Global fi­nance and e-trade gi­ants threat to African play­ers

The East African - - BUSINESS - By MOSES K GAHIGI Spe­cial Correspondent

EX­PERTS ARE warn­ing that global fi­nan­cial and e-com­merce gi­ants will take over the African mar­ket if the con­ti­nent’s play­ers do not in­no­vate and come up with mod­els that ad­dress the real needs of the peo­ple.

Although there is some level of digi­ti­sa­tion on the African land­scape through com­pa­nies like Ju­mia, there is still a big gap in well-seg­mented cus­tomer data, which has left mil­lions of peo­ple un­served or un­der­served. This is some­thing e-com­merce gi­ants like Alibaba and Ama­zon can ex­ploit in Africa, said the pro­gramme man­ager of fi­nan­cial in­clu­sion at Master­card Foun­da­tion Olga Mo­rawczyn­ski.

“The dis­rup­tion is al­ready hap­pen­ing; some African play­ers like Ju­mia are digi­tis­ing but the real strength lies in un­der­stand­ing lo­cal needs and re­spond­ing accordingly,” Ms Mo­rawczyn­ski said at the 2017 Master­card Foun­da­tion Sym­po­sium on Fi­nan­cial In­clu­sion in Ghana last week.

Giv­ing the ex­am­ple of how over-the-top com­mu­ni­ca­tion plat­forms like What­sapp and Face­book have dis­rupted the tele­coms busi­ness, forc­ing mo­bile net­work op­er­a­tors to go back to the draw­ing board, ex­perts said the same is likely to hap­pen in the fi­nan­cial sec­tor.

Amolo Ng’weno, the re­gional di­rec­tor for BFA for the East African re­gion — a con­sult­ing com­pany spe­cial­is­ing in fi­nan­cial ser­vices — said en­abling ac­cess and shar­ing in­for­ma­tion free of charge on gi­ant data com­pa­nies like Face­book and Google will give global firms an up­per hand.

The strong growth in con­sump­tion driven by dig­i­tal in­no­va­tions like mo­bile money — which is grow­ing five times faster in Africa than in any other re­gion — is an at­trac­tion for global e-com­merce com­pa­nies.

Ac­cord­ing to an­a­lysts, tech­nol­ogy is open­ing up new doors and com­pa­nies that hold more consumer data and are dig­i­tally in­clu­sive will sur­vive in the mar­ket.

For ex­am­ple, Ja­pan’s largest on­line re­tail mar­ket­place, Rakuten, also runs one of the coun­try’s largest on­line travel por­tals and its own mes­sag­ing app — which can sug­gest items based on an in­di­vid­ual’s re­cent chats. It also uses credit cards and gives mort­gages to its cus­tomers.

The real strength lies in un­der­stand­ing the lo­cal needs and re­spond­ing accordingly.” Olga Mo­rawczyn­ski, Master­card Foun­da­tion

Other tech com­pa­nies are break­ing into fi­nance in the West for ex­am­ple Ama­zon now pro­vides loans for small and medium-sized busi­nesses, Face­book is in­te­grat­ing per­son-to-per­son Paypal pay­ments into its Mes­sen­ger app while Ap­ple is start­ing to al­low imes­sage users to send cash to each other.

Ex­perts say the ground is be­ing pre­pared for these gi­ants to come to Africa, which will ren­der some fi­nan­cial ser­vice providers re­dun­dant.

The down­side about this, ac­cord­ing to Chris Locke from Cari­bou Dig­i­tal, a re­search and de­liv­ery con­sul­tancy, is that they give lit­tle to economies they op­er­ate in.

“They look more like dig­i­tal ex­trac­tive in­dus­tries, they pay no taxes yet they make huge prof­its do­ing busi­ness in for­eign mar­kets,” he said.

Pic­ture: Mor­gan Mbabazi

The vis­i­tors lounge of the Com­mon­wealth Re­sort Mun­y­onyo in Uganda. The ap­pre­ci­a­tion for global build­ing stan­dards is be­com­ing com­mon­place in Africa.

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