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South Africa: New Export Tax on Chrome Ore Intended to Resurrect the Ferrochrome Industry, but challenges prevail

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The  South African government recently approved a tax on South Africa’s exported chrome, although the tax percentage and further details are still to be announced.

The ferrochrome ore industry has been severely threatened in recent years, mostly due to increases in electricity tariffs for heavy use industries, which, combined with the unreliable supply of electricity in South Africa, have crippled the industry to such an extent that reportedly 40% of the coThe  South African government recently approved a tax on South Africa’s exported chrome, although the tax percentage and further details are still to be announced.untry’s ferrochrome mines have been unable to continue production.

Some industry stakeholders have suggested that a special electricity tariff would be a better way to support the ailing industry, stating that the export tax will not provide much benefit if electricity supply and costs to the industry are not addressed. Some in the industry feel that the challenges chrome ore producers face mean that they would not be able to sustain themselves, even after tax relief. This would not only negatively affect exports, but the downstream industry as well.

South Africa is one of the world’s largest producers of ferrochrome and the industry could have a vital role to play in the country’s pandemic recovery, if its challenges can be successfully addressed. Currently, the country exports 84% of ferrochrome to China, with Turkey and Zimbabwe, for example, producing smaller amounts. There has been concern that an export tax would mean other countries would be able to offer ferrochrome at cheaper prices than South Africa, with the country losing significant market share in the process. While China sources most of its chrome ore from South Africa, this could change if the product was available cheaper from other countries. However, it has also been noted that it would be difficult to China to move away from the type of ferrochrome it imports from South Africa.

Others in the industry, however, welcome the reprieve that an export tax would provide. India and Tanzania are examples of countries that have implemented successful export taxes for chrome ore, which have resulted in increased tax bases, higher investment in the industry, benefits to the local communities and skills development.

Key industry stakeholders have expressed interest in collectively undertaking research to explore a more viable and consolidated approach to support the ferrochrome industry. This process may involve the sharing of competitively sensitive information, which presents difficulties from a competition law perspective, and engagement on these issues has not been forthcoming.

According to South African competition law, joint industry engagement of this nature may give rise to anti-competitive conduct by facilitating collusion or adversely affecting competition in the market. Accordingly, in December 2020, key industry players applied to the Competition Commission for an exemption from certain provisions of the Competition Act. If successful, the exemption would permit stakeholders to jointly explore needed solutions in the industry for a period of two years.

While there is currently no further information on whether government will eventually impose export limitations and restrictions, the South African Revenue Service is expected to become aggressive in monitoring compliance and the collection of these export taxes when they do take effect. South African chrome ore producers who intend on exporting chrome should begin preparing, so that they can be tax compliant and in possession of the relevant customs licenses if new export taxes eventually become effective

Written By: Prenisha Govender, Associate, Tax, and Angelo Tzarevski, Senior Associate, Competition & Antitrust, Baker McKenzie Johannesburg

 

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Cellulant and Money Q Collaborate to Make it Easier for Africans Living Abroad

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Cellulant Vice President of Global & Regional Merchants  Richard Gesimba and Amit Shrimali – Founder and CEO, Money Q

Cellulant, Africa’s Leading Payments Solutions Provider has partnered with Dubai-based fintech solutions company to enable expatriates to seamlessly pay for bills and recharge airtime for their beneficiaries across Africa. These customers will be able to make these payments through KrosPayz, Money Q’s Africa-wide digital payments platform that enables online payment for transactions and value-added services at the point of sale.

Mobile remittances present a unique opportunity for millions of people to access the formal financial system, bringing financial services and prospects for revenue generation closer to their communities. According to estimates, Sub-Saharan African remittances increased by 16.4% in 2021 but only by 5.2% in 2022. The average cost of sending $200 over international borders remained high in the second quarter of 2022, at 6%. Mobile operators offer the best rates (3.5%), but less than 1% of transactions are made through digital channels. Remittance services are now much quicker and less expensive thanks to digital technologies.

The KrosPayz digital wallet, which is set to go live first in Malawi this April, will enable customers to pay for national and international utility bill payments, airtime recharge, execute their domestic fund transfers to individuals and companies, and also pay in the local markets for their purchases via QR code.

“Remittances are the single largest source of foreign exchange for many developing economies, and they are stable and resilient in the face of economic downturns. They have been described as developing countries’ most stable, abundant, and secure sources of foreign aid. This partnership reaffirms our commitment to enabling businesses, banks, and consumers to make fast and efficient payments across Africa. By leveraging Cellulant’s presence and partnerships on the continent, Money Q will be able to provide its services throughout Africa” stated Richard Gesimba, Cellulant’s Vice President of Global & Regional Merchants.

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Money Q’s goal is to ensure that no African should be deprived of using the digital channels on the continent. Commenting on the partnership, Mr Amit Shrimali, Money Q’s Founder and CEO stated “I am very excited with this partnership as it helps me to go a step closer to the vision of Money Q which is to make sure that none in the countries, we operate are deprived of using the digital medium to transact. The partnership between MoneyQ and Cellulant will indeed complement one another in growing the market share of both the companies in the African continent.”

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Shelter Afrique unveils new five-year strategic plan

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Shelter Afrique new Managing Director and CEO, Mr Thierno-Habib Hann

Pan-African housing development financier, Shelter Afrique has unveiled a five-year strategic plan to restore the Institution’s performance, competitiveness, and value creation for the long term.

Shelter Afrique unveiled the plan during a Ministerial and Board retreat in Nairobi, which was also attended by the Shareholders’ Bureau represented by Zimbabwe, Nigeria and Rwanda who currently serve as President, First Vice-president, and Second Vice-President of the Bureau, respectively. Development partners such as the African Development Bank, and investment partners such as Actis, Mi Vida and Shapoorji Pallonji (India) were also in attendance. Side discussions were held with Bilateral partners such as CDC, now known as BII (British International Investment), one of the initial shareholders of the Institution.

The new 2023-2027 strategic plan, dubbed the ‘New Dawn’, is expected to position the Institution for growth through improved governance, operational and financial performance. 

The plan focuses on building relationships with various stakeholders to deliver strong and impactful business performance based on a new corporate structure fit for purpose.  

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Refocusing the business

Speaking at a retreat organised by the Institution in Nairobi to appraise the Board of Directors, shareholder representatives, and business partners, Shelter Afrique Chairman Dr Chii Akporji said the unveiling of the new strategic plan was an important milestone for the Institution.

“The new strategic plan that we have dubbed the ‘New Dawn‘ has laid the foundations to refocus our business on growth and impact, while creating sustainable returns for our shareholders and all our stakeholders. It has the board’s unanimous support and provides the Institution with a clear compass,” Dr Akporji said.

Dr Akporji welcomed the new Managing Director and CEO, Mr Thierno-Habib Hann and thanked the board for showing a great sense of responsibility and collective support to the new leadership paving the way to “creating conditions necessary to enter this new phase confidently”.

Echoing the Chairman, Shelter Afrique’s new Managing Director and CEO, Mr Thierno-Habib Hann said it was imperative for the Institution to refocus, deliver and scale up, following the successful conclusion of its restructuring program.

“The past 20 years provided us with some vital lessons which have been critical in developing the new strategic plan – a plan centred on sustainable and competitive growth while delivering consistently and enhancing shareholder value.” Mr Hann said.

Mr Hann added that the new strategic plan offers the Institution an impetus to focus more on clients, business performance, and staff; provides a framework for upscaling engagements with various stakeholders; offers a motivation to bolster the institution’s corporate governance credentials; and creates the momentum to introduce new product lines.

“While driving Mobilization and Syndication, we will be focusing on four business lines, namely (1) Funded and unfunded lines of credit to financial institutions to finance housing solutions, (2) Project Finance for large-scale housing initiatives; (3) Affordable Housing PPPs structuring and (4) Thematic Housing Fund Management and Advisory Services. The new strategic plan envisages a streamlined approach, which allows us to reach the end users by establishing new product structures such as Employer Staff Housing Funds, Green/Resilient homes and Rent-To-Own financing”, Mr Hann explained.

New organisational structure 

The unveiling of the new strategy has necessitated the re-alignment of the organisation and the introduction of a new organisational structure and operating model designed to support the Institution’s innovation, growth, and productivity ambitions for the next five years.

Effectively, the Institution has created new units which will focus the business on financial institutions, project finance, fund management, and public-private partnerships. Additionally, the Strategy, Policy, research and partnerships functions will also be driven from the CEO’s office.  

“We believe the new organisational model is central to the successful implementation of our new strategic plan as it will make us more agile and competitive, enhance client focus, unlock significant potential across the business, and drive value-creation through operational efficiencies,” Mr Hann concluded. 

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Ghana Fintech Awards 2022: DPO Pay Fintech Discovery of the Year

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Leading African digital payments company DPO Pay wins the Fintech Discovery of the year award in the 2022 Ghana Fintech awards. As an initiative of Arkel Limited – a Fintech research and management consulting firm – that is supported by the Ghana Fintech and Payments Association, the awards acknowledge the fintech products and services, technologies, fintech firms and dynamic doers in the fintech ecosystem.

DPO Pay’s Country Manager of Ghana, Frank Anwelle, said: “We are very proud and humbled to receive the Fintech Discovery of the Year Award. Our Team at DPO Pay extends their appreciation to the Ghana Fintech & Payments Association for recognising the hard work and commitment we hold to growing African businesses on a local and global scale. Our innovative approach to simplifying payment processing across Africa continues to drive the core objective of DPO Pay as a merchant-focused solution.”

The award judged international fintech companies operating in the Ghanaian Fintech space on providing best-in-class infrastructure for the deployment of fintech solutions and the ease of integration with third parties to offer financial and non-financial services. The Fintech Discovery of the Year Award recognizes international fintech companies, working within the local Ghanaian ecosystem to provide multiple choices to the industry and clients, ranging from payments infrastructure, credit and debit cards, mobile money, merchant acquisitions, and other payment methods, leading to an integrated financial sector.

Throughout 2022, DPO focused on bringing payment solutions closer to local businesses in Ghana. As part of its efforts, the company has partnered with Mastercard to enable thousands of businesses in Ghana to offer their customers greater choice and convenience by pivoting online and accepting digital payments. It has enabled enable merchants to safely, seamlessly and securely accept a wide range of digital payment methods including mobile money and via e-wallets – both locally and from abroad – in the currency of their choice.

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In addition, at the end of 2022 DPO released a new version of their payments app, DPO Pay Mobile. With several new features, DPO listened to merchant feedback to redesign and redevelop DumaPay. The app, previously DumaPay, now offers a variety of new features to allow for easier, more convenient transactions no matter where in Africa their businesses are. The new mobile payments application allows businesses to securely transact in multiple currencies across Africa.

Founded in 2006, DPO has developed integrated payments technology to support businesses of all sizes in over 20 countries and accepts payments securely and swiftly in all currencies and through many payment methods, including virtual cards, mobile money, and e-wallets.

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