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Nigeria to spend $5.3bn on IT

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IT spending in Nigeria will top $5.3 billion in 2016 as organizations embrace digital transformation initiatives in a bid to streamline their costs and bolster their flexibility.

This is according to global technology research and consulting services firm International Data Corporation (IDC), which last week hosted an event at Victoria Crown Plaza, Victoria Island, Lagos, to announce a series of ‘IDC FutureScape Predictions’ for the year ahead.

“Some combinations of the technologies of the 3rd Platform – namely mobility, cloud, Big Data analytics, and social business – sit at the heart of most digital transformation efforts across Nigeria,” says Mark Walker, IDC’s associate vice president for Sub-Saharan Africa. “Smart City initiatives, whether greenfield or brownfield, are driving greater adoption of 3rd Platform technologies as well as a deeper paradigm shift on the part of governments, technology users, and vendors. Indeed, the success of Smart City initiatives will play a role in Nigeria’s digital transformation journey in 2016.”

The emergence of the Internet of Things (IoT) ecosystem is another key facet of the digital transformation revolution beginning to take place in Nigeria. IoT applications in the government, retail, transportation, manufacturing, and utilities verticals will offer the greatest growth opportunity for vendors operating in Nigeria, while security is expected to form a key component of any robust digital transformation strategy. And according to Oluwole Abegunde, a telecommunications research analyst at IDC West Africa, cost-optimization efforts and a lack of skills will drive demand for security services in the years ahead, while the proliferation of IoT technologies will push concerns around privacy and physical security to the top of the ICT agenda.

“The adoption of IoT will accelerate the rate of digital transformation in Nigeria as organizations and stakeholders seek actionable insights from the high volumes of data that will inevitably be generated by the proliferation of connected ‘things’ such as mobile devices, wearables, and sensors,” says Abegunde. “These insights will transform the way businesses and government organizations interact with customers, citizens, suppliers, and even employees, helping them to become more agile and innovative than they could have previously imagined.”

Elsewhere across the African continent, public and private sector organizations will shift to tighter, more digitized supply chains in 2016. Regional integration, public-private partnerships, and omni-channel services are expected to accelerate supply chain cohesion, driven by a combination of trade agreements and a reduced reliance on commoditized trade. Babatunde Afolayan, a systems and infrastructure solutions research analyst at IDC West Africa, notes that continued urbanization – together with demographic/social changes – will further drive the need for digital solutions. “eCommerce and mcommerce developments are expected to bolster the African sharing community and mobile, IoT, user experience, security, and analytics will create new experiences and opportunities across the continent,” says Afolayan. “African examples of these trends will become showcases for established and emerging markets around the world.”

IDC’s country manager for West Africa, Bola Adisa, believes that technology in Africa is undoubtedly an equalizer that enables innovation and transparency. “In Nigeria, the democratization of information is preparing the country for a digital future and enabling it to become included in the digital economy,” says Adisa. “While the digital transformation trend signals a positive development for Nigeria’s ICT vendors, a number of macroeconomic factors may nevertheless prevent the ICT market from reaching its full potential. Indeed, a challenging economic outlook, high structural unemployment, electricity supply challenges, and volatile currency fluctuations are all impacting ICT market spend. Despite market headwinds, IDC predicts ICT spend in Nigeria will grow 6.5% year on year in 2016, with mobile devices responsible for much of the increase.”

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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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