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World will wake to Africa

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The tech industry is constantly changing and EDWARD LAWRENCE, Director of Business Development at Workonline Communications, believes that there are huge changes in store for Africa, particularly related to the growth of the Internet.

The cutting edge nature of the tech industry means that constant change is a certainty. I do believe that the changes in store for Africa in the near future, particularly related to the development of the Internet in the region, are truly revolutionary. Here are some of the trends that I think will shape the future of the internet on the continent in the next little while.

The world is waking up to Africa

Having attended several industry related conferences across the world in recent months, in places such as Marrakech, New Zealand, California and even Hawaii, it is clear that global attitudes towards Africa as a prospective market are changing.

Generally, market entrants have been overwhelmed by the success of their expansions into Africa. Amongst these, international online giants such as Google, Microsoft, Netflix and Akamai who are peering in South Africa seem to have been very successful. This trend is set to assist in lowering the cost of Internet access for local ISPs. Instead of them having to pay to pick up content from these networks from other regions (usually Europe), they can now pick it up at internet exchanges in South Africa such NAP Africa, JINX, CINX or DINX at very low rates, or even free of charge.

South Africa’s healthy Internet exchange (IX) ecosystem is, as will hopefully be the trend with less developed markets in the region, encouraging deregulation and lowering the cost of services for end users.  With the establishment of IXs, ISPs can reduce their costs and hence invest more in expanding their networks and gaining market share. Once content networks realise that they can connect with many ISPs with many end users in a single location at reasonable costs, they are encouraged to develop in the region. As this process occurs, it usually attracts further investment in the industry, draws revenue away from the incumbents, and opens the market for innovative new entrants.

Demand will increase and must be met

As more and more people connect to the Internet across the continent, the domino effect picks up pace and demand for Internet services increases. This increase in demand is coupled with high expectations from a quality and speed perspective by newcomers to the Internet (often regardless of the actual benefit of the additional speed to the user). Interestingly, we found that people living in South African metropoles often have higher expectations than people living in Europe when it comes to the quality of an internet browsing experience through their mobile network operator.

This is because quality of Internet and connectivity is a frequent discussion point here, mainly due to the poor state this market was in not so long ago. It is used as a marketing tool, and therefore front of mind for the end consumer. Consumers have been conditioned to be unhappy if they do not have superfast Internet. The demand is not as high yet in some other African countries, or more rural areas, but it is definitely developing at a rapid and steady pace.

Women first

Another interesting trend I have noticed of late is that there are very few females in the industry in sub-Saharan Africa. In North Africa, for example, attending an IPv6 training session in Tunisia, the room was filled with women, and there were very few men present. If you go to an IPv6 training session in South Africa, however, it is a rare occurrence to see a woman in attendance. I foresee a mass entry of women into the technical side of the industry in the near future as the social barriers to entry are torn down.

We see this trend manifesting in Europe, where many organisations made up of women working together have sprung up and have now garnered a lot of strength in the European tech community. We support these movements in Europe wholeheartedly, and we are currently investigating ways to recreate this trend here and elevate women’s roles in the local market.

The full value of IPv6 to be unleashed

Everything that connects to the Internet needs an Internet protocol address, a string of numbers, to do so. Before, these addresses were in an Internet Protocol version 4 (IPv4) format, but this format didn’t allow for enough addresses and they are coming close to exhaustion.  IPv6 is the latest version of the Internet Protocol, and features a vastly expanded potential number of addresses to provide for the needs of the rapidly growing number of Internet-connected devices and services around the world. In technical terms, the existing IPv4 notation has been extended from 32 bits to 128 bits per IP address.

Workonline is in the process of setting up an advanced IPv6 workshop to be held as often as once a quarter in South Africa, to guide engineers with the deployment of IPv6 on their network, as this is a need that we have recognised within the local industry. At the moment, many engineers have had basic training or exposure to IPv6. They get their addresses assigned from their RIR, they know how it works conceptually, but then they stop. They do not actually deploy it across their access layer because they are frightened by the potential risks involved and often don’t know where to turn to get advice or share thoughts with other engineers who have successfully deployed IPv6 across various types of networks. Attending an advanced IPv6 workshop with globally recognised experts present would allow them to speak more freely and get stuck into the guts of deploying IPv6 on the whole of their networks, unleashing the benefits of this protocol.

As I write this, I’m on my way to Copenhagen to join the RIPE meeting. Workonline partnered with layer 2 Internet Exchange Point (IXP) NAPAfrica, to assist RIPE NCC to gather Internet data that will help network operators gain further visibility into the structure of the African Internet.

With 21 other RRCs at IXPs around the world, until now Africa has been the only continent without a RIPE NCC Route Collector, which means that it has largely been in the dark from the perspective of Internet measurements. The decision to host a route collector is extremely beneficial to operators in the region. The sponsorship of bandwidth for the RRC is in line with our commitment to continue developing the African Internet as a whole. Having access to this data will be beneficial to our clients and the industry, and we are excited to be part of the project.

It is important that the industry continues to look for ways to bring better Internet to the continent through strategic partnerships.

Africa News

Africa’s fintech is migrating

Africa’s fragmented markets and lack of legacy foreign exchange trading infrastructure means that the continent has become a melting pot of fintech activity and innovation, writes TIM HUTCHINSON, Head of Digital for Financial Markets, Standard Bank.

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The evolution to electronic foreign currency trading in Africa, while slow to start, is today gaining tremendous traction. 

In South Africa, only five years ago, almost 90% of foreign currency trades happened over the telephone. Today, despite challenges around illiquidity and complicated political and capital control environments, approximately 75% of trades are conducted digitally, with a mere 25% conducted on the phone. 

With 57.6% of the world’s 174-million active registered mobile money accounts in Sub-Saharan Africa, the continent is becoming a world leader in fintech generally, and in mobile money in particular. As African citizens and business people transact globally, Africa’s highly developed fintech culture is not only deepening on the continent, but is also migrating out of Africa.  

The foreign exchange flows that Africa’s expanding fintech culture supports are very important to the continent’s financial services providers, most of whom are developing fintech capabilities or partnering with the most popular or effective home-grown African fintech’s to ensure that they capture this flow.

Standard Bank has been an integral part of driving this rapid evolution to digital in Africa’s foreign exchange trading landscape.  

In order to function as an effective market maker, we need to source liquidity in market. We also need to, instantly, formulate risk-based pricing in an ever-changing world. Thereafter we need to distribute price. 

In Africa this requires developing solutions that allows retail, corporate and institutional customers to access foreign exchange markets across multiple jurisdictions. At the same time in most markets, “we also need to show central banks what we are doing,” adds Mr Hutchinson. All transactions need to be transparent and electronically traceable so that local authorities are prepared to approve digital trades. 

Today, however, banks are not only expected to provide the systems and networks to facilitate basic transactions but are also required to provide insight and guidance beyond pure execution by offering additional value-based services across research, hedging and, most importantly, settlement capability. Currency research for example, is increasingly a big client requirement. Having on the ground experience and local expertise as well as the ability to deliver this digitally, “differentiates Standard Bank’s distribution capabilities in this regard”. 

In addition, banks are also increasingly required to inform and guide clients through the broader economic, legal and political landscapes in which transactions occur. For example, one of the considerations in developing Standard Bank’s digital capability was how to combine market intelligence and research with real-time pricing, trade execution and post-trade services. Today it is not enough just to execute trades. It is equally important that we advise and inform the broader universe in which trades happen.  

From a technology point of view Regulatory Technology (Regtec), for example, is assisting Africa to manage new regulatory developments in heavily currency-controlled environments. Similarly, the rise in robotic process automation (RPA) and artificial intelligence (AI), “has allowed Standard Bank to develop solutions that leapfrog traditional business problems”. 

Digital trading in Africa is also evolving in its own often very different way. We have found that it is not just a question of importing developed world systems. Our approach with clients is to work with them to help understand their internal needs in terms of governance and operational efficiency. We then partner with clients to develop and implement digital solutions that talk to the heart of their business need. 

Standard Bank’s own Business Online (BOL) platform provides an example of how the bank has built digital transaction capabilities that exactly meet client need. BOL, for example, allows clients to view balances across the continent while making third party currency payments and also supporting general cash management. This kind of broad, business-wide digital cash view and capability puts control back in the hands of the clients while also allowing clients, rather than the bank, to manage their own cash flow.

From an Institutional perspective it’s very important to be able to offer customisable solutions to clients managing money on behalf of their investors. Standard Bank’s investment in Application Programming Interface (API) technology, for example, is tracking exactly its client’s growing ability to build these capabilities into their own systems. 

On the retail side Standard Bank’s SHYFT app – a digital wallet allowing global transactions in USD, EUROS, GBP and Australian dollars has extended this control element to the man in the street. SHYFT has been recognised both globally and locally for its innovation.

Standard Bank presents a very compelling, unique and globally competitive digital trading proposition to local and developed world clients seeking to access Africa. Our footprint across 20 territories – most at different levels of digital development – provides a compelling pan-African proposition for global and local clients alike.

While Africa’s record in digital adaptation and innovation is impressive, the technology part is often the easier part to implement. The human and cultural systems, and client behaviour changes, required to give this digital evolution life – like getting customer analogue systems to start pricing electronically to make trades visible 24/7 – is often a lot harder to achieve than the technology upgrade. In short, bank employees, customers and regulators all need to undergo fundamental cultural shifts in how they do things and understand the world.

It is often these broader cultural and market shifts that Standard Bank as a pan-African bank is called on to advise as clients seek to understand and engage Africa effectively. 

Given the rapid pace of digital evolution within Africa’s varied market, customer, legislative and cultural landscapes, we need to balance customer value and efficiency – and regulatory pressures to be more transparent – with what is, in the long run, best for the market. 

As a pan-African bank inextricably committed to the growth and success of the continent, Standard Bank’s digital journey requires a judicious blend of developed world technology with African insight and innovation. This blend should be capable of balancing customer need and legislative oversight in the development of efficient and inclusive markets that sustain long term growth. 

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Africa News

PC drops 5% in Africa

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The Middle East and Africa (MEA) personal computing devices (PCD) market, which is made up of desktops, notebooks, workstations, and tablets, declined 5.3% year on year in Q1 2018, according to the latest insights from International Data Corporation (IDC). The global technology research and consulting firm’s Quarterly PCD Tracker shows that shipments fell to around 5.7 million units for the three-month period, which represents the lowest quarterly volume recorded for more than six years.

While the overall PCD market experienced a slowdown in Q1 2018, PC shipments recorded healthy year-on-year growth, with both desktops and notebooks gaining traction across the region. “The overall market decline stemmed from falling demand for tablets,” says Fouad Charakla, IDC’s senior research manager for client devices across the Middle East, Turkey, and Africa. “These devices are falling out of favor across the region, with the biggest year-on-year decline seen in Kenya, where a massive delivery for the education section sector that took place in Q1 2017 was not repeated.”

There was a considerable year-on-year decline in PCD shipments to the UAE in Q1 2018, where a significant slowdown in consumer demand was witnessed, in line with IDC’s expectations. “The country had a slow start to the year owing to the introduction of 5% VAT, while April’s edition of the renowned IT and consumer electronics sales event, GITEX Shopper, was cancelled,” says Charakla. “However, this decision was well received by the PCD vendor and channel community as it enables them to focus their efforts on the October edition of this event.”

On the flip side, South Africa’s overall PCD market performed better than expected, with shipments into the country growing year on year. “This was spurred by the country’s improved economic situation and the strengthening of the local currency against the U.S. dollar, making it cheaper for PCs to be imported into the country,” says Charakla. “Meanwhile, February’s announcement of a 1% increase in VAT encouraged market players to ramp up their shipments into the country ahead of its implementation from the start of April.”

Another area of positivity is gaming PCs, which continue to act as a driver for the MEA region’s overall PCD market. “The higher-than-average price points and profit margins associated with gaming PCs is maintaining strong interest among market players in these devices, ” says Charakla.

Looking at the PC market in isolation, all the top five vendors maintained their respective positions in terms of market share when compared to the corresponding quarter of 2017. HP Inc. achieved significant growth in terms of market share to maintain its lead by a significant margin.

Middle East & Africa PC Market Vendor Shares – Q1 2017 vs. Q1 2018

Company

Q1 2017

Q1 2018

HP Inc.

26.9%

31.5%

Lenovo

18.8%

19.3%

Dell

16.4%

14.9%

ASUS

8.6%

8.2%

Acer Group

4.8%

5.1%

Others

24.6%

21.0%

In the tablet market, Samsung remained the clear leader and gained market share as well during the quarter. Lenovo climbed to second position in the market, overtaking both Apple and Huawei, which came in third and fourth place respectively.

Middle East & Africa Tablet Market Vendor Shares – Q1 2017 vs. Q1 2018

Company

Q1 2017

Q1 2018

Samsung

19.0%

21.2%

Lenovo

8.8%

10.6%

Apple

9.6%

10.3%

Huawei

9.0%

10.2%

i-life

6.6%

7.4%

Others

47.1%

40.3%

“The sharpest decline in consumer demand in Q2 2018 is expected in the ‘Rest of Middle East’ sub-region, where recently re-imposed U.S. sanctions against Iran have weakened the country’s exchange rate. Consumer demand in Turkey, the region’s largest single market, will also decline considerably due to the uncertainty and instability surrounding the upcoming elections in June. Turkey’s currency has also weakened to new lows against the U.S. dollar, making personal computing devices costlier for home users.”

In more positive news, a number of large education deals, primarily for notebooks, are expected to be delivered in Pakistan, the UAE, and Qatar over the course of the year. However, in the longer term, IDC expects the MEA PCD market to continue shrinking in shipment terms, with slate tablets declining the most rapidly of all the various PCD products.

IDC’s Shipment Forecast for Middle East & Africa PCD Market

Product Category

2017

2018

2022

CAGR 2017–2022

PC

12,310,198

12,902,095

12,950,311

1.02%

Tablet

11,354,777

9,646,870

8,508,807

-5.61%

Total

23,534,986

22,428,025

21,307,495

-1.97%

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