Kenyan startup d.Light is never leaving any stone unturned in its quest to scale its business and expand its operations. The startup is the latest on the continent to raise funds. The solar kit solution has just received Sh1.84 billion capital injection from a consortium of lenders to help accelerate its growth in Africa.
A Look At The Funding
The investment came from two responsibility-managed funds: SunFunder, DWM, and SIMA.
The startup hopes to use the funds to expand its product line and enter new markets to reach more customers.
The new capital is coming barely a few months after three European government funds committed Sh4.1 billion into d.Light.
The company said the financing was organized by Inspired Evolution, an Africa-focused investment advisory firm specializing in the energy sector.
d.Light At A Glance
Although started by the Americans Sam Goldman and Ned Tozun, the Kenya-based startup provides solar-powered solutions — ranging from lights, phone chargers, radios, and even televisions — which are sold in over 60 countries.
In April, it opened a regional office and service center in Eldoret, Kenya as part of the company’s expansion strategy to reach and impact 100 million lives globally by 2020.
Located at KIPPS Plaza, Iten road, the office, and service center has been opening daily including weekends and public holidays.
The center offers sales services and after-sales services for d.Light’s products including solar home systems and portable solar powered lanterns.
The startup has 1,000 employees and 3,000–5,000 commissioned agents, is generating about $100 million of revenue a year, and experiencing 40–50% growth annually.
Solar Energy Ventures in Africa
“Significant amounts of capital are required to enable us to continue providing these financing plans for our customers as we grow.
“We are thankful for the continued support of our funding partners to enable us to create a brighter future for the families we serve,” said d.light chief executive and co-founder Ned Tozun in a statement on Monday.
For the startup co-founder and chief executive Ned Tozun the funding by SwedFund, Norfund, and Dutch Development Bank FMO would give d.Light some new impetus to expand into new markets and increase product lines to reach more customers.
This Investment Is A Major Win For A Startup That Had A Humble Beginning
For a startup that started off struggling to raise funds, this is a big moment for it. Early investors in the startup did not believe investing in its high-risk, unproven proposal and hence were uninterested.
“I was someone who doesn’t like public speaking. I’m more of an introverted person; I was like a coder and stuff,” Ned told Forbes in a interview. “So, going out and pitching to venture capitalists, I was so nervous the first times. But, as with anything, if you do it enough, and if you really believe in the business that you’re doing, you’ll get better and better.”
This is after a series of rejection from venture capitalists too.
“You guys will fail. Please don’t waste your life on this,” one investor told them.
The startup came to its turning point when d.light won the Draper Fisher Jurvetson Venture Challenge and earned a $250,000 check from the well-known VC firm.
Inspired by the win, Guy Kawasaki’s Garage Technology Ventures doubled their $250k winnings. Buoyed by this in-pouring of funds, Ned relocated with his wife to China to figure out how to build solar-powered solutions that were affordable, high quality, and at scale. At the same time, his co-founder, Sam Goldman, moved to India to figure out how to sell and distribute the products.
Today, more than a decade since starting d.light, the startup has raised a little over $100 million in equity and debt financing. This is roughly a 50/50 mix of both.
‘‘Having the brand name of Stanford really helped. So did meeting VCs lecturing at school, and cold emailing investors,’’ Ned said.
Of course, once those initial investments came in, fundraising became a lot easier for Ned and his team.
‘‘I always say that, as a founder, you’re swimming in an ocean full of sharks, the sharks being investors. Eventually, one of them is going to bite, and then everyone else will want to bite.
You just need to stay afloat until then. You need to topple that first domino, and then the rest will come,’’ Ned said in the interview.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
21 of the whole 54 African countries are officially French-speaking countries. Africa makes up more than 70% of the world’s total French-speaking population. But how buoyant the startup ecosystem there remains a question. Only about three French-speaking African countries — Rwanda, Senegal, Cote d’Ivoire— have been at the forefront of all investment into the African startup ecosystem in the past two years.
The question is now: why are French-speaking African countries still backward in terms of startup funding?
African startup investment by country
Here are some of the reasons:
Startups In French-Speaking Countries Are Under-Funded Because of Language Barrier
While startup owners are not to blame for the language they speak, it appears however that language is actually a major barrier for most startups in the French-speaking countries. A look at the investment preference of investors and their countries of origin show a majority of investors coming from English-speaking countries, or having the major funds coming from English-speaking countries.
The table below represents the top investment in African startups for the years 2017 and 2018. Consequently, potential francophone entrepreneurs are turned off by lack of funding than their anglophone cousins, as the major financiers in tech are English-speaking investors.
This lack of funding has therefore led to the dearth of developers and designers in francophone Africa. Most resources for startups in Africa(e.g. regional incubators and accelerators, labs, conferences) are mostly in the English-speaking countries.
The Ease of Doing Business In Most French-Speaking African Countries Is Still Poor
The economies of English-speaking African countries are growing faster and tend to have better World Bank Doing Business indicators than their francophone equivalents. Top ten African countries in the latest ease of doing business report include Mauritius, Rwanda, Morocco, Kenya, Tunisia, South Africa, Botswana, Zambia, Seychelles, Djibouti. Data show that from the whole ranking in 2019, French-speaking countries were not doing well in terms of ease of doing business.
However, some governments in the speaking countries appear to have already considered this. For instance, the Ivorian government has developed a Schéma Directeur National to support the TIC, the telecoms regulatory, to simplify the creation of tech companies (Horizon 2020). In Senegal, a startup fund of $50 million, the DER, aims to catalyze entrepreneurship all around the country.
To boost internet connection to enable startups to thrive, the government of Niger Republic awarded the country’s first 4G license to Airtel Niger in May 2018.
Also, Côte d’Ivoire’s tech scene is hot on the heels of Senegal’s. The country’s first tech hub, Akendewa, was launched in 2009 and stayed active throughout the 2010–2011 crisis. The country also has generated promising startups that respond to specific problems faced by Ivoirians, such as Qelasy (an educational tablet for children) and TaxiTracker (a geolocation app to address security concerns with taxis).
“It is the hubs’ job to make sure that the different members of the ecosystem can interact, in order to provide more experience, feedback and networks to the startups. But they are not supported or strong enough at the moment to carry out their mission fully and efficiently. Hubs do need more support,” said Impact Dakar co-founder Aziz Sy.
Some francophone nations are now leading the way when it comes to startup-friendly policies, with Tunisia, Senegal, and Mali among those to have passed or been on the verge of passing dedicated “Startup Acts”. The Senegalese government is now also making direct investments in local tech startups.
Relatively Small Market
Another point investors may be taking into consideration may be the size of the market in the French-speaking countries.
“Investors tend to view most Francophone African markets as too small. In 2016, even after a deep recession, the Nigerian economy was worth US$405 billion. That same year, the ECOWAS markets excluding Ghana and Nigeria, and therefore primarily Francophone countries, only amounted to US$120 billion dollars, less than 30 per cent of the size of the Nigerian economy,” Fayelle Ouane is co-founder and managing director of Mali-based startup support organisation Suguba, which is running the Francophone-focused L’Afrique Excelle programme on behalf of the World Bank, noted.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
The growth of e-commerce has already transformed the retail landscape and with double-digit annual growth predicted into the next decade
Canon, world-leader in imaging solutions, deciphers the importance of the settings and ambiences of physical shops as they become more than just a buying space, an opportunity for the brand to build and maintain relationships with its customers. We know that customers are becoming more and more demanding and that is why brands must be able to quickly develop their concept and this adaptability is made possible thanks to digital printing.
The growth of e-commerce has already transformed the retail landscape and with double-digit annual growth predicted into the next decade, this disruptive force shows no signs of abating. Yet although almost a third of consumers report shopping in-store less often, just under 90% of worldwide retail sales still take place in physical stores, reflecting their enduring appeal for both retailers and consumers.
For retailers, physical stores play a role in sales 79% of the time and excel at converting interest to sales and increasing the value. For consumers, shopping in-store provides things digital cannot; the atmosphere, face-to-face customer service and the ability to see and try products.
From the perspective of the consumer, shopping is about customer experience, not channels. This is why the movement of consumer spending from bricks-and-mortar retail to e-commerce doesn’t mean the end of physical retail. In fact, it is driving the transformation of physical retail into an immersive experience and opening opportunities for specialty print service providers (PSPs).
The new role of physical retail
Most retailers that continue to thrive are those embracing ‘omni-channel’ strategies; focusing on delivering a seamless customer experience across every channel where they have a presence – physical stores, catalogues, e-commerce, mobile, social media and more.
In this omni-channel scenario, physical and digital touchpoints must complement one another to deliver a unified journey. This, combined with customer expectation of greater personalization and preference for experiences over things, is driving a fundamental change in the role of the physical store. Clever retail brands capitalize on their stores’ ability to engage shoppers with the emotional and multi-sensory experiences that are missing from online purchases.
For design professionals and service providers active in retail décor, physical retail’s new role represents an exciting opportunity to create spaces where customers want to spend time.
From functional store to immersive brand experience
‘Retailtainment’ and ‘the experience economy’ are concepts that originated almost three decades ago but have only really begun to transform the retail landscape in the last 10 years. With retailers increasingly competing on the basis of ‘time well spent’ instead of just product or service offering, the retail landscape is moving towards showroom-style environments that encourage consumers to experience products or stores in which cafés, events or workshops invite shoppers to linger.
Cycling brand Rapha, for example, calls its 22 stores around the world ‘clubhouses’. They are cafés that screen live cycling, have programmes of events and rides and also sell the brand’s high-end cycling clothes and accessories. Italian food brand Eataly’s stores provide a space in which people can eat, shop and learn about Italian food, combining groceries and kitchenware with a café, restaurant and cooking school in more than 20 stores globally.
The vital role of décor in an immersive retail
Delivering both atmosphere and sensory appeal, interior décor is an essential consideration when creating an immersive experience that encourages consumers to spend time as well as money in-store. 59% of shoppers want an inviting ambience in-store and 51% of consumers are more likely to buy from brands whose stores are ‘interesting or different’, rising to 63% for consumers aged 18-34.
Driving footfall
Retailers seeking to stimulate repeat visits from consumers and attract new clientele need to refresh store environments regularly to make them visually enticing, keep up with changing fashion trends and maintain the surprise factor to encourage footfall. The flipside is that tired retail interiors can quickly turn off consumers and send them to competitors.
Encouraging dwell time
The décor of physical stores and pop-up retail spaces is becoming an important part of the customer journey. In addition to ensuring that shopping in-store is visually consistent with every other touchpoint where customers interact with a brand, décor has an unparalleled ability to create a welcoming ambience and make a space a pleasant place to spend time. Indeed, unless a brand specifically wants to lead with convenience, the best store designs are those that make consumers want to stay.
This is why we’re increasingly seeing décor being used more to create a branded experience and encourage dwell time than to directly drive sales. If you look at children’s clothing retail, examples run from a life-sized doll’s house in French brand, Bonpoint’s, children’s store to a playground that runs through the displays in Spanish brand, SuperMoments’, Valencia shop. In both these examples, retail décor is simultaneously creating an experience reflecting the ‘personality’ of the brands, and encouraging consumers to spend more time in the brand environment.
Enabling connected experiences
Almost half of the consumers’ inspiration for purchases today comes from social media, but its power is even greater when you consider that the most persuasive source of information for shoppers is recommendations from family and friends – that’s who make up most consumers’ social networks! So it’s no surprise that retailers are trying to engage shoppers on social media while in-store.
Mobile-empowered shoppers are taking more photographs in-store, so retailers are incorporating design features that encourage social sharing – from purpose-built selfie opportunity areas to ‘shareworthy’ fitting rooms. London department store Selfridges, for example, promotes “selfie sticks and Instagram-worthy backdrops” in the fitting rooms of its third-floor Designer Studio. This phenomenon also demands that interiors are regularly updated and kept looking fresh.
The opportunity for print
Retailers need pragmatic solutions that can create a particular ambience or reflect what is ‘trending’, but with minimal disruption and waste and often within tight budget constraints.
This plays to the strengths of digital print in terms of flexibility, turnaround time, cost-effectiveness and sheer diversity of materials. In turn, this creates exciting opportunities for PSPs, whether they come to retail décor from a background producing retail display graphics or bring décor expertise from other segments such as hospitality.
With contemporary media, digital print and finishing technology, PSPs can offer a diverse range of creative and functional retail décor applications from bespoke branded wallpaper and creative pop-up displays and features, to comprehensive retail refits comprising wall coverings, window and floor graphics, and branded surface décor on counter tops, changing room doors and so on.
The PSP’s ability to realize the retail brand owner’s creative vision and ensure that the décor elements can withstand the physical stresses of the retail environment should mean that customized printed décor is a key element in creating more welcoming, immersive and captivating in-store experiences
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Standard Chartered announces the launch of social banking solution for Africa in Kenya, Uganda, Ghana, and Tanzania
Standard Chartered has announced yet another multi-market launch of its digital bank in Botswana, Zambia, and Zimbabwe as part of its digital transformation strategy in Africa. The next wave of digital-only banks follows launches in Uganda, Tanzania, Ghana and Kenya in the first quarter of the year and Côte d’Ivoire in 2018.
The expansion in Africa comes at a time when the continent, with a growing economy and population, is demanding wider access to digital services. The digital banking solution provides Standard Chartered customers across the eight markets with affordable, convenient, fast and easily accessible banking services.
The first-of-its-kind digital bank in Botswana and Zambia offers a truly end-to-end digital account opening experience which has been developed following client feedback to offer a convenient platform to service all their banking needs.
Commenting on the launch, Sunil Kaushal, Regional CEO, Africa, and the Middle East said: “This is a significant achievement for the Bank having now launched digital banks in 8 markets in 15 months of our initial launch in Côte d’Ivoire. The growing population of Africa is demanding faster and more convenient banking and it has been very rewarding to witness increased acceptance and growing demand for our digital products across the continent. We have an exciting pipeline of product launches on this platform which will position us as the premier digital bank in our markets of choice.”
By digitalizing the entire banking experience, customers will be able to enjoy simple, secure, and affordable banking anytime, anywhere. Active customers of the digital bank will also be eligible to receive loyalty benefits and promotions.
In just under 15 months, Standard Chartered has launched its digital banks in eight markets across Sub-Saharan Africa with impressive results. In Côte d’Ivoire the digital bank has exceeded initial expectations with 18,000 new account openings, in Uganda the Bank has seen an eight-fold increase in new account openings, whilst in Tanzania, the Bank has signed up more new customers since launching in March this year than in the whole of 2018.
The Bank is expected to continue its digital expansion in African markets with another launch planned in September for Nigeria.
Launch of social banking with SC Keyboard
In its continued efforts to meet the rising demands of Africa’s young and digitally-savvy population, Standard Chartered has also launched SC Keyboard, which allows customers to access a variety of financial services from within any social or messaging platform without having to open the Banking app. Initially launched in Kenya, Uganda, Ghana, and Tanzania, the solution is a first for the Bank in Africa and will be rolled out to Botswana, Zambia, Zimbabwe and Nigeria throughout the rest of the year.
The keyboard-based banking solution allows clients to transfer money in real-time, pay utility bills and instantly check balances from within any social or messaging platform. The unique digital solution can be configured as the default keyboard on any smartphone, making banking quick and seamless for customers who no longer need to log into their SC Mobile app for basic banking services.
The solution is ideal for the African market, which continues to see a rising number of social media users. According to the Hootsuite and We Are Social Global Digital Report 2019(https://bit.ly/2GcsJhM), in 2018 alone the African continent saw a 12 percent increase in active social media users and a 15 percent increase in active mobile social media users. This is not surprising given that 82 percent of the population have mobile connections.
According to Jaydeep Gupta, Regional Head of Retail Banking, Africa and the Middle East, “Following the additional rollouts of our online retail banks across Africa, SC Keyboard is an important milestone in our digital journey. SC Keyboard was designed with our clients in mind, as users can now pay their bills, view their account balances and transfer money to their friends or family through any social or messaging platform. Increased prosperity has made the African population more financially savvy and many users seek new and easy ways to handle their money. We want our interactions to be simple, intuitive and seamless – with, we will remain committed to leveraging the best technology to bridge digital and human channels and enhance customer centricity and service delivery.”
To enjoy the seamless and easy access to banking by SC Keyboard, clients need to:Have an Android or iOS smartphone phone with fingerprint support
Install SC Mobile app and enable SC Keyboard in the device settings
Select SC Keyboard as your default keyboard and start using it
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Africa’s output grew by 3.4 percent between 2017 and 2018 despite the slowdown in global growth during that period, a new report by the African Export-Import Bank (Afreximbank) has shown.
The African Trade Report 2019: African Trade in a Digital World, launched today in Moscow during the 26th Afreximbank Annual Meetings, states that Africa’s total merchandise trade in 2018 had a value of over $997.9 billion, noting that the continent remained one of the fastest growing regions in the world.
World Trade Organisation estimates show that the volume of global merchandise trade grew by 3 percent in 2018, down from 4.6 percent in 2017.
According to The African Trade Report 2019, the findings highlight the resilience of Africa’s economies to global volatility at a time of rising uncertainty, escalating trade wars and tariffs between the United States, China, and others. The resilience reflects the diversification of Africa’s trading partners in the context of South-South trade, growing fixed investment and public and private consumption, boosted by expanding urban populations and softening inflation. These factors reduce Africa’s exposure to the business cycles associated with individual countries and regions.
The report noted that while the European Union remained Africa’s main continental trading partner in 2018 – accounting for 29.8 percent of total trade – African trade with the South grew significantly over the last decade to account for more than 35 percent of the continent’s total trade in 2018. China and India further consolidated their positions as Africa’s first and second single largest trading partners, accounting for over 21 percent of total African trade in 2018.
Intra-African trade also increased steadily in 2018, growing by 17 percent to reach $159 billion.
The report highlights that Africa has the potential to do more, noting that its contribution to global trade remains marginal at 2.6 percent, up from 2.4 percent in 2017, and that, while intra-African trade rose to 16 percent in 2018 from 5 percent in 1980, it remains low compared to intra-regional trade in Europe and Asia.
The report states that ongoing digitalization is paving the way for a new African economy, with e-commerce platforms and internet penetration expediting transactions, reducing costs and leading to a new generation of transnational digital consumers.
The report urges African governments to further capitalize on the opportunities associated with digitalization, by bolstering regulatory environments and supporting the development of digital ecosystems.
Digitalization, the reports states, can unlock Africa’s potential in driving economic development and the integration of African countries into the world economy. It can also reduce the region’s dependency on raw commodities and natural resources by helping economies diversify into more value-added products that can enhance extra-and intra-African trade.
According to Prof. Benedict Oramah, President of Afreximbank, “It is vital that Africa grasps the economic growth opportunities flowing from the African Continental Free Trade Agreement, growing domestic demand and population, and our ever-closer investment and trading links with emerging partners in the South. We must exert concerted action to ensure that we develop, industrialize and diversify our industries and supporting infrastructure to foster regional integration and participate fully in regional and global value chains.”
In the words of the Chief Economist and author of the report, Dr. Hippolyte Fofack: “Intra-African trade, which grew by 17 percent in 2018, more than three times the rate of growth of extra-African trade, was the major driver of Africa’s total merchandise trade in 2018.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
International and Pan-African organizations agree to collaborate on initiatives following successful ABEF2019
The prospect of a fully sustainable Blue Economy for Africa gathered significant momentum following the second Africa Blue Economy Forum (ABEF2019) (www.ABEF2019.com) held in Tunis on 25-26 June.
Fishing, aquaculture, shipping, ports, energy, and finance industries all came under the spotlight at ABEF2019, which drew in Government ministers, business leaders, international investors, academics and environmental organizations from across the globe.
The need for direct action to deliver the environmental, economic and social benefits for Africa, and particularly its coastal nations given 90 percent of Africa’s trade is conducted by sea, was stressed during the two days of insight. Speakers at ABEF2019 agreed on the urgent need for better cooperation between the ocean stakeholders, better governance and law enforcement.
Regional, national and local strategies are required to build a long-term plan and develop partnerships that are beyond short-term projects. Engaging with new technologies and innovative financing mechanisms are also key to shaping a sustainable Blue Economy in Africa.
Leila Ben Hassen, ABEF founder and CEO of Blue Jay Communication, which organized the forum, said: “We can no longer just dip our toe in the water, we must dive in and be decisive in making and delivering change that will serve Africa for many years to come. It is no longer business as usual. Africa must have a sustainable Blue Business plan which will have a positive impact on the environment, on the economy and on society.”
A sustainable Blue Business plan will accelerate Africa’s transformation, create jobs, sustain livelihoods and empower communities while offering impactful climate change measures.
This was acknowledged at ABEF2019 across a range of panels with topics that explored how governments and private sectors can collaborate; tackling ocean pollution; innovative funding solutions; enhanced food security and sustainable growth for the fishing industry; sustainable ocean energy; how to engage more women to work in the maritime value chains and the opportunities to embrace the youth generation in the Blue Economy.
Key outcomes from ABEF2019 saw the World Ocean Council, Tunisian Maritime Cluster, and SETAP Tunisia signed a Memorandum of Understanding to create a platform to connect, share information, scientific research and technologies between the Mediterranean and the coastal African countries. In addition, WIMA Africa (Women in Maritime Association) launched the Tunisia Chapter with the objective of empowering women and reinforcing collaborations between Tunisian and African women in the maritime industry.
The event attracted a significant number of high-level speakers, who can drive change and opinions, including government ministers HE Samir Taieb, Minister of Agriculture, Hydraulic Resources and Fisheries, Republic of Tunisia; HE Mokhtar Hammami, Minister of Environment, Republic of Tunisia; HE Elizabeth Naa Afoley Quaye, Minister of Fisheries and Aquaculture, Republic of Ghana and HE Kwaku Ofori Asiamah, Minister of Transport, Republic of Ghana.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Startups in Zambia don’t have field days raising funds, like their counterparts in Nigeria, South Africa or Kenya. WidEnergy appears, however, ready to break this jinx. The startup has secured an undisclosed amount of funding from the Germany-based GreenTec Capital to expand its operations.
A Look At WidEnergy
WidEnergy is a woman-led for-profit social enterprise which is dedicated to female empowerment and the expansion of affordable energy access. It leverages an innovative pay-as-you-go (PAYG) model to provide solar-powered homes and appliances.
The company’s name is an acronym for “Women in Development,” reflecting its goal of engaging women as active participants in Africa’s energy transition.
WidEnergy works with 80 female sales agents to distribute renewable energy solutions across Zambia, focusing on core competencies in lending and distribution to develop a high-quality lending portfolio with minimized default risks.
The numbers that show Africa is buzzing with an entrepreneurial spirit
It has developed partnerships to be the Zambian distributor for d.light, Greenlight Planet, and Little Sun solar appliances and home systems, and expects to connect more than 1,250 households connected by next month.
It has now secured funding from GreenTec Capital to assist it as it develops its approach and model. WidEnergy recently completed an integration with MTN-backed mobile-money payments into its platform.
The investment is GreenTec’s seventh in Africa so far, and its second this year.
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
AfCFTA entered into force on 30th May 2019 and will cover a market of 1.2 billion people and a combined gross domestic product of $2.5 trillion — making Africa the world’s largest free trade area since the formation of the World Trade Organization seven decades ago.
Ahead of the 7th July launch of the operational phase of AFCFTA at the 12th AU Extraordinary Summit in Niamey, Niger where the African Union and African Ministers of Trade are expected to finalize work on supporting instruments to facilitate the launch of AfCFTA, here are a few things startups and businesses in Africa should know about AFCTA.
What does AfCFTA mean in concrete terms?
African businesses, traders and consumers will no longer pay tariffs on a large variety of goods that they trade between African countries;
Traders constrained by non-tariff barriers, including overly burdensome customs procedures or excessive paperwork, will have a mechanism through which to seek the removal of such burdens;
Cooperation between customs authorities over product standards and
regulations, as well as trade transit and facilitation, will make it easier for goods to flow between Africa’s borders;
Through the progressive liberalization of services, service suppliers will have access to the markets of all African countries on terms no less favorable than domestic suppliers;
Mutual recognition of standards, licensing and certification of service suppliers will make it easier for businesses and individuals to satisfy the regulatory requirements of operating in each other’s markets;
The easing of trade between African countries will facilitate the establishment of regional value chains in which inputs are sourced from different African countries to add value before exporting externally;
To protect against unanticipated trade surges, State Parties will have recourse to trade remedies to ensure that domestic industries can be safeguarded, if necessary;
A dispute settlement mechanism provides a rule-based avenue for the resolution of any disputes that may arise between State Parties in the application of the agreement;
Upon conclusion, the “Phase two” negotiations will provide a more conducive environment for recognizing African intellectual property rights, facilitating intra-African investment, and addressing anti-competitive challenges. How does AfCFTA benefit small and medium-sized enterprises?
Small and medium-sized enterprises are key to growth in Africa. They account for around 80 percent of the region’s businesses. These businesses usually struggle to penetrate more advanced overseas markets, but are well positioned to tap into regional export destinations and can use regional markets as stepping stones for expanding into overseas markets at a later point.
Another way in which small and medium-sized enterprises can benefit is by AfCFTA making it easier to supply inputs to larger regional companies, who then export.
Before exporting cars overseas, for example, large automobile
manufacturers in South Africa source inputs, including leather for seats from Botswana and fabrics from Lesotho, under the preferential Southern African Customs Union trading regime.
Africa comprises a range of countries from those large and more
developed, to those small and less developed. How can it be ensured that all benefit from a win-win AfCFTA?
African countries have a diversity of economic configurations and will be affected in different ways by AfCFTA. Nevertheless, the benefits of AfCFTA are widespread.
While African countries that are relatively more industrialized are well placed to take advantage of the opportunities for manufactured goods, less-industrialized countries can benefit from linking into regional value chains.
Regional value chains involve larger industries sourcing their supplies from smaller industries across borders. AfCFTA makes the formation of regional value chains easier by reducing trade costs and facilitating investment.
Agricultural countries can gain from satisfying Africa’s growing food security requirements. The perishable nature of many agricultural food products means that they are particularly responsive to improvements in customs clearance times and logistics that are expected of AfCFTA.
The majority of African countries are classified as resource-rich. Tariffs on raw materials are already low and so AfCFTA can do little to further promote these exports. However, by lowering intra-African tariffs on intermediates and final goods, AfCFTA will create additional opportunities for adding value to natural resources and for diversifying into new business areas.
The cost of being landlocked includes higher costs of freight and unpredictable transit times. AfCFTA provides particular benefits to these countries: in addition to reducing tariffs, the AfCFTA is set to include provisions on trade facilitation, transit, and customs cooperation.
It will nevertheless be vital that AfCFTA is supported with accompanying measures and
policies.
Less-industrialized countries can benefit from the implementation of the
program for the Accelerated Industrial Development of Africa; domestic investments in education and training can ensure the necessary complementary skills.
Implementation of the Africa Mining Vision can complement AfCFTA, by helping resource-based economies to strategically diversify their exports into other African markets.
The Boosting Intra-African Trade (BIAT) Action Plan is the principal accompanying measure for AfCFTA. It outlines the areas in which investments are required, such as trade information and access to finance, to ensure that all African countries can benefit from AfCFTA.
Why does intra-African trade drive sustainable growth and jobs?
Africa’s industrial exports are forecast to benefit most from AfCFTA. This is important for diversifying Africa’s trade and encouraging a move away from extractive commodities, such as oil and minerals, which have traditionally accounted for most of Africa’s exports, towards a more balanced and sustainable export base.
Over 75 percent of Africa’s exports outside the continent were extractives from 2012 to 2014, while less than 40 percent of intra-African trade
were extractives in the same period.
The great risk with products like oil and minerals is their volatility. The fiscal and economic fate of too many African countries relies on the vicissitudes of these product prices.
Using AfCFTA to pivot away from extractive exports will help to secure a more sustainable and inclusive trade that is less dependent on the
fluctuations of commodity prices.
Perhaps most importantly, AfCFTA will also produce more jobs for Africa’s bulging youth population. This is because extractive exports, on which Africa’s trade is currently based, are less labor-intensive than the manufactures and agricultural goods that will benefit most from AfCFTA. By promoting more labor-intensive trade, AfCFTA creates more employment.
What has been achieved in AfCFTA negotiations so far?
Negotiations were launched by the African Union Heads of State and
The government in June 2015. By late 2017, the intensity of negotiations had
escalated, culminating in the drafting of the agreement itself. In early March 2018, the negotiating forum met for the tenth time to finalize outstanding matters and conclude legal scrubbing in preparation for the signature of the agreement on 21 March 2018.
The outstanding matters included agreeing to a dispute settlement mechanism and finalizing several annexes to the protocol on goods. The negotiating forum also agreed on a Transition and Implementation Work Programme to finalize offers for goods and services and to prepare product-specific rules of origin, as part of the built-in agenda.
Thereafter, negotiations will progress to further deepening trade in Africa with “Phase two” negotiations expected to begin in late 2018. Phase two will focus on provisions for investment, competition and intellectual property rights. A facilitative environment for e-commerce is also being mooted as a possible additional phase-two topic.
How can the African Continental Free Trade Area provide business
opportunities that will enhance industrialization in Africa in line with Agenda 2063:
The African Continental Free Trade Area (AfCFTA) will cover a market of 1.2 billion people and a gross domestic product (GDP) of $2.5 trillion, across all 55 member States of the African Union.
In terms of numbers of participating countries, AfCFTA will be the world’s largest free trade area since the formation of the World Trade Organization.
It is also a highly dynamic market. The population of Africa is projected to reach 2.5 billion by 2050, at which point it will comprise 26 percent of what is projected to be the world’s working age population, with an economy that is estimated to grow twice as rapidly as that of the developed world.
With average tariffs of 6.1 percent, businesses currently face higher tariffs when they export within Africa than when they export outside it. AfCFTA will progressively eliminate tariffs on intra-African trade, making it easier for African businesses to trade within the continent and cater to and benefit from the growing African market.
Consolidating this continent into one trade area provides great opportunities for trading enterprises, businesses, and consumers across Africa and the chance to support sustainable development in the world’s least developed region.
ECA estimates that AfCFTA has the potential both to boost intra-African trade by 52.3 percent by eliminating import duties and to double this trade if non-tariff barriers are also reduced.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
West African businesses can now benefit from seamless trading across West African borders. This is because the Heads of State and Government of countries in the region have finally adopted ECO as the name of the single currency to be issued in January 2020.
Here Are Things To Know About The New Currency
The currency would fully be in use from January 2020.
The currency would be used for trade across West African countries.
The ECO will work this way: shops, hotels, and restaurants, particularly in the larger cities in Ghana, for instance, may now display prices in both the Ghanaian Cedi and ECO currency and many are likely to accept payment in ECO. However, as the official currency is Ghanaian Cedi, no establishment is under no obligation to accept payment in any other currency apart from Cedi.
Consequently, the introduction of ECO may serve as an alternative to the legal tenders in the countries of West Africa who have met all the requirement to start using ECO.
In simple terms, for people living in Nigeria, this means that you can now carry, in addition to Naira, ECO, and ECO can be used to buy or sell anywhere in Nigeria as long as the other party is willing to accept so.
The West African Monetary Agency, the body of ECOWAS in charge of money and finance across the region has said the currency would be based on a flexible exchange rate regime, coupled with a monetary policy framework focused on checking inflation.
In Which Countries Can You Use The Currency?
The currency can be used across the whole of West African countries from January 2020. However, ECO would be used only in the countries that have met the requirement for its use. That is, for any country in the West African sub-region to start using ECO, it must first meet the following requirements:
It must have a single-digit inflation rate at the end of each year
It must have a fiscal deficit (liabilities) of no more than 4% of the GDP
Its central bank must have deficit-financing of no more than 10% of the previous year’s tax revenues
The country’s gross external reserves must give import cover for a minimum of three months.
Additionally, each country must:
Prohibit new domestic default payments and liquidate existing ones. (That is, all domestic debts must be paid off first)
Have a tax revenue base which should be equal to or greater than 20 percent of the GDP.
Have its wage bill to tax revenue equal to or less than 35 percent.
Have its public investment to tax revenue equal to or greater than 20 percent.
Have a stable real exchange rate.
Have a positive real interest rate.
Right now, it appears Ghana is the only country in West Africa that has met all of the above requirements.
“The single currency for 2020 vision is: let’s find two, three or four countries that are ready. Once they meet up, we follow through with the others cascading in,”said Ken Ofori-Atta, Ghana’s finance minister, at a meeting of West African ministers in Accra recently.
The seriousness of the ECOWAS leaders on ECO is buried in this communique issued after the 55th Ordinary Session in Abuja:
‘‘The single currency would be issued in Jan. 2020.’’ the communique reads. “We have not changed that but we will continue with assessment between now and then. We are of the view that countries that are ready will launch the single currency and countries that are not yet ready will join the programme as they comply with all six convergence criteria.”
The leaders also instructed the commission to work with West African Monetary Institute and the central banks to accelerate the implementation of the revised roadmap with regard to the symbol of the single currency.
“It [the communique]further directs the commission to ensure implementation of the recommendations of the meeting of the ministerial committee held in Abidjan on June 17 and June 18 as well as preparation and implementation of the Communication Strategy for the single currency programme. The Authority takes note of the 2018 macroeconomic convergence report. It noted the worsening of the macroeconomic convergence and urges member states to do more to improve on their performance in view of the imminent deadline.”
Most of the eight currencies used in the 15 countries of the West Africa region are not convertible. Convertibility is defined as the possibility to freely exchange a country’s currency for foreign currencies. Where they are convertible, their rates are highly volatile ($2 in the morning, $5 dollars in the afternoon) Hence, ECO will help to address the issue of multiple currencies and exchange rate fluctuations that affect intra-regional trade.
West African countries have the least developed financial sectors in the world. The ratio of bank credit to GDP there is very low. There is no much money in their financial markets, through which money can easily flow across the region. Unlike the Eurozone where payment can be made and settled by banks using Euros and cheques. Payment and settlement systems in several West African economies are still marked by the predominance of cheques in noncash payments. In 2013, for instance, the whole money available in the West African regional market only represented 13% of GDP of the whole of the West African countries put together — this is like 8.5% of GDP for Ghana and 21% for Nigeria, against an average of about 65% for Sub-Saharan Africa. Hence, ECO will open up the market a bit.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Consider the case of human travel agents who were once consulted before trips bookings to foreign countries were made before digital disruption set in. The information below would serve as a guide for further analyses.
Data from Statista showed declining sales growth among travel agents in the United States since 2011.
The above is a classic case of how far digital disruption can go. An ABTA Holiday Habits Report 2018, which tracked British holidaymakers’ booking behaviour in the last 12 months and their attitudes to planning and booking holidays in the 12 months ahead, found that 81% of people booked their holiday online, compared to 22% of younger ( mostly 8–24-year-olds) and older families who booked their holiday in store.
This suggests a shift towards booking online and the gradual elimination of the use of human agents to schedule overseas travels. Simply put, the migration of the business of travel agency online and the increasing power of customers indicates that people are:
Now more knowledgeable about travel;
Now more technology savvy and have better access to devices;
Now get attracted by offers too lucrative to refuse;
Are offered more choice than ever.
Price is more transparent than ever.
Indeed, the above digital disruption in the business of travel agency could be extended to those of:
Tax accounting where software such as TurboTax has eliminated tens of thousands of jobs previously available for tax accountants.
Newspaper publication which has seen their circulation numbers decline steadily, replaced by online media and blogs.
Traditional taxi drivers and livery companies have completely been decimated by digital players such as Uber, Lyft, Bolt and other car and bike sharing apps.
Airbnb and HomeAway are doing the same for the hotel and motel industry.
Jobs previously done by bus and truck drivers, taxi drivers and chauffeurs are gradually being taken over by driverless cars, such as those being developed by Google (GOOG).
3D printing is continuously proving a threat to the manufacturing industry where the technology is becoming better and faster and in a few years, maybe deplored to manufacture a wide variety of goods on demand and at home. This will diminish the importance of logistics and inventory management.
Radio DJs are largely a thing of the past. Software now chooses most of the music played, inserts ads, and even reads the news.
Farmers and ranchers previously made up over 50% of the U.S. workforce. Today less than 2.5% are employed in this sector. Yet, more food than ever is being produced in America due to the automation in agriculture and food production.
Rapid and disruptive change is coming to your business, regardless of the industry in which you operate
75% of today’s leading brands will be gone inside a decade.
The table above shows the top 10 US companies ten years ago versus today, ranked by market value (market capitalization) in US dollars.
Getting ready for disruption would be the best thing that can happen to small businesses. Here are a few ways to stay alert:
Agility Will Allow Small Businesses To Survive
The best way to stay ahead of digital disruption is to stay agile. For a business to be agile means that it can move quickly, decisively, and effectively in anticipating, initiating, and taking advantage of change.
A Global Study of Current Trends and Future Possibilities 2006–2016 found that the best way of adapting to change is to develop organizations that are both agile and resilient. The report found that higher performing businesses tended to take a more proactive and opportunistic approach toward change.
‘‘…The average tenure of companies on the Standard & Poor’s 500 in 1958 was 61 years. That decreased to 25 years in 1980 and is just 18 years now, a number forecasted to dwindle to 14 years in 2026.What does this decreased lifespan portend for business?,’’ says Sasha Viasasha, content strategist based in Chicago. ‘‘Such a shortened lifespan points to the changing nature of business itself. The business cycle has shortened, and the accelerating pace of innovation — and competition — is disrupting the old linear model of business and replacing it with new, dynamic model. Today, agility rather than longevity is winning. In fact, characteristics that once contributed to corporate longevity and denoted a healthy culture, such as the ability to ‘stay the course,’ now could utterly sink a company.’’
Consider the five stages of a business lifespan, says Sasha:
Seed and development — ideation, feasibility and fundraising
Startup — product development, market testing, and iteration
Growth and Establishment — improved cash flow, established customer base and brand identity
Expansion — expanded offerings and new markets
Maturity and exit — every idea or product reaches a crisis stage, a point where improvement plateaus, expansion is no longer possible, and profits reach a ceiling.
Now there needs to be added a sixth stage:
Rebirth or return — in this stage, a company starts over again, reinvesting its resources in new innovation, she says.
Rahul Varshneya, co-founder of Arkenea, custom software development services for founder-led companies says the trick is to lean into technology rather than become consumed with fear, like forward-minded entrepreneurs in specific industries who love, not loathe, technological advance.
‘‘It’s time for you to get down and dirty and really investigate the demographics of your target audiences,’’ he says. ‘‘Find out what they want, what they need, where they’re getting assistance and how you can help them. By creating a psychographic chart for each of your prospective consumers, you can get a truer view of their personalities, attitudes, lifestyles, interests and so much more. Then, you can use this outline to make wiser predictions about their buying behaviors.’’
Innovate And Adapt To Technological Changes
The best way small businesses can also survive in the face of digital disruption is to innovate. Dr. John Kotter, a world-renowned change and leadership expert prefers small businesses to create a dual-operating structure that combines the best of both worlds.
‘‘Ultimately, great companies execute and disrupt at the same time. Often they disrupt themselves…Truly great companies like Apple, Google, Amazon, and Starbucks constantly find new ways to become relevant to us and remain an essential part of our lives. When analyzed closely, you can see that they are simultaneously executing and innovating. If there is not enough innovation, changes do not occur quickly enough, your people can lose their passion, your products can become outdated — and worse, your business can become irrelevant. Great leaders maintain the balance between achieving results today and innovating to seize new opportunities in the future. So if you want to avoid disruption — or even lead disruption — then you need to greatly accelerate the way you operate internally to keep pace with a rapidly changing world,’’ says Randy Ottinger an Executive Vice President at Kotter International and Professor of Leadership, Emeritus, at Harvard Business School.
The best way to adapt to this disruption, according to Robert Glazer, founder, and CEO of a global performance marketing agency, Acceleration Partners, is to put technology and data to work.
‘‘No matter what industry you try to disrupt or in what way you to try to do it, data and technology can be a huge help,’’ he says. ‘‘Technology doesn’t just revolutionize businesses, it changes how consumers behave in every aspect of their lives. If you track the market and note where interest in new technology is heaviest, you can likely foresee what areas are most ripe for disruption.’’
The most basic advice on adapting for small businesses would be to:
Small businesses can also hop on the frenzy of social media advertising. According to Ewan Duncan and Eric Hazan in their article, Digital Disruption: Six Consumer Trends, “Social networking represents almost a quarter of all Internet time (up 10 percentage points since 2008) and reaches over 75 percent of all Internet users.”
‘‘With more than 70% of Australians now using smartphones, and more than 40% of them making purchases directly from it, according to Our Mobile Planet, you’re missing out on a huge slice of the pie if you’re in e-commerce and operating without a mobile friendly site,’’ says Kwasi
Collaborative Partnership For Innovation
Small businesses can also survive technological disruption if they can partner with industries within their sectors, and where possible with the disruptors.
‘‘Companies that are better prepared for industry disruption are much more engaged in growing and broadening their ecosystem partnerships,’’ notes the Accenture Institute for High Performance. “They actively use this strategy to support innovation and research and development, as compared to only half of those who admit they are less prepared. Companies that are disruption-ready are a third more likely to partner with advertising agencies, innovation companies (26 percent more likely), design service providers (24 percent more likely) and even customers (26 percent more likely). They are also 36 percent more likely to collaborate with companies beyond their traditional industry boundaries, and 32 percent more likely to align with companies they consider direct competitors.’’
“In order to successfully navigate industry convergence and strengthen their network of alliances to build truly collaborative operating models, they must shift their mindset to compete as a ‘cluster’, not as a single company, creating shared value for their alliance partners and customers.”
Accenture Institute also goes to recommend tips for surviving disruption as follows:
Do not face digital disruption alone. Deepen and broaden partnerships with customers, providers, and a diverse array of companies in and beyond your core industry
Make yourself indispensable. Use your business’s focus and expertise to become a critical part of the integrated solutions that customers demand
Embrace operational flexibility. Consider what business changes you will need to be more collaborative and open — both in terms of your processes and your employee mind-sets
Develop New Customer Segments.
Small businesses can also confront digital disruption by developing new customer segments, instead of just defending existing business lines through cost cutting, automation, or service improvements for existing customers.
Medialaan NV As An Instance
Medialaan NV, a leading free-to-air video broadcaster in Belgium, found out that there had been a shift in video consumption by youngsters to platforms such as Netflix or YouTube. In a bold response, Medialaan bought Mobile Vikings, a mobile virtual operator with attractive data plans.
The strategy: Transform itself into the leading online social video platform for Flemish teenagers. Medialaan not only has diversified its revenue base to include data plans but also has been able to reengage with a lost segment — the teens — and now advertises its television programs to them more effectively. It is one of the few traditional broadcast companies to grow its TV audience in the youth segment.
Start Off New Business Models.
‘‘Innovative companies are experimenting with business models intended to disrupt their own legacy strategies,’’ Jacques Bughin and Nicolas van Zeebroeck in MIT Sloan Management Review said. They gave an instance of how earlier this century, Schibsted Media Group of Oslo, Norway, observed something that most media companies saw in their newspaper businesses: Print classified advertising was beginning to dry up. Rather than sit idly and witness the erosion of one of its most important revenue streams, Schibsted pulled the rug right out from under its own feet by moving its entire classified business to a free online marketplace. Today, more than 80% of the group’s earnings come from commissions on sales from its consumer e-commerce platform.
Commonwealth Bank of Australia (CBA) as an example.
Jacques Bughin and Nicolas van Zeebroek noted that when digital disruption started threatening CBA’s payment services business, Commonwealth Bank of Australia (CBA) confronted the disrupters once and for all. The bank moved from focusing exclusively on payment services to developing its Pi, an open payments platform that hosts an ecosystem of applications and devices for merchants.
The platform is open to third-party developers, and the bank developed for itself an Android-based point-of-sales terminal called Albert, which is fully integrated with the Pi payments platform. Equipped with a card reader and an integrated printer, Albert can be extended with dedicated apps, enabling it to do much more than process payments. Among the first adopters was Earthling Investments Pty. Ltd. of North Adelaide, South Australia, owner of wholesale fuel distributor Mogas Regional Pty. Ltd., also based in North Adelaide.
The company is using Albert at its fuel stations to process customer transactions, manage their payments, and receive sales data faster.11 Although the platform and its ecosystem contribute to the disruption of the traditional banking value chain, it also positions CBA to compete with digital entrants.
Similarly, while the mortgage side of the banking business is being disrupted by online search and home-financing platforms, CBA updated its digital value chain through an augmented-reality app that gives customers the ability to read a property’s sales history and community information by pointing their iPhone camera at the residence.
When they have found a property that they wish to buy, users can then file a loan application directly in the app, thus positioning CBA strongly against digital and incumbent competitors alike.
The Bottom Line
Imagine the hard work that comes with running a business, the burnt energy and the spent time, all guzzled up by fast-paced disruptive technologies? Although the general advice has always been that when businesses are faced with disruptive innovation the best and the most common-sensical things to do are to try and hold on to an existing market by doing the same thing better, or try to capture new markets by embracing new business models and technologies, a lot of businesses have gone into extinction due to a sudden ambush by mind-boggling, disruptive technologies. Only small businesses who understand these disruptions and can disrupt them could stand a chance to win.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
