking services to the financially underserved. This mission is made easier by their existing presence across the country, and the tens of millions of customers they already serve. Last year, Globacom and 9Mobile were granted licenses to run their own PSBs.Construction Of Kaduna-Kano Rail Line Commences
The construction of the Kaduna-Kano rail line began this year, after being flagged off by President Muhammadu Buhari. The $1.2 billion projects is being handled by the China Civil Engineering Construction Company (CCECC). Part of a wider railway network running from Lagos to the far north, the Kaduna-Kano rail line will cover 203 km and will pass through Zaria—in effect linking three of Northern Nigeria’s biggest cities. The Minister of Transportation, Rotimi Amaechi, has said that the railway stations along this line will employ at least 20,000 people. The railway project is expected to be completed in 2023.Final Words
This year has brought mixed fortunes for Nigeria’s businesses and the environment in which they operate. Hopefully, 2022 will be marked by much better outcomes for ventures operating in Nigeria’s commercial space. Featured Image Source: Google SitesGot a suggestion? Contact us: editor@connectnigeria.com
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