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Why identity infrastructure is key to unlocking financial inclusion and prosperity in Africa

July 30, 2023

Identity infrastructure, and allowing businesses to know their customers and avoid fraud while also availing critical services, is pivotal to unlocking financial inclusion and prosperity in Africa. Yet there remain several hurdles that need to be overcome if this infrastructure is to be properly built and maintained.

This is according to the H1 2023 State of KYC in Africa Report just released by Smile ID (formerly Smile Identity), Africa’s leading provider of identity verification solutions, which over the past few years has revolutionised African identity verification, conducting over 75 million identity verifications and building Africa’s most robust KYC/AML suite of products.

In the era of fintech in Africa, with startups of various shapes and sizes rolling out payments, lending, insurance and savings services, among others, to 1.4 billion Africans across 54 countries, there is a necessity for individuals to prove their identity in order to access these new services. Identity infrastructure, therefore, is pivotal if the potential of these new services to foster financial inclusion and enhance service delivery is to be fulfilled.

Yet, as the report notes, nearly 500 million Africans still lacked legal identity documentation as of 2020, meaning these individuals remain locked out of the brighter future being created by tech innovation on the continent. For that to be the case would be a travesty. The African Development Bank estimates that Africa’s digital economy could reach US$180 billion by 2025, but secure digital identities are a necessity if that potential is to be fulfilled.

According to Smile ID, however, there is some progress being made. The report notes that African businesses embraced digital transformation with “renewed vigour” in the first six months of 2023, with the demand for accurate and seamless identity verification solutions skyrocketing.

“We’ve witnessed this trend firsthand, having conducted over 75 million KYC checks since inception – an increase of over 50% in just six months,” it notes.

“Several factors drive this growth: the increasing adoption of digital platforms by businesses of all sizes, the growing importance of regulatory compliance, and the need to mitigate fraud.”

But why is identification so important when it comes to onboarding Africans into the new digital economy, and how impactful can digital solutions be in ensuring effective identification can take place? One finding from the report says it all – biometric verification reduces fraudulent users by 50%. In 2023 so far, 43% of ID frauds caught were face mismatches indicating that stolen or lost IDs were used, while 41% were selfie spoofs. With textual verification alone insufficient for ID verification, as most fraudsters can only be identified through biometric checks, facial recognition has become the preferred biometric KYC method worldwide. And it is working.

In H1, onboarding fraud rates declined by 5% in focus markets, the report finds, led by declines in South Africa and Ghana. It notes that, over the years, incentive-based acquisition has had a high correlation with increased fraud attempt rates, yet as startups deal with the decline in funding coming into the ecosystem, marketing spends have reduced, thus resulting in a decline in fraud rates.

The good news, then, given the positive impacts noted above, is that the adoption of digital identity solutions is on the up across Africa. Ethiopia has begun enrollment for foundational Fayda ID, Kenya is set to introduce Unique Personal Identifier to replace its Huduma Namba system, and Uganda will launch a new digital ID scheme in the fourth quarter of this year.

However, a number of key obstacles remain, and positive progress is not universal. In contrast to other key markets, Kenya saw cases of fraud actually increase by 7% over the last six months, with its National ID system being the most attacked. Local ID databases, in fact, remain the most robust source of truth for KYC, but the report notes that frequent downtime – on average 3% – remains a serious issue. These are problems that need to be addressed if we are to keep moving in the right direction.

Of wider concern is the fact that a total of 11 African countries are now on the FATF’s grey list, with South Africa, Cameroon and Nigeria joining countries like Uganda, Senegal, and South Sudan. Grey list countries are those that are actively working with the FATF to address the strategic deficiencies in their regimes to counter money laundering, terrorist financing and proliferation financing, and the presence of so many African countries here has an impact on KYC, the report notes.

“We expect the recent additions to the FATF grey list to significantly impact the KYC ecosystem on the continent due to the growing number of countries on the list and the profile of countries now involved. Nigeria and South Africa are Africa’s two biggest economies representing approximately 30% of the continent’s GDP, and regulators and investors apply more scrutiny when dealing with transactions from greylisted countries,” it said.

This is indeed concerning, with the potential knock-on effect to end users should lack of confidence in these countries remain, or grow, a negative one. As with all other countries on the greylist, Nigeria, South Africa, and Cameroon have committed to improving their respective AML/CFT regimes, meaning that all three nations can be expected to introduce new regulations for accountable organisations. The report notes that South Africa leads the way already, announcing amendments to its AML/CFT laws in the first half of the year. But businesses can take action of their own to mitigate the impact.

“Now more than ever, businesses across Africa must ensure their KYC/AML procedures are on par with international best practices,” the report says. “With the global focus on combating financial crimes intensifying, companies operating in the continent must prioritise robust KYC/AML procedures to safeguard their operations, protect their reputation, and contribute to the overall integrity of the financial system. Companies must also be nimble, staying up-to-date with regulatory developments and engaging in ongoing training and education.”

This is not easy, but challenges like this will need to be overcome if Africa is to fulfil its economic potential. And digital identities should go a long way to ensuring that everyone can become financially included on the continent, not just the few. This applies from a gender perspective as well. Since the third quarter of 2021, the percentage of female ID verification checks carried out using Smile ID grew from 10% to 35% in the first half of 2023. This indicates positive progress in addressing gender disparities.

More gender diversity is good news, and the fact fraud rates fell in H1 is also positive. But with cybercriminals persistently adapting, businesses must stay vigilant in combating fraud. While referral fraud rates have dropped significantly, cybercriminals are still looking to exploit digital platforms to scam other users or funnel illicit earnings.

“Based on conversations with our clients, we also believe that as digital onboarding formalises, fraudsters are re-focusing their energy on transactions rather than account creation; this reinforces the need for multi-factor authentication, including biometrics,” said the report

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

Telkom Says It Still Needs Regulatory Support

South Africa’s major telecom company, Telkom is doubling down on its demand that it should continue to qualify for asymmetric mobile termination rates (MTRs).

In the group’s integrated annual report for 2023, which was published on Monday, CEO Serame Taukobong repeated the operator’s assertion that it should qualify for asymmetric MTRs.

This would allow it to charge larger operators more and pay them less to carry calls between their networks. In other words, if a Telkom customer were to phone a Vodacom customer, Telkom would pay less to Vodacom for terminating that call than the other way around.

Under the proposed new rules, the ability to charge asymmetric rates is reserved for new licensees only

“We believe that the Independent Communications Authority of South Africa’s change of approach regarding which mobile operators qualify for asymmetric MTRs is irrational, considering the entrenched duopoly and its related market dynamics,” said Taukobong. The “duopoly” he is referring to is Vodacom and MTN.

Icasa’s change in stance came in March 2022 when it said MTRs would “move to symmetry within a transitional period of 12 months”, following a review which began in May 2021. This has not yet happened, and Telkom and Cell C continue to enjoy asymmetry in the rates.

Removing the regulatory subsidy Telkom and Cell C have enjoyed for many years could have a negative impact on their revenues. Under the proposed new rules, the ability to charge asymmetric rates is reserved for new licensees only, and they’ll only get the advantage for “three years after entry into the market”.

Telkom court application

Telkom filed a court application in September 2022 seeking a review of Icasa’s 2022 findings, the results of which are still outstanding. In June 2023, Icasa gave notice of its intention to continue with the next phase of its review despite Telkom’s ongoing litigation.

From Telkom’s point of view, Icasa’s addition of the three-year time constraint to its qualifying criteria ignores the history of asymmetric MTRs in South Africa. Former group CEO Sipho Maseko was vocal about Vodacom and MTN’s alleged dominance, claiming in 2018 that it was the result of prolonged asymmetry that disfavoured Telkom for two decades.

“For a solid 20 years, asymmetry was free cash that flowed from Telkom to the now-dominant mobile players,” said Maseko in testimony to the Competition Commission at the time.

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

Kenya’s Port Reforms to Spur Growth

The Kenyan government is keen on transforming the port to be globally competitive by raising its efficiency bar. Working with partners, President William Ruto said the government is keen on transforming, saying that reforms at the port are crucial for the country’s prosperity.

“The productivity of this Port is directly linked to the state of our economy, improving efficiency will help us create jobs, boost export volumes and stimulate economic growth,” he said.

The President was speaking during the Port Reforms Working Group Consultative Forum at the Berth 22 of the Port of Mombasa on Saturday.

Later in Miritini, the President launched the Toyota Fortuner Assembly Line, a 120 million dollars vehicle Assembly plant.

Speaking at the launch, the President said the government has instituted policies and measures to create an environment for the growth of manufacturing.

“We need investments to create the opportunities, uplift communities and strengthen the economy.”

He challenged players in the automotive sector to develop affordable cars for low-income earners.

At the Kenya Navy Headquarters, the President presided over the rededication of KNS Shupavu.

He pointed out that the move will improve the capacity of the Kenya Defence Forces to effectively support the maritime industry.

“This will significantly boost our Blue Economy and enhance our exploration for possibilities of trade and investment in the Oceans.”

Prime Cabinet Secretary Musalia Mudavadi, CSs Kipchumba Murkomen, Moses Kuria, Aden Duale, Salim Mvurya, Council of Governors Chairperson Anne Waiguru, Mombasa Governor Abdullswamad Nassir, Lamu Governor Issa Timamy, Speaker of the Senate Amason Kingi, MPs led by Majority Leader Kimani Ichung’wah, Kenya Ports Authority Chairman Benjamin Tayari, among others, were present

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

Visa Foundation Partners ITC to Create Jobs for Refugees

July 29, 2023

The International Trade Centre (ITC) is proud to announce its new partnership with the Visa Foundation, which marks a significant step towards creating market opportunities for refugees and host communities.

In Kenya, ITC will focus on further developing the digital entrepreneurship ecosystem within the Kakuma refugee camp, fostering economic growth and empowerment. Meanwhile, a pilot programme in Pakistan will identify market-based solutions that promote inclusive economic opportunities in Quetta, Balochistan. Moreover, a study is set to capture lessons and results generated in ITC’s previous projects.

The partnership with Visa Foundation lies at the heart of ITC’s mission to support young entrepreneurs and small businesses and the power of inclusion, especially for communities in fragile and vulnerable settings.

The collaboration is particularly relevant as it strives to support those affected by conflicts, climate crises, and economic inequality, providing them with the necessary assistance to maintain their businesses or explore alternative channels for income generation.

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

South Africa’s Commission to Release Online Markets Report on Monday

The South African Competition Commission will on Monday release its hotly anticipated final report flowing from its online intermediation platforms inquiry. The final report, publication of which has been delayed several times, is what the commission calls a “proactive” measure to prevent monopolies from forming in the e-commerce space. But a preliminary report has already got many industry players hot under the collar, with the commission taking aim at companies such as Google and homegrown e-commerce player Takealot.

For example, the preliminary report, released a year ago, listed several findings regarding “self-preferencing conduct” by Takealot resulting from its “hybrid platform” business model.

Takealot runs both an online marketplace for third-party sellers and its own retail division that competes with it. The Competition Commission proposed forcing the separation of Takealot’s retail and marketplace operations.

Takealot Group CEO Mamongae Mahlare was quoted as saying that the commission should be careful to support rather than obstruct the development of e-commerce in South Africa.

The commission seems to be of the opinion that small businesses in South Africa and local app developers are negatively affected by large global companies. It is concerned that these entities either charge too much for the average South African consumer, or that they have the lion’s share of business in the country, thus reducing opportunities for local entrepreneurs.

Online intermediation platforms include e-commerce marketplaces, online classified marketplaces, software application stores, and intermediated services such as accommodation, travel, transport and food delivery, the commission said. This means that large online websites like Booking.com also fall within the scope of the inquiry.

The Google Connection.

Tech giant Google also did not escape the commission’s attention. The provisional findings recommended that Google be forced to make it much clearer to South African internet users which search results are paid for – and said it may even seek to end its status as the default search engine on smartphones sold in the country.

The commission proposed a raft of regulations that cut to the heart of Google’s business model. “The inquiry has provisionally found that Google Search plays an important role in directing consumers to the different platforms, and in this way shapes platform competition,” it said.

“The prevalence of paid search at the top of the search results page without adequate identifiers as advertising raises platform customer acquisition costs and favours large, often global platforms. Preferential placement of their own specialist search units also distorts competition in Google’s favour.”

As a result, the inquiry found provisionally that paid search results should be “prominently labelled as advertising, with borders and shading to be clearer to consumers, and that the top of the page is reserved for organic, or natural, search results based on relevance only, uninfluenced by payments”.

Bowmans competition lawyer Heather Irvine said the inquiry by the commission is particularly important because it is a kind of road map for the commission to test the new powers of the amended Competition Act, which was gazetted in 2019.

“The current powers are far more extensive, and it will be very interesting to see what happens as this will be a test case for the limits of their powers,” Irvine said. “It will also be a very expensive undertaking.

“We have had no clarity on any adjustments from the preliminary report, so it will depend on their recommendations and whether they are reasonable and practical. Of course, firms can appeal if the commission moves too far outside the scope of the remedial actions.”

The Free Market Foundation said last year that the commission wanted to punish leading enterprises in the digital space for being successful and made a submission opposing the provisional recommendations of the commission’s online intermediation platforms market inquiry.

“The recommendations in the report seek to institute more regulations on the country’s economy by punishing leading enterprises for being successful,” the foundation said in a statement about its submission to the commission.

“The Free Market Foundation views the recommendations as a continuation of the commission’s misguided activities that serve to punish successful businesses that acquired their market position through voluntary transactions that satisfied consumer preferences. The potential for competition from new entrants or other, not-as-successful, competitors is there for these companies, yet they are being sanctioned,” it said.

“The barring of contractual terms, which were agreed to in the market – like price parity clauses, a recommendation of the report — undermines the freedom to contract, which is central to any market economy. The barring of ‘self-preferencing’ violates property rights and amounts to making it illegal for businesses to use their resources to favour themselves and their interests in the market,” the foundation said.

“The economic social engineering proposed by the report will see historically disadvantaged persons being given preferential treatment over the companies that were the subject of the market inquiry. It represents a worrying trend in the commission’s work, taking its cue from legislation. Any change in market dynamics must be spearheaded by the market itself; this includes the demographic transformation of that market. The aim ought to be making sure that the institution of private property is protected, and valid contracts enforced. Forcing private companies to associate or give preference to historically disadvantaged persons is an egregious intervention in market processes.

“With the South African economy experiencing record high unemployment levels and dim growth prospects, it makes it harder to do business in the country. This is what the implementation of these recommendations will do, and should not be a course of action we pursue. As such, the recommendations of the online intermediation market inquiry provisional report should be opposed,” the foundation said.

On Friday, foundation legal researcher Zakhele Mthembu told TechCentral that the preliminary report released last year was opposed on the grounds of its being anathema to general market freedom. “It operated on the premise that other businesses – competitors – are entitled to markets and customers that voluntarily patronise these ‘big’ online intermediation platforms like Google, Takealot or the Google Play store,” he said.

“Judging from the press release of the commission, the situation has not changed that much. The final report could be damaging to our economic growth prospects. The tech sector, which is being targeted by the inquiry, is one of the few sectors of the economy that is growing worldwide, and the commission seeking to strangle it with more regulations is not the answer.”

Mthembu said consumers, through patronising these platforms in their billions, have chosen freely with whom they want to do business. “Seeking to punish successful companies that have high market share is not the answer to our economic woes.”

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

Nigeria Must Fully Implement the Petroleum Industry Act

July 28, 2023

NJ Ayuk, Executive Chairman of the African Energy Chamber, CEO of pan-African corporate law conglomerate Centurion Law Group

By NJ Ayuk

For years, on behalf of the African Energy Chamber (AEC), I publicly encouraged Nigeria’s leadership to sign the Petroleum Industry Bill (PIB) into law.

Across its five chapters and 300 sections, the PIB promised to repeal all regulations pertaining to Nigeria’s oil and gas industry, effectively resetting decades of policy gridlock regarding fiscal imbalances and the detrimental effects of crime and corruption. In place of these regulations, the PIA offered a new framework for the industry to abide by, one that would place Nigeria back on track toward progress and prosperity.

On August 16, 2021, we were thrilled to see former President Muhammadu Buhari enact the law — now known as the Petroleum Industry Act (PIA) — making its entire promising provisions official at long last.

Nearly two years from its passage into law, implementation of the PIA and its initiatives has been slow for numerous reasons, but not without progress, and signals from Nigeria’s new administration indicate that these conditions will not remain the status quo.

After ascending to office in May, Nigeria’s newly elected president, Bola Ahmed Tinubu, hit the ground running in terms of reshaping his country’s approach to petroleum industry relations and preparing to execute the mandates of the PIA.

In July of this year, President Tinubu received the Shell Petroleum Development Company (SPDC) at the State House in Abuja, assuring its delegates that Nigeria welcomes their business and that his administration is working to remove any policy or procedural bottlenecks detracting from the investment appeal of Nigeria’s gas and deep-water assets.

Considering these recent statements from President Tinubu and a recently released report from his administration’s Policy Advisory Council entitled Enabling Growth in Nigeria’s Energy & Natural Resources Sectors: Sector Challenges and Proposed Interventions, Nigeria’s leadership seems intent on revitalizing the entire energy landscape across the country.

A Need for Intervention

The signing of the PIA represented the culmination of more than 20 years of efforts to reform an oil and gas sector plagued by long-standing problems on multiple fronts.

Despite its long-held status as Africa’s largest oil producer, and sixth largest in the entire world at times, 2022 saw Nigeria drop to fourth place in the African rankings behind Angola, Algeria, and Libya. With its 37.1 billion barrels of proven crude oil reserves and 206.5 trillion cubic feet of natural gas, traditionally, petroleum products comprise nearly 6% of Nigeria’s gross domestic product, 95% of earnings from foreign trade, and 80% of government revenues.

In defiance of these significant averages, Nigeria’s oil production rate has declined in recent years, down to an average of 1 million barrels per day (mmbpd), nearly halving its OPEC quota of 1.8 mmbpd. Large-scale theft, sabotage, and pipeline vandalism account for much of this drop.

While the combined security efforts of Nigerian military forces and other government agencies under the previous administration did lead to the recovery of millions of liters of petroleum products in their various forms, they did not have a meaningful effect on the downward trend in production. Nigeria’s failure to adequately secure its infrastructure and rein in these production losses has also led international oil companies toward divestment from the region. Nigerian oil and gas sector will be one of the main attractions of the Africa Energy Week (AEW) 2023, which will be held in Cape Town from October 16th to 20th.

Hope on the Horizon

The PIA aims to reverse Nigeria’s course regarding its energy future. With President Tinubu’s endorsement and proactive stance on its directives, we hope to see the PIA’s terms fulfilled and Nigeria finally reoriented toward a more prosperous era.

Efforts to overhaul the Nigerian oil and gas industry date at least as far back as the year 2000 when the Obasanjo administration inaugurated the Oil and Gas Reform Implementation Committee, whose investigations into the Nigerian energy sector eventually led to the PIA’s initial drafts.

First introduced in 2008, the PIB was subject to years of setbacks as legislators debated its content and submitted revisions. The version finally signed into law in 2021 addresses four main areas of concern for Nigeria’s petroleum industry: governance and institutions, administration, host community development, and the fiscal framework. In short, the PIA seeks to convert the governance of Nigeria’s petroleum sector into a more commercial model.

Last summer, the AEC celebrated when the Nigerian National Petroleum Company (NNPC) transitioned to NNPC Limited, a move denoting initial progress toward implementing the provisions outlined in the PIA. This transition represented a shift in how the NNPC would conduct business going forward. Free from Federal Executive Council oversight, the NNPC Limited could now pursue new ventures, become more public-facing with a stock market listing, and compete with other state-owned petroleum companies. As NNPC Limited, the company has already engaged in re-negotiations of the production-sharing contracts tied to five deepwater blocks, successfully untangling them from decades of disputes.

The transition hasn’t been as smooth for other Nigerian entities affected by the new standards put forth by the PIA. Delays in collaboration between groups like the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), attributed to incomplete agenda items like the Environmental Management Plan (EMP) and the Upstream Environmental Management Regulation (UEMR), have stalled the PIA’s full implementation. However, leaders at these authorities have affirmed their commitment to the change and have encouraged all stakeholders to expedite the process.

As detailed in the Policy Advisory Council’s report, President Tinubu and his administration are well aware of Nigeria’s low ratio of revenue to GDP, low investor confidence, and monetary losses in the petroleum sector. However, the report also outlines a path toward a full reversal of these circumstances.

On a timetable covering the first 100 days and stretching outward to 2030, the Policy Advisory Council’s report explains how Nigeria’s petroleum industry can eventually achieve sustainable production rates of 4 mmbpd for oil and 12 billion cubic feet per day (bcf/d) for natural gas.

The Tinubu administration’s short-term goals include recruiting and placing competent leaders in the various ministries, departments, and agencies accountable to the PIA, reforming military task force operations for security, and defining fiscal policies. Moving into 2024—in addition to other security, finance, and regulatory measures—the report calls for promoting a diversified oil and gas industry and developing a gas export strategy.

Attaining Nigeria’s Ideal Future

The Policy Advisory Council’s structured and detailed report sets key performance indicators and milestones for Nigeria in the years ahead, plotting a course to a stabilized and flourishing future for the national economy and its population. The report also serves as a testament to the current administration’s intent to make this future a reality.

As one of the PIB’s most vocal supporters — having recognized its potential as a mechanism for correcting worsening conditions in Nigeria’s energy sector and reinvigorating foreign investment — I urged the previous administration to pass the bill. Considering its slow start despite having been passed into law, these recent and positive developments have given me more confidence that we will see the law fully implemented.

Nigeria still sits atop a wealth of fossil resources that offers up an end to energy poverty and financial instability as long as they are extracted and monetized responsibly and in a manner that benefits all stakeholders. The steps laid out in the Policy Advisory Council’s report lead to this exact outcome, but getting there depends entirely on the full implementation of the PIA.

I implore all of Nigeria’s leaders to continue working with one another to achieve this most critical goal.

NJ Ayuk, Executive Chairman, African Energy Chamber (www.EnergyChamber.org).

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

AfDB Releases North Africa Economic Outlook 2023

President of the African Development Bank (AfDB) Dr. Akinwumi Adesina

The African Development Bank AfDB has released economic projections for North African countries, saying that there will be a slight increase in economic growth to 4.6 percent in 2023 and 4.4 percent in 2024, and should make green growth an urgent priority, according to the African Development Bank (www.AfDB.org).

The pan-African institution published its 2023 North Africa Economic Outlook report (https://apo-opa.info/44HmCuv) in Tunis on Thursday 27 July, under the theme “Mobilizing Private-Sector Financing for Climate and Green Growth in Africa”.

According to the Bank Group, growth in the region is essentially driven by the service sector, particularly trade and tourism. Growth in North Africa in 2022 was moderate: 4.1 percent compared with 5.4 percent in 2021.

However, there are significant disparities between countries in terms of the rate of growth, explained Audrey Verdier-Chouchane, Bank Group Regional Economist for North Africa and interim head of the Country Economics Department for Central Africa, North and West Africa, who presented the report.

“To sustain inclusive growth, the region should implement structural reforms that support the development of the private sector, improve productivity and employability, and create job opportunities,” stressed Ms Verdier-Chouchane.

Inflation in the region is set to climb into double digits–14.2 percent–in 2023, before falling to 6.9 percent in 2024. The regional budget deficit should continue at around 3.5 percent of gross domestic product (GDP) in 2023 and 3.2 percent in 2024. The region’s balance of payments deficit is expected to fall to 0.5 percent of GDP in 2023 and 0.2 percent in 2024. The global economic environment, including the price of fossil fuels, the structure of trade, tourism and foreign direct investments, will influence the region’s external position, according to the African Development Bank.

The African Development Bank recommends coordinating monetary and budgetary policies to keep the region’s economies afloat, tackle higher inflation and protect small businesses and populations through targeted public spending. Similarly, maintaining and supporting food security in the region is a critical objective. Countries in the region should invest in agriculture, in particular by developing improved varieties alongside water and soil management strategies. The region must strengthen its resilience, especially regarding linkages between the energy transition, water management and food security, according to the Bank.

Finally, countries are urged to continue efforts to implement reforms to tackle the challenges of budget consolidation, particularly by improving the digitisation of the tax administration system, expanding the tax base, rationalizing public spending and strengthening governance systems.

North Africa should also strengthen its implementation of the African Continental Free Trade Area to stimulate intra-African trade and investments. Furthermore, North African governments should tackle the growing levels of public debt in the medium term by allocating debt funding transparently, restructuring public corporations that are in difficulty and undertaking regular reviews of public spending.

North Africa should take full advantage of its significant natural resources while making green growth an urgent priority. North African governments, foreign and domestic private investors, multilateral development banks and development finance institutions, as well as the private sector, should invest in green growth. Private-sector financing, in particular, can play a crucial role by investing in green energy infrastructure, energy efficiency, sustainable agriculture and land restoration.

The private sector can also provide the expertise, technology and management skills needed for effective and efficient implementation of green development projects.

North African countries should therefore invest in the sustainable management of natural capital to create an additional financing option for climate-related and green growth initiatives, which will contribute to reducing poverty and inequality, and supporting job creation and sustainable economic growth.

The report emphasizes that the African Development Bank Group and other development partners have a crucial part to play in optimizing the role of the private sector and natural capital in financing climate actions and green growth in North Africa.

The North Africa Economic Outlook report, published since 2003, is one of the African Development Bank Group’s flagship publications.

Senior figures from government, national and regional institutions, the private sector, researchers, academics and the media attended the launch of the report, which took place at the Bank Group’s regional headquarters and was accessible via videoconference.

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

President Julius Maada Bio Holds Bilateral Talks with Ethiopia’s Deputy Prime Minister

The president of Sierra Leone, Dr Julius Maada Bio has held several bilateral meetings on the margins of the Africa Human Capital Heads of State Summit in Tanzania, one of them with Mr. Demeke Mekonnen Hassen, Deputy Prime Minister and Minister of Foreign Affairs of the Federal Democratic Republic of Ethiopia.

Mr. Hassen congratulated President Bio on his reelection, at the first ballot, in the recently held 2023 elections and also used the opportunity to express felicitations on Sierra Leone’s recent elections on the non-permanent seat of United Nations Security Council, emphasising that the two successes were important for the small West African nation.

On their flagship programmes, the Deputy Prime Minister said Ethiopia’s Green Legacy on climate change had seen 25 billion trees planted in the last 5 years, adding that there were also the ‘Basket of Abundance’ project, with each home engaging in agriculture and planting vegetables, the ‘Quality Education’ for the new generation and the successful Health Insurance programmes.

On his part, President Julius Maada Bio assured of Sierra Leone’s continued support and respect for her friendly relations with Ethiopia.

He also congratulated the Deputy Prime Minister on the success of wheat production in Ethiopia, adding that they had set a bright example of good practice that Sierra Leone could learn from, especially now that agriculture and food security were among the Big Five Manifesto priorities.

He also noted that the success of their health insurance scheme could provide lessons for Sierra Leone and proposed the expansion of the services of Ethiopian Airlines to Freetown.

The two leaders reflected on discussions they had in 2019 when the Deputy Prime Minister, Mr Hassen led a high-power delegation to Sierra Leone on a two-day working state visit and to be part of a high-level inter-ministerial meeting with ministries, departments and agencies on bilateral cooperation between the two countries.

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

Banks Have 18 Months to Impact South Africa’s Greylisting

July 27, 2023

South African banks have less than two years to fully implement the anti money laundering policies in line with international best practices outlined by the global anti-money laundering watchdog, the Financial Action Task Force (FATF). In January 2025, the FATF will review its decision to greylist South Africa and interrogate the public and private sector measures to address its concerns.

The country will need to demonstrate a practical, scalable plan to combat money laundering, fraud and other financial crimes. Failing to achieve this will have serious economic knock-on effects, such as a significant decrease in international capital inflows and downgrading by credit rating agencies, all of which will negatively impact the Rand. An extended greylisting is also a serious threat to state-owned enterprises that rely on offshore debt capital markets for funding.

This doesn’t need to be South Africa’s reality. Mauritius successfully met FATF’s criteria and was removed from the grey list in two years. However, this required focused attention and collaboration from the public and private sectors. Now, South African financial institutions are under the spotlight and the country has just 18 months to demonstrate an effective anti-money laundering (AML) strategy. It is sufficient time to make enough strides to reverse the greylisting, as the technology exists to combat money-laundering and financial crime at scale.

South Africa’s greylisting spans a wide range of shortcomings, some of which fall within the remit of the public sector. The private sector, however, can make a concerted effort to combat money laundering and financial crime. While some criminal activity occurs using cash or cryptocurrencies, banks remain vulnerable to money laundering, particularly in cross-border transactions. Currently, only 1% of laundered funds are ever recovered despite the government estimating R35bn-R143bn is laundered through local financial institutions each year.

To successfully combat money laundering and financial crime, banks need to get to the root cause of how these crimes can go undetected. And this root cause is identity.

Murray Collyer, Chief Operating Officer of iiDENTIFii (www.iiDENTIFii.com), says, “If banks want to effectively and reliably counter financial crime, they need to validate one critical piece of information: a person’s identity. Banks need the security that a person performing a transaction on the other side of the screen is who they say they are.”

As our lives grow increasingly digital, the ability to counter cybercrime is an urgent consideration. The global police agency Interpol’s Global Crime Trend Report 2022 estimates that over 70% of respondents (all from law enforcement) expect crimes such as ransomware and phishing attacks to increase significantly in the next three to five years. This renders the traditional verification technologies banks favour, such as one-time passwords (OTPs), outdated and a security risk.

Biometric security threats currently fall into two categories: presentation attacks and digital injection attacks. Presentation attacks refer to photos, videos, or even masks being held up to a screen to fool the technology into mapping the features of the identity being defrauded. On the other hand, digital injection attacks see imagery injected directly into the video stream, either through emulators, hacking tools, or virtual cameras.

This directly injected imagery includes sophisticated ‘deepfakes’ or ‘face swaps’, where AI technology spoofs another person’s likeness. iProov, iiDENTIFii’s technology partner, reveals in a new 2023 study that there has been a 149% increase in digital injection attacks and a 295% increase in face swaps. With the emergence and growth of face swaps, low-skilled criminals now have the means to launch advanced attacks. Threat actors launched motion-based attacks simultaneously and at scale against hundreds of systems globally.

Collyer adds, “To the untrained eye or technology, face swap synthetic imagery has the characteristics of the genuine individual’s facial traits. The imagery can match their government-issued identification photograph during a liveness verification attempt if the technology is not equipped with the latest defences.”

Banks must tackle the challenge head-on to have the robust AML systems and processes required for South Africa’s greylisting review. This needs a clear perspective on the current threats and how to mitigate the resulting risks to banks and customers.

Digital injection attack detection needs fundamentally different techniques from presentation attack detection (PAD). Many current biometric systems are not equipped to defend against this fast-growing threat and financial institutions must find a new way to prove identity to prevent money laundering and cyberattacks. The answer lies in the use of ‘liveness’ in authentication.

“Simply put, ‘liveness’ is the confirmation and verification that there is a human being conducting a transaction on the other side of the screen,” Collyer explains. “While cybercriminals can mine personal data and override certain systems through targeted attacks, it is more difficult to forge a sense of human liveness.”

Many local banks are addressing the challenge head-on. They are upgrading their systems in response to new digital risks. “iiDENTIFii has to date partnered with three leading South African banks to fortify their digital identification and onboarding processes. This is part of a wider banking strategy to protect companies and consumers against AML and fraud,” adds Collyer. “Over the next 18 months, we believe the full impact of this solution will be visible and hopefully play a part in shifting the needle on the greylisting decision.

“Our 4D Liveness is resilient to deepfake and replay attacks. It comprises different colour lights that reflect in a certain sequence off the user’s face, which helps determine true biometric liveness. This has been the solution of choice for South Africa’s leading banks.”

It is possible to reverse South Africa’s greylisting in 18 months. Financial institutions need to refine their focus on digital identity, the central factor in performing safe, verifiable, and authenticated transactions.

Collyer concludes, “We call on financial institutions and the government to embed infallible, enterprise-level and sophisticated biometric authentication into the country’s financial services infrastructure. This should not just be a response to our greylisting, but a strategic imperative in an increasingly digitised economic climate where cybersecurity risks abound. If we can demonstrate an ability to combat threats at a global level, this could instill faith in reluctant overseas investors and local customers alike.”

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

Guinean Farm Groups Flourish in Agro-Industrial Processing

Guinean based farm groups are recording huge improvements in agro processing with the introduction of innovative implements backed by new training and modern equipment. This has led to over 40 groups transforming how they farm and learning how to make new products. They sell food, but also fuel briquettes and earth blocks that have earned them major new customers.

Most of the new equipment was designed and produced locally, supporting other small businesses in Guinea.

The results of these initiatives have yielded a sizable increase in production across various agri-food sectors. For example, parboiled rice production grew by an impressive 127%, with an additional 795 tonnes produced. This surge in production triggered an increase in turnover of 146% worth $59,2334 (GNF 5,095,035,000). Similarly, palm oil production grew by 146%, generating a surplus of 229,240 litres. Sales also rose by 72% to $66,080 (GNF 568,400,000).

Over 40 cooperatives in the agricultural and agri-food sectors have undergone a remarkable transformation in Guinea through the INTEGRA ITC programme, which identified groups to support and specialize in agro-industrial processing.

With an overall increase in turnover of more than 900%, farmers’ incomes have grown and their businesses are more viable.

These initiatives have also led to the creation of sustainable jobs. In less than two years, the number of jobs created by the 40 first-time beneficiaries has increased by 30%.That’s almost 900 full-time jobs, with 60% held by women and more than 80% by young people. Working conditions and pay have improved for employees in cooperatives and groups.

These beneficiaries have also been encouraged to adopt economically, socially, and environmentally sustainable practices. They’re using renewable and resource-efficient energies that reduce production costs and help the environment. These include the production of fuel briquettes made from rice, fonio, groundnut and sawdust residues.

In addition, the introduction of stabilized earth blocks by ITC to the Société Nationale de Promotion Immobilière (National Real Estate Promotion Company — SONAPI) introduced new opportunities. ITC awareness campaigns brought the sustainable blocks to the attention of mining and construction companies. Now they’re using the blocks to build housing estates and office buildings. SONAPI has carved out its competitive niche in the construction market.

As a result, cooperatives are building integrated cross-sector value chains, with the aim of strengthening the economy using sustainable approaches. The cooperatives found new business opportunities through partnerships with the Subcontracting and Partnership Stock Exchange – a fund known in French as the Bourse de Sous-Traitance et des Partenariats – as well as major buyers, particularly in the mining sector.

These initiatives show the benefits of promoting local produce and strengthening agri-food chains, while creating sustainable jobs and developing local resources.

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