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Wizzit: The mobile application servicing South Africa’s underprivileged

Comments (0) Africa, Business, Economy

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Turning 12 this year, Wizzit is an established name in South Africa. It connects a generation of ‘unbanked’ people with safe, reliable access to financial services including debit transactions, transfers and online banking. Similar models such as M-Pesa in Kenya have since appeared on the scene, challenging Wizzit’s industry dominance.

Removing the need to travel long distances to visit a branch has drawn a whole new demographic into banking. Where cash transactions dominated in the past, South Africa’s urban poor are slowly coming around to the benefits of using financial services to receive salary, transfer money and pay for products.

Wizzit’s beginnings, financial services for those left behind

Wizzit was established in 2004 by South African banker, Brian Richardson. He noticed a niche in the market; the opportunity to provide mobile banking services to those who couldn’t obtain traditional bank accounts due to geographical locations and economic constraints. He explains: “Of the 7 billion people on the planet, half, or 3.5 billion people, have no bank account.”

Servicing this untapped market became a priority for Richardson. Not only did he recognize a major business opportunity, but the chance to offer a service that would bring major social benefits. Since its inception Wizzit has spread to Zambia, Namibia, Rwanda and Botswana in Africa and Romania and Honduras globally, proving that a lack of access to secure, convenient and affordable banking is an international problem.

An industry first, now many have followed

Wizzit was a true pioneer in early 2000s. Its success sparked major change, prompting traditional banks to take note and develop their own mobile application models to connect with this market. In just over 10 years, Wizzit has provided over 7 million people with affordable and easy mobile banking in 13 different countries. It has also played a part in decreasing the alarming number of ‘unbanked’ South Africans from 42% in 2004 to 23.5% in 2016.

With affordability a high priority, Wizzit couldn’t compete with the big-budget advertising that the major banks used to attract new customers. They developed an ingenious way of marketing their business while simultaneously helping to address unemployment problems in South Africa: WIZZkids. These were typically young, low-income individuals who live in the communities from which they recruit their customers. They acted as salesmen for the company, signing up friends and neighbors to their bank accounts and financial services. A caveat, they have to be currently unemployed to become a WIZZkid, helping some of the most disadvantaged people and communities out of debilitating poverty cycles.

Next for Wizzit, global expansion

Wizzit has recently expanded into micro-loans for individuals and small businesses and has plans to continue both its African and global expansion. Egypt, Myanmar, Mexico and Colombia are next. According to CEO Brian Richardson, they haven’t even needed to advertise in these countries, partner organizations have reached out to them. Hopefully these countries will benefit as South Africa has, bringing banking to those who would otherwise be excluded.

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China’s gifts to Africa: Government buildings, stadiums

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While much of the aid China provides to Africa comes in the form of investment and loans for infrastructure and economic development, the Asian nation has also given the continent dozens of government structures and sports stadiums.

For example, China has promised the government of Zimbabwe $46 million for a new building to house the nation’s parliament. The building will be located in Mount Hampden, about 10 miles outside the capital city of Harare.

Zimbabwe’s Senate and House number a total of 300 members and the legislative bodies have outgrown the current parliament building.

The pledge followed the Forum on China-Africa Cooperation in Johannesburg last December. The Chinese government also agreed to forgive $40 million in Zimbabwean debt to the Asian nation. At the same time, China pledged to invest more than $1 billion in development of a thermal power plant in Zimbabwe.

In return, Zimbabwe agreed to make the Chinese Yuan legal tender. Zimbabwe abandoned its own dollar currency seven years ago after a period of hyperinflation and uses multiple currencies, including the United States dollar and the South African Rand.

Support fosters economic ties

As China seeks to strengthen its economic ties to the continent, support public and government structures has emerged as one facet of the strategy. With its interest in Africa’s minerals and other resources, China has become a major investor and financier of infrastructure projects.

In 2012, China funded a $200 million headquarters in Addis Ababa for the African Union, dubbing it “China’s Gift to Africa.” The building, 100 meters tall, dominates the skyline of the Ethiopian city. Most of the materials and furnishings were imported from China and more than 1,000 construction workers from China and Ethiopia worked on the project.

China also built an opulent presidential office complex for Mozambique, complete with crystal chandeliers and marble interiors. The structure, which opened in 2014, overlooks Maputo Bay. Cost was not disclosed.

China also donated $25 million for a new building to house the offices of the president and vice president in Uganda and provided furnishings from China. The building, next to the Ugandan parliament building, opened in 2011.

In Sierra Leone, China built a new foreign ministry complex and offices for parliament as well as a 100-bed friendship hospital outside Freetown. China also renovated government offices in Zambia.

China conducts “stadium diplomacy”

The Asian nation has also conducted an effort dubbed “stadium diplomacy,” building more than a dozen sports venues on the continent.

They include Mozambique National Stadium which was built to Olympic standards at a cost of $80 million and seats 42,000 spectators; Tanzania National Stadium, also built to Olympic standards and accommodating 60,000 spectators and built with a contribution of more than $33 million from China; and Malawi National Stadium, which can seat 40,000 and cost $70 million.

China also assisted with construction of four stadiums for the 2010 African Cup of Nations competition in Angola. The complex cost an estimated $600 million. For the 2012 African Cup, Equatorial Guinea built two stadiums with Chinese assistance while 2012 co-host Gabon enjoyed a gift from China of a $60 million stadium.

Chinese investment, trade on the rise

The millions of dollars spent on public structures are dwarfed by ongoing Chinese investment in the continent. In December, China pledged to $60 billion to Africa, most of it in the form of loans and export credits.

China said its cumulative direct investment to Africa over 15 years ending in 2014 was $30 billion.

China has become by far Africa’s biggest trading partner, and more than one million Chinese laborers and traders have moved to the continent in the last decade.

Trade between Africa and China was $220 billion in 2014 and was expected to increase to $300 billion in 2015.

The United States and India are also major trading partners with Africa, according to the World Bank. In 2014, China accounted for 15 percent of imports to Africa and 6.5 percent of its exports. The United States represented 5.5 percent of imports and nearly 5 percent of exports. India accounted for 6 percent of imports and more than 8 percent of exports. Africa also imports about 5 percent of its goods from Germany and exports more than 6 percent to the Netherlands and 4.5 percent to Spain.

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South African entrepreneur succeeds with designer socks

Comments (0) Africa, Business, Leaders

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Serial South African entrepreneur Nicholas Haralambous has hit it big with a line of colorful designer socks that are sold in 20 countries around the world.

Haralambous, who counts his company Nic Harry as his ninth business venture, markets socks made from environmentally friendly bamboo fiber. Nic Socks are worn by celebrities including cricket player Herschelle Gibbs, rugby player Bob Skinstad, actor Maps Maponyane, and Mmusi Maimane, leader of South Africa’s opposition Democratic Alliance party.

Haralambous, who is in his early thirties, got the idea for the business after buying brightly colored imported socks years ago. He did not like the quality or the design. After selling a tech venture he had founded, he used the some of the proceeds in 2012 to launch Nic Harry, a fashion venture that produces the socks and other men’s accessories.

The Cape Town entrepreneur considers socks the foundation of a classy wardrobe for men who may have limited options for accessories. Men should dress “from the ground up,” Haralambous said.

Sales increase rapidly

He sold 6,500 pairs of socks worldwide during the first year of the business. Sales grew ten-fold the second year to 66,000 pairs, and the company expected to sell more than 100,000 pairs in 2015.

His best-seller is The Barbershop sock, which is popular in 10 countries. The company has produced about 70 designs with more than 60 in stock.

Socks sell for as little as $10 a pair. Buyers can subscribe to buy one or two pairs of socks each month and the company also offers early access to new designs and loyalty pricing.

In addition to socks, the company sells accessories including scarves, ties and pocket squares.

Haralambous said the subscription model is the first in South Africa.

Success after nine tries

He said Nic Harry is his tenth business venture in a decade – and he said he has learned a lot from failure.

He didn’t intend to be an entrepreneur. He studied journalism, philosophy and politics at Rhodes University in Eastern Cape and took jobs in talk radio and newspapers.

But he had started his first business while in school, at age 19, and he left the Mail & Guardian to join a start up called Zoopy. He also co-founded Motribe, a mobile social network builder. Motribe was his most successful venture before Nic Harry and Mxit, the mobile messaging giant, bought the company.

With no business training, Haralambous said he mostly learned by trial and error.

Perseverance is critical to success

“Build, fail, learn, and repeat,” he said, emphasizing that successful entrepreneurs will need to persevere in the face of many obstacles. “You’re going to face hardship. If you want the long-term benefit you need the short-term pain and risk.”

He said it is important to see problems as puzzles to solve rather than as roadblocks.

He said he started the accessories company with about $400 he made from his previous business and increased it to more than $2,000 within six weeks.

While many doubted he could build a successful company, Haralambous persisted. He found a manufacturer who could make samples at reasonable cost. He put photos online. Within a month, he had sold more than 1,000 pairs in South Africa and farther afield in the United States and France.

Lessons for entrepreneurs

He said his success carries a lesson for fellow entrepreneurs in his country because it shows it is possible to build a valuable enterprise with only a small amount of money.

Haralambous sees himself as a disruptor in South Africa’s fashion industry, which he says has become complacent.
“The online space is going to disrupt the fashion industry in South Africa. I’m getting in early enough so I’m the leading disrupter.”

 

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South Africa’s AMCU, platinum mines fail to reach wage deal

Comments (0) Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s biggest platinum mine-workers’ union and the industry have failed to reach a deal on workers’ pay, the union said on Monday, raising the prospect of industrial action in the world’s biggest producer of the white metal.

The Association of Mineworkers and Construction Union (AMCU), which led a crippling five-month strike in 2014, has been in talks with Anglo American Platinum, Impala Platinum and Lonmin since July this year.

 

(Reporting by Tiisetso Motsoeneng; Editing by Ed Cropley)

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Despite cuts, Big Oil to expand production into the 2020s

Comments (0) Business, Latest Updates from Reuters

By Ron Bousso

LONDON (Reuters) – Never mind the drop in crude prices, huge spending cuts and thousands of job losses – the world’s top oil and gas companies are set to produce more than ever for some time.

While top oil companies struggle with slumping revenues following a more than halving of prices since mid-2014 after years of spectacular growth, their production has persistently grown as projects sanctioned earlier in the decade come on line.

Overall production at the world’s seven biggest oil and gas companies is set to rise by around 9 percent between 2015 and 2018, according to analysts’ estimates.

With an expected recovery in prices, the increased production should boost cash flow and secure generous dividend payouts, which had forced companies to double borrowing throughout the downturn.

“There are a lot of projects coming on stream over the next three years that will support cash flow and ultimately dividend,” Barclays analyst Lydia Rainforth said.

And despite a drop in new project approvals, companies have throughout the downturn cleared a number of mammoth undertakings such as Statoil’s Johan Sverdrop oilfield off Norway and Eni’s Zohr gas development off the Egyptian coast.

Others opted to acquire new production, such as Royal Dutch Shell, which bought smaller rival BG Group for $54 billion this year, and Exxon Mobil through investments in Papua New Guinea and Mozambique.

Shell is expected to see the strongest growth among its peers over the next two years at 8 percent, according to BMO Capital Markets.

Production is unlikely to drop after 2020, and could post modest growth as companies continue to bring projects onstream, albeit at a slower pace, BMO analyst Brendan Warn said.

French oil major Total, for example, plans to clear three major projects by 2018 – the Libra offshore oilfield in Brazil, the Uganda onshore project and the Papua LNG project – that will begin production after 2020.

“We won’t see 5 to 10 percent growth that we’ve seen from companies in recent years. It will be closer to 1 or 2 percent,” Warn said.

 

SUSTAINABLE

Capital spending, or capex, for the sector is set to drop from a record $220 billion in 2013 to around $140 billion in 2017 before modestly recovering, according to Barclays.

But companies have learnt to do more with the money after slashing expenditure and tens of thousands of jobs, while the cost of services such as rig hiring dropped sharply throughout the downturn.

“2017 is the sweet spot for integrated companies. It took two to three years to adjust to the drop in oil prices, and a lot of the efficiencies introduced in recent years will roll into 2017, when projects kick in and free cash flow will improve,” Rainforth said.

The resilience is mostly due to new gas projects coming on stream as companies shift towards the less polluting hydrocarbon that is expected increasingly to displace oil demand in coming decades.

The slower pace of project development after a decade of rapid growth that was accompanied by soaring costs will help companies, Warn said.

“That is much more sustainable for a major that will reduce the number of large capex projects.”

 

(Reporting by Ron Bousso; Editing by Dale Hudson)

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South Africa’s antitrust body rejects appeal to delay Massmart complaint

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JOHANNESBURG (Reuters) – South African grocery retailers have lost a bid to delay a hearing into a complaint brought by Massmart that accuses them of anti-competitive behaviour, the antitrust watchdog said on Friday.

Large food retailers Shoprite, Spar, Pick n Pay had sought to delay the hearing into Massmart’s complaint on the grounds there is already a wider investigation into factors that could be distorting competition.

Massmart, a division of Arkansas-based Wal-Mart, lodged the complaint in 2014, saying its expansion into the grocery sector was being hampered by lease arrangements that restrict malls from renting out space to rival food retailers.

Known for its Game chain that mainly sells electronic goods, Massmart has been trying to push into the grocery market since Wal-Mart took a controlling stake in 2011, a move that pits it against rivals that also include upmarket food retailer Woolworths.

The Competition Commission has said exclusive clauses in leasing agreements, which can restrict malls from renting out space to rival food retailers for up to 20 years, could be one of the features preventing more competition.

Its sector-wide investigation, which will also examine competition between small informal foreign-owned shops and local stores popularly known as “spazas”, is expected to be completed by the end of May 2017.

 

(Reporting by Tiisetso Motsoeneng; editing by David Clarke)

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Rwanda signs $818 mln deal for new international airport

Comments (0) Africa, Business, Economy, Latest Updates from Reuters

By Clement Uwiringiyimana

KIGALI (Reuters) – Rwanda has signed a deal with the African division of Portuguese construction firm Mota-Engil to build an international airport at a cost of $818 million, the company and government officials said.

They said the first phase of the airport, which is part of a push to attract more tourists and boost Rwanda as a conference destination, would cost $418 million and is expected to start in June next year and be completed by December 2018.

Rwanda’s plans for the new Bugesera International Airport date back to 2011 when it first announced it was seeking bids from the private sector to design, build, finance, maintain and operate the airport through a 25-year concession.

“The first phase is for 1.7 million passengers (per year) capacity and it gets all infrastructure associated for $418 million,” Mota-Engil Africa Chief Executive Officer Manuel Antonio Mota told reporters late on Thursday after signing an agreement with government officials.

Rwanda said in a statement that Mota-Engil would operate the airport for 25 years, with an option to extend another 15 years.

When it first sought bids, the government said the first phase would involve building passenger and cargo terminals and a 4.2 km runway to handle large commercial airplanes, while the second phase would be for a second runway and more terminals.

Mota-Engil said the second phase costing $400 million was expected to raise the airport’s handling capacity to 4.5 million passengers per year.

Neither Mota-Engil nor the government said when the second phase would start.

The existing international airport in the capital Kigali has an annual capacity of 1.6 million, according to the Rwanda Civil Aviation Authority, though it has little scope for expansion.

“Bugesera International Airport is coming in at the time when it is badly needed because we all know that the current airport capacity is not matching the growth of our traffic in terms of aircrafts, in terms of passengers,” James Musoni, Rwanda’s minister for infrastructure, said.

The coffee and tea producing country expects its economy to grow 6 percent this year and 2017 and then 6.5 percent in 2018.

 

(Editing by George Obulutsa and David Clarke)

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Kenya sees tourism revenues rising 18 pct to 100 bln shillings

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NAIROBI (Reuters) – Kenya sees earnings from tourism rising to 100 billion shillings ($990 million) in 2016, helped by improved security, infrastructure and marketing, the president’s office said on Wednesday.

The office did not give a comparative figure, but in June, Tourism Minister Najib Balala said Kenya earned 84.6 billion shillings from tourism in 2015.

Tourism, along with tea, horticulture and remittances are Kenya’s leading sources of foreign exchange.

($1 = 101.2500 Kenyan shillings)

 

(Reporting by George Obulutsa; Editing by Toby Chopra)

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How did South Africa overtake Nigeria to be crowned South Africa’s largest economy?

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According to the IMF’s World Economic Outlook, South Africa has dethroned Nigeria to once again become Africa’s biggest economy. The two African nations have swapped the title many times in recent years. Nigeria previously held the designation since 2014.

The reasons behind South Africa’s re-coronation are fairly simple. When nations are compared to each other, the values of their respective economies are converted into USD, the international benchmark. Therefore, the results are heavily affected by the fluctuations of international exchange rates.

This most recent announcement has been arrived at by comparing the last GDP figures, from December 2015, with exchange rates from August 2016. The numbers state that South Africa’s economy is now worth $301bn and Nigeria’s is worth $296bn. However looking at this designation in isolation is largely meaningless, telling little about how the economies in these two countries are actually faring.

Currency crash sends Nigeria to second place

In June of this year, Nigeria ended its 16 month peg of the Naira against the USD. The peg was put in place in order to stabilize the currency, fixing the value of the Naira to 199 against the USD. However this measure was costly, as the government had to spend billions of dollars worth of currency reserves to uphold it.

Analysts say the global slump in oil prices inadvertently forced Nigeria to abandon the peg. With reduced oil revenues, and government reserves already at critically low levels, there was little choice but to end the fixed value of the Naira. As soon as the control was removed, the value of Nigeria’s currency went into a tailspin. Today the Naira is worth 308.5 vs the USD, compared with the fixed 199 a few months ago. As a result approximately $169bn has been wiped off the value of the Nigerian economy.

Conversely, the South African Rand has risen in recent months. The currency experienced major falls late in 2015; however the Rand is now 17% higher against the dollar than where it sat at the beginning of the year. These two factors explain the recent exchange in status as Africa’s biggest economy.

Alan Cameron, an economist at Exotix Partners said, “More than the growth outlook, in the short term the ranking of these economies is likely to be determined by exchange rate movements,”

Questionable results

A strong argument can be made that Nigeria’s economy has been overvalued since the introduction of the peg, and that the market has corrected itself now that the measure has been removed. However, it would only take a modest rally of the Naira for Nigeria to again eclipse South Africa as Africa’s biggest economy.

Some analysts have called these recent results into question, citing problems with the methodology used to arrive at the new figures. KPMG senior economist Christie Viljoen explained his concerns: “The time difference between the two data points (December 2015 GDP vs August 2016 exchange rates) makes these calculations spurious at best and not really a reliable indicator of recent developments.”

In the coming months, both South Africa and Nigeria will be releasing their official 2016 Q2 GDP reports. Viljoen believes that these figures will bring clarity to the situation, and that there is a possibility that Nigeria will regain the top spot.

Beyond the figures both Nigeria and South Africa are struggling

However these figures can be distracting. A look beneath the surface reveals a somewhat more troublesome picture. Both South Africa and Nigeria’s economies contracted in Q1 of this year. South Africa posted negative growth of -1.2% while Nigeria recorded -0.63%. If either nation posts a contraction for Q2, it will be in recession.

In South Africa, unemployment is at a distressingly high 26.7%, while in Nigeria employment has increased every month this year to 12.1%. South Africa’s economy is fairly dependent on the mining industry which exports heavily to China. The global slump in commodities prices along with China’s slowdown has heaped misery on the sector. What’s more it could see its borrowing power reduced if its credit rating is downgraded later this year. Nigeria has been staggered by extreme levels of inflation, currently at 16.5%, regional terrorism, and the oil crisis.

The rest of the world is no doubt more interested in the arbitrary title of “Africa’s biggest economy” than either South Africa or Nigeria, who both realizes they have serious issues to address.

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Shares in Kenya’s two biggest banks fall for third session after rate caps

Comments (0) Africa, Business, Economy, Latest Updates from Reuters

NAIROBI (Reuters) – Shares in KCB Group,, Kenya’s biggest bank by assets, and Equity Bank, the biggest in terms of number of customers, fell sharply on Monday for a third consecutive session as investors reacted further to a government move to cap commercial lending rates.

By 0647 GMT, shares in KCB and Equity were both down 9.3 percent on the Nairobi Securities Exchange at 24.50 shillings and 26.75 shillings respectively.

Co-operative Bank of Kenya dropped 9.7 percent to 9.75 shillings, while NIC Bank fell 8.3 percent to 22.00 shillings.

President Uhuru Kenyatta on Wednesday signed into law a bill capping commercial bank lending rates in a bid to boost the economy.

Businesses in the East African country have complained that high rates, which average 18 percent or more, hobble corporate investment. Analysts, however, have said capping rates may be counterproductive as it makes banks less willing to lend.

 

(Reporting by George Obulutsa; Editing by Susan Fenton)

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