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Africa can lead in digital

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GORDON GREYLISH, VP, Sales and Marketing Group General Manager, Governments and World Ahead Division, Intel, discusses how embracing the 3rd industrial revolution will assist in addressing issues like diversifying economies and improving efficiency.

One interesting theme took centre stage during panel discussions at the recently concluded World Economic Forum on Africa in Rwanda; that what the continent needs as much as roads, dams, power plants (although there is still more development required) is a way to embrace technology and infuse digital transformation in all sectors.

It was interesting because when questions such as “how can we diversify our economies” and “how can we improve efficiency” or “how do we prepare our young generations to have jobs” were asked, the answer from a lot of different players including politicians, think tanks, investment organisations and the private sector was the same; embrace the “3rd industrial revolution”; the digital transformation revolution.

With a 350 million strong middle and upper class currently expected to jump to 430 million by 2020, in a 1.3 billion continent by that time, the private and public sector strongly concurred that technology will have a significant impact in modernizing African governments’ in effect creating what I call the next-generation governments.

It’s encouraging that this revolution is already being stirred in small offices and houses across Africa that have wholly embraced mobile communications. Thanks to Kenya’s pioneering M-Pesa, Africa is leading the mobile money revolution and this has already had a noticeable impact on the continent in expanding financial inclusivity.

But mobile technology alone is not enough.

The next logical step should be to harness technology for industrialisation, agriculture and social transformation. The world is entering one of the most exciting eras of technology.  Everyday objects are becoming part of an integrated system of smart devices that are changing the way we live. Opportunities are endless in smart energy power grids, smart cities, smart agriculture, building secure government services and developing a vibrant globally competitive technology industry. Beyond getting more people connected to the internet, making things smart and connected in Africa will allow governments to create opportunities that enhance productivity, improve service delivery, support real-time decision making, solve critical societal problems, and deliver innovative user experiences. These opportunities have the ability to fuel GDP, create new jobs, and boost economies.

I was encouraged to see that the political will to use ICT for economic and social growth abounds in Africa. For instance, over the last decade, Kenya has experienced substantial growth in the ICT sector that is now worth Sh138 billion in GDP. In addition, Kenya’s public service outlets, Huduma Centres, anchored on e-government, have increased efficiency and even won Kenya a United Nations award. The Rwanda government on the other hand saw a 20 percent increase in VAT collections from 2014 to 2015 after introducing e-fiscal devices while the Nigerian government saved more than $1B through the introduc­tion of digital IDs for public servants.

As governments continue to use ICT, they will gather a lot of data and in the modern world, data is the new oil. The next big thing after the big thing will be for governments to analyse this data, which will then help in detecting trends, increasing efficiency, reducing costing and, as it were, opening new business opportunities in transportation, power supply, agriculture, social welfare or even security provision. The private sector is ready to help governments digitise operations. Indeed, there are already efforts towards this. Smart Africa, African Development Bank and Intel Corporation, for instance, are finalising a Digital Government Blueprint. This is a framework that will provide guidance and systematic steps for governments to tap the power of ICT and build digital infrastructure that will help transform how they operate and delivers service to their citizens.

With such a blueprint, there is no room for guess work. It will enable governments to develop a National ICT policy aligned to the national priorities of the country and provide a measurable plan to enable everyone to participate in the digital economy and reap its benefits.

The best starting point is automating internal government, whether external services or internal operations. Second is developing an electronic ID system at the national level, which provides the foundation for securing identities, protecting privacy, and enabling trusted e-services.

The other critical area thing is having an interactive government portal with open application programme interface (API). Here, a government can partner with private sector to develop additional secure services through an open API. The government should then create cashless societies through digital payments to reduce the cost of doing business and increase revenues by having visibility of all transactions. The Nairobi County Government in Kenya has successfully digitised payments for parking and licences. This has not only increased collections, but also reduced physical interactions that encourage corruption.

Last but not least are e-government services like e-tax, licenses and registrations, e-parking, smart city services, digital signatures, and more. The e-government portal will provide high quality, timely and accurate data and services in a secure yet transparent and accountable manner.

It was not surprising that the recent AfDB annual general meeting in Lusaka would also amplify ICT. In fact, Africa Development Bank and World Bank Africa have changed their priorities into transformation through ICT, as a catalyst of economic growth, sustainability and equality and created special funds to invest in the digital transformation of Africa.

AfDB announced a $5 billion fund focused on opening opportunities for 50 million young people in Africa through skills development and job creation in Agriculture, Industry and ICT sectors. With the current political goodwill, I believe a smart Africa can be achieved by harnessing the ICT revolution.

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VoD cuts the cord in SA

Some 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.

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That’s according to GfK’s international ViewScape survey*, which this year covers Africa (South Africa, Kenya and Nigeria) for the first time.

The study—which surveyed 1,250 people representative of urban South African adults with Internet access—shows that 90% of the country’s online adults today use at least one online video service and that just over half are paying to view digital online content. The average user spends around 7 hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.

Consumers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television. People aged 18 to 24 years spend more than eight hours a day watching video content as they tend to spend more time with free digital video than people above their age.

Says Benjamin Ballensiefen, managing director for Sub Sahara Africa at GfK: “The media industry is experiencing a revolution as digital platforms transform viewers’ video consumption behaviour. The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption.”

The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services. Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still sometimes watch content on disc-based media.

“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research & regional business development at GfK Sub Sahara Africa. “Among most demographics, usage of paid online content is incremental to consumption of linear television, but there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”

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New data rules raise business trust challenges

When the General Data Protection Regulation comes into effect on May 25th, financial services firms will face a new potential threat to their on-going challenges with building strong customer relationships, writes DARREL ORSMOND, Financial Services Industry Head at SAP Africa.

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The regulation – dubbed GDPR for short – is aimed at giving European citizens control back over their personal data. Any firm that creates, stores, manages or transfers personal information of an EU citizen can be held liable under the new regulation. Non-compliance is not an option: the fines are steep, with a maximum penalty of €20-million – or nearly R300-million – for transgressors.

GDPR marks a step toward improved individual rights over large corporates and states that prevents the latter from using and abusing personal information at their discretion. Considering the prevailing trust deficit – one global EY survey found that 60% of global consumers worry about hacking of bank accounts or bank cards, and 58% worry about the amount of personal and private data organisations have about them – the new regulation comes at an opportune time. But it is almost certain to cause disruption to normal business practices when implemented, and therein lies both a threat and an opportunity.

The fundamentals of trust

GDPR is set to tamper with two fundamental factors that can have a detrimental effect on the implicit trust between financial services providers and their customers: firstly, customers will suddenly be challenged to validate that what they thought companies were already doing – storing and managing their personal data in a manner that is respectful of their privacy – is actually happening. Secondly, the outbreak of stories relating to companies mistreating customer data or exposing customers due to security breaches will increase the chances that customers now seek tangible reassurance from their providers that their data is stored correctly.

The recent news of Facebook’s indiscriminate sharing of 50 million of its members’ personal data to an outside firm has not only led to public outcry but could cost the company $2-trillion in fines should the Federal Trade Commission choose to pursue the matter to its fullest extent. The matter of trust also extends beyond personal data: in EY’s 2016 Global Consumer Banking Survey, less than a third of respondents had complete trust that their banks were being transparent about fees and charges.

This is forcing companies to reconsider their role in building and maintaining trust with its customers. In any customer relationship, much is done based on implicit trust. A personal banking customer will enjoy a measure of familiarity that often provides them with some latitude – for example when applying for access to a new service or an overdraft facility – that can save them a lot of time and energy. Under GDPR and South Africa’s POPI act, this process is drastically complicated: banks may now be obliged to obtain permission to share customer data between different business units (for example because they are part of different legal entities and have not expressly received permission). A customer may now allow banks to use their personal data in risk scoring models, but prevent them from determining whether they qualify for private banking services.

What used to happen naturally within standard banking processes may be suddenly constrained by regulation, directly affecting the bank’s relationship with its customers, as well as its ability to upsell to existing customers.

The risk of compliance

Are we moving to an overly bureaucratic world where even the simplest action is subject to a string of onerous processes? Compliance officers are already embedded within every function in a typical financial services institution, as well as at management level. Often the reporting of risk processes sits outside formal line functions and end up going straight to the board. This can have a stifling effect on innovation, with potentially negative consequences for customer service.

A typical banking environment is already creaking under the weight of close to 100 acts, which makes it difficult to take the calculated risks needed to develop and launch innovative new banking products. Entire new industries could now emerge, focusing purely on the matter of compliance and associated litigation. GDPR already requires the services of Data Protection Officers, but the growing complexity of regulatory compliance could add a swathe of new job functions and disciplines. None of this points to the type of innovation that the modern titans of business are renowned for.

A three-step plan of action

So how must banks and other financial services firms respond? I would argue there are three main elements to successfully navigating the immediate impact of the new regulations:

Firstly, ensuring that the technologies you use to secure, manage and store personal data is sufficiently robust. Modern financial services providers have a wealth of customer data at their disposal, including unstructured data from non-traditional sources such as social media. The tools they use to process and safeguard this data needs to be able to withstand the threats posed by potential data breaches and malicious attacks.

Secondly, rethinking the core organisational processes governing their interactions with customers. This includes the internal measures for setting terms and conditions, how customers are informed of their intention to use their data, and how risk is assessed. A customer applying for medical insurance will disclose deeply personal information about themselves to the insurance provider: it is imperative the insurer provides reassurance that the customer’s data will be treated respectfully and with discretion and with their express permission.

Thirdly, financial services firms need to define a core set of principles for how they treat customers and what constitutes fair treatment. This should be an extension of a broader organisational focus on treating customers fairly, and can go some way to repairing the trust deficit between the financial services industry and the customers they serve.

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