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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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South Africa’s economy avoids recession as manufacturing, mining grow

Comments (0) Economy, Latest Updates from Reuters

PRETORIA (Reuters) – South Africa’s economy grew by its most in six quarters as the mining and manufacturing sectors reversed sharp contractions due to an uptick in exports, the statistics agency said, ending fears of a recession.

Growth beat market consensus, rising by 3.3 percent in the second quarter of 2016, its fastest quarterly growth since the fourth quarter of 2014, after shrinking by 1.2 percent in the three months to March, Statistics South Africa said on Tuesday.

The currency of Africa’s most industrialised economy extended its gains to 1.3 percent after the growth data was released. The rand traded at 14.1890 per dollar at 1023 GMT versus overnight close of 14.3800.

Economists polled by Reuters had expected a quarter-on-quarter GDP expansion of 2.3 percent while the economy was seen expanding 0.5 percent year-on-year.

Mining led the growth, expanding by 11.8 percent after an 18.1 contraction in the first quarter.

Manufacturing also grew, up 8.1 percent quarter on quarter from 0.6 percent previously.

“The mining and manufacturing were your key drivers for the 3.3 (percent growth) mainly related to exports of platinum and exportation of motor vehicles,” said chief director for national accounts at Stats SA Michael Manamela.

On a year-on-year basis, the economy grew 0.6 percent versus a 0.1 percent contraction in the first quarter, the agency said.

The agency however warned that the jump in quarterly growth was also due to the sharp contraction in the previous quarter, and the more realistic measure was to look at the first six months of 2016, which showed growth at 0.3 percent.

“You should see it in context of that it compares with a very low first growth,” Manamela said.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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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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South Africa’s cabinet reappoints Zuma ally as head of national airline

Comments (0) Economy, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s government has reappointed Dudu Myeni as the chairwoman of South African Airways, the loss-making state-owned airline, it said on Friday.

The cabinet said Myeni, an ally of President Jacob Zuma, was appointed alongside 11 other board members to the board of SAA. The new team will meet the Minister of Finance Pravin Gordhan who will provide direction from a shareholder perspective, it said in a statement.

On Thursday a Finance Ministry source said officials in the department had opposed Myeni’s selection, but had managed to push through some preferred candidates to the cash-strapped airline’s new board.

SAA has been surviving on state-guaranteed loans and has failed to submit financial statements for the past two years, with results for 2015/16 held back after the Treasury refused to grant it 5 billion rand ($343 million) in additional loan guarantees.

Myeni’s reappointment comes two days after asset manager Futuregrowth said it had halted lending to state-owned firms over concerns of political interference in their administration.

In December Zuma denied rumours that he had had an affair with Myeni or that their ties had led to the sacking of then-finance minister Nhlanhla Nene, who had rebuked Myeni for mismanaging a 1 billion-rand deal with Airbus.

Critics say government plans to form a new committee to be supervised by Zuma that would oversee state-owned enterprises like SAA will limit Gordhan’s control over firms.

The rand has slid more than 8 percent against the dollar since Aug. 23, also on renewed fears that Gordhan could be charged over the activities of a surveillance unit set up when he was head of the tax department which police say illegally spied on politicians.

($1 = 14.5933 rand)

 

(Reporting by TJ Strydom; Writing by Stella Mapenzauswa; Editing by Greg Mahlich)

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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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Tunisia’s state airline to cut 1,000 jobs: minister

Comments (0) Economy, Latest Updates from Reuters

Tunisia's state airline

TUNIS (Reuters) – Tunisair, Tunisia’s state-owned carrier, plans to lay off 1,000 employees or more than 12 percent of its full-time workforce, as part of reform plans, the Transport Minister told Reuters on Monday.

Transport Minister Anis Guedira told Reuters the Tunsiar reforms were planned months ago as part of a programme at the airline made in agreement with major unions to reduce costs and improve competitiveness.

“We will soon lay off 400 employees who have chosen to leave voluntarily and they will receive compensation,” Guedira said. “Job cuts will reach 1,000 in Tunisair in total”.

A source told Reuters the airline will pay about $50 million in compensation to 1,000 employees. The airline currently has around 8,200 full-time workers.

As part of broader reforms, Tunisia’s government is seeking to curb the large losses incurred by major state-owned companies, which last year amounted to about $1.5 billion.

Prime Minister Youssef Chahed has promised his new government will take tough decisions to help the economy grow and create jobs as the country comes under pressure from international lenders to push through reforms and trim public spending.

Public sector wages at about 13.5 percent of gross domestic product are among the highest in the world. The central bank said the government would need to seek more external financing for next year or it would be unable to cover those costs.

Chahed has warned an austerity programme with public sector job cuts will be inevitable if Tunisia does not introduce reforms that include the overhaul of some state-run companies.

 

(Reporting by Tarek Amara; editing by Patrick Markey and Susan Thomas)

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Nigeria in recession as low oil prices shrink economy

Comments (0) Economy, Latest Updates from Reuters

By Chijioke Ohuocha and Alexis Akwagyiram

LAGOS (Reuters) – Nigeria, Africa’s biggest economy, officially slid into recession for the first time in more than 20 years as the statistics office announced a further contraction in the second quarter of the year.

The Nigerian Bureau of Statistics (NBS) said on Wednesday that gross domestic product (GDP) contracted by 2.06 percent after shrinking 0.36 in the first quarter.

It said the non-oil sector declined due to a weaker currency, while lower prices dragged the oil sector down.

A slump in crude prices, Nigeria’s mainstay, has hammered public finances and the naira currency, causing chronic dollar shortages. Crude sales account for around 70 percent of government revenues.

Compounding the impact of low oil prices, attacks by militants on oil and gas facilities in the southern Niger Delta hub since the start of the year has cut crude production by about 700,000 barrels per day (bpd) to 1.56 million bpd. The government’s 2016 budget assumed 2.2 million bpd.

On Wednesday, the statistics office said annual inflation reached 17.1 percent in July from 16.5 percent in June – a more than 10-year high – and food inflation rose to 15.8 percent from 15.3.

Nigeria’s sovereign dollar bonds fell across the curve to their lowest value in more than two weeks after the NBS released its data.

“The Nigerian economy contracted more deeply than we had expected in the second quarter,” said Razia Khan, chief economist, Africa at Standard Chartered bank.

“With a wider current account deficit it remains important for Nigeria to maintain a credible policy response, in order to attract much-needed stabilizing inflows,” she added.

The NBS figures showed Nigeria attracted just $647.1 million of capital in the second quarter, a 76 percent fall year-on-year and 9 percent down from the first quarter.

Nigeria’s economy was last in recession, for less than a year, in 1991, NBS data shows. It also experienced a prolonged recession from 1982 until 1984.

President Muhammadu Buhari was in power for some of that period as a military ruler after seizing power in a December 1983 coup and remained head of state until the military pushed him out in August 1985.

The office of the vice president, who oversees economic policy, said in a statement it expected a “better economic outlook” for the second half of 2016 “because many of the challenges faced in the first half either no longer exist or have eased”.

Niger Delta Avengers, the group claiming responsibility for most of the attacks in the oil-producing region in the last few months, said on Monday it had ceased hostilities.

Adeyemi Dipeolu, a presidential economic advisor, attributed the recession largely to a “sharp contraction in the oil sector” caused by the militant attacks.

“The rest of the second quarter data is beginning to tell a different story. There was growth in the agricultural and solid minerals sectors,” he added.

The naira remained at the record low of 418 per dollar hit on Tuesday on the black market, as dollar shortages curb activity on the official interbank market where the currency was offered as rates as weak as 365.25 this month before gaining ground after central bank interventions.

 

(Additional reporting by Felix Onuah in Abuja; Editing by Toby Chopra/Ruth Pitchford)

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IMF insists on international audit of Mozambique debt

Comments (0) Economy, Latest Updates from Reuters

MAPUTO (Reuters) – The International Monetary Fund (IMF) is demanding an external forensic audit of Mozambique’s public debt to regain investor confidence after a scandal over more than $2 billion in secret loans, its local representative said on Tuesday.

Parliament and the attorney-general’s office have launched investigations into the undisclosed borrowing in 2013 and 2014 but the government has baulked at opening up its books to outside auditors.

However, the IMF, which suspended assistance when the loans came to light this year, has insisted on external scrutiny as a precursor to resuming financial aid to what is one of the world’s poorest countries.

“It is important to move quickly to an international forensic audit,” its representative, Alex Segura-Ubiergo, said in an interview on Radio Mozambique, the public broadcaster.

“Investors are still interested in investing in Mozambique and this will bring foreign exchange, will bring dollars, but for this we need also the return of confidence,” he added.

The debt crisis and aid suspension has hit Mozambique hard, with its currency, the metical, losing nearly 40 percent against the dollar since January and economic growth slowing to below 4 percent.

With foreign debt soaring towards 100 percent of GDP, the government has been forced to revise its 2016 budget, which now shows a deficit equal to 11.3 percent of GDP, while the central bank hiked interest rates by 300 basis points in July to try to prop up the currency and contain inflation.

 

(Reporting by Manuel Mucari; Editing by Ed Cropley; Editing by Ed Stoddard)

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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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