Chamber of Indigenous Business & Investors critics Fourth Estate’s NLA-KGL investigation

The Chamber of Indigenous Business & Investors has criticised the Fourth Estate and the Media Foundation for West Africa (MFWA) for its latest exposé on the National Lottery Authority (NLA).

According to an investigative report by the Fourth Estate and the Media Foundation for West Africa (MFWA), the National Lottery Authority (NLA) gave away a GHS 3 billion prime business to KGL Technology Limited in exchange for peanuts of GHs 170 million annually.

The Fourth Estate has also stated that the contract signed in 2024 was for 15 years, with automatic renewal for another 5 years after expiration.

Below is their analysis of the report

15 years Contract of KGL

KGL Technology Limited is not the only company having a 15-year agreement with the National Lottery Authority (NLA). For the avoidance of doubt:

1. Lots Services Ghana Limited had a 15-year contract with NLA in 2013, subject to automatic renewal of another 15 years after expiration.
2. Simnet Ghana Limited had a 10-year contract with NLA in 2015 subject to automatic renewal for another 10 years after expiration.
3. Alpha Lotto Limited and some Private Lotto Operators signed 10-year contract with NLA in 2024 subject to automatic renewal after expiration.
4. All the Lotto Marketing Companies currently doing business with NLA in the Kiosks and using Point of Sale Terminals (POSTs) were issued licenses in 2006 in accordance with Section 58 (Transitional Provisions) and 57 of the National Lotto Act, 2006 (Act 722). These Lotto Marketing Companies have been in operations for the past 19 years.
5. There are also Lotto Receivers who were previously working with the then Department of National Lotteries (DNL), and these Lotto Receivers were admitted as Lotto Marketing Companies under the Act 722. These companies have been doing business with the National Lottery Authority (NLA) for the past 40-50 years.

Contract of KGL

KGL Technology Limited has No “Contract” with the National Lottery Authority (NLA).

The arrangement between NLA and KGL is a Licensing Agreement issued by the Board of the National Lottery Authority (NLA) in accordance with Sections 5, 6, 7, 8, 9, 10, 11, 12, 13, & 14 of Act 722, and Regulations of 12 & 13 of L. I. 1948.

All licensing agreements issued by NLA to Lotto Marketing Companies, Collaborators and Private Lotto Operators have NEVER gone through the procurement process since they are NOT procurement contracts but rather licensing agreements in accordance with Act 722 and L. I. 1948.

Therefore, it is very misleading for the Fourth Estate and Media Foundation for West Africa (MFWA) to conclude that the NLA-KGL deal is a contract. That is very unprofessional, making the submission highly unethical.

NLA Gave Away A GHS 3 Billion Business to KGL for Peanuts

For the avoidance of doubt, the National Lottery Authority (NLA) was NOT operating any GHS 3 billion business before KGL started operating in Ghana. The highest gross revenue ever generated by NLA before KGL was GHS 401, 711, 318 (400 Million Ghana Cedis) in 2017. As a matter of fact and backed by data, the NLA has NEVER generated GHS 3 billion annually since its establishment in 1957.

The National Lottery Authority (NLA) used 8 years to generate GHS 2, 766, 159, 507 (2.7 billion Ghana Cedis), and out of the GHS 2.7 billion, the NLA used GHS 1, 378, 104, 374 (1.3 billion) to pay winning tickets to the staking public.

Below are the revenues generated by National Lottery Authority (NLA) from 2013-2020 before the active operationalization of the KGL licensing agreement:

2013 – GHS 255, 229, 663

2014 – GHS 315, 918, 378

2015 – GHS 365, 529, 893

2016 – GHS 397, 750, 549

2017 – GHS 401, 711, 318

2018 – GHS 381, 038, 324

2019 – GHS 349, 220, 308

2020 – GHS 299, 761, 074

Total Revenue generated by NLA for 8 years (2013-2020) = GHS 2, 766, 159, 507(2.7 billion).

Therefore, Fourth Estate Lied to the public about annual revenue of a GHS 3 Billion business of NLA being given away to KGL based on the aforementioned data.

Below are the Lotto Prizes Payments made by NLA from 2013-2020:

2013 – GHS 122, 407, 648

2014 – GHS 156, 414, 997

2015 – GHS 172, 349, 847

2016 – GHS 203, 687, 057

2017 – GHS 209, 545, 892

2018 – GHS 179, 326, 708

2019 – GHS 171, 375, 506

2020 – GHS 162, 996, 719

Total Payments of Lotto Prizes (Winners of National Lotto) for 8 years = GHS 1, 378, 104, 374(1.3 billion).

This should inform the Fourth Estate and Media Foundation for West Africa(MFWA) that Lotto money is NOT the same as revenue generated by GRA. NLA used 8years to generate 2.7 billion and pay 1.3 billion to winners of National Lotto within that same 8years.

GHs 170 million Peanuts Paid by KGL to NLA

So far NLA-KGL deal is the best at the NLA and below are the facts:.

1. From 2013-2020(8years), NLA paid only GHs 182, 009, 000(182 million Ghana Cedis) to the Consolidated Fund. Below is the breakdown of payments to the Consolidated Fund by NLA:

2013 – GHs 25, 000, 000

2014 – GHs 11, 850, 000

2015 – GHs 33, 270, 000

2016 – GHs 16, 000, 000

2017 – GHs 30, 000, 000

2018 – GHs 33, 927, 000

2019 – GHs 16, 962, 000

2020 – GHS 15, 000, 000

The above figures indicate that, the annual payment of GHS 170 million by KGL to the Consolidated Fund through NLA exceeds all the individual figures paid by NLA itself to the Consolidated Fund from 2013-2020.

For the avoidance of doubt, the amount of money paid by KGL to NLA from 2019-2024 (5years) EXCEEDS the amount of money paid by NLA itself to the Consolidated Fund from 2013-2024 and this is the ABSOLUTE FACT.

Therefore, everything shows that the NLA-KGL deal is one of the best regardless of the propaganda by the Fourth Estate and Media Foundation for West Africa (MFWA).

Does NLA Have the Capacity to Operate the 5/90 USSD Short Code?

1. In accordance with Act 722 and L. I. 1948, the NLA cannot sell lottery products/tickets directly to the staking public as a Lotto Marketing company.
2. The NLA has to depend on Lotto Marketing Companies or Collaborators or Private Lotto Operators to sell lottery products/tickets to the public.
3. Under Act 722 and L. I. 1948, NLA has no power to pre-finance Lottery operations.

Is KGL the Only LMC ever to Have Operated 5/90 USSD?

1. In 2008, NLA in partnership with a private company operated NLA 5/90 USSD termed as “Mobi Game 2 Sure” but the project FAILED.
2. In 2015, NLA in partnership with a private company operated “Mobile 5/90” but the project FAILED.
3. In 2019-2020, NLA in partnership with a company operated NLA 5/90 USSD(*890#) but the project FAILED.
4. In 2020- 2021, Alpha Lotto Limited started the illegal operations of NLA 5/90 USSD(*896#) but the short code was legally shut down by NLA and NCA.

Why Exclusive License to KGL?

1. The National Lottery Authority(NLA) has NEVER given multiple USSD and Web Online lottery license agreements to Lotto Marketing Companies or Collaborators or Private Lotto Operators to operate one lottery game or product.
2. All License Agreements based on USSD and Web Online are Exclusively preserved for the operation of one particular lottery product. Below are some of the examples of USSD and Web Online EXCLUSIVELY operating a specific lottery product or game:

(a). 787 is exclusively for Wotiriyie Lottery

(b). 766 is exclusively for Atena

(c). 959 is exclusively for NLA 5/90

(d). 446 is exclusively for Daywa Lotto 5/39

(e). 946 is exclusively for Pick4/Pick1

(f). 987 is exclusively for Lucky 3

Therefore, it is extremely FALSE that, KGL is unfairly enjoying monopoly of NLA 5/90 USSD and Web Online.

Payments to the Lotto Account

1. In fulfilment of Section 32 of Act 722, KGL makes quarterly payments to the NLA for onward submission to the Lotto Account as a requirement for the pre-financing of the lottery operations.
2. In alignment with Regulations 13 and 14 of L. I. 1948, KGL is empowered to pay winners of National Lotto via the *959# short code.
3. In fulfillment of Section 2(4) of Act 722, KGL is responsible for all the losses on the *959# short code, and all the losses of KGL throughout the operations of NLA 5/90 USSD and Web Online will NOT be compensated by the State or from the Lotto Account provided for under Section 32 of Act 722.

Conclusion

It is very imperative for the Fourth Estate and Media Foundation for West Africa(MFWA) to understand that, the operations of KGL never started from GHS 3 billion, and also, if KGL stops operations, that supposed GHS 3 billion business would NEVER be automatically available for the State.

Also, we would like the Fourth Estate and Media Foundation for West Africa(MFWA) to remember that NLA has ZERO(0) investments when it comes to the:

1. Cost of IT infrastructure and its periodic maintenance.
2. Cost of daily payment of WINNING TICKETS to the staking public. KGL has been responsible for all the Liabilities and Risks associated with the operations of 5/90 USSD.
3. Cost of Marketing
4. Cost of Technical Fees
5. Daily operating FEES charged by MTN, Telecel and AirtelTigo

Payments of Taxes to GRA by KGL

From 2019 up to date, KGL has NEVER defaulted in the payment of taxes to the Ghana Revenue Authority(GRA), and the records are available at the Ghana Revenue Authority(GRA).

Signed…
Mr Alistair Nelson
Executive Director