👨🏿‍🚀TechCabal Daily – Loan sharks lose teeth

This week in Abuja, Nigeria’s Minister of Communication, Innovation and Digital Economy, Bosun Tijani announced that Nigeria has now published 20 AI compute research papers in the last two years, part of its strategy to build capacity and position itself as an AI hub in Africa. Now, Nigeria is preparing its biggest AI push yet.

What’s new? Starting October 1, the federal government will fund 75 new research projects under a ₦75 million ($49,000) scheme managed by the National Information Technology Development Agency (NITDA). The effort, unveiled this week at GITEX Nigeria in Lagos by Tijani, is aimed at researchers, startups, corporates, and the diaspora, to deepen the country’s role in digital innovation.

State of play: NITDA DG Kashifu Inuwa added that Nigeria is moving to build hyperscale data centres in partnership with Big Tech firms. He said the push is central to solving Nigeria’s lack of data sovereignty, since much of the country’s data now sits in servers outside its borders.

Between the lines: Nigeria is also betting on small language models tailored to its cultural context and languages. Inuwa, in a TechCabal interview in May, revealed that these models will make AI more practical and reflective of local realities, giving the country a competitive edge on the continent.

The big picture: All of this adds up to an ambitious playbook. Alongside government funding, AI innovation clusters are beginning to form, bringing together policy makers, universities, investors, Big Tech, local talent, and community networks. The thinking is that each of these groups has a role in scaling the ecosystem and making Nigeria a regional leader in AI.

The plans are big, but the test, as always, will be execution.

We often say fintechs “bank the unbanked” and throw around other familiar buzzwords. But should we be asking tougher questions about the role neobanks and digital payment providers play in the financial system? A Kenyan high court thinks so.

Fintechs in Kenya no longer owe the taxman value-added tax (VAT) on payment services. The court overturned a Kenya Revenue Authority (KRA) claim of $568,000, saying licenced payment service providers (PSPs) should get the same VAT breaks as commercial banks under the law.

How did we get here? KRA argued that Pesapal, a payment service provider, was just a tech-enabler, not a financial institution, despite its central bank license under the National Payment System Act (NPSA). The tax appeals tribunal initially agreed with KRA, leaving Pesapal on the hook for millions of shillings. But a high court reversed that call, equating the services of payment service providers to banks.

Why does this matter? The court ruled that digital payment providers are functionally equivalent to financial institutions. This sets a firm precedent that fintechs are providers of essential financial services and not just technology firms. This legal ruling also protects the sector from tax liabilities. For everyday users, it means a lower cost of charges for transactions. 

The VAT win isn’t a full tax holiday. Fintechs still have to pay other taxes, including the Significant Economic Presence Tax (SEP) at the rate of 30% of the taxable profit or 3% of gross turnover. They also have to pay a 15% excise duty tax on money transfer fees, but this ruling trims one burden from the taxes fintechs have to pay.

Put a finger down if you remember how loan sharks harassed Nigerians who took online loans, luring them in with apps and accessible loans at exorbitant rates, then shaming them with calls to family and friends when payments were late. Those days may finally be numbered.

The Federal Competition and Consumer Protection Commission (FCCPC), Nigeria’s consumer protection watchdog, has said its new Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations (DEONCL), which it released in July, are now in effect. 

State of play: The rule gives the Commission teeth to sanction abusive digital lenders with fines of up to ₦100 million ($65,000) or 1% of their turnover. Company directors could also be banned from operating for up to five years.

Between the lines: The law covers all unsecured digital lending, from loan apps to airtime lending, and sets strict rules on transparency, data privacy, marketing, and recovery tactics. Lenders must register with the FCCPC, disclose loan terms clearly, and stop practices like pre-authorised lending or unsolicited promotions.

Zoom out: The move comes after years of consumer complaints about harassment, unfair rates, and data misuse. Earlier crackdowns by the FCCPC involved raids and app delistings. Now there is a defined playbook, one that makes digital lending a formal part of Nigeria’s financial system rather than a free-for-all.

The big picture: The rules could mean more protection and fairer terms for borrowers. While for lenders, compliance will raise costs and set minimum standards for players coming in.

The outcome could redefine borrowing in a country where millions, shut out and bogged down by the complicated steps in formal banking systems, rely on quick loans for daily needs.

For years, Shoprite has worn the crown of Africa’s largest supermarket chain. At its peak, the South African giant had stores scattered in about 14 countries across the continent. 

But over the last five years, Shoprite has pulled back due to currency volatility, high inflation, and import duties. In August, it exited Ghana and Malawi, following exits in Nigeria, Kenya, the Democratic Republic of Congo, Uganda, and Madagascar.

Why these exits? Shoprite attributes these exits to consolidation efforts. The company wants to double down in its home base in South Africa and focus on specialising its offerings in clothing, baby, outdoor, and pet products, all in a bid to improve year-on-year gross margins.

Mozambique now looks shaky. Why? For one, it is a small fry in Shoprite’s portfolios; just 15 Shoprite stores compared to the 44 in Zambia and 682 in South Africa. And for its small number, it has its troubles. The country’s economy is wobbling. Its annual real GDP growth declined to 2.2% in 2024 from 5.5% in 2023. And its economic hope, the $20 million LNG infrastructure project, has failed to lift off since insurgent attacks in 2021, biting into the revenue of businesses.

Multinationals have been edging out, too. The economic situation and insecurity in Mozambique have facilitated the exit of other companies. In 2024, the Mozambican Confederation of Business Associations (CTA) announced that over 100 businesses had exited the country. In August, Ecobank Transnational Incorporated (ETI) divested its stake in Ecobank Mozambique S.A. (EMZ) to FDH Bank Plc.

If push comes to shove, Shoprite might be the next to roll out. This exit wouldn’t shrink Shoprite’s empire. But for Mozambicans who have relied on the supermarket’s cheap groceries, it would mean one less buffer against an already harsh economy.