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Why OLX Acquired Nigeria’s Cars45 – CEO Soumobroto

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Mr Ganguly Soumobroto, Chief Executive Officer (CEO) of Cars45, on Friday said the company acquired Nigeria’s largest online used cars market to upscale the business to an international platform.

Soumobroto gave the insight at a news conference at Alausa Shopping Mall while responding to questions on the investment made by the international online market platform, OLX.

OLX Group, Prosus Netherlands-based classified business, invested 400 million dollars in Frontier Car Group (FCG), with the plan to integrate the Berlin-based start-up with the OLX Corporation.

FCG had invested 5 million dollars in Cars45 Series A fund raised in May 2017. This acquisition has made Cars45, a proud member of the OLX Autos family.

The goal is to lead the online market for second-hand cars and transform customer experience in the used car industry.

Soumobroto explained that the acquisition of Cars45 had enabled the online market for used cars to metamorphose from infancy and nurturing stage to a well-structured international online store.

“OLX Group has its international presence and this is the leverage which Cars45 is now enjoying because of the international platform given to it.

“Naturally, when there is a new ownership, or change in shareholding, there will be change in management structure. Sometimes the real owners may want to do more entrepreneurship.

“For Cars45, it is now a more well-structured business and now belongs to a larger group. The nature of the DNA has changed from start-up or entrepreneurship to larger community and improved structure.

“Businesses have phases, from the founders to another phase which is expansion and that is where we are now to scale up with managers who will spend most time on structuring to meet global demands,’’ he said.

Soumobroto, a retired Director at KPMG, said the market value of automotive sector in Africa was estimated at 45 billion dollars with used cars accounting for 95 per cent.

“The opportunities for automobile business in Africa is enormous and it is estimated at 45 billion dollars annually which 95 per cent is used cars and less than 5 per cent for new cars.

“What we are doing before is to buy, sell and swap but we noticed that the whole value chain of automobile in Africa is fragmented, so we bring a clearer and verified platform to make it easier.

“We now use our improved technology to help build Nigeria’s automobile business and not to disrupt the system. The value chain from sales to servicing and maintenance to scraps is almost non-existence.

“So what we plan to do is to apply technology to the business and make it well coordinated and structured for easy ownership and disposal at convenience,’’ he said.

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Kenya Terminates Covid-19 Tax Relief Amid Debt Default Risk

Kenya’s National Treasury Cabinet Secretary Ukur Yatani on Friday issued a statement saying the corporate tax rate also reverts to 30 percent from 25 percent while the value added tax (VAT) reverts to 16 percent from 14 per cent.

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In a desperate move to save an ailing economy closing in on a Ksh9 trillion ($90 billion) debt ceiling, with the risk of debt distress rising to ‘high’ from ‘moderate,’ Kenya has terminated part of the tax relief measures extended to cushion households and businesses from the adverse impact of the Covid-19 global pandemic.

Kenya’s National Treasury Cabinet Secretary Ukur Yatani on Friday issued a statement saying the corporate tax rate also reverts to 30 percent from 25 percent while the value added tax (VAT) reverts to 16 percent from 14 per cent.

The treasury clarified that “these are not new tax rates but just a return to the prevailing tax rate before the pandemic.”

However, the government will continue to cushion low-income earners by retaining 100 percent tax exemption/relief for those earning monthly incomes of Ksh24,000 ($240) and below.

The announcement comes as it emerged that Kenya’s risk of debt distress increased from moderate to high as the government’s debt accumulation closes in on the Ksh9 trillion ($90 billion) ceiling, breaching several debt sustainability indicators and narrowing the space for additional borrowing.

Read also: Kenya’s debt repayment to India and China is piling up

With close to half of the total revenue collections going towards debt repayment, Yatani faces a difficult task in financing government operations and infrastructure development projects.

Kenya’s apex bank says the country’s risk of debt distress has been exacerbated by the impact of the pandemic.

“The rapid pace of debt accumulation has resulted in increased interest and principal repayments in the past six years. However, revenues and export earnings have not increased in tandem with debt service. As a result, the ratio of debt service to exports and debt service to total revenue increased, signalling potential debt distress,” according to the Central Bank of Kenya in its Financial Stability Report (2019) released last week.

Also, data from Kenya’s Treasury shows that as at August this year, the country’s stock of public debt stood at Ksh7.06 trillion ($70.6 billion), accounting for 69.2 per cent of the gross domestic product, compared to the East African Community convergence criteria of 50 percent.

This $70.6 billion, together with committed undisbursed debt of Ksh1.35 billion ($13.5 million) translates to a stock of public debt of Ksh8.41 trillion ($84.1 billion) against a ceiling of Ksh9 trillion ($90 billion) implying limited space for additional borrowing, according to the National Treasury’s Post-Covid-19 Economic Recovery Strategy (2020-2022).

Kenya has already breached the solvency indicator; present value of the external debt-to-exports ratio and the liquidity indicator; external debt service-to-exports ratio, which are already above the thresholds, according to the NationalTreasury’s Quarterly Economic and Budgetary Review report.

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African Development Fund Approves $71.5m Loan for Roads in Uganda

The Fund explains that the central element of the project is to upgrade and pave 34km of the Kabale-Lake Bunyonyi-Kabeho circuit and the Kisoro-Mgahinga Park Gates road, as well as construct two roadside markets, farm produce holding facilities, and four ferry landing sites on Lake Bunyonyi.

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The African Development Fund, which is a part of the African Development Bank Group has approved a $71.5 million loan for the improvement of roads in one of Uganda’s high-end tourist destinations in the south-western districts of Kabale and Kisoro.

The African Development Fund (ADF) Board said in a statement that the loan was approved on December 3, to pave sections of two roads which will improve road transport in the area as well as boost

The money will finance the upgrading of roads and ease movement and connectivity to the popular tourist destinations Lake Bunyonyi and Mgahinga National Park.

Lake Bunyonyi is the second deepest lake in Africa, and also known for luxury island holiday resorts, while Mgahinga Park is famous for mountain gorillas and golden monkeys.

Related: AfDB approves $1 million grant to help Uganda fight Ebola

The Fund explains that the central element of the project is to upgrade and pave 34km of the Kabale-Lake Bunyonyi-Kabeho circuit and the Kisoro-Mgahinga Park Gates road, as well as construct two roadside markets, farm produce holding facilities, and four ferry landing sites on Lake Bunyonyi.

AfDB’s Bank Director of Infrastructure and Urban Development Amadou Oumarou said “This innovative and integrated infrastructure development project is poised to increase market development, widen business opportunities and scale up food productivity, enhancing income levels in South-western Uganda.”

The financing will be sourced under ADF-15, the most recent replenishment of the Fund, which is the concessional lending window of the African Development Bank Group.

The loan represents roughly 86 percent of the project’s total costs and the government of Uganda will fund the remaining $11.9 million.

Read also: Uganda Safeguards Financial Stability Amid COVID-19

The funds will also underwrite the provision of two ferries with navigational aids and the provision of technical assistance to the government to strengthen road safety regulations and support implementation of inland water transport aspects of the project.

The project also makes provision for relocation and compensation of those affected.

Through this approach, blending investment in road renewal with investment in farming and other infrastructure, ADF aims to increase market access for farm produce, increase productivity in a rural part of the country, and strengthen social welfare.

Expected outcomes include improved tourism earnings, higher farm gate prices for commodities, increased school enrolment, and stronger hospital attendance in the project area.

The loan aligns with the government of Uganda’s third National Development Plan 2020/21-2024/25 under its Vision 2040. It is also consistent with the AfDB Group’s 10-year strategy 2013-22, Pillar I of ADF-15 strategic priorities as well as two of the High-5s operational priorities, namely, feed Africa and improve the quality of life for the people of continent.

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NC Village Square | The Rising Insecurity in Nigeria

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Nigeria is in a security crisis and too many of these incidents have gone unchecked. Boko Haram and ISWAP terrorists are killing with reckless abandon, and the Nigerian people want an end to the bloodshed.

Watch Sulaiman Aledeh as he discusses the rising insecurity in Nigeria with a Security expert from Abuja, Kabir Adamu and a preventive terrorism expert from the UK, Temitope Olodo.

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