A gruelling week for Nigeria's tech sector

Nigeria may have reduced its import duty, but nothing much has changed

Today’s newsletter is brought to you by Fincra. Fincra provides reliable payments solutions for fintechs, online platforms and global businesses.

If you missed last week’s newsletter, catch up here. 

TOGETHER WITH FINCRA

Fincra provides easy-to-integrate APIs developed and designed to launch seamless and reliable global payment solutions. With Fincra’s customisable APIs, developers can build quick financial applications; online platforms and fintechs can integrate seamless payment flows into their web and mobile applications with complete SDKs. 

Fincra has designed its API infrastructure for developers that build platforms that send and receive frequent payments and require flexibility. 

Ready to build the best cross-border payment solutions? 

Nigeria’s Customs Service reduces custom duty…Not really

This week, the Nigerian Customs Service announced a reduction in the import duty on used cars coming into Nigeria. The reduction is not entirely a Nigerian effort but a result of the ECOWAS Common External Tariff (CET) for which Nigeria is a member. Every five years, ECOWAS reviews the CET and it always means new tariffs. This year, it has translated to a reduction in import duties for used cars from 35% to 20%.

It’s a welcome change at a time when Nigeria is battling record inflation levels (15.92% in March). The devaluation of the Naira has also led to a steep rise in the price of used cars, which is worrying when you consider that used cars constitute 95% of the country’s auto market. With all of this, we’re bracing up for a slight reduction in the price of cars, right? 

Well, not so fast. Because the Nigerian Customs and the Ministry of Finance can’t quite cope with losing 15% in revenues on used cars. So, just as it reduced import duty, it introduced a 15% National Automotive Council levy on imported used vehicles. 

There are already indications that port operators are considering another strike action to push back against the NAC levy, but I’ll be surprised if the revenue-starved ministry of finance reverses this. And if you need a bit of a laugh into Nigeria’s fiscal situation, consider that in the same week where the Ministry of Finance is fighting for its 15%, Muhammadu Buhari has obtained approval from the National Assembly to push spending on fuel subsidy to ₦4 Trillion. That figure is more than the ₦3.42 trillion Nigeria generated as revenue in 2020. 

Thankfully, we will not be rehashing the fuel subsidy conversation today, but if you need a primer, I’ve written about it here and here. 

Instead, we’ll talk about Nigeria’s tech sector’s eventful week. 

Why tech needs critical media 

Last week, Nnanna wrote a blistering piece on the problem with startups focusing solely on big valuations. While wanting to be a unicorn is not a bad thing, without solid unit economics and the right business models, this kind of focus incentivises businesses and founders to fudge the numbers, lie and use all sorts of ends to justify their means. 

This week’s expose and the subsequent conversations on Flutterwave show (if the allegations hold true), the extent to which founders are willing to bend the rules to create valuable startups. I’ve seen a few tweets to suggest that in building innovative products, founders often have to play in regulatory grey areas and be willing to break things first and ask questions later. There are aspects of this ethos I understand, but as founders build, there’s a need to ask tough questions and allow critique—including those from the media—to become guardrails. 

It’s incredibly easy to say right now that a strong and independent media is what holds leaders to account, but the Nigerian ecosystem has not always made things easy. Founders have more visibility than the people who report on them, and Nigeria’s culture of silence towards the excesses of powerful people also extends to tech. It makes for very few investigative pieces and makes every critical question come off as “hate.”

In the end, this feels like a net positive for tech journalism. Balanced and responsible reporting on weighty matters enhances trust in journalists and makes more employees willing to share the realities of what it’s like to work in startups. I expect that we’ll continue to have conversations on work culture and startups long into the year, and while we’re very far from having any real guardrails, I’m confident we’re well on our way there.