Malawi and Lottery Droughts

…investor to claim less than 30% of profits

Three years has been such a long time, but Malawi’s penchant for ‘voluntary taxes’ is set to be tested when the sad tale of a nation-without-a-national-lottery-operator comes to an end on December 19, the day the National Lottery Group (NLG) launches the country’s first operations in three years.
Malawi has been without a national lottery operator since Aflot, the company National Lotteries Board (NLB) awarded a national operator licence abandoned ship under circumstances NLB executive director, Francis Mbilizi, says hinged on inferiority of equipment used in the games.
The country’s lottery laws- as stipulated in the Lotteries Act, Number 9 of 2003- give NLB the mandate to offer only one licence per five years, a development that contributed towards Malawi’s failure to have a national lottery operator after Aflot pulled out mid-way through its licenced tenure.
However, Mbilizi said he is now a happy that NLG has come on board. He says the coming in of NLG will bring income to government coffers, citing the monetary contribution national lottery operators are obliged to make through taxes.
Mbilizi said national lottery operators play a pivotal role in the economic development of any country, citing their contribution to government revenue.
“National lottery operators benefit the economy because they invest their money to collect voluntary taxes on government’s behalf basing on the face value of tickets. In addition, the operator just retains a fraction of the profits, and channels the rest back to community causes,” he said.

Under the Lotteries Act of the Laws of Malawi, NLG will be expected to remit 50 percent of
its revenue to members of the public through lottery prizes, 3 percent is earmarked for the lotteries board- which donates the funds to development activities of its choice through the National Lottery Distribution Fund- while 10 percent will be paid to the Malawi Revenue Authority.
“NLG will also be required to pay between 5 and 8 percent to vendors as their sales’ commission. This means that the investors in national lotteries take less than 30 per cent, but this is enough for them to
meet their operational and administrative needs and realise profits,” Mbilizi said.
NLG hopes to generate between US$14 million and US$28 million (between K2.3 billion and K2.8 billion) within the next four years.
The company’s investment plan indicates, among other projections, that the company will generate between US$14 million and US$17 million (Approximately between K2.3 billion and K2.8 billion) in 2012; between US$20 million and US$22 million (approximately K3.3 billion) in 2013, and; between US$25 and US$28 million (K4.1 billion and K4.6 billion) in 2014.
“This presents great opportunities for Malawi,” Mbilizi said.
The NLB chief added that the board has put in place mechanisms aimed at averting mistakes that led to the closure of Aflot.
While showing reluctance to talk about Aflot, Mbilizi said the company stopped its operations because it was using low level technology, as evidenced by over-reliance on paper-based systems loathed worldwide for their susceptibility to human interference and operational mistakes.,
Speaking in a separate interview, NLG executive director, Momi Nahum said the company will use its experience in Asia, the Pacific, Latin America, Euro-Asia and other countries in Africa to ensure it raises the much-needed money for public causes.
These countries include Mexico, Colombia, Georgia, Macau, Nigeria, Ivory Coast and Equatorial Guinea.
“This year, we are adding Malawi and Central African Republic to the list, and Kyrgyzstan in the near future.
“We will create memorable experiences for Malawians. By playing the games, many Malawians will realize their dreams and live a completely different life because we are giving out huge sums of money in prizes. We will provide Malawians with the most innovative value for money experiences,” said Nahum.
He added: “We are in Phase One till the launch day (December 19) and, in this phase, we have invested US$ 6 million. There will be further investments in millions of dollars. So you can see that we mean serious business.”
Cheng said the launch has deliberately been set closer to Christmas “to give the first winner an early Christmas gift”.
“In terms of products, we will start with two: Instant Game and Lotto Game. The first one uses scratch cards while the second one uses 6/36 game,” said Nahum.
Cheng added that his company will create between 100 and 150 direct jobs for Malawians, apart from creating between 2000 and 4000 indirect job opportunities through 2000 point-of-sale terminals.