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High data costs in Africa have long been cited as an impediment to greater use of Internet services on the continent, even though Africans technically have full Internet access.
Now, a new service that will promote increased access to low-cost Internet services and expand social, digital and financial inclusion will soon be rolled out in Zimbabwe through a partnership by two digital and telecommunications companies - Cassava Fintech International (CFI) and Liquid Telecom Group (LTG).
The service, which will be made available through the Sasai wi-fi finder, will be "rolled out at thousands of hotspots across Africa", and allows "greater connectivity in a variety of locations, including retail, healthcare, education, government and small business trade facilities".
CFI Group chief executive officer Mr Darlington Mandivenga said the service to provide an "expansive network of data access points" would be facilitated through tie-ups with various service providers.
"We see this launch as a critical piece in the social digital inclusion agenda we are driving on the continent," said Mr Mandivenga.
"Through Sasai wi-fi finder, we plan to establish an expansive network of data access points across Africa and build 'Africa's missing network' through partnering with broadband providers, internet service providers and local community hubs."
LTG, which boasts of Africa's largest independent fibre network stretching over 70 000km, will be providing the infrastructural backbone for the new offering.
"We are proud that our best-in-class broadband infrastructure network is the backbone of this service and is enabling more Africans to access the digital and financial benefits of the internet," said LTG chief operating officer Ahmad Mokhles. "This partnership is providing consumers with affordable wi-fi access, while local franchisees and partners are able to grow their businesses and the economies of their countries. This is a true example of the transformative power technology can have across the value chain."
Digital and financial integration is considered as integral in facilitating business and narrowing digital divide in Africa, particularly at a time when Covid-19 has affected businesses that depend on human contact.
A GSMA report last year claimed that affordability remains a significant barrier to internet adoption in Africa, resulting in social, digital and financial exclusion.
The Sasai wi-fi finder will be an in-app feature on the Sasai app that will allow users to identify hotspots at which they can access affordable data.
Sasai chief operating officer Mr Tapera Mushoriwa said: "When a new smartphone user has registered on the Sasai app, or when an existing user opens the app, they receive automatic notification "pop-up" alerts showing available #Sasaiwi-fi finder hotspots nearby.
"They also receive additional services, such as distinct indoor and outdoor wi-fi hotspot markers, directions to wi-fi hotspots, session usage, range and signal strength details - making it easier than ever before for African users to access the Internet."
The partnership between CFI and LTG will see the progressive roll-out of the Sasai wi-fi finder in other countries such as Kenya, Tanzania, Uganda, Rwanda, Democratic Republic of Congo and South Africa.
CFI has core operations in mobile money, social payment services, digital banking, international remittances and mobile micro insurance.
AGRICULTURE sector grew by an average of 5.2 per cent in the past five years and still remains one of the biggest pillars of the country's economic growth.
And, for almost five years, products from farmers contributed about 17 per cent in the country's Gross Domestic Product (GDP), the government has said.
According to Permanent Secretary (PS) in the Ministry of Finance and Planning, Dotto James, the sector also raised employment opportunities by 58 per cent as of 2018.
Mr James who doubles as the country's Pay Master General (PMG) made the speech, while officially opening the National Workshop on the implementation of Warehouse Receipt System and Tanzania Mercantile Exchange (TMX) on Sesame and Cashew nut farming products.
The workshop was organised by TMX in collaboration with other stakeholders including Financial Sector Deepening Trust (FSDT), Warehouse Receipt Regulatory Board, Cashew nut Board of Tanzania (CBT) and Tanzania Cooperative Development Commission (TCDC).
In his speech read on his behalf by the Commissioner of Financial Sector Development, Dr Charles Mwamwaja, the PS said that between 2015 and 2019, the agriculture sector continued to grow at an average of 5.2per cent, while the sub sector of agricultural products continued growing at an average of 5.8per cent.
However, Mr James pointed out that based on the fact that the agricultural sector was key to the country's economy, the government saw the importance of organizing a workshop to convene stakeholders in Sesame and Cashew nut products so as to address the challenges in order to increase efficiency.
"Because of this, the main agenda of this meeting is to look on supervision of Warehouse Receipt System (WRC) and selling of agricultural products through TMX on Sesame and Cashewnut," he noted.
According to TMX Chief Executive Officer, Godfrey Malekano, his institution was the first commodity exchange in Tanzania.
The exchange was established as a platform where farmers, traders, exporters and other various market actors should be able to access domestic and global market and obtain a fair price in selling or buying of commodities.
He insisted that TMX was an organized marketplace, providing a platform where buyers and sellers come together to trade, and become assured of quality, quantity, payment, and delivery.
Equally, he underscored the need for the government to improve the Warehouse Receipt System so as to increase efficiency to farmers and as well allow local and international businesspeople to purchase products online.
Luanda — The issues related to financial management, definition and implementation were, this Tuesday, the highlights of the meeting, by videoconference, of the Finance Sub-Committee as part of the cycle of discussions of the 40th Summit of leaders of the Southern African Development Community (SADC).
Among the topics discussed, for about 10 hours, were the report of the Finance Sub-Committee, including the audit report, with emphasis on the overview of governance, internal control mechanisms and risk management process in the region.
The programme also included the adoption of the agenda at a session where the Angolan delegation, present with 13 members in the room, was led by SADC national secretary, Nazaré José Salvador.
On Monday, the SADC group of experts opened with the analysis of a proposal to hold an extraordinary summit of Heads of State and Government of the region in March 2021, in person, if the situation of combating Covid-19 improves.
The meeting continues until August 17, with the SADC Ministerial Council Session, the Body Troika Summit, which will be preceded by the Senior Officials Meeting and the Ministerial Committee of the Body Troika.
It is scheduled to end next Monday with the Ordinary Summit of Heads of State and Government.
The meeting, of the organization that marks 28 years of existence on 17 August, since its foundation in 1992, takes place via online due to the coronavirus.
Machinga — Over 800 people engaged in gold mining in Machinga on Friday were delighted when government reaffirmed its commitment to enhance the mining industry in the area and country at large.
Minister of Mining, Rashid Gaffar, visited people engaged in illegal gold mining in Busiri River in traditional authorities Liwonde and Nsanama in the district. Busiri River borders the two traditional leaders.
In his statement, Gaffar assured people from the area government would guide them to follow proper procedures so that they carry out their mining activities legally and freely.
"I have learnt that people here have built houses and paid school fees for their children through this illegal mining.
"The Tonse Government wants to uplift lives of the local people, as such, we will help you follow proper procedures so that the mining activity that are taking place here should be legal and you should do it freely," said the minister.
He, therefore, advised people from the area not to allow foreigners to engage in the activity.
"My ministry was informed that foreigners are the ones doing mining here, but we have all witnessed that these are people from Malawi.
"As such, we can't stop them using force, but rather help them so that they can be self reliant and that government should also benefit.
"The government created the Ministry of Mining to be a stand-alone portfolio so that we should put the mining activities as one of the priority areas," Gaffar said in an interview during the tour.
He added, "We need to provide these local miners with equipment so that they can carry out their works properly. We have witnessed that they are using old methods of mining which are tiresome and a long process.
"For this activity to be a success there is need for these people to be in cooperatives so that we can easily assist them," added the minister.
Traditional Authority Liwonde said he was glad with the current administration for showing commitment to uplift people from his area who are engaged in gold mining.
"When we heard that the minister is visiting my area, we were worried that the mining activities would be stopped while our people employed themselves in this industry to find food for their families," said T.A. Liwonde.
Machinga District Commissioner, Rosemary Nawasha asked the minister to consider devolution of the mining industry and that the council should be advised accordingly.
"Over 800 people from this area are the ones involved in gold mining activities and we are told the surveyors are from Ntcheu, Balaka and Lilongwe," said the DC.
Source: Malawi News Agency (Mana)
Falling costs and improved sales networks mean that small-scale solar power for households or micro-businesses is taking off across Africa. Crucially, this is fast becoming a self-sustaining sector that can generate its own revenues, and allowing numerous companies of all sizes to cater for demand on a commercial basis.
The reasons for this change in the landscape for small-scale solar are not hard to find. As consultancy Kleos Advisory put it in a recent report on the sector: “In 2010 a typical solar unit could replace a kerosene lamp for around three hours per day – hardly a replacement for grid power. Today an affordable solar unit can power a 32-inch television with satellite, 24 hours a day. In five years’, time affordable solar units are expected to be able to power all the key routine devices many Africans have in their homes, such as mobile phones, TVs, fans, lights and the Internet.”
The widely used pay-as-you-go model for the sector enables consumers to buy a small solar unit with a rechargeable battery pack on a rent-to-own basis. They make repayments via mobile phone at a cost similar to those of buying kerosene for lighting and paying someone else for phone recharging. Typically, they can pay off the costs of the solar unit and other equipment in around 18 months and then own it outright.
GOGLA, an association representing the off-grid solar industry, estimated in 2019 that over 5m pay-as-you-go sales had been made in Africa since 2015, with more than 1m sales in the first half of 2019 alone.
Sustainable business
Kleos, whose report was carried out in collaboration with small-scale solar provider Azuri Technologies, says this means that up to 25m people are getting the benefits of off-grid power via this model without any direct government or development institution financial support, and with the prospect of a rapid rise in uptake over coming years.
However, there is little prospect that household-scale solar installations could power heavier duty equipment, such as washing machines or hair dryers – and this is not going to be a solution for powering cookers anytime soon. Kleos says that for most off-grid Africans using small-scale solar this won’t be a problem because they have limited power needs or have access to a diesel generator to run any more power-hungry equipment. But, at the moment, that is unlikely to include the very poorest Africans.
This has led to some criticism that proponents of small-scale solar are overstating the benefits to those without electricity access, because the poorest remain excluded. They might be able to acquire a simple solar powered lamp, or even a non-rechargeable battery powered torch with a long lifespan, but not a generator or a solar system.
A report published in February 2020 by consultancy 60 Decibels, and backed by UK development finance institution CDC, notes that despite the growing availability of financing, the poorest were underrepresented among users. Some 37% of off-grid energy customers around the world live below the $3.20 a day poverty line, compared to 60% of the population as a whole in the developing markets in which 60 Decibels operates.
“These data suggest that whilst off-grid energy offers tremendous promise to bridge the global energy divide, to do so we need to see more accessible financing options, lower prices, smarter subsidy, and wider distribution,” the report says.
Supporting the sector
CDC Chief Executive Nick O’Donohoe says greater inclusivity is needed but there are Africans who are so poor that it is hard for energy businesses to serve them on a commercial basis and they will continue to require aid, grant support or subsidies.
However, this shouldn’t detract from the benefits off-grid solar has brought. “There are probably 50m low-income Africans that have access to power who wouldn’t have been able to afford it before. And in most cases, it’s replacing kerosene in homes. So, it’s a win-win by any standards,” he says.
One element of CDC’s support for the sector has been its investment in M-KOPA, one of the world’s largest pay-as-you-go solar energy companies. The company’s off-grid solar home systems now operate in over 750,000 low-income households in Kenya and Uganda.
CDC invested $11.6m of equity in M-KOPA in 2016 and a further $7m in 2017. In 2017, CDC also provided $20m of debt financing, as part of a $55m local currency facility with Stanbic, FMO and Norfund.
Source: African Business Magazine.
Central and commercial banks across Africa are working together to increase liquidity and improve access to finance in an effort to keep the economies within which they operate functioning during the Covid-19 lockdown.
Interest rates have tumbled and capital reserve requirements been cut to encourage companies and individuals to keep borrowing and investing. However, the huge uncertainty generated by the pandemic has deterred potential customers from accessing credit, underlining that there is a limit to what banks can do.
Although there will undoubtedly be a deep recession and widespread job losses across the continent, central banks have introduced a range of measures to see banks through the immediate crisis, while cushioning the impact on domestic economies as much as possible.
They have eased capital reserve requirements, many of which were introduced in the aftermath of the 2008 global economic crash. They have also made low interest loans available to help see banks through the crisis, while reducing benchmark lending rates.
The Central Bank of Kenya’s two-pronged stimulus strategy – lowering capital requirements and slashing interest rates, to allow banks to lend more of the reserves that they do hold and encourage them to borrow more from the central bank – has been replicated in other countries.
For instance, the National Bank of Rwanda reduced its reserve requirement ratio by a fifth, from 5% to 4%, and lowered the Central Bank Rate from 5% to 4.5%. The Bank of Tanzania reduced its statutory minimum reserve requirement ratio from 7% to 6% and its discount rate from 7% to 5%.
By contrast, banks in the most developed banking market on the continent, South Africa, must hold just 2.5% of their deposits as reserves.
However, the situation in Nigeria is even more challenging. The Central Bank of Nigeria (CBN) has asked banks to expand lending to support an economy affected by both the coronavirus pandemic and the associated collapse in oil prices. (See pages 52-53.)
The IMF forecasts that the Nigerian economy will contract by 3.4% this year but other sources predict that the fall in GDP will be more than twice as big. Much depends on how quickly oil prices recover.
Yet at the same time, the CBN requires them to hold a massive 27.5% of deposits as reserves, one of the highest rates in the world. The central bank introduced strict protection measures to avoid the bank collapses that plagued the Nigerian banking sector in the past. They have had a big impact in increasing confidence in the industry. Yet such requirements also restrict Nigerian banks’ room for manoeuvre in crises such as the current coronavirus pandemic.
The CBN has devoted its energy to putting a N3.5trn ($9bn) stimulus package together. The money is being passed on to commercial banks, to be lent to businesses at low rates.
There could still be an increase in lending. Zenith Bank expects its loan book to grow by 2% this year, although this is a big fall on last year’s 22%.
The crisis has greatly reduced Nigerian banks’ access to foreign currency but they have been buoyed by a fall in the ratio of non-performing loans (NPLs) from an average of 11% at the start of 2019 to 6.5% this February. This figure is widely expected to increase rapidly over the course of this year but at least it is starting from a lower base.
Multilateral banks are seeking to support African economies through the crisis. In early June, the African Development Bank (AfDB) approved a $288.5m loan for Nigeria to help mitigate the impact on companies and individuals; cushion Abuja’s finances from the oil price crash; and help the government to identify the scale of the outbreak within the country.
Ebrima Faal, the AfDB’s senior director for Nigeria, said: “The proposed programme will ensure that the fiscal position and the economy are sufficiently supported to weather the Covid-19 shocks, thereby limiting its potential adverse impact on livelihoods and the economy more generally.”
Deft negotiations
Despite central bank supply-side support measures, all the main credit ratings agencies forecast big falls in access to finance in Africa, because demand is likely to remain weak.
Even where commercial banks offer low interest finance, corporations and individuals may be reluctant to take on loans. There is also likely to be an increase in bad loans and it remains to be seen how understanding banks will be over debt renegotiation at a time when they are under severe financial pressure themselves.
In late May, Kenya’s Equity Group increased its bad debt provision from KSh410m ($3.83m) in the first quarter of 2019 to KSh3.12bn ($29m) for the same period this year in order to cope with the expected financial impact of the crisis.
CEO James Mwangi said that the pandemic had “introduced unprecedented uncertainty within the global financial systems, prompting us to adopt a conservative approach – fortifying our balance sheet and assuring ample liquidity to support our customers”.
Other banks have made similar provisions and analysts think even more money may need to be set aside as borrowers’ ability to repay loans weakens further.
The biggest bank in Kenya by assets, KCB Group, has allowed borrowers to suspend debt repayments for three months. However, the impact may not be as great as some fear. The Kenya Bankers Association forecasts that the ratio of bad loans will rise from 12.4% to 14% over the course of the lockdown.
Many central banks, including in Kenya and South Africa, have repeatedly cut their headline interest rates in an effort to maintain access to finance but customers are understandably reluctant to take on more debt at this time.
Kenyan banks already report a big fall in the volume of lending on the back of lower demand and they have already restructured a high proportion of their loans. Demand for sovereign bonds has therefore soared as banks have sought out the lowest risk investments.
This policy does have a downside: Moody’s cut its outlook for Equity Group, KCB and Co-operative Bank of Kenya from stable to negative because of their increased exposure to a single borrower, in the form of the government.
South African measures
Some mitigation measures have had a rapid positive impact on the markets. For instance, under advice from the country’s central bank, South African banks decided to suspend dividends for this year.
This led to an immediate 10% rise in bank stock prices on the Johannesburg Stock Exchange, as investors calculated that the boost to bank finances more than compensated for the loss of dividend income. Other banks across the continent have also opted for a moratorium on dividends for the year.
Banks must prepare for big falls in earnings but current projections feel like guesswork rather than concrete estimates. South Africa’s Absa says that its profits will be at least 20% down but all banks could face much bigger falls, as lower benchmark rates mean lower earnings, exacerbating the fall in transaction volume and higher rates of loan default. However, stress tests carried out by PwC concluded that South Africa’s big five banks would all be able to withstand the crisis, even under the worst-case scenarios.
Changing bank culture
The huge rise in digital banking over the past few years has allowed banks to continue operating and customers to continue accessing services despite the closure of branches. Indeed, many banks have actually increased the level of their digital investment to cope with the anticipated rise in demand.
It may take some time for figures on the scale of the actual increase in demand to be published. Some Ghanaian banks have removed the fees they charged on e-banking transactions to both boost the uptake of e-banking and support their customers during the pandemic.
It was widely reported in Nigeria that Access Bank had decided to permanently close more than 300 branches and make 75% of its 28,000-workforce redundant, but this has been denied by the bank. A spokesperson said that the bank has only closed branches temporarily, as instructed by the CBN, to reduce the risk of Covid-19 infection.
Access Bank has had 29m customers since last year’s acquisition of Diamond Bank, giving it perhaps the biggest customer base of any African bank. Some rationalization of the bank’s network is possible as the two systems are merged.
In common with many other sectors, African bank employees have worked from home wherever feasible. In many cases, this appears to have worked better than executives had anticipated and some banks say that they may retain higher levels of home working in the long term. This can reduce infrastructure costs and allow employees to integrate work and home life more easily.
The chief executive of South Africa’s Investec, Fani Titi, said: “We have established that we can work very effectively from outside of the building. In the fourth quarter of the year we may see an increase. But I don’t think we’ll ever get back to a situation where you will have approximately 95% of your people in one place.”
How many of the changes, quite a few positive, induced by Covid-19 will remain in place once the lockdowns have been completely lifted? Time will tell but as often happens, changes are often forced by circumstances and Covid-19 may have changed banking culture in Africa to quite an extent.
Source: African Business Magazine