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African Middle Class to Reach 900 Million by 2040

11 December 2015 Comments (0) Africa, Business, Featured

africa middle class

On October 15th, the CFAO – a specialized distribution leader and partner of major international companies – published a new, detailed study on consumption patterns in Africa. The conclusion was that the nature of the middle class is changing as it expands and that it could reach as many as 900 million people by 2040.

In recent years, the media has latched on to the notion of an increasing middle class in Africa despite there being a real lack of research in the area. This idea arose from the strong economic growth being experienced in a number of African countries. This has resulted in the construction of large shopping malls and supermarkets, increased housing ownership and increased access to information and communications technology.

Due to the size of Africa, as well as the cultural differences, religions and varied economies, defining the middle class can be quite difficult. To get around this problem the study was based on data accumulated from five countries, Kenya, Ivory Coast, Nigeria, Cameroon and Morocco.

What is the Future of the African Middle Class?

The African middle class is expected to continue growing rapidly. According to Jean-Michel Huet, one of those responsible for carrying out the survey, in 25 years the population of middle class citizens in Africa could exceed that of China and India combined. This is of huge interest to large Western countries who will see this an opportunity. If they can attain a significant share of such a large market, the revenues and profits earned could potentially be enormous. In a global economy still struggling from the economic downturn following the financial crisis, the continued growth of the African economy represents an important opportunity for Western countries and corporations.

Currently, 62% of the population of Africa is under the age of 25. As the middle class grows and access to private health care increases, it is expected that this will lead to an increased life expectancy. This increase in the average age of the population will result in an increase in the size of the workforce.

The trend in recent years in Africa has been towards urbanization and much of the middle class can be found in the continent’s cities. However, increasing numbers of middle class people can be found in rural areas. Hélène Quénot-Suarez, a doctor of political sciences in Sub-Saharan Africa for the French Institute of International Relations has said that “African rural areas are also gradually experiencing the emergence of a middle class.” This is a trend that is likely to continue into the future.

A study conducted by the consultancy firm Deloitte in 2010 found that as the middle classes in Africa grow, people will have more recreational time. This combined with a better standard and higher level of education will result in people becoming more politically assertive. This presents further opportunities to western countries. Increasing education levels will mean greater access to a skilled workforce. When combined with greater levels of political activity this could lead to stronger democracies and free market economies being formed. This would make it easier for corporations from outside the continent to conduct business.

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African Nations See High Stakes, Opportunities in Paris Climate Talks

10 December 2015 Comments (0) Africa, Environment, Featured, Politics

Africa at Cop21

African nations brought a unified agenda to the Paris climate conference, making clear they are willing to take aggressive steps to fight global warming but need international support to make significant cuts in pollution.

Africa is highly motivated. Ironically, it is the least polluting of the world’s continents, but it has suffered some of the most severe effects so far – drought in some regions and severe flooding in others.

As the Paris conference drew to a close, key issues of vital interest to Africa were under debate, including the allocation of responsibility for reducing carbon emissions between rich and poor countries as well as how to finance clean-energy improvements and repair damage already done.

Aggressive emission cuts sought

“African countries have demonstrated greater ambition in cutting their emissions than the high-emitting nations,” Akinwumi Adesina, president of the African Development Bank, said. Forty-seven of 53 African countries had completed plans to cut emissions by an October deadline, he said.

Alassane Ouattara, President of Côte d’Ivoire, said his country has set a goal of reducing greenhouse emissions by 28 percent by 2030 by increasing renewable sources, reforestation and development of carbon neutral agriculture.

Morocco recently increased its goal to increase renewables from 42 percent in 2020 to 52 percent in 2030.

Seeking international support

At the same time, numerous African nations made clear that they would need international support to make good on their pledges.

Sudan, for example, pledged to “reach 20% renewable share in the power mix by 2030… Aims to raise forest area to 25% of Sudan by 2030… Pledge conditional on international support.”

Yemen pledged a 1 percent cut in emissions by 2030 without international support or by 14 percent cut if international support was forthcoming.

High cost of action

Adesina said Africa needs an international investment of $55 billion a year up to 2030 to create a more efficient energy sector that uses more renewable resources for power. He said the African Development Bank would contribute $5 billion in financing, which will represent 40 percent of its total investments.

The United Nations has estimated it will take more than $93 billion a year for the world’s 48 poorest, least developed countries, including 34 in Africa, to put their action plans into effect.

Of more than $60 billion that has been committed so far, less than a third goes to the poorest countries, according to a November 2015 report by the International Institute for Environment and Development.

Paying for climate damage

African leaders also stressed the need for financial help to confront losses climate change has already wrought in their countries.

The United Nation’s Adaptation Fund “must be reinforced to support the losses and damages suffered by developing countries,” Denis Sassou Nguesso, President of Congo, said, echoing comments of many African leaders.

Currently, the negative effects include drought in South African, Mozambique, Botswana and Zimbabwe as well as heavy rains, landslides and flooding in Burundi, Nigeria, and Somalia.

Great Green Wall

The Great Green Wall aims to cultivate more forested land in Africa to fight the effects of climate change.

Seeing opportunity in the challenge

Adesina and other African leaders also pointed to the opportunities – both economic and environmental – that significant climate change work could unleash.

For example, the continent has significant capacity to produce wind and solar power, as well as potential geothermal power.

African forests have the potential to absorb tons of carbon emissions and reforestation efforts are under way to grow forest stock.

Among the efforts unveiled at the Paris conference is the African Restoration Initiative, a coalition of African countries and donors who seek to restore 250 million acres of degraded or deforested land by 2030.

Economic opportunity

As their development accelerates, African nations also are poised to benefit from clean industrialization, tapping technologies that have emerged in the past decade rather than relying heavily on older, carbon-hungry machinery.

“Industrialized countries will have to retrofit older infrastructure to harness the sector’s vast potential. Africa, however, is not married to any technological platform and is ready to leapfrog to these new, efficient and more sophisticated technologies,” Carlos Lopes, executive secretary of the United Nations Economic Commission for Africa, said at the Paris conference.

Progress for Africa

As Africa looks ahead to the challenges and opportunities of climate change, Adesina of the African Development Bank contrasted its position today with that of the last climate conference.

“A decade ago, at COP 11 in Montreal in 2005, Africa had no common position and no common negotiators,” he said. “This year, at COP 21, it has a Conference of African Heads of State on Climate Change; it has an expert team of about 200 climate negotiators; it has a clearly outlined position on the negotiations; and it has a well-articulated collective work program to support low-carbon and climate-resilient development on the continent.”

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Flying With Fatima Beyina-Moussa

9 December 2015 Comments (0) Africa, Featured, Leaders

Fatima Beyina Moussa - ECAir13

A profile of Fatima Beyina-Moussa, CEO of ECAir.

The African aviation market is becoming one of the most significant in the world thanks to its growing middle class, which now makes up over 35% of the population. African air traffic is growing by 5.2% per year. Fatima Beyina-Moussa is 41 and a mother of 2 children. Ask her if she dreamed of being the CEO of an airline and changing the African airline industry and you will elicit a hearty laugh from Ms. Beyina-Moussa. The quick and honest answer is an emphatic “No”. She mentions several other things she dreamed of and the academic track that she trained in, but none of them involve air transportation and helping lead a revolution in travel by air in Africa.

Born in Dakar, Senegal, where her father, Pierre Moussa, studied and taught at the University of Dakar in the area of planning and development alongside Prof. Samir Amin, Fatima’s thoughts on her path in life mirrored her father’s career more than anything. Pierre Moussa was born in Owando, located in northern Congo-Brazzaville, in 1941. He is considered a man gentle in nature, married, and a father of 4 children including Fatima.

Before the Daughter, the Father

Fatima Beyina-MoussaPierre Moussa, Ms. Beyina-Moussa’s father, is an economist by training and a politician in the Congolese government. He started his government career in 1978 as Secretary-General of Planning. President Denis Sassou Nguesso promoted Moussa to Minister of Planning in 1979, the same year he joined the Central Committee of the Congolese Labour Party (PCT). The PCT selected Moussa as Secretary for Planning and the Economy in 1984. He climbed to the role of Minister of Planning and Finance in August of 1987. Moussa is considered “the regime’s economist”, and joined the PCT Political Bureau in 1989, taking on the responsibility for planning and the economy; he was promoted to Minister of State for Planning and the Economy in the Congolese government in 1989. Pierre Moussa is now President of CEMAC, the Commission of the Economic and Monetary Community of Central Africa. His 5-year term appointment was announced at the 11th Summit of CEMAC Heads of State in 2012 at Brazzaville.

Fatima has inherited much from her father, including the role of an economist and interest in development and planning. Her post-secondary school education has focused on economics and finance, primarily in Canada, where she received her Bachelor’s degree from the prestigious HEC Montreal. She then received her MBA from the University of Ottowa, pursuing specialized studies in the USA and France as well. Not only is she keenly aware of issues in Africa, but she is also aware of how Africa interfaces with the rest of the world. As a black African woman, Beyina-Moussa is a pioneer in her field, and her actions and opinions are followed with much interest. As she takes the pulse of modern Africa as one of its business leaders, she is also someone that drives that pulse with her ideas and decisions.

A Rising Career

Beyina-Moussa started her career as a consultant at Ernst & Young in the Congo. She advanced to the role of a consultant at the official Bank of Central African States (BEAC), then moved to New York City, working for the United Nations Environment United for Development (UNDP). Her rise, professionally, was quick but not entirely unexpected. In the Congo, she took on the job as an advisor to the economy and to reform the Congolese Ministry of Finance, Budget and Public Portfolio. Beginning in 2007, she worked on establishing a national air carrier to advance the Congo’s transportation industry and its economy. Success has been quick and in 2011, Fatima Beyine-Moussa was appointed Director/CEO of the national airline of the Republic of Congo, Equatorial Congo Airlines (ECAir). Shortly after her hiring as CEO of ECAir, Fatima was selected as a member of the Executive Committee of African Airlines Association (AFRAA) in 2012. In November 2014, Beyine-Moussa was appointed Chairwoman AFRAA and recently completed her 1-year term at the 47th General Assembly of AFRAA from November 8th-10th, 2015 in Brazzaville.

Fatima Beyina-Moussa is embracing her role as a favorite and influential daughter of Africa. She has plans and a clear view of how she wants Africa to evolve now and in the future. One that she is fervently working on now is travel between cities and countries within Africa. Currently, it can be easier to fly out of the continent, take a connection in Dubai or Paris, and fly back into Africa. Beyina-Moussa is working on a plan to avoid this and make travel within Africa easier and more beneficial for airlines and passengers. Connections between African countries are insufficient, and there are not enough round trips, making travel difficult. With Beyina-Moussa working on this, it is without doubt a job that will get done. In her words, “We have only just begun.”

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OPEC Rejects Oil Production Limits Despite Falling Prices

8 December 2015 Comments (0) Business, Featured, Middle East

OPEC Meeting

In spite of growing climate concerns and plummeting oil prices, the world’s largest oil cartel has rejected limits on pumping crude oil in the coming year.

The move by the Organization of Oil Producing Countries (OPEC) virtually guarantees a continuing glut of oil along with low prices at the gas pump. Low prices could further undercut U.S. production shale oil production in 2016.

Meeting December 4, 2015 in Vienna, Austria, representatives of OPEC’s 13 member countries debated whether to cut crude production, currently about 31.5 million barrels a day, in an attempt to prop up prices.

Growth in demand is cited

In a statement following the meeting, OPEC acknowledged the oversupply but emphasized potential growth in demand next year.
“ The Conference observed that global economic growth is currently at 3.1% in 2015 and is forecast to expand by 3.4% next year. In terms of supply and demand, it was noted that non-OPEC supply is expected to contract in 2016, while global demand is anticipated to expand again by 1.3 mb/d (million barrels per day),” the OPEC statement said.

OPEC ministers divided

The failure to impose limits followed a fractious discussion within OPEC. The Vienna meeting, scheduled to last four hours, was extended to seven as members debated whether to continue a year-old policy of oversupply.

The prevailing faction, led by Saudi Arabia, the cartel’s largest producer, wants to pump at current levels despite the risk of even more price reductions. Other members, such as Venezuela and Algeria, want to cut production in an attempt to bolster prices.

OPEC member countries produce about 40 percent of the world’s crude oil and their exports represent about 60 percent of the total oil traded internationally, which has enabled the cartel to influence oil prices, according to the U.S. Energy Information Administration.

That was evident as the U.S. benchmark rate for oil declined 2.7 percent to $39.99 a barrel on the day of the OPEC meeting.

Action could undermine U.S. producers

Saudi Arabia says it wants to protect its market share. But some analysts say Saudi Arabia wants to pump more oil in order to slow down shale oil production in the United States, leaving OPEC producers to fill the vacuum as demand grows. Shale oil is significantly more expensive to produce so these producers are even harder hit by lower prices.

A U.S. slowdown is already happening. According to Baker Hughes North American Rig Count for the week of December 4, 2015, there were 737 active rigs in the United States compared to 1,920 rigs a year earlier.

Oil production may increase

Meanwhile, OPEC production is likely to increase beyond the current 31.5 billion barrels a day.

In Vienna, Iran said it would double production to 4 million barrels a day, the amount it was producing before international sanctions were imposed. Iran’s production dropped sharply in 2012 as a result of the sanctions, which are being lifted as a result of the Iran nuclear deal. Iraqi oil production also has increased to about 4 million barrels a day.

A new reality for OPEC

The decision to keep pumping underscored the cartel’s weakened ability to collectively sway prices.

“Effectively, it’s ceilingless,” Iranian Oil Minister Bijan Namdar Zangaeh said. “Everyone does whatever they want.”

Iraqi Oil Minister Adel Abdul Mahdi noted that other producers do not operate with production limits. “Americans don’t have any ceiling. Russians don’t have any ceiling. Why should OPEC have a ceiling?”

Historically, OPEC has been able to bolster prices by squeezing production. But in November 2014, Saudi Arabia blocked calls from poorer OPEC members to cut production in hopes of halting the slide in prices. At that time, the price of oil was slightly more than $71 per barrel.

“It is a new world for OPEC because they simply cannot manage the market anymore. It is now the market’s turn to dictate prices and they will certainly go lower,” Dr. Gary Ross, chief executive of PIRA Energy Group, said at the time.

Indonesia rejoins OPEC

OPEC also welcomed the re-entry of Indonesia into the cartel after a six-year absence. The country is the fourth smallest producer of OPEC’s 13 members.

A net importer of oil that also exports, Indonesia rejoined OPEC hoping to gain greater access to crude oil supplies.

Climate change concerns

While declining to set limits on crude production, the OPEC ministers did discuss the United Nations Climate Change Conference that was ongoing in Paris at the same time.

The discussions “stressed that climate change, environmental protection and sustainable development are a major concern for all of us,” the OPEC statement said.

Efforts to reduce carbon emissions could place large oil producers in even more of a bind if governments in the climate talks move to reduce dependence on oil in favor of sustainable energy sources.

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COP21: Africa’s Solar Industry Poised to Take Off

4 December 2015 Comments (0) Africa, Business, Featured

solar power in africa

With some of the most abundant renewable energy sources but the world’s highest prices for power,  Africa has an enormous stake at the COP21.

Africa’s Power Deficit

This week, one of history’s largest-ever gatherings of world leaders is taking place in Paris, as the international community comes together to tackle climate change. Until  December 11th, the 21st United Nations Conference of the Parties on Climate Change (COP21) will host more than 30,000 diplomats and delegates, seeking to reach a global pact which commits nearly every country in the world to reducing their greenhouse gas emissions.

Africa has an enormous stake in its success. 621 million people, two thirds of the population, currently live without electricity, using candles, kerosene, or wood to light their homes and cook. Power shortages and service interruptions are the norm. At present rates of progress, 300 million people will still lack electricity in 2040.

And although the continent produces little of the greenhouse gas emissions that world leaders at the COP21 are seeking to reduce, it is Africa’s poor and rural population who pay the highest prices in the world for power. Measured on a per-unit cost, households in Africa pay up to 80 times more for energy than those in London. Indeed, in Kenya charging a mobile phone costs nearly 400 times more than in the US. The economic effects are huge. According to the World Bank, more than 50% of African businesses cite inadequate power supply as a major business constraint.

UN Secretary-General Ban Ki-moon adds: “Africa is particularly vulnerable to the effects of climate change. Much of its economy depends on a climate-sensitive natural resource base, including rain-fed subsistence agriculture. Disruptions in food or water supplies pose serious risks not only for the economy but also for political stability, particularly in fragile states.”

Solar-preneurs

M-Kopa Solar Kit

M-Kopa Solar Kit

But there is an environment primed for change. Africa has some of the most abundant renewable energy sources in the world, most notably solar, thanks to 320 days of sunshine per year. Over the past seven years, the price of solar panels has dropped by more than a quarter. Some East African countries have already declared solar products VAT exempt. And mobile penetration has brought people, even in remote communities, into a digital economy. In 2010, investment in renewable energy across Africa was just $3.6 billion, but estimates suggest that is set to hit $57.7 billion by 2020, as an affordable African solar industry is poised to take off.

First and foremost, we are seeing a rise of “solar-preneurs”. For example, Tanzanian startup Juabar designs, builds, and operates mobile solar charging kiosks which it leases to a network of entrepreneurs who can offer electricity to their communities. In Rwanda, the African Renewable Energy Distributor operates a similar franchise network around its own smart solar charging kiosks. There is also the hugely successful M-Kopa Solar – “kopa” is Swahili for “borrowed” – which has pioneered the idea of “Pay-as-you-go” renewable energy. Clients pay an upfront fee of $35 for a solar system (an eight watt solar panel, two LED lights, a USB phone charger, and a portable, solar-powered radio). Using a mobile payment system, clients then top-up $0.45 per day for a year after which the system is theirs. Since launching in 2012, the company has grown to provide power for more than 140,000 households in Kenya, Uganda, and Tanzania, and is adding over 4,000 homes each week. Two similar companies, Azuri and Angaza, are also seeing success.

Working to a slightly different model is Patrick Ngowi’s Tanzanian startup Helvetic Solar Contractors. Operating in Tanzania, Kenya, Uganda, Rwanda, and Burundi, and expanding to other parts of Africa, the company supplies durable and affordable solar products (including water heaters, solar kits, solar batteries, and solar street lights). The company also works in less privileged areas through its non-profit division, Light for Life Foundation, providing free solar solutions to rural African women, with a goal to help 100,000 by 2025. Valued at $8 million, it has been awarded the title of Fastest Growing Company and Brand in Tanzania by KPGM. On a similar theme German company Mobisol offers home solar systems via a mobile phone payment plan providing enough electricity to power a variety of household and consumer appliances. It also has larger systems on offer for small businesses.

Solar-orientated accelerators and financers are also emerging. For example, the San Francisco and Tanzania based SunFunder has already financed $2 million of solar projects. And Senegalese-American singer Akon’s Akon Lighting Africa initiative to bring solar electricity to rural Africa has announced the launch of a new Solar Academy to consolidate African expertise. The Academy will train African engineers and entrepreneurs in the skills needed to develop solar power, and to install and maintain solar-powered electricity systems and micro grids, with the support of European experts.

The International Commitment to Solar in Africa

The international community, too, is getting involved. The UK has launched an Energy Africa access campaign, chaired by former UN Secretary General Kofi Annan. This brings together Richard Branson (who has worked to develop solar power in Caribbean countries), Bob Geldof, and politicians from 14 African countries to work on solar power projects in Africa.

Branson is also part of the Breakthrough Energy Coalition alongside Bill Gates and Mark Zuckerberg. The coalition acts as an investment platform for early-stage clean energy projects which launched on the first day of COP21.

Again in the UK, the Africa Renewal Energy Alliance has seen Nigeria and Sierra Leone sign agreements to fast-track off-grid solar power. A further 12 countries, including Malawi, Senegal, and Tanzania, are expected to join.

2015 Paris Climate Conference COP21

This week’s COP21 is reaffirming the commitment to African renewables. On the first day of the conference, the host country’s President François Hollande announced plans for France to devote €6 billion to generate renewable energy (wind farms, solar power, and hydroelectric projects) in former West African colonies and across Africa between 2016 and 2020.

India’s Prime Minister Narendra Modi also launched an international solar alliance of 121 countries which will mobilize $1 trillion in investment by 2030 for a “massive deployment of affordable solar energy” in sun-rich but cash-poor countries around the world. Modi said: “Solar technology is evolving, costs are coming down and grid connectivity is improving,” he said. “The dream of universal access to clean energy is becoming more real. This will be the foundation of the new economy of the new century.” The Indian government is investing an initial $30 million and will host the alliance secretariat and fund its operations for five years.

So without the entrenched regime of oil and gas to negotiate, Africa now has the opportunity to jump from being the world’s energy-poorest continent to the leader of a new model of renewable energy.

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Profiles of 5 Promising Kenyan Startups

30 November 2015 Comments (0) Africa, Business, Featured

nairobi

Following up on our article about the blossoming startup scene in Nairobi, Kenya, we’ve compiled a list of 5 promising Kenyan startups with a quick description of what they do.

 

1. iCow

iCow is an Agricultural Information Service SMS mobile phone application designed to help enhance the productivity of small-scale dairy farmers in Kenya. Aiming to help rural communities and farmers by giving them knowledge to develop as both farmers and businessmen, each farmer enters personalized details about their cows – whether that may be five or 500 – before receiving text messages and voice prompts with tailored instructions about the breeding and production patterns of their livestock. It helps farmers manage their stock and tackle challenges by tracking the estrus stages of their cows, providing the cost per liter of milk produced by their animals, helping them find the nearest vet and AI providers, and by giving information on breeding, nutrition, milk production efficiency and gestation, fodder production, hygiene and animal diseases. Following the 365-day cow cycle, farmers are assisted year round in making informed decisions and reducing risk.

The app runs on even the most basic mobile phone, and each text message costs about 10 Kenyan shillings, or $0.10.

 

Zatiti

2. Zatiti 

Launched in 2013, Zatiti is a web platform which helps entrepreneurs create e-commerce websites (which are M-PESA compatible). 81% of sellers in Kenya are looking for a mobile e-commerce solution to reach the 98% of Kenyans who access the web through mobile devices, but coders and developers are hard to find. The Zatiti platform requires no technical expertise from customers, handling everything from set-up to the design of customized themes. And clients can easily update their platforms with the website builder’s simple content management system. Empowering entrepreneurs, users can also monitor revenue and sales orders, and receive messages through the service.

Zatiti charges a 2% transaction fee and a monthly subscription fee depending on type of plan, along with offering premium templates, increased storage space, and increased product variety.

soko

3. Soko

Soko is a mobile driven e-commerce platform that enables artisans to engage with the international marketplace, even if they lack access to the internet or a bank account. In a similar mold to Etsy, Soko works with artisans to create modern, ethical jewelry, handmade from sustainable materials, and then helps them to sell their products to a global audience of brands, retailers, and online customers around the world. Its niche: all that can be done via only SMS. An SMS entry form allows artisans to create online storefronts, profiles, and upload images. As they text the information is transcribed as metadata which is automatically uploaded to the Soko website. It uses a peer recruitment model whereby store owners recruit and mentor new sellers. Soko says: “With our tools, any talented artisan can participate in the global marketplace, becoming a driver of social and economic development in their community.”

Based in Nairobi, so far the company has 12 employees around the world, about 250 artisans currently featured on the site, and has raised close to $1 million in seed funding.

m-farm

4. M-Farm 

M-Farm is a SMS mobile phone application, compatible with even basic mobile phones, which aims to empower African farmers. M-Farm cuts out the middle man by connecting farmers directly with buyers. It provides them with real-time food pricing information, allowing them to sell their produce at much fairer prices. Making small farmers more visible, it offers a group selling tool where farmers can team up to bring their accumulated produce to drop off points and the SMS system then promotes what they have to sell. And it offers a group buying tool, allowing farmers to pool resources to get better prices for things like fertilizer. Kenyan CEO and founder Jamila Abass says she founded MFarm in 2010 after reading about how farmers have been “oppressed for decades and disconnected in terms of information”.

A SMS for a single crop is the cost of a text message. The company counts nearly 17,000 users in Kenya, and projects one million by the end of next year.

sokotext

5. SokoText

SokoText uses mobile phone text messages to aggregate demand for food in Kenyan slums and unlock wholesale prices for micro-entrepreneurs. The company says “Small-scale vegetable sellers and kiosk owners are the gatekeepers and key players of food accessibility in urban slums. Yet a lack of capital means that they cannot afford to buy in bulk and pay to travel long distances to markets every day to buy just enough stock that will help them get by. SokoText leverages the widespread and increasing use of mobile phones in slums to solve these problems. With SokoText, they can boost their business while becoming the key agents that empower people living in the slums to eat better and healthier.”

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Kenya’s Tech Renaissance: Nairobi Set to Become Africa’s Key Technology Hub

27 November 2015 Comments (2) Africa, Business, Featured

nairobi

Mobile and internet penetration, a mobile economy, developing tech ecosystems, and government support are set to make Nairobi Africa’s key technology hub.

Over the last half-decade, Kenya has rapidly developed into a country of digital innovation, and its capital Nairobi, dubbed Silicon Savannah, looks set to become Africa’s key technology hub. With a fast-growing urban economy and a young and digitally savvy population, it is already easier to pay for a taxi by mobile phone in Nairobi than it is in London or New York. Since 2002 Kenya’s technology services sector has grown to more than £300 million (2013) up from just £11 million. And VC funding for African startups, which hit more than $400 million in 2014, is projected to grow to at least $1 billion by 2018. Google, Intel, Nokia, Vodafone, and Microsoft have already opened sites in Nairobi. And IBM has chosen the city for its first African research lab (a $100 million Innovation Centre).

A mobile economy 

At root, this technology renaissance has been spurred by mobile phone penetration. Back in 1999, Kenya, as with most of the Africa region, had a rudimentary telecommunications infrastructure and counted only 300,000 landline telephones. Over the last decade, it has proved easier and cheaper for the country to bypass the analogue age entirely and instead move directly to installing mobile phone networks. Mobile phones are also easily accessible, cheap, and practical, especially when compared with a computer. And unsurprisingly in just a few years mobile phone penetration in Kenya has grown from less than 20% to 85% (it’s 89% in the US).

At the same time, Kenya lacks a traditional banking infrastructure. Until recently, for example, the high proportion of Kenya’s urban population working to support family members in the countryside relied on hand delivery or sending cash through bus drivers. And the combination of these two elements has created the perfect setting for a mobile payments-based economy.

In 2007, state-owned telecoms company Safaricom launched M-PESA, the SMS-based money-transfer system (pesa is Swahili for “money”). Converting even the most basic phones into roaming banking devices, M-PESA spread at speed. And by 2012, more than 17 million Kenyans (70% of the adult population) were using mobile payments, the highest percentage of any country in the world. Now more than $320 million dollars are transferred via Kenyan mobile phones each month as huge swathes of previously unbanked customers join the digital economy. Safaricom also sells solar-powered charging equipment to expand the market.

mpesaGovernment support

With a 40% unemployment rate to solve, the Kenyan government is also supporting the country’s technology renaissance, determined to leverage the opportunity to create jobs and drive sustainable economic growth for the next generation.

In 2009, the East African Marine system, backed by the Kenyan government, laid a 5,000 km fiber-optic undersea cable linking the coastal town of Mombasa with the UAE. And since this time, internet penetration has grown to just under 67% of the population. This is a significant growth from 2010 when internet penetration was around just 14%.

It has created a fertile marketplace for e-commerce and tech businesses, in which the government continues to invest. In 2013 the government formed an Information Communication Technology (ICT) Authority. It laid out a policy roadmap, Vision 2030, focusing on digital infrastructure (e.g. a new fiber-optic network). And it is currently building a multi-billion dollar “techno city” called Konza with aims to create 200,000 jobs by 2030. Located 60 km south of Nairobi, a 2,000-hectare plot will offer office parks for science and technology firms, a university, retail outlets, and residential facilities. Tax breaks are also being offered to companies willing to move to the new city.

A tech ecosystem

A tech ecosystem is also starting to emerge. Where traditional ecosystems may be lacking, Silicon Savannah is filling the gap with innovation hubs and accelerators. The trend has been led in part by Ushahidi co-founder Erik Hersman who considers the future of tech in Kenya reliant on hubs to bring together technology entrepreneurs, young programmers, creative professionals, and investors, along with their ideas and innovation. “Hubs in major cities with a focus on young entrepreneurs… Part open community workspace (co-working), part investor and VC hub and part idea incubator. The nexus point for technologists, investors, [and] tech companies,” says Hersman. Ushahidi established the iHub innovation Centre in 2010, and since then it has been part of creating 152 startups and counts 15,000 members. iHub has also partnered with the ICT Authority on several initiatives, has hosted speakers including Yahoo’s Marissa Mayer, and has driven an upsurge in different types of innovation hubs across the continent.

Accelerators are also part of the emerging ecosystem. A particularly successful example is Nailab, which launched in 2011 to work with early stage globally scalable startups. So far it has incubated 30 companies, and in 2013 it partnered with the government to launch a $1.6 million technology program providing entrepreneurs with access to capital, education, and contacts within the industry. Tech competitions are also emerging. For example, the IPO48 startup competition brings together over 100 Kenyan entrepreneurs, programmers, designers, and project managers at a time, to build a new mobile or web service over the course of two days.

In Kenya, the stars of mobile and internet penetration, a mobile economy, developing infrastructure, and government support have aligned, and there are great opportunities ahead. And as its global reputation for innovation continues to grow, the country has the chance to future-proof itself both as an economic driver and Africa’s key technology hub.

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Doing Business amidst Terrorism

25 November 2015 Comments (0) Africa, Business, Featured, Middle East

lagos

Despite the odds, the Middle East and Africa show improved business environments.

On June 1, 2015 the World Bank Group published its 13th annual Doing Business 2016 report, a virtual check-up on the health of 189 different economies and each one’s environment for small and medium sized businesses. By monitoring domestic business regulations, the World Bank Group attempts to analyze the shifting horizons for international entrepreneurs, hoping to usher in a firm-friendly future in light of the ever-globalizing world economy.

The rise of cross-border terrorism has caused concern for many business leaders and potential investors in the region. Though the state of presumed instability may suggest a weakened business environment in the Middle East and Africa, contrary to media sensationalism these regions have made massive strides in improving the economic conditions for business owners alongside the threat of potential conflict. As always, there is much more than meets the eye.

A Binary Opposition between Appearance and Reality

In light of this, though most foreign policy surrounding terrorism concerns blunt force and combat, there is a need to not just strengthen the fighting power of our African and Middle Eastern allies, but also strengthen the structures that support them. The dangers portrayed by mainstream media are a bite-sized vision of the entire reality at play, as the emotional nuances of warfare footage packs a more memorable punch than the hard numbers Doing Business presents.

The toll of a nearby enemy is evident in the World Bank’s report. The Middle East and North Africa (MENA) is still held as the least transparent region internationally, and with the exception of Morocco there is little public engagement in forming regulatory policy. The region’s governance carries a relatively low regulatory quality but with great efficiency.

Improved Business Conditions as the Norm

Despite the multiplicity of issues these policy makers face, almost all nations within the Middle East and Africa have made huge strides to improve their business environment. This region currently represents half of the twelve nations that implemented four or more reforms, specifically Rwanda, Madagascar, Senegal, Morocco, and the United Arab Emirates. Across the board, low income economies have made much bigger improvements than high-income economies: Sub-Saharan Africa alone accounted for over 30% of all regulatory reforms made between 2014-2015.

In addition, Sub-Saharan Africa represents half of the top-ten improved economies as ranked by Doing Business, with Uganda, Kenya, Mauritania, Senegal and Bahrain implementing major economic reform. Within this region Rwanda also stands out, boasting a massive reduction in the number of days required to transfer property from 370 to a mere 32, and jumping from a score of 2 to 19 out of 20 on an index that rates the ease and efficiency of attaining credit.

The thirteen years of data collection has afforded the World Bank group several conclusions about the relationship between regulation, efficiency, and performance, and in this year’s Doing Business report they found that transparency during policy making was “highly and significantly” related to greater regulatory quality as well as efficiency. Currently in Mozambique, proposed regulations are published in a federal journal and distributed to stakeholders to encourage dialogue. In Ethiopia, Niger, and Afghanistan, public meetings are held so that the public and business leaders can be a part of the process of reform. In Kenya they even have a website for proposed regulations, where anyone at any time can weigh in on economic policy.

And Kenya’s not the only place that’s gone online- Rwanda made electronic tax filing and payment compulsory in 2014/15, and the time required for businesses to prepare and file taxes fell by 10 hours. Uganda introduced an online system for obtaining trading licenses, and other economies introduced systems where trade-related documents could be processed, including Benin, Côte D’Ivoire, Ghana, Madagascar, Mauritania, Suriname, Tanzania, and Togo. Currently, 25% of MENA nations have online systems for tax filing and payments, reducing the scope for bureaucratic discretion and corruption while increasing the system’s transparency, simplicity, efficiency, and cost-effectiveness.

The Best and the Worst

Countries’ ability to govern and enhance opportunities for citizens despite attacks from groups like ISIS and Boko Haram is commendable and demonstrates that optimism is in fact realistic. Turkey, though overrun with refugees, was able to streamline the process of obtaining construction permits. Saudi Arabia, with ISIS only 30km from their borders made property transfers faster by updating to a computerized registry system.

Nigeria and Kenya, the top two sub-Saharan nations affected by terrorism in the last year were still able to make their business environments healthier, with Nigeria reducing fees for property transactions and increasing the protection of minority investors by requiring external review. Kenya significantly reduced the time it takes to start a business by eliminating procedural inefficiencies, improved electronic document management for land registry, and improved access to credit, electricity, and proposed policy dialogues.

During a time of growing cross-border terrorism, with sensationalized militias such as Boko Haram and the Islamic State, as well as lesser known groups such as the al-Nusra Front or the Fulani militia, the significance of the stability a strong economy offers has never been so important. The relative security a growing economy offers provides the resources and willpower to combat terrorists, supports the persecuted, ensures justice, and dissuades the sympathetic from joining the extremists. Like many other groups branded with violence that preceded them, this generation of extremists will fall from within once they realize that peace is a more profitable reality.

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Gilbert Diendéré: Coming Out from the Shadows

24 November 2015 Comments (0) Africa, Featured, Leaders

Diendéré

Chief of staff to Blaise Compaoré, Burkina Faso’s ex-president, Gilbert Diendéré is far more than a jack of all trades; intelligence, information, organisation and control, he is a master of all.

Burkinabé military officer and head of the powerful Presidential Security Regiment (RSP) for almost three decades, Gilbert Diendéré, who was known to lead from the shadows, took an unprecedented step into the lime light on September 17th, 2015.

In a move the General is now calling “the biggest mistake,” he took power of his West African home country, in a coup d’état that lasted a mere six days. After which, he and his army succumbed to mounting pressure to step down.

The coup, which pushed out the interim president, appears to have been an attempt to reinstate his comrade, Compaoré, the man for whom he was the quiet power behind through the former president’s entire time in office.

A Military Force

As the officer who announced the October 1987 coup, this was not Diendéré’s first experience of overthrowing a government. Taking power from the popular and revolutionary Thomas Sankara, with whom Diendéré had trained alongside as a young cadet in the army, he then placed it in the hands of Compaoré.

This was a pivotal time for the General, who was subsequently made head of the Presidential Security Regiment (RSP). With Compaoré’s blessing, he developed and expanded the RSP into a reportedly stronger and better trained army, which offered its soldiers better conditions and higher pay. It also answered directly and exclusively to the president himself.

Together the pair ruled Burkina Faso for an almost unfeasibly long time. Not until October of last year, when Compaoré’s push to be re-elected resulted in him being ousted by mass public demand, did their reign come to an end. Throughout his time in power, Diendéré has been accused of crimes against humanity. The charges against him include murder and firing at unarmed protestors, allegations for which the General will now stand trial.


Multifaceted Man

Standing at an impressive 6.5 ft, Diendéré may be physically imposing and considered to be one of the most powerful men in Burkina Faso, but until recent events the 56 years old had chosen to exert his power indirectly.

His international connections boosted Compaoré’s network and political status, whilst also cementing his own reputation internationally, particularly in America and France. In 2008 Diendéré was awarded the Légion d’Honneur, one of France’s most prestigious military medals.

The former head of RSP is highly regarded for being well informed, knowledgeable in many fields; particularly that of the West African political affairs, and a skilled negotiator and strategist. Known as a “master of intelligence,” the Burkinabé General has been involved in delicate negotiations with al-Qaeda linked group AQMI and in the release of several European hostages in 2009 and 2011.

A fearless thrill seeker, he enjoys regular parachute jumps and is popular and respected amongst his colleagues. However, it is recognised that the man described as shy and calm, with the formidable “iron fist” handshake, is a man one would prefer as a friend and not a foe.

In the Face of Justice

Just days after the coup began Diendéré conceded, “I am willing to turn myself over to face justice,” and called for his army to lay down their weapons. “I would like the people of Burkina Faso to find a solution to this crisis through dialogue.” He said, after turning himself in on October 1st.

The self-appointed Chairman of the National Council for Democracy sought shelter in the Vatican embassy as crowds on the Burkina Faso streets became violent. Negotiations took place to ensure his safety before he was handed back to the interim government. The Presidential Security Regiment (RSP) was later ordered to be disbanded and the assets of Gen. Gilbert Diendéré, frozen.

What is next for the shadowy figure is uncertain. He remains adamant that Compaoré had no dealings with the latest coup and has openly denounced his own actions. For now the country awaits the delayed elections which will take place on November 29th, perhaps a clever by-product of the General’s failed coup. The complicated history of Burkina Faso informs us that the future is most likely to follow suit, as for the rest, only time will tell.

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African Solutions to African Problems: Ushahidi is Taking the Internet to the Next Five Billion

23 November 2015 Comments (1) Africa, Featured, Leaders

Ushahidi's BRCK

Representing a new frontier of innovation in Africa, non-profit technology collective Ushahidi is developing African solutions to African problems

“If it works in Africa, it will work anywhere,” is the motto of Ushahidi, a Kenyan non-profit technology collective which designs and builds open source software and digital tools to help people in the developing world.

Indeed, while in the West technological possibilities are being stretched to their bounds, across Africa something as seemingly straightforward as an Internet connection is unreliable. Figures from the East African Community (EAC) suggest 90% of schools and 30% of hospitals are still off-grid. Only 24% of the developing world is connected to the internet. And, as Ushahidi comments, “power spikes and outages are everyday occurrences in Nairobi and across Sub-Saharan Africa, no matter your income level”. But in a region lacking adequate roads and clean water, developing reliable Internet connectivity is simply not a priority for governments.

There are a number of Western companies working to solve the problem – and at the same time bringing their products to the world’s next five billion Internet users. For example Google has ProjectLink Uganda and LoonBalloon, and Microsoft is experimenting with the TV White Spaces spectrum. But Ushahidi has developed an African solution that really might solve the African problem.

The Internet back-up generator BRCK

Designed to be an “internet back-up generator”, Ushahidi has developed BRCK, a piece of hardware that offers rugged and reliable connectivity. Working like a phone, it can be used in any area that gets mobile signal, as it works by intelligently and seamlessly switching as per the need between the strongest network types in the vicinity (broadband, Ethernet cable, Wifi, CDMA, and 3G or 4G mobile phone networks). It supports up to 20 wireless connections at a time. And it also has up to 16 gigabytes of storage space and a BRCK Cloud connection so it can serve as a back-up server and sync with connected devices and cloud applications.

Designed to face Africa-specific environments, the portable hardware handles the heat and dust of even the most demanding environments. And while it connects to the mains, is also comes with about 8 hours of power back up, can be charged via a car battery, or plugged to a solar charger, combating the region’s lack of reliable energy sources.

“As the next 4.5 billion people (65% of the world) start coming online, the need for rugged, reliable, and simple connectivity becomes critical in places with poor infrastructure and limited resources. While existing technologies work well in modern cities, the demands of emerging markets necessitates a rethinking of how technology is engineered, packaged, delivered, and supported. BRCK was conceived in exactly this type of environment. In particular, our struggles in Africa with reliable connectivity inspired us to rethink the entire concept of rugged internet access device – designing the world’s first go-anywhere, connect-to-anything, always available internet device,” says Ushahidi.

Ushahidi driving innovation in Africa

Indeed, Ushahidi, which is part of the thriving Kenyan tech start-up scene – nicknamed the Silicon Savannah -, developed BRCK as a solution to its own problems. “As a company full of engineers working in places with poor infrastructure, we simply couldn’t get connected as reliably as our peers in the developed world”.

Ushahidi designed and developed BRCK with $172,000 raised on Kickstarter. And in doing so, pushed another frontier of innovation in Africa. Crowdfunding is a relatively new phenomenon in the region, but Ushahidi’s Kickstarter success has kick-started crowd-funded entrepreneurship and innovation.

UshahidiExpanding technology’s reach

Co-founder Ory Okolloh, previously Google’s policy manager for Africa and named by Forbes as “one of the most influential women in global technology”, is committed to bringing the benefits of technological innovation to Africa. The company’s first project, for example, was a location-based crowdsourcing crisis-tracker map developed in the wake of Kenya’s 2007 post-election violence. Empowering individuals to document and report incidents in real time, the software allows users to text, email, tweet, or photograph information which is then plotted on to a map. The idea is that media, governments, and relief organizations can see a live picture of what’s happening on the ground and can target responses in real-time. The map has since been used in India during the 2008 Mumbai attacks, during the Haiti earthquake in 2010, and in Japan during the tsunami in 2011. It has also been used to log medicine shortages across Africa and reports of violence in the Middle East.  The company takes its name from this piece of software; “Ushahidi” means “testimony” in Swahili.

And the company is currently expanding its reach with the launch of a digital classroom – the Kio Kit. Ushahidi explains: “You open a box and there are 40 tablets inside, there is a BRCK inside and on the BRCK there is a Linux [open-source] server — so we can locally cache educational content, and serve it up to the tablets.” Ever prepared for the African environment, the modem is in a watertight, hardened-plastic wheeled suitcase and acts as a wireless charging station.

African solutions to African problems has become a bit of a catchphrase, but the impact of socially motivated entrepreneurs could have huge implications for the technological development of the region.

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