BD Insider: 🇿🇦 South African marker - a win for small businesses

In today’s midweek update, we look at:

• MTN faces backlash amidst NIN-SIM verification chaos
• Google labels South African businesses in search results
• Lagos state targets remote workers and influencers for tax revenue.

MTN Faces Backlash Amidst NIN-SIM Verification Chaos

MTN Nigeria has found itself in the crosshairs of public anger after abruptly cutting off thousands of subscribers over the weekend. The telecom giant's actions, taken in response to the government's National Identification Number (NIN) to SIM linkage policy, have sparked outrage as many Nigerians found themselves disconnected despite supposedly complying with the regulations.

Context: The disconnection comes following a directive from the Nigerian Communications Commission (NCC) to bar subscribers who failed to link their phone numbers to their NIN on or before February 28, 2024. A deadline that was first extended to April 15, 2024, and later July 31, 2024.

The telco attempted to resolve the issue by informing users of steps to reactivate their barred lines. The NCC also instructed all telcos to reactivate customer lines that were deactivated over the weekend. Despite these efforts, many affected users flocked to MTN offices nationwide on Monday morning. This led to the vandalisation of the company’s offices by aggrieved customers.

In a social media clip, angry customers were seen pulling down the fence of the MTN office complex in Festac town, Lagos. Other offices in Oyo, FCT, and Kano also suffered some form of vandalisation. The telecommunication company has now responded by directing all its offices and customer service centres nationwide to shut down.

Zoom Out: The Nigerian government plans to use the NIN-SIM linkage to facilitate the identification of Nigerians through their phone numbers. However, with over 40 million lines blocked as of March 2024, it remains to be seen if the deadline will be extended yet again.

Google labels South African businesses in search results

Google is making it easier for users to find South African businesses by introducing a new "ZA South African" label in search results. This will help spotlight local enterprises and encourage users to support South African companies.

This move is a direct response to pressure from South Africa’s Competition Commission. In its market inquiry report released last July, the commission expressed concerns about the platform's potential to favour larger international businesses over local competitors, making it difficult for small businesses to gain visibility and acquire customers on Google.

The "🇿🇦South African" marker is currently applied to businesses headquartered and owned by South African citizens in the travel and e-commerce sectors. South African websites that have the label included in organic search results include: Takealot.com, lekkeslaap.co.za,sa-venues.com, safarinow.com, roomsforafrica.com, wheretostay.co.za, shotleft.co.za, sleepingout.co.za, travelstart.co.za and bobshop.co.za.

Google has also introduced dedicated local curation for apps published by South African developers on the Play Store. Along with highlighting South African businesses in Google's search results, this initiative is part of a list of remedial actions stipulated by the Competition Commission. Other recommended measures include financial support programs and training initiatives to empower South African online platforms further. Google is required to provide support programs worth 330 million rand ($17.9 million) over five years, with 180 million rand ($9.8 million) allocated to advertising credit for non-leading South African platforms.

Google says it would also allow eligible platforms that have not received the label to apply over the coming weeks.

Looking Ahead: Whether South Africa’s success in this dispute with Google will inspire similar actions from regulatory bodies in other African countries is something to look out for. Would small businesses in other African countries get a label too?

Lagos State targets remote workers and influencers for tax revenue

Lagos State, Nigeria's economic powerhouse, has unveiled ambitious plans to increase its annual revenue by ₦5 trillion ($3.01 billion), with a particular focus on the digital economy. A cornerstone of this strategy is imposing a new tax on remote workers and digital influencers. Through this digital economy sector tax, the state government plans to raise ₦200 billion yearly from two million people.

How do they intend to do this? The Lagos state government plans to implement a Resident Global Digital Citizen Tax Management System that targets remote workers, foreign companies, and digital influencers.

The system will encompass a range of initiatives, including the accreditation and licensing of digital economy operators. It will feature a comprehensive platform with an e-portal, Marketplace, and Recovery Platform. The estimated cost for building this platform, associated data mining, partnerships, stakeholder engagements, and communications, is expected to cost ₦250 million.

The government’s plan to increase revenue from the digital economy includes establishing a public data marketplace to license and monetise data from various government services. Additionally, the state aims to set up a fintech hub to foster digital payments, mobile money, lending, and crowdfunding.

Zoom In: Other plans for the digital economy include creating the Lagos State Software Development Center, Lagos State Digital Economy Acceleration Hub, and Lagos State Advertisement Network. The government also intends to implement a Blockchain and Tokenization Agenda and collaborate with the Federal Government on Digital Service Tax (DST).

These initiatives are part of the Lagos New Money Initiatives, which aim to unlock an additional ₦2.73 trillion in revenue, raising the IGR to ₦5 trillion. The digital economy is projected to contribute ₦750 billion, while the property industry is expected to add ₦1.5 trillion. The informal sector and the circular economy are anticipated to contribute ₦460 billion and ₦20 billion, respectively.

Zoom Out: Lagos state is not the only one that has moved to tax remote workers. In April 2024, Ghana also revealed plans to tax remote workers, content creators and influencers who earn money on international platforms.

By the Numbers

17.5 million

The number of online gig workers in Nigeria, Kenya and South Africa, according to World Bank