How to access the e-commerce gold mine of Africa, By Peter Harvey, Buisness Day, 14 November 2012

AFRICA’s financial sector has tremendous potential. The continent is home to 1-billion people, half under 20, and has six out of 10 of the world’s fastest-growing economies. Yet a study last year by the African Development Bank, German International Co-operation and the World Bank found less than 20% of households have a formal bank account, and only 23% of enterprises have loans or lines of credit.

Informal financial arrangements, savings clubs (stokvels) and other independent moneylenders seem to meet the continent’s needs and are often defended as an “African solution to African problem”. However, these are largely imperfect substitutes — unreliable, unsecure and rarely private. These arrangements limit individuals, and hamper the economy as entrepreneurs and businesses are unable to take advantage of opportunities such as e-commerce, which requires a complex ecosystem for making and processing online payments.

Not one African country got into the top 30 on the Global Retail Development Index determining the most lucrative retail opportunities in the world, the top five being China, Brazil, Russia, Chile and Mexico. (China’s vast online retail market secured the top position — the value is estimated at R194bn, second only to the US.)

Even South Africa, despite having the most internet users in Africa, is underperforming with its online retail value sitting at just R2.5bn last year. Surprisingly, telecoms infrastructure is not the only cause. The first step in an online transaction is a person with a valid credit or debit card. Credit card penetration in South Africa is 0.2%, compared to Brazil’s 110%.

Debit card ownership is only slightly higher, with less than one card per South African.

We need our issuing banks to speed up the rate at which they roll out cards to their customers. Debit cards are likely to dominate as most Africans have little experience of handling credit and credit cards carry big risks for banks. The continent will also need a cadre of acquiring banks prepared to accept online payments for their merchant customers.

It remains difficult as an acquiring bank that wants to enter the e-commerce field has to buy the appropriate licences from card associations (such as Visa and MasterCard), install card processing systems, hire skilled staff to manage those systems while still having a firm grasp of the risk of fraud. It’s easier to find a bank that will issue cards than one that will acquire transactions. This has all led to a big imbalance between supply and demand. This may lead to businesses seeking greener pastures overseas.

As an alternative, smaller businesses often turn to “super-merchants” who make their own merchant facilities available to others but the costs are high and the payment cycles are notoriously bad. It can take as long as 30 days to get your money out, damaging the cash flow of a business.

Payment gateways (payment service providers) link customers, merchants, banks and the card associations and can greatly facilitate the growth of this market by educating merchants, sourcing acquiring banks for them and managing their relationships with those banks. In this regard, businesses and the government will have to step up to the plate, pressuring banks to modernise and create opportunities. After all, 1-billion potential consumers is a market too large to ignore.

• Harvey is founder and MD of PayGate

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South Africa: Jamaica Endorses the Establishment of BRICS-Led Development, South African Government (Pretoria) via All Africa, Bank 9 November 2012

press release

The government of Jamaica has come up in support of the establishment of the BRICS-led Developmental Bank. Jamaican Minister of Foreign Affairs and oreign Trade, Senator Arnold Joseph Nicholson, told the Minister of Trade and Industry, Dr Rob Davies during their bilateral meeting in Jamaica today that a BRICS Bank was good for Jamaica and that his country was in support of it.

South Africa will host the fifth BRICS Summit in March next year and among the key decisions expected to come out of the summit is the formation of a BRICS Development Bank. BRICS is an acronym for the grouping of the emerging economies, which include Brazil, Russia, India, China and South Africa.

The two Ministers agreed that the BRICS Bank should play a role in mobilising resources for infrastructure and sustainable development projects in BRICS and other Emerging Economies and Developing Countries (EMDC). They also said that the Bank was not intended to replace the International Monetary Fund and the World Bank. According to them, the BRICS-led Developmental Bank will complement the two institutions.

Minister Davies said that the importance of South Africa’s membership to BRICS was not just for South Africa, but for the African continent and emerging economies. Nicholson added that Jamaica was proud to be associated with South Africa and to see that the Caribbean economic bloc, the Caribbean Community and Common Market (Caricom) was included in the South African agenda. Jamaica is a member of Caricom, which consists of 15 countries that are located in the Caribbean Sea.

“Next year you are going to assume the chairperson of BRICS and it seems to me you are not only thinking of South Africa in a traditional way of doing things. You are also looking for an expansion of opportunities and diversifying trade. We are pleased to see that Jamaica and Caricom are within that category of opportunities,” said Minister Nicholson.

Minister Davies is in Jamaica on a two-day visit to discuss trade relations between the two countries. The two ministers also agreed that there would be a South African business delegation to Jamaica sometime next year.

Davies’s visit to Jamaica follows President Jacob Zuma’s state visit in August this year.

 

Obama second term: What it means for Africa, Andrew Harding, Africa correspondent, BBC, 7 November 2012

Some people on this continent expected more from the son of man who grew up herding goats in a village in western Kenya.

President Barack Obama made only one, cursory trip to sub-Saharan Africa during his first term, and at the time made it fairly clear that he would not be smothering the continent with attention.

“Africa’s future is up to Africans,” he said in Ghana, in a speech that quietly acknowledged the limitations of American influence in a region that now trades more with China than the US.

So how much will change in Mr Obama’s second term?

That question was, perhaps understandably, barely mentioned in an election campaign that focused on pressing domestic issues and the Arab uprisings.

In his victory speech, Mr Obama again made only passing reference to “a decade of war” and to “people in distant nations… risking their lives right now just for a chance to argue about the issues that matter, the chance to cast their ballots like we did today”.

Behind the scenes US diplomacy will no doubt continue to be furiously in demand.

No ‘Obama doctrine’

In the first term, the focus was on headline-hogging conflicts in Ivory Coast, Somalia, Sudan and South Sudan and even a close-run election in Zambia.

The start of the second term is likely to be preoccupied with more of the same: International efforts to remove al-Qaeda-linked rebels from the north of Mali – by force or negotiation or both – and efforts to ensure that Zimbabwe and Kenya avoid repeating the violence that wrecked their last elections.

If Kenya pulls off a free and fair vote, expect a fairly prompt visit to Nairobi by Air Force One.

So far, there is no sign of a grand “Obama doctrine” for Africa – and perhaps that is a good thing given the diversity and complexity of the continent.

Mr Obama has left it to others to warn about the dangers posed by an insatiable China.

But his second term may give him an opportunity to move away from the distorting, “war on terror” preoccupations of Mali and Somalia, and focus on the broader issues – trade in particular – that he raised three years ago in Ghana.

 

Africa’s longets serving leaders, BBC, 6 November 2012

• 33 years: Teodoro Obiang Nguema Mbasogo – Equatorial Guinea, took power in a coup in August 1979
• 33 years: Jose Eduardo dos Santos – Angola, took over after death of the country’s first president in September 1979
• 32 years: Robert Mugabe – Zimbabwe, won the country’s independence elections in April 1980
• 30 years: Paul Biya – Cameroon, took over after resignation of the country’s first president in November 1982
• 26 years: Yoweri Museveni – Uganda, became president after his rebel group took power in January 1986

 

Malawi suspends laws against homosexual relationships, BBC, 5 November 2012

Malawi has suspended laws against same-sex relationships pending a decision on whether to repeal the legislation, the justice minister has said.

Police have been ordered not to arrest or prosecute homosexuals until parliament has debated the issue, said Ralph Kasambara.

At present, homosexual acts carry a maximum sentence of 14 years in jail.

Some Western leaders have suggested they would cut aid to African countries failing to recognise gay rights.

Homosexuality is illegal in most African nations and remains a controversial topic in Malawi’s traditionally conservative society.

One of Malawi’s most influential traditional leaders, Chief Kaomba, has urged the government not to let parliament change its laws on homosexuality.

“This is against our culture,” he said.

Read more at Anti-gay laws suspended in Malawi

 

Nigeria: PhD, MBA Holders Apply as Truck Drivers at Dangote Group, By Senator Iroegbu, This Day via AllAfrica, Abuja, 3 November 2012

The Chairman and Chief Executive Director of Dangote Group, Alhaji Aliko Dangote has made a shocking disclosure that PhD and MBA Holders were among over 13,000 applicants who applied for the recent Graduate Executive Truck Driver in his company.

Dangote disclosed this Thursday evening during a mentorship chat with World Bank Youth Forum (WBYF) Coordinator, Mr. Rotimi Olawale with the support of the World Bank Country Director, Ms Marie Francoise Marie-Nelly.

Speaking to the surprised youthful audience, the business mogul said that the company only needed 100 drivers but was surprised to receive over 13000 graduate applicants and amongst them were about six Phd, 65 MBA, 649 Masters and over 8, 460 Bachelor degree holders.

He said what surprised him most was not the sheer number of the applicants but the quality and calibre of those that applied who equally graduated from reputable higher institutions.

“All these things are verifiable, and they all graduated from reputable institutions which is satisfactory; and our plan is to eventually make them self dependent”, he said.

“Despite the fact that the drivers get trip allowances on each trip along with their salaries, the arrangement is that they will own the trucks at no interests or repayments after they must have reached 300, 000 kilometres, which is about 140 trips from Lagos to Kano and a hard working driver can complete in two years, while lazy ones can take maximum of four years”, he explained.

Speaking further, Dangote stated that his company is already one of the largest conglomerates in Africa, and disclosed that the group’s five-year target is to reach a net-worth of $75 billion capitalisation and among the top 100 companies in Africa.

He assured that the group, which have diversified into various trading and manufacturing subsidiaries can achieve the set target with just three of them including Dangote Cement, Dangote Sugars/Salt, and Dangote Flours.

The business icon used the opportunity to advise the youths to be focused, forthright and that determination to succeed with integrity is the key to a sustainable wealth.