The Board of Directors of the African Development Bank Group has approved a loan of $4.25 million to the Lesotho Revenue Authority to provide digital tax services, including e-taxation and e-payment, that will broaden the country’s tax base and boost government revenue.
The funds, to be sourced from the African Development Fund, the Group’s concessional lending window, will go to support the Supplemental Financing of the Lesotho Tax Modernization Project. The project follows the Lesotho Tax Modernization Project (LTMP) approved in November 2017, and for which the African Development Bank Group provided $7.09 million, in financing.
Specifically, financing will be used to procure and install e-taxation, e-payment, and e-invoicing software and hardware and to integrate financial institutions and mobile money providers into e-payment systems.
“The project will allow broadening of the tax base through simplifying and streamlining the tax regime and procedures for the small business and informal sector.” said the Bank’s Director of Governance and Financial Management Coordination, Abdoulaye Coulibaly. “A strong revenue base is imperative for Lesotho to finance the spending needs on public services, social support, and infrastructure as set out in the National Strategic Development Plan II.”
Lesotho’s economy has been negatively affected during the past two years, by sluggish global growth including in South Africa, a major trading partner, as well as political instability and the Covid-19 pandemic. Revenues from the Southern Africa Customs Union, accounting for 50% of total revenue, have fallen below their historic average, threatening fiscal stability and development planning and investment.
The project, which will also update and consolidate legal and institutional tax collection frameworks, will benefit taxpayers as well as the Lesotho Revenue Authority. The Authority, which has launched a successful reform and modernization program to reduce the burden and cost of tax compliance, has introduced VAT and improved border management processes.
The Bank’s portfolio in Lesotho, equivalent to $79m, comprises 8 projects across the water and sanitation, energy, and ICT sectors, with nearly one-third of projects being multisectoral.
Africa Prudential Posts 24 Percent Decline in Profit for H1 2021
African Prudential Plc, a digital technology business provider in Nigeria, has reported a 24 percent decline in profit after tax to N830 million in the period ended June 30, 2021.
The company stated in its unaudited financial statements released on Friday. Below is a year-on-year comparison between the first half of 2021 and the first half of 2020.
• Revenue from contracts with customers: N0.52 Billion, compared to N0.59 Billion in HY 2020 (12% YoY Decline);
• Interest Income: N1.15 Billion, compared to N1.28 Billion in HY 2020 (10% YoY Decline);
• Gross Earnings: N1.67 Billion, compared to N1.87 Billion in HY 2020 (11% YoY Decline);
• Profit Before Tax: N0.97 Billion, compared to N1.22 Billion in HY 2020 (20% YoY Decline);
• Profit After Tax: N0.83 Billion, compared to N1.08 Billion in HY 2020 (24% YoY Decline);
• Earnings Per Share: 41kobo. (54kobo in HY 2020)
• Total Assets: N88.87 Billion, compared to N17.73 Billion as at FY 2020 (401% YTD Increase);
• Total Liabilities: N80.71 Billion, compared to N9.36 Billion as at FY 2020 (762% YTD Increase);
• Shareholders’ Fund stood at N8.16 Billion, a 2% YTD decline from N8.37 Billion as at FY 2020.
Comparing HY 2021 to HY 2020, we observed the following key items worthy of note:
• Revenue from contracts with customers: During the period under review, Revenue from contracts with customers contracted by 12% year-on-year on the back of a significant renegotiation of fees rate by customers along our corporate actions revenue lines as well as slow sign off of contracts within the period in digital consultancy. However, revenue from register maintenance increased by 8%.
• Interest income: While the company was bullish with 436% increase in the interest realized from bonds and also a 193% increase in the interest realized from short term deposits, there was a slight 10% year-on-year decline in interest income owing to a 4% decline in interest on loans and advances and a nil income on T-Bills relative to HY 2020.
• Profit After Tax: On account of the business considerations around revenue and operating cost, PAT dereased by 24% year-on-year. Comparing HY 2021 to FY 2020, the following were observed in the Balance Sheet:
• Total Assets: In the second quarter of 2021, the total assets increased 401% on the back of 7336% surge in cash and cash equivalents as well as an 70% increase in trade and other receivables.
• Total Liabilities: The company total liabilities increased by 762% Year-till-date driven by a 829% increase in customers’ deposits which accounted for about 99% of the company’s liabilities.
• Shareholder’s Wealth: Due to slight drop in earnings, total equity marginally declined by 2% year-to-date.
Nigeria’s External Reserves Gained $83.3 Million in Seven Days
Nigeria’s external reserves rose by $83.3 million in seven days, according to the latest report from the Central Bank of Nigeria.
The reserves which stood at $33.088 billion on July 12, 2021 gained $83.3 million to $33.171 billion on July 19, 2021. Still below the $33.279 billion reached on July 1, 2021.
Experts have blamed the inability of President Muhammadu Buhari-led administration to effectively diversify the economy after 6 years in power for the dwindling foreign reserves. Nigeria imports over 90 percent of her consumption, a situation that has dragged on the external reserves and the value of the Nigerian Naira.
Naira plunged to N504 against the United States Dollar on Monday morning at the black market, the only section of forex that is accessible to most businesses and individuals looking to import raw materials or make oversea’s payments.
At the bureau de change section, the exchange rates are not any better as the Naira hovers at record lows against its global counterparts. Naira exchanged at N500, N705 and N595 to the United States, the British Pound and the Euro, respectively.
Nigeria, a mono-product economy, relied on crude oil sales to service its over 200 million population economy and support its central bank pegged currency, Naira. However, OPEC’s production cuts agreement and years of dilapidated oil production facilities have crippled the nation’s ability at upping its crude oil production enough to increase foreign revenue generation, effectively service the economy and support the local currency.
Inflation rate rose to almost 19 percent before moderating to 17.75 percent in the month of June, this was largely due to the chronic forex scarcity experienced across the nation as businesses and individuals in need of forex had to access the black market, the only section it is readily available for those that are willing to pay the exorbitant rates hoarders and speculators charged at that section of forex.
The Central Bank of Nigeria-led monetary policy committee had maintained a 11.5 percent interest rate to stimulate growth and damned the rising inflation number, saying strategies put in place by the apex bank would eventually rein in inflation rate.
However, in reality, inflation continues to rise in Africa’s largest economy but reducing in the monthly data released by the National Bureau of Statistics (NBS). Forcing economic watchers and other experts to question the disparity in the numbers and economic reality of the nation.
Vietnamese Prime Minister Moves on CBDC Amid Questions on Regional Nature of e-Yuan
This month, it was reported that Vietnamese Prime Minister Pham Minh Chinh asked, in Prime Minister’s Decision No 942/QD-TTg, the State Bank of Vietnam to study and execute a pilot implementation of a central bank digital currency before the end of 2023. Currently, cryptocurrencies are not legally recognized as an asset in the country, nor do any crypto exchanges hold licenses from the central bank. Last year, the country set up a group to study digital assets, with a purview that extended to potentially proposing regulatory mechanisms.
“Vietnam is a country that has had its eye on blockchain, even though they haven’t made many steps towards mainstreaming cryptocurrencies. It is a country that is interested in technology and riding a potential economic wave brought upon by new innovation, from blockchain to AI and VR. But, what’s notable here is that this decision was pushed forward very near the time that many pundits began to ask whether the Chinese e-Yuan would become a digital currency which transcended China and became something of a regional powerhouse as an asset,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“I think that’s important. Many countries are looking at what’s happening in China, then taking a look at their own place in the CBDC rat race, and they’re making decisions, I think, which moves up their timetable. This isn’t an innovation where you want to be last to the party. Doing so, in fact, could have ripple effects across a country’s monetary policy,” noted Gardner.
“Digital money is an inevitable trend,” said Huynh Phuoc Nghia, Deputy Director of the Institute of Innovation under the University of Economics Ho Chi Minh City. Some believe that moving quickly to develop a CBDC could give countries like Vietnam greater influence in the global financial system.
“I think it’s too soon to say what kind of ripple effects this development will have. It’s worth noting that Vietnam is in the very early stages. This isn’t a case where they’re ready to begin a pilot test in the short-term. Vietnam isn’t Ghana. But, forging ahead now can only be a positive. It’s better to move forward than continue to wait. Those countries that continue to take a wait-and-see approach are going to find themselves in last place. This is a race you don’t want to finish last. It very well could be the 21st century equivalent to the Race to Space,” opined Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“Vietnam is so close in proximity to China, and China is so far ahead in the development of their own CBDC, it was likely the push that they needed to move on this. Earlier this year, some pundits wondered if the e-Yuan would replace the dollar. That’s a premature discussion to have. But, if successfully rolled out, could it have a real regional impact? Absolutely,” Gardner offered.
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