Africa Top10 Business News

Aircastle Limited
Toshiba Exif JPEG

[REPORT] How a South African State Firm Deprived its Own Government of Tax Revenues

Aircastle Limited
Toshiba Exif JPEG

Without knowing it, you’ve probably flown on an airplane owned by Aircastle Limited. The US-based company, which trades on the New York Stock Exchange and is valued at $1.6 billion, leases aircraft to the likes of United, American Airlines, British Airways, easyJet, and KLM. A surprisingly hefty chunk of Aircastle’s business comes from a deal with South African Airways. Between 2011 and 2014, it made $53 million from leasing planes to the state-owned company. Aircastle also legally avoided paying taxes to the South African government by routing that cash to the tax haven of Mauritius, according to confidential financial statements reviewed by Quartz. Aircastle paid just $1.5 million in tax, at an effective rate of 2.87%, to the tiny island nation in the Indian Ocean, situated about 2,000 miles from Johannesburg and 9,200 miles from Aircastle’s Stamford, Connecticut, headquarters. Through a complex scheme involving networks of subsidiaries, it likely avoided $14.8 million in taxes, compared to what it would have paid at the South African government’s business rates at the time. That’s more than double what Johannesburg—the country’s largest city, with 5 million people—spent on its social housing body in 2012-13. Poorer countries lose up to $100 billion each year thanks to tax agreements with offshore jurisdictions like Mauritius, according to UN research. 

SOURCES: QUARTZ AFRICA

Leak Reveals How Mauritius Siphons Tax From Poor Nations To Benefit Elites

Mauritius Leaks

Mauritius Leaks, a new investigation by the International Consortium of Investigative Journalists and 54 journalists from 18 countries, provides an inside look at how the former French colony has transformed itself into a thriving financial center, at least partly at the expense of its African neighbors and other less-developed countries. Based on a cache of 200,000 confidential records from the Mauritius office of the Bermuda-based offshore law firm Conyers Dill & Pearman, the investigation reveals how a sophisticated financial system based on the island is designed to divert tax revenue from poor nations back to the coffers of Western corporations and African oligarchs, with Mauritius getting a share. The files date from the early 1990s to 2017. The island, which sells itself as a “gateway” for corporations to the developing world, has two main selling points: bargain-basement tax rates and, crucially, a battery of “tax treaties” with 46 mostly poorer countries. Pushed by Western financial institutions in the 1990s, the treaties have proved a boon for Western corporations, their legal and financial advisers, and Mauritius itself — and a disaster for most of the countries that are its treaty partners.

SOURCES: AFRICA.COM

AfDB Invests Millions for Youths in the Agricultural Space

AfDB Agriculture Invests

Agriculture and agribusiness are projected to become a trillion-dollar industry in Africa by 2030. Dr Martin Fregene, Director of Agriculture and Agro-Industry at the African Development Bank, outlines the opportunities this presents for Africa’s youth. The Bank is working with its member countries and other development partners through implementation of the Enable Youth Program, one of the Bank’s flagship initiatives addressing Africa’s youth employment challenges. Enable Youth empowers young men and women at each stage of the agribusiness value chain as agripreneurs. To date, the Bank has committed over $350m to Enable Youth investments in 12 countries on the continent. The goal of the Bank’s Jobs for Youth in Africa Strategy is to create 25m jobs by 2025. Of the various economic sectors that can engage youth, the agribusiness sector is best placed to provide significant employment and economic opportunities.

SOURCES: AFRICAN BUSINESS MAGAZINE

Zimbabwe Risks Alienating its Economic Neighbours

Mozambique has threatened Zimbabwe with sanctions, after repeatedly warning Harare against imposing trade sanctions on a variety of goods exported from Maputo including alcohol. During a business seminar in Maputo, officials that Zimbabwe had placed bottlenecks for trade between the neighbours in clear violation of the SADC Free Trade Protocol agreement. The Minister of Trade and Commerce, Rajendra De Sousa allegedly told Zimbabwe President Emmerson Mnangagwa that the ban could be met with retaliation, such as, closing its border with Zimbabwe for three days which would complicate life for Harare. “Mozambique has this weapon, which is our geographical location. If they stick to the strategy of not using the law and using mechanisms, we will do the same,” De Sousa warned. A similar incident took place in 2017 with Malawi, after it too had banned several products being imported from Mozambique. Mozambique is Zimbabwe’s closest gateway to the sea and key imports such as fuel, maize and wheat come through the port of Beira.

SOURCE: CITIZEN

The Process of Nationalising Kenya Airways

Nationalising Kenya Airways

Kenya will take at least 21 months to resume full control of its national carrier Kenya Airways, buying out minority shareholders and converting shares held by banks into Treasury bonds. The loss-making airline, which is 48.9 percent government owned and 7.8 percent held by Air France-KLM, was privatised 23 years ago but sank into debt and losses in 2014. Lawmakers voted to re-nationalise it this week. Kenya wants to emulate countries like Ethiopia – which runs air transport assets, from airports to fuelling operations – under a single company, using funds from the more profitable parts to support the less lucrative ones. Under the model approved by lawmakers, Kenya Airways will become one of four subsidiaries in an aviation holding company. The others will be an aviation college; Jomo Kenyatta International Airport (JKIA), the country’s biggest airport; and Kenya Airports Authority, which will operate all the nation’s other airports.

SOURCE: AL JAZEERA

Selling the Immersive Cinema Experience across Movie Halls in Nigeria

Kene Okwuosa

Kene Okwuosa is bullish about letting Nigeria’s 190 million population experience the thrilling excitement of the celluloid world. Using the theater to extract a sizeable profit from the Nigerian culture of socializing and communal engagement, his Filmhouse Cinemas has grown from just three screens to multiple locations across the country. As part of the company’s strategic expansion plans, Okwuosa signed a pioneer deal to bring IMAX, the world’s most immersive cinematic experience, to West Africa in 2016. In doing so, Filmhouse has flipped a switch not just to beat competition from other local cinema chains, but also become one of the fastest-growing IMAX businesses in Europe, the Middle East and Africa. The cinema industry is one of the priority sectors identified in the economic recovery growth plan of the federal government of Nigeria with a planned $1 billion in export revenue by 2020. Furthermore, the National Film and Video Censors Board estimates the Nigerian movie industry needs at least 774 cinemas across the country for it to tackle the menace of piracy.

SOURCE: FORBES AFRICA

There’s Need For More Disruption In Africa’s Tech Scene

Africa’s Tech Scene

There are a number of laudable achievements the continent has earned for itself. These achievements, although rarely spoken of, have positioned the continent on a global map, earned it positive recognition from First World countries, changed its narrative to something better and more appealing, and made it a sought-after destination for business investment, leisure and entertainment. This article will dwell on the business investment opportunities that have changed the fortunes of the continent, and how these businesses are impacting and transforming the quality of lives in Africa. E-commerce is one of the business sectors powering the engines of commerce and trade in the continent. It has brought many untold opportunities for both the consumers and the micro, small, medium enterprises. In Nigeria for instance, Jumia paved the way for e-commerce in 2012, provided consumers access to hundreds of thousands of products, and expanded access for discerning entrepreneurs who quickly took advantage of the many unique opportunities presented by these platforms, to reach more consumers and sell more products. The convenience of e-commerce made a compelling case for early adoption of online shopping by customers who until then only shopped from brick and mortar stores.

SOURCE: AFRICA.COM

South Sudan Celebrates a Rare Advance in Technology

South Sudanese technology

South Sudanese technology firms have launched the country’s first mobile money transfer platform, M-Gurush. The new service called M-Gurush — M for mobile and Gurush for money in Arabic — removes the need for a bank account, which most South Sudanese lack. It allows customers to pay for goods and services across South Sudan, similar to platforms in Kenya and other African countries. While a 2018 peace deal allowed for the service to be rolled out across the country, there are still infrastructure challenges. Mobile money is expected to speed up trade and add thousands of new jobs to South Sudan’s struggling economy. Lado Kenyi, director general of the National Communication Authority, has high hopes for the new system. “The real success of mobile money is in targeting the people of low income and our rural population,” Kenyi said. “Those are the people we want to reach and include them into the financial system.” It also puts South Sudan in the ranks of other East African nations using mobile money, such as Kenya, Rwanda, Tanzania, and Uganda. Ravaged by years of war and conflict, South Sudan is racked by poverty and has one of Africa’s lowest rates of mobile phone penetration — just 21 percent. 

SOURCE: VOA

Nigeria Payments Firm Goes IPO Route

Interswitch Nigeria

Interswitch has hired advisers to resurrect plans for a stock-market listing in London and Lagos later this year. JPMorgan Chase & Co., Citigroup Inc. and Standard Bank Group Ltd. are among the firms working on an initial public offering, which may value the financial technology company at $1.3 billion to $1.5 billion. Interswitch, owned by private equity firm Helios Investment Partners, has engaged with banks in recent weeks after a thwarted IPO attempt two years ago. The potential listing would follow those of two other major African and Middle Eastern tech company share sales this year. Jumia Technologies AG, dubbed the Amazon of Africa, listed in New York earlier this year, while Dubai-based payments firm Network International Holdings Plc went public in London. Helios is among several private funds that specialize in investing in African assets as the economic recovery taking place across the continent bolsters investor sentiment and infrastructure plans.

SOURCE: BLOOMBERG

South African Mining Firms Brought to Book

South African Mining

A Johannesburg High Court has approved a $353 million class action settlement between gold mining companies and law firms representing thousands of miners who contracted the fatal lung diseases silicosis and tuberculosis. The settlement follows a long legal battle by miners to win compensation for illnesses they say they contracted over decades because of negligence in health and safety. The companies involved are Harmony Gold, Gold Fields, African Rainbow Minerals ARIJ.J, Sibanye-Stillwater SGLJ.J, AngloGold Ashanti and Anglo American South Africa. The latter no longer has gold assets but historically was a bullion producer. The gold producers agreed in May last year to the settlement but it needed to be approved by the Johannesburg High Court before being implemented. The class action suit was launched in 2012 on behalf of miners suffering from silicosis, an incurable disease caused by inhaling silica dust from gold-bearing rocks. It causes shortness of breath, a persistent cough and chest pains, and also makes people highly susceptible to tuberculosis.

SOURCE: REUTERS AFRICA