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Africa a long way from connecting everywhere

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The African continent is still being marked by a lack of pervasive connectivity due to outdated infrastructure as well as delayed decisions around the introduction of 3G and 4G technologies, says MOHAMED ABDELREHIM, Head of Solutions and Business Development for Nokia MEA.

Many African countries are also going through geopolitical changes, prioritising areas other than ICT for investment to mobilise their countries. According to Mohamed Abdelrehim, Head of Solutions and Business Development for Nokia in the Middle East and Africa market, there has, however, been a shift towards providing 4G licenses without expecting substantial license fees.

“Generating quick sales by overpricing the license fees has a short-term benefit for governments. Their mid to long term goals should be around driving connectivity and accelerating the telecommunications sector, as it drives job creation and has a much bigger impact,” he says. “Once you establish a new network, you trigger different market sectors. So, accelerating the telecommunications sector automatically generates more jobs and this, in turn, drives innovation and the potential of extending connectivity nationwide including the rural areas, as the cost of MB will be reduced with the 4G compared to 2G/3G.”

Abdelrehim says that if this is delayed, all the segments relating to telecommunications will be held back from growing and generating jobs and the continent will lag behind the rest of the world in introducing new solutions, as there will not be enough connectivity, bandwidth or the required handsets to introduce those services. “Accordingly, it delays GDP growth, especially in the SME segment. If you look at Europe and Asia Pacific right now, the biggest economy segments which are benefiting from telecommunications infrastructure are basically the SMEs,” he says.

Smart city solutions, including eHealth and eLearning, are also impacted. “These solutions are dependent on services that are provided via remote connectivity. So, if you don’t have the right telecommunications infrastructure you will not be able to introduce those services. This again has a direct impact on the SME segment, which ultimately will slow down GDP growth.”

Abdelrehim says despite the relatively gloomy outlook, they are seeing some positive events unfolding on the continent. “Nokia has been selected as the strategic infrastructure provider to roll out a smart city in partnership with the Government of Rwanda. As part of the project rollout, the Government of Rwanda will invest in network connectivity and sensor deployment in different applications, which will serve the local citizens in public safety, waste management, utility applications and healthcare to name a few. “It is projects of this nature, supported and driven by government, that will make a real difference in enhancing people’s lives, creating jobs and improving economies – in this case, the economy of Rwanda. The Ministry of Youth and ICT in Rwanda believes that through this project, they will not only improve people’s day to day lives with better services and security, but they also anticipate long-term positive socio-economic benefits for the people in Rwanda. Furthermore, they also plan to share their experience with other countries in Africa.”

He says this initiative clearly demonstrates that Rwanda has the political mandate to provide the latest and best services for citizens. “Once the political mandate is in place, the next step is to partner with the right entities such as the Smart African and key vendors that can implement innovative solutions that can ultimately be replicated in other African countries as well. This, in turn, will generate more jobs in different segments and accelerate the introduction of more services, especially when it comes to learning. The key here is to address those pain points that are specific to each country.”

Abdelrehim says this lies at the heart of connecting the unconnected in Africa. “In many of the African countries, governments see it as their political mandate to connect all their citizens and a human right for every citizen on the continent to have access to broadband. Already there are several discussions underway with key entities such as UNESCO and vendors, such as Nokia to investigate the right solutions to connect the unconnected. That said, we do need the political blessing for us to bring our business models, solutions and success stories to make pervasive broadband a reality.”

He adds that while organisations have a mandate to generate revenue, they also have a social responsibility to address the social needs of people on the continent. Nokia recently sponsored and participated in CodeBus Africa, a 100-day tour connecting Finnish and African innovators as part of Finland’s official 100th anniversary celebrations. The CodeBus Africa journey spanned ten countries in total – Ethiopia, Ghana, Kenya, Mozambique, Namibia, Nigeria, South Africa, Tanzania, Uganda and Zambia.

The aim of the project was to boost grassroots level teaching of computer programming, particularly among girls, and to contribute to long-term efforts to promote quality education, youth empowerment and employment. “The project consisted of creative coding workshops, most of which were run in township communities. Learners paired up to produce their own song with the open-source programming platform Sonic Pi – a tried-and-true curriculum developed by a Finnish technology education company and project partner Mehackit,” says Abdelrehim.

Nokia is also currently focusing on the non-carrier segment to drive acceleration of the ecosystem. “We are engaging with governments and universities and focusing very strongly on innovation and smart cities, to enable us to bring the latest use cases to Africa. At the same time, we would like to stimulate local markets through key discussions and by executing hackathons across the continent as these result in innovative solutions to local pain points that can make a real difference to people.” He says that while there are generic use cases around innovation taking place in Europe, these might not necessarily meet the needs of the continent. “That is why we are taking a bottom up approach in trying to help people bring their ideas so that we can assist them in turning those ideas into commercial products and solutions. That way we are not only solving real problems on the African continent, but we are also making a meaningful contribution to people’s lives and driving innovation to further stimulate economic growth.”

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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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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