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Africa in world’s first blockchain bank transaction

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A trade finance transaction between the Seychelles and Ireland, via Barclays Africa, could herald a new era in financial technology.

Africa was at the forefront of a major technology landmark this week as Barclays Africa and its UK parent company Barclays plc completed the world’s first trade finance transaction using blockchain technology.

The trade, between Ireland and the Seychelles, was based on a new technology platform developed by Wave, an innovative start-up company that went through the Barclays Accelerator programme powered by TechStars in New York last year. The bank says it could herald a new era of simpler, faster and safer trade finance.

While companies around the world are looking for ways to improve trade finance transactions using the speed and security offered by blockchain technology, this is the first time it has been achieved in a live trade. Because of the involvement of Barclays Africa, additional pilot projects involving African clients are likely as the technology is developed and adapted.

The pilot trade involved a letter of credit transaction between Seychelles Trading Company Ltd and Ornua (formerly the Irish Dairy Board), clients of Barclays Africa and Barclays UK respectively. It used the Wave technology platform to transfer the electronic Bill of Lading (“eB/L”), with the funds sent via Swift.

The Wave application allows all stakeholders on the supply chain to send, receive and track an eB/L as well as upload and send related documentation. The application is linked to a distributed ledger which securely records and verifies the ownership and authenticity of the documents. This eliminates many of the current inefficiencies in international trade.

The Global Alliance for Trade Facilitation estimates that “7% of the global value of trade is absorbed by the cost of documents alone”,  which means companies around the world stand to save significant costs and time, with the shipping industry and financial institutions expected to be some of the biggest beneficiaries.

George Wilson, Head of Africa Trade Financial Institutions, says that “While trade finance is ripe for innovation, it has been a difficult area to digitise because every unique trade involves numerous parties – importers, exporters and banks at either end, shipping carriers and customs officials – and they all have to be supportive and comfortable with the technology.”

Barclays Africa project manager for the pilot, Kelly Parkhurst, said the successful Seychelles pilot trade would accelerate interest in the Wave technology.

“The Wave application is simple to use, and their team has a long term vision and strategy that sets them apart from other start-ups playing in this field,” she said.

Given the speed of technological advances and the global interest in the Wave product a full commercial rollout of the application might happen sooner than originally anticipated. The key to adoption is in an agile and highly collaborative approach, says Parkhurst.

James Scott, Head of Digital at Corporate and Investment Banking for Barclays Africa, said the successful pilot trade was an example of the technological advances taking place across Africa.

“We have been taking a leading role in helping to develop products and investigate technologies that will bring efficiencies and cost savings to Africa. This includes blockchain, which has the potential to fundamentally change the way certain businesses operate.”

“Barclays Africa was the first African bank to join the R3 Blockchain consortium, which includes some of the world’s biggest financial institutions investigating the uses of blockchain technology. We nominated our Seychelles client for this first pilot and could involve other African trade finance clients, and other banks with clients in Africa, in future tests.”

Temi Ofong, Chief Executive – Corporate and Investment Banking Africa (Excluding South Africa) and Head of Global Finance and Transactional Banking at Barclays Africa, said Africa continually provides examples of new technology leapfrogging over existing and often outdated systems.

“This technology solves a lot of issues for everyone involved in trade finance. It reduces risks such as fraud, it prevents forgeries of documents, and it eliminates a huge amount of paper work. Importantly, it saves a lot of time – typically these documents take anywhere from 2 to 10 working days to be couriered from party to party. Now it can be done electronically in hours or minutes, depending on the back end processing.”

Both Seychelles Trading Company and Ornua were excited about the change the Wave application could bring to the trade industry, CEO of Seychelles Trading Company, Veronique Laport commented that “The allure of Wave is in its simplicity. It’s easy to operate and simply reduce paper based transactions in the international trade. An industry wide roll out of such an application will greatly benefit any Company dealing with imports or exports.”

David O’Rourke, Group Trade Finance Manager at Ornua Co-operative, said:  “Moving to paperless trade would be hugely beneficial in supporting the supply chain, through reduced costs, error free documentation, and fast transfer of original documents to our customers worldwide.”

Gadi Ruschin, CEO at Wave said: “Effective use of blockchain technology really can have a huge impact on the future of trade. By adopting our system, trade can be done more easily and more cheaply while providing a simple and friendly user experience without changing existing workflows.

We thank all participants for joining our live pilot and for taking the first steps towards paperless trade. Barclays has been a tremendous support in getting us to this important milestone and we look forward to engaging in more industry collaborations as the application progresses to the next stage.”

Africa News

Africa phones go flat

Africa’s mobile phone market declined 2.1% quarter on quarter in Q3 2018 according to the latest figures from IDC.

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The global technology research and consulting firm newly released Quarterly Mobile Phone Tracker shows overall shipments for the quarter totalled 52.6 million units, with feature phone shipments falling 2.7% QoQ and smartphone shipments declining 1.3% over the same period.

Transsion brands (Tecno, Infinix, and Itel) led the feature phone space in Q3 2018, with a combined unit share of 58.2%. Nokia was next in line with 11.7% share. Transsion, Samsung, and Huawei dominated the smartphone space with respective unit shares of 34.9%, 21.7%, and 10.2%. However, in value terms, Samsung led the smartphone market with 37.2% share, followed by Transsion (21.0%) and Huawei (13.0%).

There were differing fortunes in the region’s three major markets, with Nigeria suffering a heavy 11.6% QoQ decline in mobile phone shipments, while South Africa and Kenya saw respective QoQ growth of 8.5% and 7.9% in Q3 2018.

“The decline in Nigeria stemmed from a slowdown in government spending, ongoing warfare in the country’s northern states, and market uncertainty in the lead up to elections,” says George Mbuthia, a research analyst at IDC. “In South Africa, the market’s growth was spurred by the penetration of low-end devices from brands such as Mobicel, Mint, and Nokia, while the launch of entry-level smartphones helped drive growth in Kenya despite increases in taxes and fuel prices placing a significant burden on disposable income in the country.”

While feature phones remain steadfastly popular across Africa, particularly in more rural areas, consumers are increasingly being attracted by smartphone offerings from Chinese brands such as Xiaomi, Oppo, and Huawei, which are actively targeting feature-oriented customers at more economical price points.

“There is a new wave of Chinese brands aggressively pursuing growth opportunities in the region, while the more-established Huawei is also accelerating its marketing efforts and expanding its distribution budget,” says Ramazan Yavuz, a research manager at IDC. “These brands have quickly progressed along the learning curve and evolved their offerings to perfectly reflect the realities of the region by addressing the diverse pricing and feature needs of the consumer base.”

Looking ahead, IDC expects Africa’s overall mobile phone market to reach 58 million units in Q4 2018, spurred by the festive season and online consumer events such as Black Friday. The introduction of more affordable smartphones in the African market will help drive progress in this space over the coming quarters, while the share of feature phones will decline steadily as the transition to smartphones gathers momentum.

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Mobile money to cross borders

Orange and MTN launch pan-African mobile money interoperability to scale up mobile financial services across Africa.

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Two of Africa’s largest mobile operators and mobile money providers, Orange Group and MTN Group, today announced a joint venture, Mowali (mobile wallet interoperability), to enable interoperable payments across the continent. Mowali makes it possible to send money between mobile money accounts issued by any mobile money provider, in real time and at low cost.

Mowali will immediately benefit from the reach of MTN Mobile Money and Orange Money, bringing together over 100 million mobile money accounts and mobile money operations in 22 of sub-Saharan Africa’s 46 markets. Mowali is ready to enable interoperability between digital financial service providers beyond MTN and Orange operations and markets, to support the existing 338 million mobile money accounts in Africa.

Mowali is a digital payment infrastructure that connects financial service providers and customers in one inclusive network. It functions as an industry utility, open to any mobile money provider in Africa, including banks, money transfer operators and other financial service providers.

The objective of Mowali is to increase the usage of mobile money by consumers and merchants.  Mowali enables money to circulate freely between mobile money accounts from any operators in all countries.  From the customer’s point of view, this means “I can pay or receive money anywhere from my mobile account regardless of my operator”. The system will unlock further innovation in the digital financial space within the continent. 

For Stéphane Richard, Chairman & CEO of Orange, “by providing full interoperability between platforms, Mowali will provide an important step forward that will allow mobile money to become a universal means of payment in Africa. Increasing financial inclusion through the use of digital technology is an essential element in furthering the economic development of Africa, particularly for more isolated communities. This solution embodies Orange’s ambition to be a leading player in the digital transformation of the continent. By joining forces with another of Africa’s market leaders, MTN, we aim to accelerate the pace of this transformation in a way that will change the lives of our customers by providing them with simpler, safer and more advantageous services. “

“One of MTN’s goals is to accelerate the penetration of mobile financial services in Africa, Mowali is one such vehicle that will help us achieve that objective. Furthermore, co-operation and partnerships that help us accelerate the pace of development and overcome some of the scale, scope and complexity of challenges that society faces are key. This partnership with Orange is therefore an important step in helping us play a meaningful role in supporting the United Nations’ Sustainable Development Goals related to eliminating extreme poverty and enhancing socio-economic development in the markets we operate in and beyond. Thus giving our customers access to a bright, digital future.” said Rob Shuter, Group President and CEO of MTN.

The GSMA supports the Mowali initiative as interoperability at this scale is a key accelerator for both financial inclusion and Mobile Money usability across Africa.  “Today, there are over 690 million mobile money accounts around the world. Mobile money services have become an essential, life-changing tool across Africa, providing access to safe and secure financial services but also to energy, health, education and employment opportunities. The creation of Mowali will help to further transform mobile financial services throughout the African region. It demonstrates the mobile industry’s continued leadership and commitment to driving financial inclusion and economic empowerment through industry collaboration. The GSMA is proud to support its development,” said Mats Granryd, Director General, GSMA.

“Interoperability of digital payments has been the toughest hurdle for the financial services industry to overcome, in support of financial inclusion. With Mowali, Orange and MTN deliver a solution that will enable them, and other companies, to scale digital financial services across Africa, faster, to everyone—including the poor,” said Kosta Peric, deputy director of Financial Services for the Poor, at the Bill & Melinda Gates Foundation “This is a signal that a new wave of innovation, which can help alleviate poverty and drive economic opportunity, is coming. We’re pleased to see an implementation of Mojaloop—an open source payment platform available to operators across the sector—help achieve that.”

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