Enu Afolayan, Auteur à Africa M.E.

Abu Dhabi’s Mega Projects Continue Despite Oil Slump

24 May 2017 Comments (0) Middle East Like

Sitting on 6% of the world’s oil reserves, Abu Dhabi has pushed forward with a construction program that has seen a combined USD $37 billion poured into several mega building projects in the region, despite 2014’s slumping crude oil prices. Expected to be completed by 2020, the ten biggest projects under construction include Abu Dhabi’s own Louvre art museum, a nuclear power plant, sewerage tunnel, hospital, special burns clinic, highway, housing development, residential area and a new air terminal, among others.

Construction on the projects began before the global economic downturn and Abu Dhabi has had to make sharp cuts to spending over the past few years. According to credit-rating company Fitch, spending was cut by a 20% in 2015, after falling oil prices led Abu Dhabi to run a fiscal deficit of 13.2% of GDP that year. However, the recovery of oil prices in 2016 has eased some of the pressure from government finances and several construction projects are about to be unveiled.

Under Construction

The Louvre, Abu Dhabi, is among the most anticipated construction projects set to be finished by the end of May. The white dome-covered building is surrounded by water and was designed by French architect, Jean Nouvel. Costing $1.14 billion, it includes a 280-seat theater and a children’s museum. Also, to be completed later in the year is a $1.5 billion housing development, Jabel Hafeet, which will provide homes for 3,000 people, including a school, a clinic and other facilities; $1.14 billion residential development, Ain Al Faida, which will house 2,000; the $1.1 billion, Sheikh Shakhbout Medical City, which specializes in treatment for burns and has 739 beds; and a new sewerage tunnel, which is said to be among the world’s longest at 25 miles in length and at a cost of $1.5 billion.

Projects to be completed in the following years include, the first nuclear power plant in the United Arab Emirates, Barakah Nuclear Plant, which will supply 25% of the country’s electricity by May 2020, according to the Emirates Nuclear Energy Co-operation. The $23 billion plant includes four reactors, which will produce a combined 5,600 megawatts. Abu Dhabi’s newest air terminal, the $3.5 billion, Midfield Airport Terminal, which will have 49 gates, shops, restaurants and a hotel. The terminal was built over six levels and will double the airports capacity to 30 million passengers a year. It is expected to be finished in January 2019.

Also under construction is a new highway, the E11, which will link Abu Dhabi with the Saudi border at a cost of $1.5 billion. The $1.2 billion, Al Ain Hospital to be completed by December 2018 and a new district in Abu Dhabi called Zayed City. Currently the road network, sewerage, electricity, lighting and water infrastructure is only 19% complete. The $909 million project is expected to be finished by 2020.

Positive Outlook for 2017

Despite the cut-backs, the outlook for construction companies across the Middle East is set to improve in 2017. According to a report from Middle East Business intelligence service MEED, the region still offers significant opportunities for construction companies, despite the slowdown in spending. ‘There is no doubt that the worst is behind us,’ said MEED editorial director, Richard Thompson. ‘The recovery in oil prices and the implementation of reforms means things will improve for the region’s construction market in 2017,’ he said. Although the future for construction companies looks brighter in Abu Dhabi, increased competition is expected due to the lower volume of construction projects, warns MEED.

Cameroon Tastes Success with its Penja Pepper Export

10 May 2017 Comments (0) Agriculture, Featured 2

Cameroon’s distinctive Penja pepper, hailing from the volcanic soil of the Penja valley, is the first African product to receive an internationally protected geographical indications label (PGI) by the African Intellectual Property Organization. Recognized by the European Union, the label awards the name of an area, a specific place, or in exceptional cases, the name of a country, as a description of an agricultural product or foodstuff. The product must be traditionally and at least partially manufactured within the region and thus acquire unique properties.

The Penja pepper, known for its bright, musky flavor, has become a prized spice used by Michelin-starred chefs around the world and fetches as much as USD$33 per 3.5 ounces. There is some confusion as to the origins of the pepper, some saying a farmer stumbled across it and gave it to his wife to plant, whilst others maintaining a French colonialist planted it on his banana plantation, but it is clear the white peppercorn rose to prominence through French entrepreneur Erwann de Kerros. Kerros came across a farm growing the pepper, in Cameroon, in 1992 and was astounded by its distinct flavor. He stayed in the region for four years before returning home to reveal the great qualities of the pepper. Today Kerros runs his spice company, Terre Exotique, with almost $10 million in revenue.

PGI Label Profits Farmers

The PGI label on Penja pepper has also helped the local community who farm it. The small town of Penja, and surrounding villages have been transformed by the localized Penja production. According to law professor Michael Blakeney, from the University of Western Australia, who has advised nations on intellectual property rights, there are huge economic benefits from the PGI label. You can charge between 8 – 10% more for a product that’s sold under the label and it protects rural economies: farmers stay where they are if their product is profitable, he said.

The label prohibits the products name from being used by producers outside of the region, just as champagne must be produced in the Champagne region of France and therefore means more work for the local people of Penja. Since the label was awarded in 2013, some 200 new farmers have taken up production, said pepper plantation owner Rene Claude Metomo. Many others have abandoned growing coffee and cocoa in favor of Penja pepper. Although there are some growers in Madagascar, Cameroon is the only country where it’s grown on a large enough scale to be reflected in export statistics.

Production on the Increase

Over the past five years, production of Penja pepper has increased more than fifteen-fold, according to Business Cameroon. In 2012, before the PGI label was awarded, production levels of Penja were at 18 tons per year, but in 2015 that figure had risen to 300 tons and continues rise. With around 60% of production consumed locally, the remainder is exported to the European market and chefs around the world are clamoring for more. New York City chef, Lior Lev Sercarz said he buys around 331 pounds of Penja pepper per year. It’s got herbaceous, grassy notes and doesn’t burn, he said.

Business Cameroon also reports that there are plans made by Swiss agro-food giant, Nestle, to use Penja pepper in their Maggi bouillon cubes. Maggi stock cubes, officially represents 90% of the production of the Nestle Cameroon factory, which supplies the whole CEMAC market – Cameroon, Congo, Chad, Central African Republic and Equatorial Guinea. The project would mean an increase in demand and production of Penja pepper, and a further boon to the local people of the area. Most of whom are farmers who would not be protected if it weren’t for the PGI label.

Penja pepper is one of three African products to be awarded the PGI label, along with Oku honey from Cameroon and Ziama Macenta coffee from Guinea. According to the general manager of the African Intellectual Property Organization Paulin Edou Edou, there may be six more African products with the PGI label in the near future. Only a few years ago the notion of intellectual property was unknown in the African continent, said Edou Edou. Now, countries are lining up to have products registered. With the success, Cameroon has seen with Penja pepper, it is easy to see why.

Africa’s first online shopping mall looks to make its mark

25 April 2017 Comments (0) Business, Featured, Technology 5

Online shopping is big business across much of the world, but in Africa e-commerce has yet to make the sort of impact that other technologies, such as cell phones, have done. However, the online retailer, Odjala, is Africa’s first online shopping mall, and it hopes to capitalize on the ever increasing access the continent has to smartphones and the internet.

The spread of e-commerce

While most African consumers still visit bricks & mortar stores or markets to make a purchase, the market for online retail in Europe and North America is huge. The man behind Odjala, Afiss Bileoma, mentioned that 60% of people in Europe and North America use online shopping to make purchases. The company E-marketer, states that Africa only accounts for 2% of online purchases worldwide, but this is a situation that is already changing and likely to change even more as time goes on.

Internet penetration is around 20% in Africa now, and smartphones are rapidly spreading along the path that cellphones already trod.

This embracing of technology has already led to large online retailers such as Nigeria’s Jumia, which has sites in 23 different African countries. However, the Benin based Odjala will be the first to offer a virtual mall online, and it will be offering consumers the chance to buy a wide range of products.

Bileoma states, “We turn around 10,000 Internet users a day, 20% of which will go through with a purchase. They buy a lot of gifts, clothes, toys. We succeeded a big blow by signing a partnership with Naomi Dolls; dolls that were only available in Côte d’Ivoire or France.”

In addition to offering exclusive products such as Naomi Dolls, Odjala’s main role is in providing an online presence to Benin’s largest outdoor market. The market is called Dantokpa, and is situated in the Cotonou area of the nation. Dantokpa hosts numerous independent shops and stands, yet most of its stock is now available on Odjala’s online mall which allows Benin’s consumers to peruse the extensive range of goods from their own homes.

Outdoor meets online

It would initially seem that an outdoor market is the antithesis of online shopping, but Odjala has sought to connect the traditional way that most Beninese shop, with the growing demand for online services. Odjala means “Big Market” in the local language of Yoruba, and the Odjala app is free to download on both Android and Apple products. Bileoma set up Odjala in 2016, and secured agreements with the majority of Dantokpa’s stores, and additionally made deals with other retailers in the area.

A consumer can use either the app or visit the online mall directly on their computer; any order that is placed is then delivered to their door by a courier. Bileoma accepts that this relatively new concept will take time to grow, as many potential customers have to get used to shopping in such a different way. Bileoma has promoted the concept on social media sites, such as Facebook, but still encountered a lot of customers who he said would “call and who actually wish to see the stalls.”

Nevertheless, such problems can often be overcome by providing customers with a sense of security that lessens concerns they may have over a new service. Bileoma explained that, “If a customer is not satisfied by a product, he can return it.”

This policy is fairly standard for online retailers around the world, but one of Odjala’s other features is a lot less common. Around 90% of purchases made on Odjala are paid for by the customer upon delivery. This model would be highly unusual for most online retailers, and is more akin to the method used by auction sites like Ebay.

However, these types of reassurances could help ensure that people new to online retail, feel more confident about trying a new method of shopping. It is online shopping with an understanding of how the majority of consumers in Benin are used to spending their money, and Bileoma will be hoping that such things build confidence in his brand.

As online shopping saves customers’ time, and the money that would be spent on traveling to a store, Odjala looks set to make the most of the ongoing spread in Africa’s online presence.

Israeli start-ups raise a record $4.8 billion in 2016

19 April 2017 Comments (0) Business, Featured, Technology 2

Overall, last year was a successful one for Israeli start-ups, raising a record breaking $4.8 billion in funding, according to a recent survey by the Israel Venture Capital (IVC) Research Center and law firm Zysman Aharoni, Gayer & Co. (ZAG). The increase is of 11% from the year before, when Israeli high-tech companies raised $4.3 billion. The report also stated that the average financing round, which has been steadily growing over the past five years, reached $7.2 million last year, 19% above the $5.1 million five year average. However, the last quarter of 2016 saw a drop of 8% compared to the last quarter of 2015.

IVC CEO, Koby Simana explained in a statement, that 2016 was a record breaking year for Israeli start-ups, but despite the higher total amount, it was characterized by a smaller number of financing rounds, with higher average capital raised each round. “This is a troubling trend for the Israeli VC funnel, since the majority of capital goes into later rounds.” Simana said. “If there are no companies lined up for later investments, there could be a more serious issue later on.”

Fewer financing rounds

While capital-raising reached new heights, the survey found the number of financing rounds were much fewer than expected. There were 659 deals closed in 2016, which is only marginally above the average of 657 deals closed per year. It was also 7% lower than 2015’s record high of 706 deals closed throughout the year.

The IVC – ZAG report also found an upsurge in large deals (above $20 million) in 2016. Both in terms of deal numbers and capital raised. There were 76 large deals during the year and $2.68 billion of capital raised. An increase of 22% from 2015 where 76 deals closed and $2.19 billion was raised. The increase in large deals is due to the enhanced activity of foreign investors, primarily corporate investors and venture capital funds, explained Simana.

Software companies raise most capital

Software companies led the capital raising again last year, with $1.7 billion in funding, up from $1.4 billion in 2015, which also placed them first. Internet capital decreased, attracting a mere 16% of total capital, or $744 million, compared to 2015’s $1.12 billion, when it placed second with a 26% share. Life science capital raising also decreased in 2016, by 14%. However, the outlook for life science capital is still positive, according to Shmulik Zysman from ZAG. The industry still has potential in Israel, he explained, due to three reasons: the interest shown by Chinese investors, good chances of European and US investors returning to Israel and Donald Trump’s campaign to ease price control on medical services and drugs.

An optimistic outlook for 2017

According to Forbes, Israel continues to attract the attention of top global funds looking for great deals outside of Silicon Valley, Boston and New York City. As well as large corporates interested in the innovation coming out of Israel, Chinese investors will continue to be a major influence. Forbes also put the decline of exits (initial public offerings and merger and acquisition deals) down to a growing maturity of the tech ecosystem in Israel. Regarding the findings in the report, Zysman remained cautious for the year ahead. “We expect the uptrend in capital raising activity to continue in 2017,” he said in a statement. “Though possibly at slower rates.”

Mark Shuttleworth: Africa’s first dot com millionaire

4 March 2017 Comments (0) Africa, Leaders 5

With a net worth of $500 million, a trip to space, three successful businesses and a not-for-profit under his belt, it is not surprising that South Africa’s Mark Shuttleworth is an inspiration to many in a country still emerging from apartheid, and still plagued by rampant poverty and corruption.

The Emergence of Thawte

Shuttleworth’s success story stared in 1995, whilst still a student at the University of Cape Town, Shuttleworth created Thawte, a consulting firm that became a world provider of digital certification, a trusted third party that could be used to create secure connections to a server via the internet. According to AFKInsider, it was the first ever full-security encrypted ecommerce web server commercially available outside of the United States. Shuttleworth sold the firm in 1999 to US based company VeriSign, who at that point owned 50 percent of the market, the other 50 percent belonging to Thawte. VeriSign bought the company for $575 million when Shuttleworth was only 26 years old.

With the profits from the sale of Thawte, Shuttleworth could easily have retired. Instead he used his capital to help other South African’s find their potential. In the year 2000, Shuttleworth created HBD Venture Capital, a company which invests in local South African businesses with international potential and in 2001, The Shuttleworth Foundation, a non-for-profit that aims to improve access to, and quality of, South African education. Shuttleworth was still looking for new challenges, however, and began to embark on the long journey that would lead him to being a space tourist.

Shuttleworth Becomes the First African in Space

In 2002 Shuttleworth became the first African ever to travel to space and the second private citizen ever to self-fund a trip to space. At a personal cost of $20 million, Shuttleworth bought a seat on a Russian spacecraft and began training. He trained for nearly a year, seven months of which were spent at Russia’s Star City, at the Yuri A Gagarin State Scientific Research and Testing Cosmonaut Training Center. He became part of the Russian Soyuz TM-34 crew and visited the International Space Station (ISS). Shuttleworth spent eight days aboard the ISS where he conducted scientific experiments for South Africa. He returned to Earth on May 5^th, 2002, but his incredible feats don’t stop there.

After returning from space, Shuttleworth founded yet another company, the Ubuntu project, a computer operating system that would be completely free. Based on a version of the Linux computer operating system that is open source, Ubuntu, roughly translates to ‘human-ness’ in the South African Nguni Bantu language. It also means ‘I am what I am because of who we all are,’ which works with Shuttleworth’s idea that the software could be edited and improved upon and shared for free. Without heavy licensing fees, Ubuntu could reach a wider audience and be shared by people who could not afford other operating systems. However not every move Shuttleworth has made has been supported by the people of South Africa.

Shuttleworth in Court over Exit Charge Levy

In 2009 Shuttleworth decided to leave his home in South Africa and move to the Isle of Man. In doing so, he also decided to move approximately $177 million in capital from South Africa with him. The South African Reserve Bank, however, charged him a $17.7 million exit fee that would need to be paid in order to release the businessman’s assets. He paid the exit charge, but then sought to recoup the levy. Shuttleworth argued the government’s position around foreign exchange controls constrained small business and sought to have the exit fee returned, with interest.

According to ITWeb, the legal battle was taken to the Supreme Court, which initially Shuttleworth won and the Reserve Bank was ordered to repay the levy amount with interest. However, the Constitutional Court, the highest in South Africa, overturned the Supreme Court as they found the exit charge was in place to regulate conduct, not to raise revenue and the ruling was overturned.

The Reserve Bank did not have to repay Shuttleworth the exit charge with interest and he was repaid nothing.

Although the move out of South Africa may have soured his relationship with his country a little, Shuttleworth continues to be an inspiration for young South African entrepreneurs. He now has dual citizenship with the UK and South Africa and continues to run Ubuntu and Canonical. Never resting for long, it will be with great interest to see what the future holds for Africa’s first dot com millionaire.

The collapse of oil prices is forcing the UAE to reconsider a long-standing taboo on taxation

4 January 2017 Comments (0) Featured, Middle East 1

The past seven months have seen global oil prices drop sharply leading to significant revenue shortfalls in many energy exporting nations in the Middle East. Desperate to diversify revenue, the Gulf states will introduce direct taxation on its citizens for the first time.

According to Younis Haji Al Khouri, the United Arab Emirates Finance Minister Undersecretary, taxation could generate billions of dollars in revenue for the oil-dependent nation. A draft law for corporate taxation was approved by the UAE cabinet at the start of the year and plans to introduce value-added tax (VAT) by 2018 are underway. VAT would include heavy fees on luxury items such as cigarettes and alcohol, Al Khouri explained, but certain sectors such as healthcare, education, social services and 94 different food items would be exempt.

“There was a study conducted in 2014 that showed that the [revenues] collected from the implementation of value-added tax for the UAE are between AED10 billion (USD$27 billion) to AED12 billion (USD$32 billion)” Al Khouri said.

Falling oil prices

Oil prices reached an all-time low at the start of the year with benchmark Brent crude oil prices as low as just $28 per barrel and up to only $45.4 per barrel half way through November. In comparison, Brent crude went for more than $115, per barrel in June of 2014, reported Gulf News.

Largely to blame for the decrease in oil prices are surging oil production in the United States, a higher US dollar, and weak economic growth in energy importing countries, reports the BBC. However, the war in Syria and Iraq has also had a part to play. Militant group ISIS has been capturing oil wells and purportedly undercutting market prices by selling oil on the black market at a significant discount. According to the BBC, ISIS is making around $3 million a day selling oil for around $30 – $60 per barrel.

This has left the UAE and other oil-producing countries to deal with lower prices for their output. While the UAE government has taken some steps to remedy the situation, such as cutting billions of dollars’ worth of petrol subsidies, according to Deutsche Bank and IMF, the nation would still need the price of oil barrels to rise to at least $81 per barrel to balance its budget.

Introducing Tax in the Gulf nations

Introducing tax may be the answer to the UAE’s revenue woes. Although taxation has long been a taboo subject in the Gulf states, the current price of oil has caused many countries in the Gulf Cooperation Council (GCC) to rethink their stance. Taxation could be an alternative source of income for countries hoping to move their economies away from a dependence on oil and gas.

A research and risk analyst at Moody’s Investor’s Service Mathias Angonin, said the UAE has a limited amount of ways to improve revenue. “The UAE introduced tough measures quickly, including the fuel subsidy reform and the reduction in capital expenditures,” Angonin said. “But the list of low-hanging fruits to raise revenue or reduce expenditures is getting shorter and shorter. The authorities are focusing on medium-term measures such as the VAT introduction in 2018 and 2019 and new forms of taxation.”

Moving Economies Away from a Dependence on Oil

Although it has long been a steady source of income, the UAE is not entirely dependent on oil and gas. The country has a thriving maritime port and is a global aviation hub. According to Gulf News, UAE is one of the most diversified economies in the region. Trade and logistics, services, retail, tourism and aviation are among the key drivers of non-oil growth, explains Shady Shaher Al Borno, Head of Macro Strategy Research, Global Markets and Treasury, Emirates NBD.

“We expect the UAE economy to grow by 3.4 per cent in 2017,” says Al Borno. “In the medium run, we expect Expo 2020 to have a positive impact on growth dynamics of the UAE as a whole as the non-oil sector will benefit from the flow of projects for the construction of facilities to host the 2020 event.”

Dubai’s staging of the next universal technological exposition, entitled ‘Connecting Minds, Creating the Future’ and based on themes such as sustainability, mobility and opportunity, is expected to add an estimated 4.5 percentage points to GDP growth in the UAE and an extra $10 billion of private sector cash injected into the GCC, according to a report by Qatar National Bank. The event will also create thousands of jobs in construction, planning and tourism.

Shuffling the Deck: Saudi Arabia favors new minds over lifetime politicians

20 December 2016 Comments (0) Featured, Middle East, Politics 4

Amidst a global re-shuffling of political office and norms, Saudi Arabia has appointed a new Minister of Finance. Mohammed Al-Jadaan has replaced Ibrahim Al-Assaf, who worked within the ministry for the previous two decades before being appointed its top position. Al-Jadaan is seen as a breath of fresh air for the Saudi Arabian economy, bringing with him an outsider’s view, free from the restrainst associated with career politicians. While Al-Jadaan has vast experience with trade policies and restrictions from his time at Capital Markets Authority, this will be his first governmental ministry post.

Re-gilding of the government

A royal decree announcing the appointment of Al-Jadaan was issued earlier this month by King Salman, the leader of Saudia Arabia. Al-Assaf has been appointed Minister of State and has been made a Member of the Cabinet, moving his expertise from finance to a broader scope of affairs. Al-Jadaan was integrated in the 2015 opening of the Saudi market to foreign investments and is expected to ease existing barriers in an effort to attract more overseas capital. According to Jason Tuvey, Middle East economist at Capital Economics, Al-Jadaan “already has policymaking experience having overseen the opening up of the Saudi Tadawul to foreign investors over the past couple of years,” which is expected to positively influence his role as Minister of Finance.

Al-Jadaan studied both Islamic law and Islamic economy at Imam Mohammed Ibn Saud Islamic University in Riyadh. Before his appointment as the chairman of Capital Markets Authority, Al-Jadaan was a founding partner of the Al-Jadaan and Partners Law Firm. He was listed in Chambers and Partners as a leading lawyer in corporate/commercial law and banking/finance practice for a decade and is expected to bring this wealth of real-world experience into the Ministry of Finance.

Right Hand Man

King Salman has already been seen as a mover and a shaker, mixing up the tenured ministry heads with younger men from a variety of backgrounds. He has notably centralised power, and is making an effort to ensure those around him will remain loyal and share his vision for Saudia Arabia. Al-Jadaan is expected to assist the new King in his desire to diversify the Kingdom’s economy from largely hydrocarbon based to other industries such as financial services. His appointment coincides with first ever sovereign bond sale, an order reaching $67billion. Many are lauding this as a sign of the freer economy to come, but experts caution against overexuberance, pointing to the Kingdom’s recent history of austerity as a better indicator of what lies ahead.

A diversified economy is, of course, the long term goal, but Al-Jadaan has inherited more immediately pressing matters, chiefly alleviating current market conditions. Saudi Arabia has been running a deficit due to the low price of oil. The International Monetary Fund (IMF) predicts that without a significant increase in the price of oil matched with level demand, the current budget deficit will continue to grow and will exhaust foreign exchange reserves as early as 2020. This would be disastrous for Saudi Arabia.

The oil price crisis is the umbrella underwhich Al-Jadaan will operate. He will be a key player in on-going discussion with Iran as other OPEC members continue to lobby for a reduction in oil exports from the Kingdom. Iran and Saudi Arabia do not currently have private negotiations on this or any other topic, but if Al-Jadaan is able to reopen such talks, his aim will be to get as many concessions from Iran as possible.

Another piece in the puzzle of 2016

Al-Jadaan’s appointment is but one among many injections of new men into global governments. As the world shifts away from the previous decades of western democratic hegemony into uncharted territory, it will fall upon men like Al-Jadaan to find a new balance.

Africa looks set to for a revolution in technological innovation

18 December 2016 Comments (0) Africa, Economy, Featured, Technology Like

Africa is changing, and technology is the catalyst for the unprecedented changes that are occurring continent wide. Although there are still large areas of the continent that lag behind, the levels of tech access found in, Europe and the USA, change is happening at an incredible rate. These changes are fueled by Africa’s innovators, who are helping alter how the rest of the world sees the globe’s second largest continent.

The rapid growth of technology

The growth of cellphones and the internet in Africa has happened so rapidly that access to personally owned technology has often happened before nations have built more routine infrastructure. Before many nations have even constructed reliable, national electricity supplies, individuals have access to cellphones that are fueling innovation, and changing people’s outlooks.

The cellphone company Ericsson, says that by 2019 there will be 930 million cellphones in Africa. The majority of Africa’s population is under 30, and the lack of infrastructure in many countries has proved to be a spur for creative solutions to everyday problems. Cellphone money transfer systems are one of Africa’s most popular technological services, in part fueled by the lack of access to banks that many people experience. This technology has now moved to the west, showing an intriguing reversal of the flow of new inventions. The developed world is now importing some of the developing world’s ideas and creations.

As broadband penetration expands, the opportunity for further innovation will become even greater. Access to regular cellphones is gradually moving towards access to smartphones. Around 20% of the continent currently has access to the internet, but this is expected to treble over the next 5 years. According to The Guardian, cellphone technology will account for 8% of Africa’s GDP by 2020, a figure that is more than double what it is anywhere else in the world.

African created apps now cover a broad range of areas, from providing question and answer services with registered doctors, to allowing farmers market figures to ensure they maximize their profits. A young generation of Africans across the continent have bypassed traditional technologies, such as landline phones and branch banking, and simply moved straight into a world of conducting everything via their cellphone.

Confronting the obstacles

Despite the swift growth in personal technology in Africa, there are still clearly issues around more routine forms of modernity that need to be overcome. For instance, in sub-Saharan Africa only around a third of people have access to grid electricity.

Cellphones are one thing, but for technology to become a genuine driving force – against poverty – there does need to be a minimum level of infrastructure.

Akinwumi Adesina, President of the African Development Bank, said, “If you can’t have electricity you can’t drive any industrial development… electricity drives everything, so until we fix that problem Africa faces huge challenges.”

This is an issue that organizations like the African Development Bank are addressing, with the ADB investing $150 billion over the next 10 years in order to try and provide connectivity to a further 130 million people.

Several nations have invested heavily in technology, in order to draw investment from major, foreign corporations, and also to provide openings for domestic talent to shine. Kenya in particular has looked to announce itself as a global leader in nurturing tech innovation, including the construction of an entire tech city (Konza) to create jobs, support start-ups and attract foreign investment.

Continuing to adapt

There are areas in which Africa has incorporated new technology very quickly, with e-commerce being one of the most notable success stories. Nigeria’s Jumia Group is Africa’s first tech “unicorn”, meaning that the company is valued at $1 billion.

For other companies to have such success, and for Africa’s tech entrepreneurs to feel empowered, there needs to be cross continental support from governments. There are signs that several governments intend to help support tech innovation, and the hope has to be that as this brings increased prosperity to individual nations, so their neighbors will follow suit.

Mteto Nyati, chief executive of MTN (South Africa’s second largest telecommunications company), says that the continent needs “partnerships between governments and mobile operators” in order to ensure that future technology, such as 5G, is widely available.

Aside from the money that Kenya’s government has invested in technological infrastructure; there are other governments showing determined efforts to embrace the opportunities that technology offers. Rwanda aims to become Africa’s first “cashless society” in terms of the public sector, and it has spent 15 years working to digitize much of society.

What is most exciting in such a fast changing continent is that this leap forward in tech innovation can help solve long term difficulties faced by normal people. Technology commentator, Ory Okolloh, states that many African startups now are “thinking about innovative ways to solve real problems in the market.” The next generation of African entrepreneurs looks set to benefit from a continent that has truly embraced technology.

Andrew Mupuya is an award winning entrepreneur, and he’s not yet 25

12 December 2016 Comments (0) Africa, Featured, Leaders 9

When Forbes magazine lists you as one of the 30 most promising young entrepreneurs in Africa then you must be doing something right. In the case of Andrew Mupuya, he was named one of Forbes’ “30 under 30” in both 2013 and 2016. The list highlights entrepreneurs under the age of 30 who are on the way to achieving great things within their chosen industries. Remarkably, Mupuya has been in business for 8 years, and yet is still only 24 years old!

From humble beginnings

Andrew Mupuya was born, in the Manafwa district of eastern Uganda, to a large, extended family with very little income. Mupuya’s family struggled to buy clothes for him and his siblings, and he was only able to get an early education due to the help of government grants.

Such a background does not provide the greatest opportunity for entering the business world, but the struggles that Mupuya experienced helped foster a work ethic and determination that has held him in good stead.

In 2008, everything changed, and it was a combination of bad luck in his family and new government legislation that paved the way for Mupuya’s business. Both of Mupuya’s parents lost their jobs, making their financial situation precarious once more, and at only 16, Andrew realized that he needed to help ease their burden. At the same time, the Ugandan government banned the use of plastic bags due to environmental damage that they were causing, and within this moment the young entrepreneur saw an opening.

Remembering the initial process, Mupuya says, “”I conducted a feasibility study, market research around retail shops, kiosks, supermarkets around Kampala and discovered there is need and potential market for paper bags.”

Mupuya worked out that he needed around $14 to start a small enterprise, producing paper bags, so he collected 70 kilos of plastic bottles which he sold to a recycling plant for $11, and he then borrowed the remaining $3 from his school teacher. His company was named, YELI (Youth Entrepreneurial Link Investments) Paper Bags, and it has gone from strength to strength.

Award-winning success

Not only was the company successful in a short period of time, but it was the first registered company in Uganda for the production of paper bags. By 2012, and still only 21 years old, Mupuya had been put forward for the prestigious Anzisha prize for young entrepreneurs in Africa. Against stiff competition, Mupuya won the award, and with it, $30,000 that he immediately put into developing the company.

Although he is still only 24, Mupuya has twice made Forbes magazine’s list of 30 African entrepreneurs below the age of 30 to watch out for. YELI paper bags currently produces around 20,000 paper bags per week, and employs 16 people in Uganda. Since he began his business, Mupuya has overseen production that exceeds 5.6 million bags, which have been sold both locally, to neighboring nations like Kenya, and as far afield as the U.S and Norway.

Andrew Mupuya is clearly buoyed by the recognition he has had saying, “The awards I have won give me courage to push on with my business.”

What should please Ugandans is that not only does this young man want to create more opportunities within his home country, but he is looking to do so with a company that can benefit the whole continent.

Mupuya explains that he has much grander plans for YELI, stating, “My vision is to have a cleaner Africa by eradicating use of plastic bags…I dream of having a big plant where I am able to supply paper bags all over Africa…so I believe this is just the start.”

Kenya’s ride hail market shows African businesses adapting to global trends

8 December 2016 Comments (0) Africa, Business, Featured, Technology 1

When Uber took its taxi app to Kenya in 2015, the response was mixed as it has been in most markets. While many people embraced the service, others felt it undermined local taxi cab operators, and there were protests against the US Company.

However, over the course of its time in Africa, Uber has actually led to African businesses adapting to what it offers, and in Kenya a domestic rival app is already proving highly successful.

A Kenyan response to globalization

When globalization brings a new product to an emerging market, the response from locals is always likely to be mixed. Just as some will be delighted to share in a popular aspect from a developed nation, others will be concerned about the impact upon local culture and businesses. With a service like Uber there is clearly no concern over an erosion of local culture, but there are serious issues around how it affects local businesses. The same worries around exploitation of drivers that have captured headlines in the US and Europe have been replicated in Kenya, along with a worry that local taxi firms will be driven out of business.

In fact, earlier this year, the United Kenya Taxi Organization demanded that Kenya’s government banned Uber from the East African nation. While this did not happen Kenyan business has spawned a domestic rival. The upshot of this rivalry is that Uber has had to diversify what it offers to customers in an attempt to stay ahead of the game.

The local rival is called Little Cab, and it was launched in July this year by the Kenyan telecommunications giant Safaricom in conjunction with software firm, Craft Silicon. Evidently this is not a story of a small startup fighting a global brand, but nevertheless it is an African company ensuring market competition. Little Cab immediately set out to quell concerns over driver wages by announcing that it would only take 15% of drivers’ earnings, compared with Uber’s standard rate of 25%.

Little Cab did not end its points of differentiation there though; it also ensured that it provided free Wi-Fi in its cars, cheaper prices, and the option for female customers to request a female driver. Not only has Little Cab proved popular with consumers, it has forced Uber to alter its standard model and try to offer more to the Kenyan public. Within months of Little Cab’s launch, Uber slashed its Kenyan prices by 35%, a move that obviously benefits the taxi using people of the country.

Little Cab also allows users to pay in cash, and due to the scope of Safaricom’s telecommunications network, the service can also be used by people without a smartphone. A simple SMS can order a taxi with Little Cab, opening up the market – to an even wider number of potential users – as around 50% of Kenyan cellphone owners do not have a smartphone yet.

Moving Forward

As Little Cab continues to grow, it is likely to fuel even greater innovation from its rival, which should mean a better service for the customers. The former national minister of technology and information, and a professor of entrepreneurship at the University of Nairobi, Bitange Ndemo, highlighted the appeal of Wi-Fi in Little Cab’s cars and spoke of the rivalry with Uber saying,

“Both of them will have to look at what they are offering with bundled services in their vehicle.”

Uber claims that since its launch in Kenya, over 1 million trips have been taken by Kenyans, and that in Nairobi the service gets more than 100,000 hits a month. This is a figure that Little Cab strongly believes it will match, as Craft Silicon CEO, Kamal Budhabhatti, said that, “Little Cab aims to achieve one million rides in the next six months by entrenching and differentiating ourselves as a homegrown taxi app.”

In August of this year, drivers formed the Kenyan Digitial Taxi Association to lobby for worker rights and better pay deals. Drivers now have more leverage as they are able to simply move to a rival company if they feel the benefits are greater.

As competition for ride hailing services in Kenya steps up, if Uber want to avoid being overtaken by African innovation, they will have to work to the famous idea of “Think globally, act locally”.

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