It’s the last day of August, What are you grateful for?
We are grateful that from today you can deposit all your bad banknotes in exchange for clean notes at your bank – courtesy of the CBN’s clean note policy.
Now go convert those trash notes to millions 💰 and while you’re at that, don’t forget to tell a friend to tell more friends to subscribe to this newsletter! 😊
Let’s dive into the news 😊
For the second time in office, President Muhammadu Buhari joined other world leaders this week for the 7th Tokyo International Conference on African Development (TICAD) in Yokohama, Japan. TICAD is the biggest international conference in Japan that gives room for stakeholders around Africa and beyond to discuss developmental opportunities in Africa.
How does this affect the state of the nation? Japan’s interest in Nigeria has grown over the years. In this meeting, Japan declared interest to invest in Nigerian Oil and Gas industry and infrastructure. Also, Toyota Group, the major automobile company in Nigeria also assured the president of their commitment to the development of Nigeria through innovations in the health, energy sector and automobile. The Nigerian President, in turn, has assured Japan in return that all forms of “bureaucratic bottlenecks” is being cleared, hence there it’d be easy to do business with Nigeria.
What’s in it for Japan?
Japan is just being friendly or in other words “looking for ways to enhance its longstanding engagement to promote healthy governance and sustainable business.” Japan has pledged 30 billion dollars investment for the future of Africa combined with the private sector and 10 billion dollars infrastructure investment as well as 500 million dollars for vocational training of 50,000 Africans.
According to Japan’s ministry of foreign affairs, the country invested $20 billion in the continent from 2016-2018. But that’s nothing compared with China. According to a report from the Japan External Trade Organization, Japan’s foreign direct investment in Africa in 2017 was $9 billion, only a fraction of China’s $43 billion invested in the continent in the same year.
Bottom line: Japan claims to not be in competition with China. For Nigeria who is on the receiving end, do we need more friends like Japan and China?
President Muhammadu Buhari recently ordered for the Nigerian-Benin border to be temporarily closed. This is a step forward to minimize the illegal importation of rice and other farms produce from the Benin Republic to Nigeria. The Nigerian government also claims that the massive importation of rice from Benin republic also poses a threat to the plans of its administration on food provision and sustainability.
Who’s happy about this?
Local Farmers. The closure of the Seme border, which is believed to be the busiest land crossing in Nigeria will give room for local farmers to sell and grow their businesses while allowing the Nigerian Customs Service (NCS) maintain sanity around the border as this would reduce illegal importation of arms and second-hand goods into the country.
The Rice Processor Association of Nigeria (RIPAN) said that the closure will save the country of about 144 billion Naira. ($400million). RIPAN said that over 1million metric tonnes of goods were brought to Benin from other countries and are waiting to be illegally smuggled into Nigeria.
Who’s not smiling?
Thousands who were left stranded on both sides of the border when it was closed on Wednesday without notice.
Nigerians. Rice is on the list of 41 items banned from getting access to Forex, now that the border has been closed, this has spurred an increase in the price of rice due to hoarding and panic buying following the announcement.
The latest report released by the National Bureau of Statistics (NBS) shows that Nigeria generated N311.94 billion revenue from Value-Added Tax (VAT) in the second quarter (Q2) of 2019. A 16.3% increase when compared to a year ago.
I know what VAT means but I could use a refresher.
VAT is a consumption tax placed on a product from production to the point of sale. It means a higher VAT on goods is borne by the final consumer of such goods. In Nigeria, VAT is payable on goods and services consumed by any person, whether government agencies, business organizations or individuals.
Got it. So what’s going on?
The Most: Other manufacturing sectors generated the highest amount of VAT with N34.43 billion and closely followed by Professional Services with N29.58 billion VAT, while commercial and trading ranks 4th to generate N16.27 billion.
The Least: On the other hand, mining generated the least and closely followed by Pharmaceutical, Soaps & Toiletries and Textile and Garment Industry with N50.60 million, N250.09 million and N316.91 million generated.
Why it matters
This is good news as the Federal Inland Revenue Services (FIRS) has been under attack for failing to meet Tax revenue targets in 2017 & 2018. However, if it keeps up with this performance, this year would be an exception.
The FIRS is taking deliberate steps to grow its revenue, it is also introducing VAT on online transactions starting from January 2020. This could translate to the availability of more funds for the government to spend on worthwhile projects.
MultiChoice Africa, the parent company of DStv and GOtv, has announced plans to reduce DStv subscription fees across East Africa.
In Uganda, It will be cutting monthly DStv subscription fees by up to a third (30%) for some packages. Kenya will see an even bigger decrease, ranging between 5% to up to almost 37%.
What else should I know?
Despite DStv dropping prices by as much as 30% in Kenya recently, the satellite TV service remains cheaper in SA. DStv has 7.4 million subscribers in South Africa, compared to 7.7 million in the rest of Africa. This year also marks the first time that the Rest of Africa (RoA) subscriber base of 7.7 million exceeded the 7.4 million households in South Africa, it said.
MultiChoice reported a 6% rise in revenue to R50.1 billion ($3.3 billion) for the year ended March 2019. MultiChoice reported a 12% increase in its subscriber base to 15.1 million, while trading profit climbed 11% to R7 billion ($460million).
DStv is quite secretive about giving numbers for its own VoD platform Showmax. PayTV is under pressure from Video on Demand(VOD)
Dig Deeper: Multichoice Financial Reports 2019
China Everbright Bank, one of its largest investment arms across Europe and Africa, has placed Zimbabwe on a list of countries it will not be dealing with. This list contains 10 other countries thankfully Nigeria’s not there yet.
The reason isn’t clear but this could hint that the China-Zimbabwe relationship could be going south. Or could Zimbabwe be punished for reclaiming land through land reform programmes of 2001 which helped to empower Zimbabweans?
I’m gonna need a history lesson here.
China’s political and economic stake in Zimbabwe is high.
China’s brotherly relationship with Zimbabwe goes way back to the liberation war era. The major political party Zimbabwe African National Union (ZANU), the predecessor of the current ruling party Zanu-PF, received China’s financial and military sponsorship in its fighting with the rival faction supported by the Soviet Union. After independence, China continued to offer support to the Zimbabwean government, building a national stadium, hospitals, and power stations, and providing 35 percent of Zimbabwe’s imported arms from 1980-1999. Ever since they’ve been thriving with China as Zimbabwe’s major international partner.
Western Countries aren’t too pleased with Zimbabwe.
Mugabe who ruled Zimbabwe for 37 years, was slapped with economic sanctions after the country embarked on farm seizures in 2001 in a bid to redress colonial land imbalances.
Critics – Mostly western nations – labelled this act as a move to retain power following the emergence of strong opposition. And since the displacement of Mugabe they’ve pushed for reversal of the law stating it shows a lack of respect for property rights, but Mnangagwa, the current President has maintained his stance that the land reform programme as irreversible.
Mnangagwa is battling to persuade the US in particular to repeal the Zimbabwe Democracy and Economic Recovery Act (Zdera) that has effectively imposed economic sanctions on Zimbabwe, scaring most global financial lenders to stay away from helping Zimbabwe or face from the wrath of the US.
Bottom line: Zimbabwe, already has enough on its hands; it cannot afford more enemies.
The UK’s Parliament is taking some more time off before Brexit happens. Thanks to the UK’s Prime Minister Boris Johnson who is bent on leaving the EU before Brexit happens on 31st October with or without a deal.
Why would Johnson push for more time off?
Boris Johnson’s goal appears to be to make sure Parliament has as little time as possible to mount an effective challenge to his commitment to leave the European Union on Oct. 31, without a deal if necessary. A deal could help the UK prevent crashing out of the EU without a plan could bring travel disruptions and shortages of food, medicine and other goods. A No deal means the opposite could happen.
So…what happens next?
As per the Skimm, “It’s not clear. Lawmakers really want to avoid a no-deal Brexit. They could try to call a no-confidence vote to replace Johnson’s government. Or pass a law forcing him to request a Brexit delay. But the EU would need to sign off on a delay, anyway.”
The members of the G7 gathered in France last weekend. The exclusive club members are the US, Canada, France, Germany, Italy, Japan, and the UK. It used to be the G8, but Russia got kicked out in 2014 after it added Crimea to its territory by force, a decision the other members weren’t in support of.
A few highlights from the 2019 G7 meeting
Flashback: Trump unilaterally withdrew from the 2015 Iran nuclear deal last May, calling it the worst deal in history. Macron has had to soldier the responsibility of leading the remaining signatories in attempting to salvage the deal.
Zoom out: It seemed like a lot of progress was made during this year’s meeting. Hopefully, it continues this way.
They take an iPad, slap it on an exercise bike, and charge $2000 for it. I could do that for the cost of the parts. The only thing protecting their business model is their exclusive patent on the idea. Perhaps the patent system is what is truly at fault here?
A comment from Hacker News.
What are we talking about here?
Peloton Interactive Inc., a home exercise startup filed for an initial public offering – access to public fund in exchange for ownership of the company – that will likely be among the year’s biggest. Founded in 2012, now with more than 1.4 million members, Peloton describes itself as the “largest interactive fitness platform in the world”
What they really do: The company sells exercise bikes and treadmills that have television screens connected to the internet for showing its own workout programs. Its basic “connected fitness” subscription costs $39 a month and the bikes start at $2,000.
How are they performing
Like almost all US companies that filed for an IPO this year, Peloton is unprofitable and has been so since inception. For 2017, 2018, 2019 here’s how it performed:
Revenue: $218.6 million, $435.0 million (+99.0%), and $915.0 million (+110.3%), respectively,
Net losses: $71.1 million, $47.9 million, and $195.6 million;
Connected Fitness Subscribers: 107,708, 245,667, and 511,202, respectively; and
Average Net Monthly Connected Fitness Churn: 0.70%, 0.64%, and 0.65%, respectively.
Out of all figures here, the most fascinating appear to be the subscriber growth rate, and its churn rate – the rate at which it’s customers leave a service – which at ~0.7% a month and 8.4% in the year is quite impressive.
Like everyone else, Peloton claims to be a tech company; with an ambition to empower people to improve their lives through fitness. Despite the constant loss-making streak, They must be up to something good here.
As Ben Thompson quipped “The key breakthrough in all of these disruptive products is the digitization of something physical. Netflix digitized time, Airbnb digitized trust, Facebook digitized offline relationships, etc. In the case of Peloton, they digitized both space and time: you don’t need to go to a gym, and you don’t have to follow a set schedule”
Think that’s enough value fo $2,000? Over 500,000 people think so.
Logo Quiz Answer: D
And that’s all for this week! 😎
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