Here are three big stories from Africa’s business and policy landscape you (probably) didn’t miss but should keep in mind this week:

Starlink Cuts Off South African Users Over Licensing Issues

South African Starlink users face a sudden internet blackout as the satellite internet provider terminates their service effective April 30th. In an email sent to users, Starlink cited violations of its terms and conditions, specifically highlighting the unauthorized use of Starlink kits outside designated service areas. After termination, users can only access their accounts for updates. This service disruption stems from Starlink’s lack of a license to operate in South Africa. The Independent Communications Authority of South Africa (ICASA) requires all internet service providers to have 30% ownership from historically disadvantaged groups, a stipulation Starlink hasn’t met yet.

Many South Africans resorted to creative solutions to bypass this restriction, like purchasing roaming packages from countries where Starlink is licensed. However, ICASA made it explicitly clear last November that using Starlink outside its designated service areas is illegal. The recent email reiterates this point, emphasizing that “Mobile-Regional” plans are for temporary travel, not permanent use in a location outside the original service area. This move leaves many South Africans who relied on Starlink for internet connectivity scrambling for alternatives.

Nigeria Loses Top Spot in African Economies

The International Monetary Fund (IMF) made a significant shift in the ranking of Africa’s leading economies. Nigeria, once the continent’s undisputed leader, is expected to fall out of the top three by this year. Nigeria’s GDP is projected to be $253 billion in 2024, surpassed by South Africa ($373 billion), Egypt ($348 billion), and Algeria ($267 billion). A series of currency devaluations have weakened the Naira, impacting purchasing power and hindering economic growth. Additionally, a 40% decline in oil production and a fall in foreign investment have further hampered Nigeria’s economic prospects. This situation is exacerbated by high inflation, reaching 33.2% in March 2024, due in part to the Naira’s devaluation.

Algeria, benefiting from high oil and gas prices due to its OPEC+ membership, is set to displace Nigeria as the third-largest economy. The IMF predicts South Africa will become the continent’s largest economy until 2027, driven by strengths in manufacturing, finance, and real estate. Nigeria’s future economic position remains uncertain. The IMF predicts it will remain in fourth place for several years. Recovery hinges on controlling inflation, stabilizing the Naira, and diversifying the economy beyond oil dependence. The success of the government’s reforms depends on effective implementation and tackling fundamental economic issues.

Kenya Cracks Down on Tax Dodging with New Transfer Pricing Database

The Kenya Revenue Authority (KRA) is taking a strong stance against tax evasion by multinational corporations (MNCs) by implementing a new transfer pricing database. This initiative aims to enhance transparency and ensure MNCs operating in Kenya pay their fair share of taxes. Transfer pricing refers to the pricing of goods and services exchanged between affiliated companies, which can be part of the same multinational group. MNCs have sometimes been accused of manipulating transfer prices to minimize their tax liabilities. For instance, an MNC might sell goods to its Kenyan subsidiary at an inflated price, reducing its taxable profits in Kenya.

The KRA’s new database will be a critical tool for monitoring the transfer pricing practices of MNCs in Kenya. By collecting and analyzing data on such transactions, the KRA can identify potential discrepancies and ensure that transfer prices are set at arm’s length, reflecting fair market value. This increased scrutiny will likely involve examining detailing pricing and profit margins across various stages, such as manufacturing, distribution, and services.

ICYMI: Market roundup

  • Nigeria’s equities market went upwards over a 5-day trading week, with the NGX All-Share Index appreciating by 2.71% to close at 99,539.75 points. The top gainers were Morison Industries Plc. (45.31%), Guinness Nig. Plc. (10.00%), Academy Press Plc (9.77%), Prestige Assurance Plc (8.93%), and Thomas Wyatt Nig. Plc (8.63%). The top decliners were Guaranty Trust Holding Company plc (-19.08%), Unity Bank plc (-19.00%), Livestock Feeds Plc (-18.99%), Japaul Gold and Ventures. plc, (-18.54%) and Chams Holding Company Plc. (-16.67%).
  • The naira closed the week at ₦1169.99/$1 on Friday at the investor’s and Exporters’ window.
  • Brent crude closed the week at $90.38 while US West Texas Intermediate (WTI) crude closed at $83.14.
  • The global cryptocurrency market cap stood at $ 2.39 trillion, as of 11 p.m. Sunday, the 22nd of April. Bitcoin stood at $65,042.39, a 0.48%, decrease over the week, Ethereum decreased by 0.02% to trade at $3,315.59 and Binance coin increased by 2.48% over the week, to trade at $580.31.
  • Agricultural insurance and technology company Pula closed a $20 million Series B fundraising round. The funding round was led by BlueOrchard, via its InsuResilience strategy.
  • The Folklore, a B2B marketplace helping fashion brands from emerging markets like Africa, Asia, and The Caribbean tap into the international market, raised $3.4 million in a seed funding round led by Benchstrength.

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