Archives for posts with tag: Africa

Ecommerce in Nigeria
Nigeria is the largest country by population in Sub-Saharan Africa and it also has the biggest economy. By 2030, one in every six Africans will be Nigerians, and Nigeria will have one of the 25 largest economies in the world. One area to look for continued growth and real opportunity is E-Commerce or M-Commerce (Mobile Commerce). In 2014 Nigeria recorded over $2 million worth of online transactions per week and close to $1.3 billion monthly. Nigeria’s e-commerce market is developing rapidly, with an estimated growth rate of 25 percent annually.

According to an online researcher, emarketer, while e-commerce across the rest of the world is growing at 16.8 per cent, Africa’s e-commerce space is growing at a rate of 25.8 per cent – making it the fastest growing in the world. Nigerians are notorious for their love of shopping. The Euromonitor Nigeria in a 2011 report revealed that Nigerians spend $6.3 billion per year on clothing. In a recent survey conducted by Philip Consulting 38 percent of Nigerians prefer to buy products through the internet. Middle class consumers are the biggest purchasers online. Nigeria’s middle class now accounts for 28 percent of the population, and the middle class are well educated, with 92 percent having completed a post-secondary school education. This middle class is brand conscious and tech savvy and their technology of choice is a mobile device.

Mobile phone shopping
A Terragon Group study in 2014 shows 63 per cent of Nigerian internet users had bought at least one item online. 60 percent of these buyers claimed to have used their mobile phones for these purchases. 86 percent of the respondents to the Terragon Group study claim to carry out research about an item before making a purchase, and 80 per cent pointed at mobile as their major platform for research. Mobile is the first and major point of access for all internet activities. Nigeria is the largest mobile market in Africa and the 10th largest in the world. 71 million Nigerians access Internet via mobile phones according to statistics released by the Nigerian Communications Commission (NCC) and Nigeria was number eight among the top 10 internet user countries in the world.

connectivityOne of the keys to growth in e-commerce is connectivity. Internet access in the past has been spotty at best, but is getting better. Nigeria’s internet subscriber base rose from 48.2 million in June 2013 to 67.4 million in June 2014. This represents a density of 40 percent, placing the country above the African average of around 16 percent, as estimated by McKinsey & Company. Nigeria’s internet access market is set to witness a huge boost, as the federal government has set the target of a five-fold increase in broadband penetration by 2018. This is continued good news for e-commerce in Nigeria and Nigeria’s Minister of Communications Technology, Dr. Omobola Johnson, has said that Nigeria’s e-commerce market has a potential worth of $10 billion with about 300,000 online orders currently being made on daily basis.

Even with all the potential and the good that is currently happening there are still core issues. The lack of basic infrastructure, the failed postage system, power supply, expensive broadband internet and poor road networks are greatly inhibiting the rapid growth of e-commerce business in Nigeria. Nigeria’s notoriety for online fraud has further hindered growth. In 2005, PayPal closed all Nigerian accounts and denied registration to any user traced to a Nigerian IP address. PayPal has since changed that policy and entered the Nigerian market this past summer. Outdated myths can be hard to shake and unfortunately some still see Nigeria as a haven to scam artists and fraud. Another area of concern is cybercrime. The lack of legislation that specifically targets cybercrime or cyber security has no doubt continually hampered accelerated growth in the e-commerce sector. Legal intervention will need to be raised to deal with future nefarious activities online.

Nigerians shopping
There are tremendous opportunities for e-commerce growth. In Nigeria shopping is a task that takes an incredible amount of time and effort. Many wealthy Nigerians still travel abroad to shop. Some of the reasons for going abroad are limitations on what one can buy online and the challenges associated with online shopping systems. Increased internet access, more affordable data costs, mobile connectivity, the convenience offered by online shopping, and a better product offering should attract more Nigerian consumers to make use of e-commerce sites. Two of Nigeria’s largest e-commerce sites, Jumia and Konga, have seen continued growth and as more players enter the market not only will the consumer benefit, but the Nigerian economy should benefit as well.

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Screen Shot 2014-10-28 at 11.38.40 AM Las Vegas, NV November 2nd-5th 2014 – MMIT will be attending the Money 20/20 Conference at the Aria Casino and Resort in Las Vegas. Money 20/20 is the leading conference for global innovations in money and will be attended by over 7,000 people, including 700 plus CEO’s from 2,400 companies in 60 plus countries. There will be over 500 speakers and some of the key note speakers at this year’s event include Hill Ferguson from Paypal, Kenneth Chenault from American Express, and Tom Taylor from Amazon to name a few. There will also be over 400 sponsors and exhibitors at this event. To find out more about Money 20/20 please visit http://www.money2020.com.

MMIT is a mobile payment processing company that focuses on the Sub-Saharan African market. We work with some of the largest financial institutions in Africa and have access to over 80 million consumers in East and West Africa. MMIT’s mobile technology platform offers secure, fast, and easy payment solutions. MMIT is dedicated to creating forward thinking payment solutions for each transactional demand, all through your mobile phone. To find out more about MMIT please visit http://www.mmitonline.com. Rebecca's blog signature

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AccraH-d1bf92b9-9b06-40bf-8f94-3d70442b4c4eGhana’s Mobile Landscape

The next destination in MMIT’s mobile market series is Ghana, a country that is populated by more mobile phones than people. Ghana presently has a mobile phone penetration rate of nearly 109%, one the highest in all of Africa. However, this statistic does not equate to every Ghanaian owning a mobile phone; this high percentage is due to people having multiple phones or SIM cards. Even so, this statistic is eye-catching to those in the mobile industry and Ghana is a country that should not be ignored.

Phones in GhanaThe actual number of unique mobile phone owners in 2013 was an estimated 15 to 16 million. Ghana continues to see rapid growth in the amount of mobile subscribers, and of all the Sub Saharan countries it is ranked 4th behind Kenya in amount of mobile users.

Ghanaian consumers are more connected to media content compared to other countries in Sub Saharan Africa, largely due to the fact that the country boasts the highest penetration of mobile broadband in the region. Data subscriptions are growing faster than voice and are the focus of players within the industry. Ghana’s telecommunications industry has 6 major providers: MTN, Tigo, Airtel, Glo, Vodafone, and Expresso.

Mobile GhanaThe Ghanaian Consumer 

The spread of media and technology has penetrated so deeply into the country that media touches even the most rural areas. TV, radio, and internet penetration rates exceed most of their African counterparts, while the more traditional newspapers and magazines lag behind. Mobile phones are predominately used for text messaging followed by voice calls and accessing the internet. Social media is extremely popular and ever growing in Ghana placing it behind South Africa, Nigeria, and Kenya for most users. The presence of media greatly influences Ghanaians as they are easily swayed by packaging, advertising, and the reputation of a brand.

Ghana ED School

As seen throughout much of Sub Saharan Africa, Ghana has a youthful population, 56% of the 26.4 million residents are under the age of 25. The abundance of youth is the ideal environment for introducing the latest technologies as they are quick to adapt to innovations. Additionally, a large portion of the population is financially excluded. According to Fidelity roughly 70% of the adult population in Ghana is unbanked as of March 2014.

An unbanked population is an opportune environment for mobile payments, as people do not have bank accounts, lack trust in the banking system, and are at large a cash-based economy. Visa reported in 2013 that the Ghanaian market is one of the leading mobile money markets in the world. A survey that was conducted by the payment company revealed 93% of respondents were aware of mobile money options.

Although this may be an attractive market to enter, many mobile payment providers have failed to tap into the market due to its intricacies and barriers to entry.

Business and Economic Environment

Ghana was recognized in 2013 by the Economist as one fastest growing economies in the world. As a result, the country has attracted the interests of investors from all over the world. The political environment is stable and often considered a model for success in West Africa.

Unfortunately, this impressive growth has declined since early 2014 due to currency issues. Ghana has seen the world’s worst currency slide as the Cedi plunged 36% against the dollar this year. As a result of this currency crisis, inflation has spiked to a hefty 15%. This causes concern for entering the country as it effects foreign exchange rates and cost of goods to consumers.

cedi

This currency crisis has led to a rise in taxes on bank transactions. Fees can be as high as 17.5% as a VAT (Value Added Tax) rate, causing people to pull money out of the banks and close their accounts. This only furthers Ghanaian’s mistrust in the government and banking systems.

In light of these issues, many banks have been reacting to the crisis by revamping their brand images, adding new innovative products, and launching new mobile apps in effort to retain and attract customers. Many of these initiatives popped up at the beginning of 2014 and focus on reaching unbanked consumers or debuting never before seen value added services into the product mix.

These issues present an interesting opportunity for the mobile payment market, as people will avoid traditional banking methods or transactions with associated fees. Mobile money is a convenient way to address the unbanked and bring people into some form of financial inclusion.

With changes developing so quickly within the Ghanaian market it presents considerable barriers to entry and thereby furthering the difficulty of entering the market. Those who can successfully enter this market will reap considerable benefits, as the market is risky yet ripe with opportunity – particularly in the mobile sector.

Please check out our “Mobile Market Look” series for Kenya and Nigeria

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nigeria-location-mapWhat lies beneath the surface of a troubled country?
People may question why would a company consider doing business in a country like Nigeria with poor infrastructure, frequent terrorist attacks, political instability, corruption, fraudulent internet activities, and more than 40% of the population living below the poverty level. What benefits could the country possibly have that outweighs such turmoil?

Most people only see the negative aspects of entering an African nation. However, to see the opportunities you have to look beyond the common perceptions and recognize the true market potential.

The most valuable resource
Africa is known for its abundance of resources such as oil, gas, gold, and diamonds, but what may be the greatest asset is often overlooked– the people. Africa is home to 1.11 billion people making it the second largest and second most populous in the world.

Traffic Lagos

Lagos, Nigeria

Nigeria is the largest country in Africa and ranked 7th worldwide in terms of population with 173.6 million people as of 2013. Not only is the population large but it is also young, entrepreneurial spirited, and growing. Roughly half the population is reported to be 19 years of age or younger. Interestingly, Nigeria reportedly has the highest total entrepreneurial activity in the world; many Nigerians tend to be innovative and business oriented by nature.

Growth and investment in a rising nation
Nigeria’s projected growth rates rival the top emerging economies – even the renowned BRICS nations.

In April 2014 Nigeria surpassed South Africa as the largest economy in Africa, with a GDP of $510 billion in 2013, $190 billion more than the GDP of South Africa. GDP grew by 7.4% in 2013 up from 6.5% in 2012 and is forecasted to achieve an average growth rate of 7.1% through 2030. Nigeria is ranked as the 26th largest economy in the world and is on track to break the top 20 by 2030. Nigeria plans to invest heavily in 5 major economic sectors to sustain growth: agriculture, trade, infrastructure, manufacturing, and liquid production of oil and gas.

The impressive growth has recently attracted investors all over the world. According to Frontier Market Sentiment Index report in the Wall Street journal, Nigeria is the number one frontier market in terms of attracting investment interests from European and American multinationals. Citing an average of 3 out of 10 major companies having Nigeria on their watch list. Large multinationals such as Dominos, YUM! Brands, and P&G are examples of businesses planning to further expand their current presence in Nigeria because of their success.

With an unsaturated market and promising future, Nigeria is considered an “economic sweet spot” for business.

A mobile hot spot  
The combination of the market size, age, and growth offers great potential to become the most lucrative mobile telecom markets in Africa. The industry accounted for more than a quarter of the GDP in 2013.

mobile Nigeria

Nigeria is ranked 8th in internet usage worldwide with over 67 million users, the majority accessing the web through their mobile phones as many do not have desktop computers and broadband issues remaining prevalent. Nigerians with their adaptive instincts have leap-frogged several technological product cycles; one instance is many people are buying cell phones before having a landline for their household. Nigeria has over 120 million mobile phone users with over 70% market penetration and is predicted to continue to grow substantially. Although mobile phone penetration is rapidly increasing, only about 25% of the population owned a smartphone in 2013 but this number is expected to increase as technologies become more affordable and as the middle class rises.

The mobile service carrier industry is fiercely competitive with main operators MTN, Airtel, Globacom, and Etisalat battling for market share. However, opportunities in other areas within the mobile sector such as applications, content, and payment methods are immense and profitable. Nigerians use their mobile phones for work, entertainment, and social media beyond typical talk and text features. Nigerians are the leading country in Africa in terms of social media use with well over 11 million users with over 6 million members on Facebook’s site alone. Nigeria ranks the 4th in terms of Facebook membership growth rate.

Nigeria is in a great position to benefit from worldly economic trends including the rising demand from emerging economies, growing demand for global resources, and spreading the digital economy. Despite the continued problems within the nation Nigeria continues to display impressive economic growth rates, a growing middle class, and a youthful population that embraces technological developments making the market extremely attractive for business.

Please visit our “Mobile Market Look” series and our look at the Kenyan mobile market

To Follow MMIT and subscribe to our newsletter please contact us at newsletter@mmitonline.com


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African SMEs and Entrepreneurs – the time is now!

Africa is quickly emerging as a top contender for business expansion in large company ventures. In many ways, Africa has been referred to as the “next Asia” with strong investment growth. After all, the continent is home to 7 of the 10 fastest growing economies in the world. The future has been looking much brighter for Africa, especially in the last decade where we have seen Africa’s GDP more than double.

According to EY’s recent attractiveness survey for 2014, Sub-Sahara Africa places in second place.  Three years ago in 2011 SSA was listed 3rd from last on the same list. This year, North America is the only region that ranks ahead of Africa in terms of investment attractiveness.

Growth within these nations not only provides incentive for foreign direct investment (FDI) from all over the world, but also more importantly provides immense opportunities for African entrepreneurs across the continent. EY also cites Intra-African investment and development as a major source of growth for the continent.

Inherently Africa has a high level of risk associated with business investment with many nations battle political instability, corruption, and problems associated with the lack of proper infrastructure. All of these factors contribute to the risk in conducting business in Africa which is eminently complex. In the past, such issues have resulted in the hesitation by global companies from exploring expansion into African nations. However in present day, it appears investors have been able to see beyond negative headlines of nations such as Nigeria, Kenya, and Sudan due to the market potential outweighing many of the risks.

Africa micro business While many large size multinational enterprises (MNEs) such as Nissan, H&M, and Burger King are making headlines for their decisions to expand into Africa for business ventures, the success behind these rapidly growing countries is largely due to SMEs, small and medium sized enterprises. Several MNEs have recently been attracted to the region due to significant improvements in regulatory, legal, and business systems. However, according to IFC and World Bank reports, over 90% of all businesses in Sub-Saharan Africa are SMEs. Aside from this, there is also the informal market of micro businesses that are largely unaccounted for.

With the exciting growth of the mobile phone industry, it presents a major opportunity for Sub Saharan companies to prosper. MMIT, Mobile Media Info Tech, a Nigerian software provider of mobile payments is an example of how Nigerian entrepreneurs and SMEs can benefit from the recent growth trends. With the significant increase in cell phone users, mobile opportunities are abundant. MMIT quickly entered the market by creating M-Wallet and M-Diaspora products.  These products allowed Nigerians to use their mobile phones to pay for products, acting as a mobile wallet, and our M-Diaspora product which allowed ex-pat Nigerians in the United States and United Kingdom to send money to friends and relatives in Nigeria. MMIT saw the opportunity and benefit of mobile payments, a technology that has revolutionized the African consumers’ lack of banking access and dependency on carrying cash.

With the overwhelming majority of the business landscape being SMEs, they are instrumental to the growth of the economy within the Sub-Saharan region. African SMEs growth and development helps create the desperately needed jobs within the formal economy which can ultimately boost economic growth and stability. Although things are looking up, reports of high unemployment rates in SSA, particularly among the youth, continues to plague the continent. The need for the creation of jobs and infrastructure is still in dire need to foster the current economic growth and to sustain it.  Therefore, it is imperative that they do not ignore these rising opportunities created by the economic growth of the past years.

Business in Africa is challenging and varies significantly from country to country which further adds to the degree of difficulty for foreign entrants. African companies have many advantages that they can capitalize especially in terms of market knowledge, understanding of consumer behavior, and realizing what innovations can revolutionize the African way of life. African companies partnering with foreign companies is another smart option for both sides of the spectrum as local African business are able to fill many of the gaps that large MNEs cannot always fill. With new economic developments and increasing incomes, consumers are demanding access to more goods more than ever before. African entrepreneurs and SMEs should seize the opportunities before the MNE’s flood gates open.

To follow MMIT please visit www.mmitonline.com and to subscribe to our monthly newsletter please contact us at newsletter@mmitonline.com


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A look at the predicted mobile payment growth in Nigeria

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Predicted mobile growth in Africa

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In the Western World the idea of mobile banking/payments starts with our smartphones.  Our chief concern usually centers around privacy and security.  In the emerging World, especially Africa, mobile banking/payments are quite different and the concerns are quite different as well.  I recently talked to MMIT COO – Kim Fraser about the unique concerns and problems that face mobile wallet users in Africa:

AB: First of all thank you for taking the time today to meet with me Mr. Fraser.  I was hoping you could elaborate on the issues faced by mobile wallet users in Africa?

Kim: Thank you, and yes I can definitely speak on that.  In the west traditional banking services are universally accessible to a majority of the population through the use of ATMs, credit cards and debit cards. In Africa and other emerging markets banking services are not so universally widespread and accessible to the majority of the population. This is due to a number of factors such as the high cost of brick and mortar establishments, account opening criteria with the need for credible references, and relatively high initial deposit requirements, minimal balances, high transactional fees, cash based salary payment for many low end wage earners, etc.

In the west most mobile wallets or mobile phone banking products are based on the use of credit cards, and debit cards. They store the users card details on the phone. In developed markets most users of mobile phone technology are aware of the constant problem of identity theft in the mobile phone industry and the underground business that surrounds this activity such as illegal phone shops. Thus many view this as a security issue and an avenue for the theft of their financial details and the impending havoc it can create in ones life.

In Africa and the emerging markets with high rates of poverty the percentage of the population that is banked and using credit cards and debit cards is very small. Mobile banking in its original state, as introduced in Kenya by Safaricom (M-pesa), was not intended to target the banked but the unbanked, those that have no bank account, and no credit facilities. In this market segment the issues around adoption are different. Security is a concern but it does not revolve around identity theft but instead around the risk of carrying physical cash as opposed to carrying virtual cash, which is seen as safer. Also transaction fees for mobile banking are lower than brick and mortar banking fees, there are no minimal account balance barriers, and signing up for a mobile wallet/ bank account normally doesn’t require two reputable references that are already clients.  All it requires is a photo ID, and your phone number, and can be done at any of the mobile banking agent outlets.  Today there are 30,000 M-pesa agent outlets in Kenya and everywhere there is mobile phone service.

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AB: So really the perspective is totally different in Africa than in the West?

Kim: Yes, in Africa and other emerging markets most of the population perceive such services from a totally different perspective than in the west.  It is a game changer and an enabler not a convenience factor such as is the case in the west, where a larger percentage of the population carry smart phones and have credit, debit and ATM cards.

AB: Thank you Kim for your time and knowledge and remember you can follow Kim and MMIT at http://www.mmitonline.com.

MMIT COO – Kim Fraser