Nigeria’s anti-corruption watchdog, the Economic and Financial Crimes Commission (EFCC) accused Binance and Gambrayan of money laundering and foreign exchange manipulation. The crypto exchange also faces four-count tax evasion charges filed by the Federal Internal Revenue Service (FIRS). Last week, the court adjourned both cases, citing the failure of the two agencies to inform the company before arraignment.

Gambaryan, who appeared before Justice Emeka Nwite of the Abuja Division of the Federal High Court on Monday, pleaded not guilty to all four counts of money laundering, the News Agency of Nigeria reported.

Nwite dismissed Gambaryan’s appeal to be served without the charges of his escaped colleague, Nadeem Anjarwalla, Binance’s regional manager for Africa, who fled the country on March 22. 

Gambaryan will be remanded in Kuje Correctional Centre, pending the determination of his bail application on April 18.

The judge adjourned the case to May 5 for commencement of trial. 

Gambaryan and Anjarwalla were arrested and detained in February after flying into the country to resolve the company’s restricted website access—which the government blocked on suspicion of manipulating FX prices in unofficial markets. Binance’s regulatory woes in Nigeria are in connection with a push by the government to halt speculation on forex trading, following volatility in the price of the naira.

In a statement last week, Binance asked Nigerian authorities to release its detained official, saying he “has no decision-making power in the company and should not be held responsible while discussions are ongoing between Binance and the Nigerian government.” Both executives filed a human rights violation case in the Federal High Court, demanding their release, the return of their passports, and a public apology.

Gambaryan who made his first appearance in court on Thursday, was charged with tax evasion by Nigerian authorities, alongside Nadeem Anjarwalla, Binance’s Kenya-based regional manager for Africa, who fled the country on March 22. 

Both executives were arrested and detained after flying into the country to resolve the company’s restricted website access—which the government blocked on suspicion of manipulating FX prices in unofficial markets. 

TechCabal reported that the Nigerian government also charged Binance on a four-count charge, including nonpayment of corporate income tax and value-added tax, failure to file tax returns, and cooperation in helping users of its website avoid paying taxes. The government also accused Binance of failing to register with its tax collection agency, the Federal Inland Revenue Service (FIRS), for tax purposes, an offence punishable under Section 8 of Nigeria’s Value Added Tax Act of 1993.

Justice Emeka Nwite, presiding over the case, also adjourned the suit against Binance until April 8, when a hearing will commence. 

In a separate lawsuit, last week, both executives filed a human rights violation case in Nigeria’s Federal High Court, asking the office of the National Security Adviser (NSA) and Nigeria’s anti-graft agency, the Economic and Financial Crimes Commission (EFCC) to release them, return their passports, and issue a public apology.

This is Gambaryan’s fifth week in detention. On Wednesday, Binance asked Nigerian authorities to release its detained official, saying he “has no decision-making power in the company and should not be held responsible while discussions are ongoing between Binance and the Nigerian government.” 

The Nigerian government also has issued an international arrest warrant for Anjarwalla. 

The government said Binance failed to register with the Federal Inland Revenue Service (FIRS), Nigeria’s tax collection agency, for tax purposes, an offence punishable under Section 8 of the Value Added Tax Act of 1993, according to court documents seen by TechCabal.

The crypto exchange was also accused of non-payment of value-added tax and company tax, and failure to file tax returns, said a charge filed before a Federal High Court in Abuja. Binance was also accused of aiding customers to evade taxes through its platform. The FIRS confirmed the charges, per reporting from Bloomberg.

Anjarwalla, a UK citizen, and  Gambaryan, a former US Internal Revenue Service special agent, have been in detention since February 26. The duo came to Nigeria when the government threatened to block access to the company’s website as part of a crackdown on forex speculation. 

On Monday, Premium Times reported that Anjarwalla escaped from the Abuja guest house where he and Gambaryan were detained after he was led to a nearby mosque to pray. He is believed to have flown out of the country using a Middle East airliner, the report said. The office of the NSA said he fled Nigeria using a smuggled passport. “Security agencies are working with Interpol for an international arrest warrant for the suspect,” it said in a statement.

Binance’s regulatory woes in Nigeria are in connection with a push by the government to halt speculation on forex trading, following volatility in the price of the naira. Last week, TechCabal reported that Nigeria’s central bank analysed peer-to-peer trading on Binance in February, confirming suspicions that some traders manipulated prices to benefit from the resulting arbitrage opportunity. A court ruling also mandates Binance to share user data with the Economic and Financial Crimes Commission (EFCC).

Binance, which has disabled naira services on its platform, said it will comply with authorities. The company claimed that since 2020, it has responded to over 626 information requests that have assisted the government’s investigations into financial crimes such as scams, fraud, and money laundering. 

Flourish Ventures and TLcom Capital, a pan-African venture capital fund, led the seed round, according to a statement on Monday. Other investors include international blockchain-focused VC firms Digital Currency Group, Verod-Kepple Africa Ventures, and Alter Global. 

“The startup was funded initially by the parent company. When you separate the traditional business, the natural thing to do is to raise money to continue growth,” Obi Emetarom, CEO and co-founder of Zone, told TechCabal over a call.

With the new funding, Zone—Africa’s first regulated blockchain network for payments—will expand the coverage of its network domestically and connect more banks and financial services companies. The company runs a blockchain network that enables direct transaction flow between financial service providers without an intermediary. It automates settlement, reconciliation, and dispute management.

Zone claims over 15 of Africa’s largest banks and fintech companies use its network to process payments. Access Bank Plc, Guaranty Trust Bank Plc, and United Bank of Africa—three of Nigeria’s biggest banks with a market capitalisation of at least ₦1 trillion—are among its clients.

“We are excited by the potential for Zone’s technology to be replicated across borders to advance payment innovation globally,” Ameya Upadhyay, Partner at Flourish Ventures said.

Zone will improve its technology, especially in terms of instant settlements. The company will also roll out more use cases for its blockchain network beyond ATMs to reach more users.

“We aren’t building the interface for the end users, we are building the API that banks, fintechs, and other financial service providers can integrate their payment applications to,” Emeratom said.

Zone’s fresh funding comes in a difficult fundraising market. African startups raised $3.2 billion in 2023—the lowest figure in three years, according to TechCabal’s funding tracker. “The participation of high-quality investors despite the funding drought and the fact that we had more interested investors than we needed, is a sign of trust in the Zone brand,” Emetarom said. He noted that Zone’s selling point to investors is the uniqueness of its product and the experience of the founders who are veterans in the banking industry. “We have seen a lot of customer-facing payment startups in the last five years. But you don’t have startups raising money to build payment infrastructure. That makes us unique.”

Zone has ambitions to extend its blockchain network across Africa. The company will spend part of the fresh funding to conduct a comprehensive pilot program to test its cross-border capabilities, as it plans to launch a remittance product in 2025. However, Zone isn’t in a rush to expand into new markets. “Right now, the focus is to build out the capabilities domestically on the technology side and use cases.”

In 1999, it entered a market with other big-name players like the Chinese multinational ZTE, Nokia, the Finnish giant, and Sweden-based Ericsson. These companies original equipment manufacturers (OEMs) doubled as infrastructure and service providers to telecom companies like MTN and Airtel. ZTE, for instance, was instrumental in building MTN Nigeria’s 2G and 3G networks. 

While ZTE and Ericsson have trimmed their operations in the last two decades, Huawei has been on the ascendancy, expanding its carrier and enterprise business. Today, its offerings include networking equipment like routers, firewalls, switches, servers, and storage devices; it provides data centre solutions and cloud services and deploys applications like mobile wallets for its customers. 

Huawei’s success in Nigeria is down to a mix of its pricing strategy and a bold decision to provide end-to-end solutions to customers in a market where its competitors often choose specialisation.

“While IBM and Dell are synonymous with storage, and Cisco focuses on networking and security, Huawei provides everything by competing in both the carrier and enterprise businesses,” an industry insider with knowledge of Huawei’s business told TechCabal.

Huawei declined to comment on any part of this story.

A roll-call of ambitious projects 

Huwaei has sold servers and storage solutions for top Nigerian banks like UBA, Zenith, Access, and Fidelity. Other traditional banks Huawei serves include Keystone, First Bank, Unity Bank, UBA, and FCMB. 

In May 2023, a fire at Zenith Bank’s primary data center caused a service downtime, and attempts to switch to its disaster recovery center also failed, two people told TechCabal. 

That incident is thought to have convinced Zenith—a tier-1 bank with a market capitalisation of ₦1.1 Trillion—to sign a $10 million deal with Huawei for a storage solution, two people with direct knowledge of the deal said.

Chinese-backed Huawei has secured other significant deals in Nigeria. Galaxy Backbone, a government-owned internet IT shared services provider, is one of its biggest clients. Huawei is building two data centers for Galaxy, said one person familiar with the project.

Those data centers are part of a broader project called the National Information and Communication Technology Infrastructure Backbone (NICTIB). The first phase of the controversial project was completed in 2018 and the second phase—valued at $328 million—was also contracted to the Chinese company. 

Huawei has handled projects for the Lagos state government, the Nigerian Ports Authority (NPA), the Central Bank of Nigeria (CBN), Nigeria National Petroleum Corporation (NNPC), and Ikeja Electric. It was also a Technical Partner for the Nigeria Customs Modernisation Project in 2022.

Before Huawei, there was Ericsson 

Ericsson was the market leader among mobile telecommunications vendors in Nigeria since 2009, said one person familiar with the company. The Swedish company’s biggest clients were MTN and Airtel. At the time, Nokia and Alcatel had already lost significant market share and were beating a retreat, according to two people with industry knowledge.

But things began to change in 2014 as Huawei began its march to dominance by poaching several Ericsson employees. It then went after its Swedish competitor’s clients next.

Huawei had a model: ‘You can use our equipment now, you don’t have to pay right away,’ said an ex-Ericsson employee. 

“Very quickly, they were able to win over a lot of the market share that Ericsson had. It was very easy for mobile telecommunication companies to swap out Ericsson to save costs.” 

Unlike Ericsson which only catered to telcos, Huawei had bigger ambitions. 

Jack of all trades

Handling managed services is one of the most lucrative businesses in the telecommunication industry. Not only do OEMs get paid for maintenance, but they can also propose solutions to operators that involve buying more services or equipment. Huawei benefitted greatly from this.

Huawei’s primary strategy is to sell one solution to a client and then ensure it upsells all its other inventory, according to a person familiar with the company’s thinking. “Huawei likes to position itself as the solution for every client,” the person said. 

Huawei currently offers managed services to Galaxy, Lagos State government on the enterprise side, according to a person familiar with the company. 

On the telco side, its clients include MTN and Airtel. It has also built data centres for Zenith Bank, MTN, Seplat Petroleum, and the Lagos state government, according to one person with direct knowledge of the deals.

In 2020, MTN launched a Tier III data center built by Huawei. In 2021, Cloud Exchange,  a system integrator IT company, launched Africa’s first uptime institute tier IV modular prefabricated data center in collaboration with Huawei.

Huawei also offers cloud services. Opay, the Chinese fintech, runs on Huawei’s cloud architecture, a person with direct knowledge of the matter said. The cloud business is now a separate business entity, the person added.

Huawei’s government playbook

Huawei entered the government and enterprise business in 2015. The shift to enterprise was strategic, considering Nigeria’s place as the company’s most important African market. “We expect it [Nigeria] to remain the number-one global market for enterprise business,” Frank Li, Huawei Nigeria’s Managing Director at the time, said in a 2018 interview.

The company secured an office in Abuja, the nation’s capital, the seat of the federal government, hoping to build a stronger relationship with the government. That move has generated results.

Huawei now handles major contracts for the Nigerian government and in 2023, the company was awarded the National Productivity Merit Award by the Nigerian government.

By August 2004—barely five years into the market, Huawei had invested more than $10 million into its Nigerian training center. By 2018, the figure had risen to $76 million. In December 2023, it launched a scholarship program in partnership with the Ministry of Communications, innovation, and digital economy.

The company also invests in training employees and prioritises knowledge transfer. 

Yet, Huawei’s success story in Nigeria is not without controversy. There have been allegations of poor pay and exploitation of workers at Huawei Nigeria.

In 2022, Nigeria’s House of Representatives investigated a memorandum of understanding signed by the government and Huawei for the National Information and Communication Technology Infrastructure Backbone (NICTIB).

Despite these issues, Huawei has been unscathed because of its close relationship with the government,  claimed two people familiar with the company. 

One thing is clear: Huawei is here to stay. If it retains its market share despite the presence of some new upstarts, the company will continue to profit massively from Nigeria’s huge telecoms market.

The new bid translates to an offer of 125 rand per share, a 20% increase from the initial offer of 105 rand, per reporting from Bloomberg. MultiChoice has a fiduciary responsibility to inform its shareholders about the new offer.

South Africa’s Takeover Regulation Panel (TRP) has issued Canal+ a 25-business day extension which lapses on the 8th of April, to submit a mandatory bid to purchase shares of the pay-TV company, Multichoice. Canal+ has stated that it will comply and respect the panel’s decision. 

Since 2020, the French company has increased its stake in MultiChoice from 20.1% to 35.01% in February 2023. Per South African law, a more than 35% stake would require Canal+ to make a mandatory offer to MultiChoice shareholders.

In February, MultiChoice, which has a market capitalisation of $2.15 billion, turned down a non-binding acquisition offer by Canal+. MultiChoice told shareholders at the time it considered the offer undervalued.

The fine comes barely 48 hours after news broke that security agencies detained two executives of the global crypto exchange. Both executives flew to Nigeria last week following a ban on their website and were arrested by the office of the National Security Adviser (NSA).

While the NSA initially denied reports of any arrests, it later confirmed that it was investigating Binance but did not share any details of the investigation.

On Tuesday, Olayemi Cardoso, the central bank governor, claimed “$26 billion has passed through Binance Nigeria from sources and users who we cannot identify.” There have been reports that the government has asked Binance for user data and details. It is unclear if the company has handed over the requested data.

*This is a developing story.

Both executives flew to Nigeria last week following a ban on their website and were arrested by the office of the National Security Adviser (NSA), the same report said.

In an anxious week for Nigeria’s crypto industry, regulators made significant changes, blocking access to the websites of several exchanges and pegging USDT/NGN exchange rates.

On Wednesday, several crypto exchanges barred users from buying the USDT and USDC stablecoins, TechCabal reported.

The Nigerian authorities have been silent on the arrest. A spokesperson of the NSA told TechCabal he knew nothing about the arrest and it was likely that the action was taken by other security outfits.

Olayemi Cardoso, the central bank governor, alluded to some actions by security agencies at the end of the monetary policy meeting on Tuesday and said those actions would soon be made public.

He also said the regulatory environment was about to get stricter, warning speculators about consequences.

Nigeria’s aggressive move against these crypto companies comes months after it reversed a long-standing ban that shut them out from banking services.

One Binance employee also told this publication that their office had warned them against wearing Binance merchandise or sharing of any identifiers of their employers.

*This is a developing story.

The apex bank will begin those sales after proposing more stringent rules for BDC operators last week, according to a circular published on Tuesday. The CBN hopes that this move will take the pressure off the banks and help meet the demand in the retail market. 

“What we’re hoping to accomplish by this, frankly, is to bring some sanity to an industry that arguably no longer serves the interests of those whom it was meant to protect,” CBN governor Olayemi Cardoso said at the end of the rate-setting meeting on Tuesday. The apex bank raised the benchmark lending rate to 22.75% in the most aggressive push to contain inflation. 

BDCs will only be permitted to sell to end-users at a margin not exceeding 1% above the purchase rate from CBN, according to the new directive.

Analysts have said the CBN aims to eliminate street trading and standardize the operations of BDC operators with technology so their volumes and activities can be monitored in real time. Under ousted CBN Governor Godwin Emefiele, the CBN banned sales of FX to BDC operators in 2021. The apex bank reversed the two-year ban in August 2023.

Last week, the bank increased the minimum capital requirements for BDC operators to N2 billion for Tier 1 license holders and N500 million for Tier 2 licence.

“We hope we’ll be able to increase competition from those who are genuine,” Cardoso said.

CBN’s efforts to unify the naira have failed to hit home due to the bank’s inability to meet demand. As a result, the parallel market continued to be the viable source of supply, opening up a significant arbitrage opportunity. The prevailing thinking on the government’s side is that speculators are taking advantage of the situation to inflate prices artificially. 

Still, many experts disagree, pointing out an absence of liquidity as the real cause of the problems. 

TechCabal reported on Monday that the fear of being arrested by officials of Nigeria’s anti-graft agency, the Economic and Financial Crimes Commission (EFCC) has driven currency traders away from street trading. Last week, Nigerian authorities blocked access to crypto companies’ websites and pegged rates on Binance, a global crypto exchange. 

Tijani’s argument was simple: Nigeria must participate in developing the emerging technology to solve the nation’s problems. The minister discussed plans to create a comprehensive national AI strategy for Nigeria, following the footsteps of other African countries such as Tunisia, Mauritius, and Egypt.

But Nigeria’s AI ambitions rubbed some Nigerians the wrong way and the pushback has been more than what Tijani envisaged. The criticism revolved around one point: Nigeria must address fundamental issues such as reliable electricity, food security, and poverty. To critics, pushing an AI agenda without fixing the basics puts the cart before the horse. 

In a nation that’s already struggling to tackle inflation and poverty, many consider the conversations around AI to be misplaced and premature. 

Yet it could be argued that Nigeria has made impressive technological progress despite these problems. Nigeria’s telecommunications revolution happened in 2001 when internet penetration was less than one percent. A similar argument can be made for the growth of Nigeria’s tech ecosystem, which led to the rise of homegrown multimillion-dollar startups.

Nigeria is still far behind in the AI race compared to the rest of the world and Africa. Tunisia released its national AI strategy in 2019, while Nigeria has yet to develop one fully.

“AI development is happening around the world in real-time. If Nigeria does not take its place, it will be left with the crumbs,” said Kehinde Olateru, CEO and Co-Founder of Zero Complex AI, a B2B technology startup, arguing that the development of AI will force rapid development in other areas. 

According to experts, if properly utilised, AI could optimise agriculture, improve healthcare delivery, and tackle security challenges – issues deeply intertwined with the very basics critics emphasise. AI’s uses in agriculture include pest and disease detection, harvesting and sorting, livestock management, and supply chain optimization, according to this TechCabal article, uses of AI in agriculture. In Senegal, there has been research into how combining algorithms with Internet of Things (IoT) detectors can develop sustainable automated irrigation systems.

Africa’s AI market is projected to reach $6.9 billion in 2024, with widespread application across various sectors. 

There are concerns that focusing on AI would divert resources from crucial areas, but data suggests otherwise. Nigeria doesn’t have a mature AI ecosystem yet. In October 2023, Nigeria’s tech regulator, the National Information Technology Development Agency (NITDA) unveiled an AI research scheme to provide grants to startups and researchers. 

According to a new study on the state of AI in Africa, much work still has to be done in expanding computing facilities and data infrastructure. “Of the top 500 most powerful commercially available computer systems known to us, only one is located in Africa – in Morocco,” the report notes.

If anything, balancing such lofty AI ambitions with immediate needs will require careful consideration.

“Both can coexist. While we solve infrastructure challenges, we can build our capacity in AI,” Victor Famubode, an AI policy researcher told TechCabal.  “It is not one or the other.”