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A first look at the E-Custom Concession By Chido Nwakanma

September 7, 2020

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed

After years of doodling on the prospect, Nigeria on September 2 voted for automation of processes at the ports as the Federal Executive Council approved a 20-year concession for the E-Custom project by a consortium of firms. The project attracts a headline figure of $3.1b, but the country would not need to spend a kobo. The concessionaire would invest the sum over the 20-year lifespan of the Public-Private Partnership project.

Instead of spending, the Federal Government says the project will generate revenues in multiples of the approved expenditure. Finance, Budget, and National Planning Minister Zainab Ahmed said FEC approved the project following a memo she presented to the Council. She said: “The purpose of the memo we presented to Council was for a project that will enable the complete automation of the Nigeria Custom Service processes and procedures using the application of information technology in all aspects of Customs administration.”

Minister Zainab Ahmed added: “So, Council today ratified Mr President’s approval for the PPP concession for 20 years to Messrs E-Customs HC Project Limited as a concessionaire for the delivery of customs modernisation project.“This is a project that will not have a direct cost to the government. The investors are providing the financings, and this revenue will be deployed in three phases. They will look over the investment in the concessionary period of 20 years.”

Like most people, I prefer to take these huge figures in byte sizes. Renowned Japanese consultant Kenichi Ohmae advised in The Mind of The Strategist that we break down these things into their constituent units for clarity, then rearrange them.

What then is the simple arithmetic of the E-Custom concession?

The Federal Government has approved a cost of $3.1b for the project. The breakdown is a capital investment of $1.2billion in three phases over three years or the average of $400million annually. On the cost side, the government approved for the concessionaire operational cost of $1.9b over 20 years. It translates to a handsome $95million annually.

What does Nigeria get in return?

The projection is that the concession will yield $176billion in 20 years. On paper, this is excellent. It translates to $8.8billion or N3.5trillion annually. In contrast, the Nigeria Customs Service projects revenue of N957billion for 2020. At the exchange rate of N400-$, it will fetch $2.39billion.

The Nigerian Customs Automation Scheme, led by Bionica Technologies, is a presidential initiative on customs modernisation, e-customs project, and the establishment of a digital/paperless customs administration. It will change the mode of administration and results from the running of Nigeria’s 82 border stations significantly. Yes, 82 customs points in Nigeria!

The Customs Automation Scheme will deliver a single-window model of cargo clearance. Experts say the benefits include paperless customs administration, E-payment of customs duty, E-container loading, and electronic risk-board inspection. There is also a single platform link to all other government agencies and E-permit exchange among operators.

The scheme will reduce delays, bottlenecks and corruption within the ports. More crucially, it will increase productivity, national security and revenue generation by the Customs. Bionica Technologies W.A. Limited is the lead partner of the consortium to manage the concession. Other partners include Bergmans Security Consultant and Supplies Ltd, Paramount Group, Huawei Technology, Smiths Detection, Larsen & Toubro Group and Nuctech of China.

President Muhammadu Buhari approved the concession in September. It follows the success of the consortium in a competitive bidding process conducted in 2016. Ninety-four (94) companies responded to the request for bids by the Nigeria Customs Service. The service pre-qualified 15 companies and invited them to make presentations on their solutions. Bionica Technologies W.A. Limited topped.The Nigeria Customs Service commenced a modernisation process in 2013.

The goal remains to change the narrative of poor or under-performance associated with the service. The Customs Automation Programme will guarantee the evolution of an integrated border management module with a centralised and automated Customs Risk Management system. The system would run real-time scanning. It will also ensure full automation of all customs procedures and business. Integral to the system is the complete automation of Customs operations using the latest smart technologies supplied by Original Equipment Manufacturers. There would also be strategic capacity development for the personnel of the service. Stakeholders in the maritime sector agree on the imperative of leveraging technology to drive efficiency and productivity at the ports. They support the programme introduced in 2016 as part of the seaport reform plan adopted by the Federal Executive Council.

Dr Dakuku Peterside, Director-General of the Nigerian Maritime Administration and Safety Agency affirms that port automation and digital solutions are potential game-changers not only for cargo throughput but also profitability. Peterside cites a global benchmarking study conducted by SAP which found that ports that leverage technology to drive productivity improvements enjoy 36% higher operating margins than their peers. The result informs part of the resolve of the Federal Government to institute a single-window operation in Nigerian ports.

The NCS has been modernising since 2013 and has made some remarkable progress. For instance, it announced in 2019 increased revenue of N1.125trillion due to electronic payment of duties and taxes generated from January to October 2019. The Bionica Consortium asserts that a fully automated system would increase the revenue exponentially.

Job creation is another feature of the port automation programme of great interest to stakeholders. It will also minimise smuggling as well as build partnerships with investors. There is a guarantee of external finance having no direct cost to the NCS for all projects. It is pertinent to note that there is no linkage between the over N30 billion in the comprehensive import supervision scheme accruals which are in the custody of the Central Bank of Nigeria, CBN and the concession scheme.

The 20-year concession arrangement provides latitude for long-term planning. Various ports around the world have successfully run similar programmes. Success stories include Singapore, China, Qatar and Venezuela.

We could not ask for a better deal. Will Nigeria allow it to work? Is it optimal? Will it exist over the 20 years or will a new administration throw it out? Experts in that field will let us know in the days ahead, particularly given that it looks alluring ab initio. The E-Customs Concession comes at a time the government is considering various other concessions for airports and other infrastructure. Will it create jobs or eliminate them? The application of technology has worked both ways, but which will it be for Nigeria?

Chido Nwakamma is of The Lagos Business School.

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

Here Is Why Nigeria, Kenya, and South Africa Hold The Highest Potential for Fintech Investors

August 1, 2019

Expect investors who invest in Africa’s fintech sector to cash out big. Investment deals in Africa’s fintech sector shot to a record $357 million in 2018. This is partly because more people are using mobile money services in Sub-Saharan Africa (SSA) than in any other sub-regions in the world. In fact, over the last 12 to 18 months, Sub-Saharan Africa (SSA) has now emerged as one of the fastest-growing financial technology (Fintech) hubs in the world in terms of investments, albeit from a low base.

Here Is All You Need To Know

In 2018 alone, investment in African fintechs nearly quadrupled to $357 million, with startups in Kenya, Nigeria, and South Africa accounting for the largest share. This trend continued into 2019, with a number of high-profile deals.
For example, three Nigerian fintech start-ups — Kudi, OneFi and TeamApt, each raised around $5 million in funding during the first half of the year.
These statistics are from the Global System for Mobile Telecommunications Association (GSMA).
GSMA said huge opportunities await Fintech’s investors, with emerging markets including Nigeria, Kenya, and South Africa holding huge potential for fintech innovations.

The Numbers

GSMA further added that 395.7 million registered mobile money accounts now exist in the region and that nearly nine in 10 registered mobile money accounts are in East and West Africa.
According to the body, which is in charge of over 800 telecoms companies globally, over the past year, several underserved markets in the region have taken steps to accelerate mobile money adoption and, by extension, financial inclusion among citizens.
The body noted that in Nigeria, regulatory reforms introduced in October 2018 allow mobile operators to obtain licenses to operate payment service banks (PSBs), while in Ethiopia, an ambitious financial inclusion strategy has been attracting investment into mobile money services.
Indeed, reforms in Nigeria have seen MTN getting Super Agent license on Tuesday from the Central Bank of Nigeria, with other telecoms to follow suit.

Integration of Mobile Money Platforms With Broader Financial Ecosystem Will Change The Game

GSMA noted that Angola’s national bank plans to submit new laws governing payment systems, including mobile payments, to parliament for approval in 2019.

The telecoms body said these developments notwithstanding, future growth of mobile money services in the region will be largely driven by the interoperability of mobile money services.

Account-to-account (A2A) interoperability gives users the ability to transfer between customer accounts held with different mobile money providers and other financial system players.

It also disclosed that Tanzania led the way in 2014, but several countries across the region, including Kenya, Rwanda, Nigeria, and Ghana, have now launched interoperability projects and use cases.

According to GSMA, mobile money providers’ integration with banks is one particular use case that has significantly increased volumes moving between mobile money and banking systems.

The body, while charging Nigeria and other countries, informed that a next step in the interoperability journey will be the implementation of innovative solutions to integrate mobile money platforms with the broader financial ecosystem.

“A number of options exist around central switching infrastructure for the industry to enable nascent use cases to scale, including merchant payments and efficient connections to domestic and international financial system players. This is already happening at sub-regional levels.

“For example, the eight countries 11 of the West African Economic Monetary Union (WAEMU) are building an interoperable system that will connect 110 million people to more than 125 banks, dozens of e-money issuers, and more than 600 microfinance institutions.

“However, much of the existing bank-focused infrastructure is not optimal for mobile money. In an effort to solve this, MTN and Orange, with the support of the GSMA, launched a joint venture to enable interoperable payments across Africa.

“Known as Mowali (‘mobile wallet interoperability’), the service is open to any mobile money provider in Africa, as well as banks, money transfer operators and other financial services providers.

“With its pan- African footprint allowing for economies of scale and a cost-recovery commercial model, Mowali has the potential to drive down the price of services offered to lower-income customers.

“Additionally, Mowali could shape the future of the mobile money ecosystem in the region by creating a common mobile money acceptance brand with the potential to connect fintechs, banks, merchants and other ecosystem players to nearly 400 million mobile money accounts across Africa,” GSMA stated.

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.

Facebook: https://web.facebook.com/Afrikanheroes/

Africa needs the private sector to bridge the infrastructure gap – Zubairu

July 30, 2019

Samaila Zubairu is President, Africa Finance Corporation (AFC), a pan-African multilateral development finance institution focused on infrastructure development in Africa.

In this interview, he speaks on the need for Africa to bridge its yawning infrastructure gap and how the AFC is working towards providing the infrastructure base that will allow for regional trade to take place on the continent. Excerpts:

Despite efforts of development finance institutions to boost infrastructure outlay, Africa still has a huge infrastructure deficit. What needs to change to bridge the gap?

There are several ways of looking at Africa’s infrastructure gap. Let’s start at the macro level. Look at the investment required for infrastructure; it is about $170billion annually and most of that is for water and sanitation infrastructure which should take $67billion. Energy requires an investment of about $50billion, transport and logistics take $47billion while ICT takes $7billion.

However, Africa has been spending $77billion annually on infrastructure in the last seven years and that leaves a deficit of about $93billion. So, we should look at areas where the private sector can come in such as transport and logistics, based on a public-private -partnership basis.

Why is PPP not as forthcoming as you would like?

There are several points through which the private sector can come in. Water and sanitation is a bit of a challenge for private sector investment because they are viewed as social goods and so governments need to really concentrate on that. For energy, what is important is a pragmatic view of what is required. Governments fail to understand that they alone cannot make the investments that the continent needs, so they need private players. However, they need to de-risk the sector for private capital to come in.

So, the big challenge with infrastructure is that private capital is not flowing into that space. Capital is shy and you have to make it comfortable. So, African governments need to understand that they should make investors comfortable so they can come into the sector and once the sector receives these investments and the critical mass is built, they can withdraw the credit enhancement that is required to attract the investment.

Which countries have successfully deployed this model you described?

We have seen it in several economies. For example, in Turkey, they had bankable power purchase agreements (PPAs) to mobilize and encourage investors. However, when they achieved the requisite investment critical mass, they stopped providing the PPAs. So, there are no PPAs in Turkey today, as the power market has stabilized. Businesses produce the power and the government buys as it needs.

The AfCFTA has come into force and a common market will be launched in July. What role can the AFC play to ensure that it achieves its goal?

We have always believed that infrastructure deficit is a hindrance to regional trade. Africa has the lowest level of regional trade in the world. Some say it is at 10 percent while others say it is 18 percent.

However, the best estimate we have seen is 20 percent which is still very low when compared to Europe where it is 70 percent and Asia at 60 percent. A major bottleneck is an infrastructure. For example, a company in Nigeria finds it difficult to export to Cameroon or Benin Republic because of poor infrastructure. What we are trying to do at AFC is to provide that infrastructure base that will allow for regional trade to take place.

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.

Facebook: https://web.facebook.com/Afrikanheroes/

This Kenyan Startup Has Just Secured $330k In Debt Finance

July 25, 2019

Optimetriks, the Kenyan sales force automation startup has just defied odds and gone after debt finance. A whole $330,000 debt facility (loan) to grow its customer base and add new features? For a startup that was founded in 2016, this appears a life-saving option. But then, why not fund-raising?

Here Is The Deal

Debt financing came from French commercial banks.
The startup intends to use finance to grow its customer base and add new features.
Optimetriks currently serves more than 25 companies across 16 countries in Africa, with its clients operating in sectors such as beauty, telecommunications, food, and professional services. Last month, it took on EUR300,000 (US$335,000) in debt financing from commercial banks in France to fund its growth, with Langlois-Meurinne saying this will go towards product development.

Why Debt Financing?

Although debt financing is an option for fundraisers, so much remains to be said about the strong terms under which loans are given. Optimetriks does not appear to be desperately resorting to borrowing as the nearest funding alternative to remaining in business, however.

The Kenyan startup has previously received grant funding from the GSMA in 2017 and took part in the Francophone Africa-focused L’Afrique Excelle accelerator program earlier this year and has bootstrapped until now. It could also take on Series A investment soon.

“As our company has matured, and based on our existing traction, we are now considering fundraising in the coming months, to benefit from strategic investors, knowledge of East Africa, and consumer goods distribution,” said Langlois-Meurinne.

About Optimetriks

Founded in 2016, Optimetriks has developed a sales force automation platform that helps consumer goods companies and distributors digitize their workflows and operations.

“Typical use cases are route management, defining where the sales representatives need to pass, checking on visits and productivity, providing guidance and background information on the retailers they engage with, outlet management, checking on stock levels, and things like that,” said Paul Langlois-Meurinne, the startup’s co-founder and chief executive officer (CEO).

Optimetriks, which makes money from license and service fees, was launched in a bid to solve key problems in African distribution.

“First, the lack of reliable market information and the costs and limitations that exist when trying to collect and analyse data at a large scale,” Langlois-Meurinne said.

“Second, the fact that there are information asymmetries and sometimes misaligned interests between the actors of the ecosystem. Finally, the fact that middlemen take unnecessary margins at the expense of retailers, and distort the value chain.”

The Optimetriks platform aims to bring more transparency and visibility to the distribution space, and help companies better understand how their resources are being employed.

“We help our clients implement scientific distribution that is data-driven, where every action is logged in the system, and can be tracked. Our clients access our platform either through the mobile app for the field users, or the web app, for office users who need to navigate in the reporting dashboards and configure the deployment.,” said Langlois-Meurinne.

“Our ambition is to be the reference platform that connects directly and on a daily basis consumer goods brands with the millions of African retailers that distribute their products on several key dimensions.”

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.

Facebook: https://web.facebook.com/Afrikanheroes/

GTBank Named Best Bank in Africa at Euromoney Awards

July 13, 2019

Guaranty Trust Bank plc, one of Africa’s foremost financial institution has been named the Best Bank in Africa 2019 by Euromoney at its annual Awards for Excellence, which held in London over the week.

The Bank was also named the Best Bank in Nigeria for a record ninth time, reflecting the Bank’s position as one of the best managed financial institutions in the country, with strong and focused leadership that keep the business in a constant state of re-invention and innovation.

Now in its 50th year, Euromoney is the leading publication for covering the growth of international finance. Euromoney’s Awards for Excellence are the awards that matter to the banks and bankers who matter. This year, Euromoney received almost 1,500 submissions from banks in an awards programme that covers 20 global awards, more than 50 regional awards, and best bank awards in close to 100 countries.

The Magazine’s Awards for Excellence celebrates the best banks around the world by recognizing institutions that have demonstrated leadership, innovation, and momentum in the markets they operate. In selecting its award recipients, Euromoney combines quantitative and qualitative data to honor institutions that have brought the highest levels of service, innovation, and expertise to their customers.

Key to the emergence of GTBank as the Best Bank in Africa and the Best Bank in Nigeria, is the Bank’s digital drive and its clarity of vision in reimagining the future of banks and banking. The Euromoney awards also recognized GTBank’s commitment to leading the future of banking as well as its consistent long-term strategy led by a senior management team that abhors complacency and keeps the business in a constant state of innovation.

Commenting on the Bank’s Euromoney awards, the Chief Executive Officer of GTBank, Segun Agbaje, said; “We are delighted and proud to win the Euromoney Awards for Africa’s Best Bank and Nigeria’s Best Bank. These awards reflect the progress we are making in delivering the best banking experience that captures what customers want in the world of today and tomorrow. They are also a testament to our leading role in driving world-class corporate governance standards, excellent service quality and innovation in Africa’s banking industry.”

He further stated that; “At GTBank, we are passionate about building the bank of the future by leveraging the best of technology to add real value to our customers’ lives, and these awards illustrate the hard work and commitment of our staff, management, and board towards achieving this goal.”

GTBank has consistently played a leading role in Africa’s banking industry. The GTBank brand is regarded by industry watchers as one of the best run financial institutions across its subsidiary countries and serves as a role model within the financial service industry due to its bias for world-class corporate governance standards, excellent service quality, and innovation.

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.

Facebook: https://web.facebook.com/Afrikanheroes/

Opera Founded Startup OPay Raises $50M For Mobile Finance in Nigeria

July 10, 2019

OPay is just a year old in Nigeria, but the startup is already making waves. Nigerian road users would be familiar with the green livery motorbike hailing startup ORide, which is a part of the OPay business. Founded by Norwegian browser company Opera, OPay, the Africa-focused mobile payments startup has raised $50 million in new funding.

A Look At The Funding

A large chunk of the investment came from investors including Sequoia China, IDG Capital, and Source Code Capital. Opera also joined the round in the payments venture it created.
OPay intends to use the capital (which wasn’t given a stage designation) primarily to grow its digital finance business in Nigeria — Africa’s most populous nation and largest economy.
OPay will also support Opera’s growing commercial network in Nigeria, including its motorcycle ride-hail app ORide and OFood delivery service.
Opera founded Opay in 2018 on the popularity of its internet search engine. Opera’s web-browser has ranked number two in usage in Africa, after Chrome, the last four years.

The Startup’s Statistics

On the payments side, OPay in Nigeria has scaled to 40,000 active agents and $5 million in transaction volume in 10 months.
The $50 million investment in OPay is more than just another big round in Africa. It has significance for the continent’s tech-ecosystem on multiple levels.
To start, OPay’s raise tracks greater influence in African tech from China — whose engagement with African startups has been light compared to China’s deal-making on infrastructure and commodities. OPay founder Opera was acquired in 2016 for $600 million by a consortium of Chinese investors, led by current Opera CEO Yahui Zhou.
The majority of the investment for OPay’s raise comes from Chinese funds and sources, including Source Code Capital, Sequoia China, and GSR Ventures. There’s not a lot of statistical data on the value of Chinese VC investment in Africa, but a large portion of $50 million to a fintech venture stands out.

This New Investment May Mean A Major Shift For Nigerian Digital Payments Startups

OPay’s VC haul also has significance vis-a-vis digital-finance in Nigeria. In tandem with other trends, it could support the shift of Nigeria surpassing Kenya as Africa’s digital payments leader. For years Kenya has outpaced Nigeria in P2P digital payments volumes and digital financial inclusion, largely due to the rapid adoption of mobile-money products, such as Safaricom’s M-Pesa.
Some of this is due in part to Nigeria’s Central Bank limiting the ability of non-banks (including telcos) to offer mobile payment services. The CBN eased many of those restrictions earlier this year. This opens the door for mobile-operators like MTN, with the largest phone network in Nigeria, to offer mobile-money products. In addition to fintech regulatory improvements, there’s been a gradual increase in VC flowing to Nigerian payment ventures.
The country’s leading digital payment company, Paga, raised $10 million in 2018 to further expand its customer base that now tallies 13 million. OPay’s $50 million backed commitment to grow mobile money in Nigeria should provide another big boost to digital-finance adoption across the country’s 190 million people.
And not to be overlooked is how OPay’s capital raise moves Opera toward becoming a multi-service commercial internet platform in Africa. Part of the $50 million investment includes diversifying country and product offerings. “Geographic expansion of OPay and other services is a key part of our plans,” Opera CEO Yahui Zhou told TechCrunch via email.

This could place OPay and its Opera supported the suite of products on a competitive footing with other ride-hail, food-delivery, and payments startups across the continent. It could also mean competition between Opera and Africa’s largest multi-service internet company, e-commerce unicorn Jumia.

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.