A debt dilemma: Bonding over borrowing costs?
Last week, Nigeria agreed to convert $4.9 billion of debt owed to the central bank into bonds as part of its plan to reduce the country’s debt burden. The move is expected to free up funds for infrastructure investment and help lower the government’s borrowing costs.
The debt conversion plan involves the central bank exchanging the debt for longer-term bonds with maturities of up to 30 years. The bonds will carry a lower interest rate than the debt, reducing the government’s borrowing costs. The move is expected to help the central bank manage inflation, which has been rising due to the country’s high debt levels. The debt conversion plan is also part of a wider push by Nigeria’s government to reform the country’s economy and reduce its reliance on oil exports.
In March, the country’s debt-to-GDP ratio hit 35%, breaching a government target of 25%. And the West African giant has since been seeking ways to reduce its debt by increasing tax revenues and cutting government spending. This news means Nigeria’s debt burden, which has been growing due to falling oil prices and the impact of the Covid-19 pandemic, is poised to jump 50%.
Nigeria gets blockchain-ready
Last week, the federal government of Nigeria approved a national blockchain policy, called the National Blockchain Adoption Strategy, making it the newest government to do so. The policy focuses on promoting the adoption of blockchain technology across various sectors, such as blockchain-based financial services for revenue collection and management, creating an enabling environment for blockchain innovation and investment, building blockchain-based solutions, and promoting the use of blockchain in public service delivery.
By adopting blockchain technology, Nigeria can enhance transparency, security, and efficiency in sectors such as finance, agriculture, healthcare, and education, making this an excellent step toward driving innovation and entrepreneurship in the digital economy and positioning Nigeria as a leader in digital innovation in Africa.
Kenya’s digital assets to be taxed
Kenya is making plans to implement a 3% tax on digital assets revenue. According to the regulations in the Finance Bill 2023, proposed by the Kenya Revenue Authority, the new tax will affect the sale of digital assets, including cryptocurrencies and NFTs. The Bill requires platform owners or facilitators to deduct the tax and pay it to the Commissioner and unregistered digital asset exchanges in Kenya must register under the simplified tax system.
The proposed amendments also seek to increase the excise duty on telcos’ money transfer services from 12% to 15%, while the administration reportedly wants to reduce the excise duty on bank transfer fees from 20% to 15%, and decrease the cost of telephone and internet data by the same rate. Additionally, the KRA wants to impose daily excise duty remittance on companies that have a history of inflating actual sales through self-declaration. If approved, the KRA will have complete authority to require high-risk companies to pay daily taxes.
ICYMI: Market roundup
The market opened for four trading days last week as the federal government of Nigeria declared Monday, 1st of May as a public holiday to mark the Workers’ Day celebration.
- The NGX All-Share Index appreciated by 0.12% from last week to close at 52,465.31 points. The top gainers were CWG plc (25.71%), Academy Press plc (20.00%), Wema Bank plc (16.58%), Ardova plc (14.63%), and Multiverse Mining and Exploration plc (11.51%). The top decliners were Transnational Corporation plc (-30.96%), Mcnichols plc (-17.72%), Geregu Power plc (-10.00%), Living trust mortgage bank (-9.73%), Glaxo SmithKline consumer Nig. Plc (-8.73%).
- The naira closed the week at N462.23/$ on Friday at the investor’s and Exporters’ window.
- Brent crude closed the week at $75.30, while US West Texas Intermediate (WTI) crude closed at $71.34.
- The global cryptocurrency market cap stood at $ 1.19 trillion, as of 7 pm Sunday, the 7th of May. Bitcoin stood at $28,914.52 a -1.95% decrease over the week, while Ethereum gained a little momentum over the week by 0.48% to trade at $1,913.63 and Binance coin dropped significantly by -3.41%, to trade at $323.77.
- Nomba, a leading payment service provider for African businesses, raised a $30 million pre-series B funding round to support the delivery of bespoke payment solutions for African businesses. The oversubscribed equity funding round was led by San Francisco-based Base10 Partners, with participation from Helios Digital Ventures, Shopify, Partech, and Khosla Ventures.
- Drest.tn, a Tunisian startup specializing in online sales of lifestyle products, raised $336 in a recent fundraising round with investment fund 216 Capital Ventures.