The terrible NLA-KGL Deal: How the driver became master to the car owner

1. Not long ago, if you needed airtime on your phone, you had to go and buy a scratch card from a vendor to upload airtime. The telecom companies did not have the capacity to sell the scratch cards everywhere by themselves, so they had dealers and agents who sold the cards for commission.

2. Before the dealers and agents could get the scratch cards to sell for their commission, they had to pay for the cards in advance. So, the telecom companies got their money even before the cards were sold.

3. Technology evolved. So, at some point, you could buy airtime directly on your phone, without going to the scratch card vendor. In the early days of the technology evolution, some people hadn’t learnt how to buy airtime directly on their phones. Such people still needed a scratch card to load airtime. The telecom companies, therefore, still printed a few of the scratch cards for those who were yet to migrate to the option of buying airtime directly on their phones. At this point, the scratch card business started to decline.  

4. Over time, almost everyone could buy airtime directly on their phone. Those who still could not do so were in such a micro minority that it didn’t make sense anymore for telecom companies to continue to print scratch cards. Accordingly, they didn’t need scratch card dealers and sellers anymore.

5. What the telecom companies needed at this point were technology company partners who would help make sure that you could buy airtime on your phone without challenges.

6. The current business model is that telecom companies engage relevant partners and pay them a service fee or an agreed commission based on the services delivered. For every amount of airtime you buy, the money goes directly to the telecom company, not the technology partner. This is because the operator of the business is the telecom company, not the technology partner. You continue to buy airtime on your phone while the telecom companies pay their technology partners and continue to grow in revenue.

Now, the terrible case of the NLA-KGL Deal

1. Not long ago, everyone who wanted to stake the national lotto would have to go to the lotto sales agent, mostly in a kiosk, to stake or buy the National lotto and receive a coupon. The NLA is the owner of every national (5/90) lotto coupon. But because NLA cannot sell the lotto directly, it engages Lotto Marketing Companies (LMCs) to sell the NLA lotto for a commission.

2. Just like the scratch card seller, the LMCs are required by law to prepay for the NLA coupons before they get them to sell. So even before the LMCs sell NLA coupons for their Commission, NLA would have received payments for the coupons.

3. All the money NLA generates from the sales and other ventures must, by law, go into what is called the Lotto Account. From this account, NLA pays for lotto winnings and other expenses. Every month, NLA is required by law to transfer the balance in the lotto account to the Consolidated Fund. If at any point the money in the Lotto account is not enough to pay winners, the excess can be charged against the Consolidated Fund.

 4. Then technology evolved. So NLA introduced POS machines. Instead of lotto sellers writing out the numbers (pen on paper), they punched the numbers on POS machines and gave the lotto staker the coupon in the form of a printed paper receipt. But the LMCs still had to pre-pay NLA to load the POS machines. So even before they sold the lotto to someone, they would have paid NLA. The money went into the NLA’s Lotto Account.

5. Technology further evolved. Around the world, lottery moved online, and about 90% of lotto stakers now buy their lotto on their phones directly using a short code (USSD). In Ghana, the evolution was ongoing, too.

6. So NLA started experimenting with different forms of technology partners to reap the full benefits from online sales of its lotto business. At this point, what NLA needed most were technology partners to make sure people could buy lotto on their phones without challenges.

7. Enter KGL. They started to take advantage of the fast movement towards online lottery and did so illegally. NLA caught KGL and fined it to pay GHC10million for operating an online lottery illegally.  KGL paid the fine and applied to NLA to be licensed as an online LMC.

8. NLA granted KGL a three-year provisional licence in 2019 for KGL to sell NLA’s 5/90 lotto online.  In the licence, KGL was to pay some GHC20 million to NLA, instead of KGL selling the lotto on behalf of NLA for NLA to pay KGL a commission as required by law. This is where it all began!

9. The provisional licence to KGL expired in 2022.  NLA then granted KGL a 10-year licence to expire in 2032. But before the 10 years would end, KGL goes back to NLA in 2024 and tells NLA that they want to be the only company to operate or sell NLA’s 5/90 lotto online and use the USSD short code on phone. In other words, NLA should make it illegal for any other company to operate or sell NLA’s 5/90 online or on the phone.

10. At this point, 80% to 90% of lotto stakers in Ghana had moved to buying lotto online using just a USSD short code on their phone, just as the majority of people now do their betting online through their phones. The analogue lotto kiosk sales had literally collapsed, and NLA was getting virtually nothing from the lotto kiosk business.    

11. NLA agrees and grants KGL a 15-year exclusive licence in 2024 to be the only company that is allowed to operate or sell NLA’s 5/90 lotto online using USSD short code. So, the prime business of the NLA, which will generate 80% to 90% of the NLA’s revenue, has been handed over to one company, KGL.

12. For 2024, KGL was to pay to NLA GHC157.6 million, being the total amount for licence fee, contribution to good causes and Lotto Stabilisation Fund. This pre-determined amount was to be paid to NLA instead of KGL working as an LMC for the NLA and being paid a determined commission by the NLA as required by law. For the first three years, the NLA will review the amount to be paid by KGL, but any upward review should not exceed 10%.  

13. The amount to be paid by KGL to NLA is not based on an assessment of how many sales will be made by KGL. Also, KGL sells what is legally NLA’s 5/90 “digital coupons” via USSD for itself, not for NLA. The sales from NLA’s 5/90 digital coupons by KGL do not go to NLA’s Lotto Account as required by law. In fact, NLA doesn’t even know how much of its digital coupons (online lotto) KGL sells. So KGL has fully taken over the prime business of the NLA and pays NLA some revenues instead of NLA paying KGL a determined commission as an LMC to NLA.

14. All NLA is left with at this stage as its business is the archaic analogue lottery sold in kiosks, with just about 10% or less of lotto stakers. So KGL’s 2024 annual revenue from NLA’s 5/90 business is over GHC3billion. And NLA’s total revenue for the same year, including what it received from KGL, is under GHC350million.

 15. In the meantime, KGL, which is now operating NLA’s prime business exclusively, now brags that it is the financial lifeblood of the NLA. It says that without its payments and donations to NLA, which is the owner of the KGL business, NLA will suffer and collapse.

This is what the past leadership of the NLA has done to the state. They handed over the car to the driver, and the driver makes sales to himself. The car owner doesn’t know how much the driver makes. This is how the Driver (KGL) became the Master of the car owner (NLA). This is why the driver now brags that without him, the car owner can’t survive.

But the car owner only has to take over the ownership of the car or change a driver and make sure the new driver doesn’t make sales to himself but to the owner, so that the owner will, in turn, pay the driver.

Meanwhile, the current NLA Board and the Finance Minister look on.

 In an upcoming revelation that should make all discerning Ghanaians angry, you will learn about how the driver (KGL) is making millions of profits from NLA’s car, while the car owner (NLA) makes no profits.