The changing landscape of retail in Nigeria

Nigeria’s current retail consumption is listed at $388 billion per year and could rise to $1.4 trillion per year by 2030 according to a report by Mckinsey’s Global Institute. To achieve that estimate and sustain it Nigeria’s retail industry is going through drastic change. Retail growth is being fuelled by the increase in the size of the Nigerian population, more than 80 million of Nigeria’s 170 million citizens live in or close to urban areas, increasing disposable incomes among certain segments of the population, and the drive by the government to modernize retailing. International retailers have also helped growth through their investments and the expansion of international retail stores throughout the country. A report prepared by international management consultancy AT Kearney in 2014 labeled Nigeria, along with Gabon, as offering the best retail investment opportunities in Africa.

The Nigerian government has played a significant role in the growth of modern retail. Like most African countries, Nigeria has a huge informal economy, with large open markets where items are sold, including food and clothes, electronics, and phones to name a few. There are also many small neighborhood stores, ranging from large to small operators, as well as kiosks, roadside food sellers and street hawkers. Because of high unemployment and other factors the informal economy has traditionally played a large role in Nigeria. Nigeria‘s informal retailing channel is believed to be worth billions of naira, much of which is untaxed and unaccounted for in the nation‘s GDP. The government has made a commitment to place its focus on the formal economy and modern retailing and has implemented new policies discouraging open air street retailing.

The new phenomenon for retail in Nigeria is large shopping or “mega” malls. The first mega mall in Nigeria was launched in 2005, when South African grocery chain Shoprite and other retailers began trading from the Palms Mall in Lagos. The mega mall concept has been hugely popular in Nigeria as it has become the place to be seen for aspiring Nigerians. These malls have also further increased the trend towards modern retailing.

Although there are now eight shopping malls spread throughout Nigeria, with others still to come, retailers have found the high rent at these locations to be a major detriment. These malls have shown a steady turnover in merchants. Also many of the Nigerians who love to come to the mall and be seen, cannot afford the products that are being sold at the high end international merchant retail stores that occupy the malls.

Another retail channel that is experiencing high growth is internet retailing, or ecommerce. Mobile phones are ubiquitous throughout Nigeria and more Nigerians are shopping via their mobile devices. Nigeria is the largest mobile market in Africa and the 10th largest in the world. 71 million Nigerians access Internet via their 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. 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.

Ecommerce companies that operate in Nigeria, such as Jumia and Konga, have shown tremendous growth over the last few years. Jumia recently secured $150 million of fresh investment from its shareholders and both companies are currently selling over 100,000 items on their sites. Nigeria’s ecommerce industry is now worth over $1 billion 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. Even with the ecommerce industry being young and facing logistical issues, this is another potential channel for a retailer to actively engage the Nigerian consumer and see real growth and revenue.

Not all international retailers entering the Nigerian market have been successful. In November 2013, international retailer Woolworths announced it was pulling all of it’s supermarkets and department stores out of Nigeria. Woolworth’s found the environment to be challenging and  failed to lure Nigerian consumers.  Woolworth’s initially entered the market in 2012 but high rental costs, duties, and a complex supply chain process made it difficult to succeed. In order for international retailers to be successful one needs to understand the regulatory environment, the challenges of doing business in Africa, the tastes and habits of the Nigerian consumer, and whether or not your business is a good fit for the market.

Understanding Nigeria is key. The Nigerian consumer market is largely defined by the super-rich and the super-poor. Nigeria is among the most unequal countries in the world in terms of income distribution. Although income inequality limits the overall consumer market by concentrating purchasing power with the rich, there is a booming luxury market in Nigeria. Wealthier Nigerians are attracted to well-known brands which are perceived as being of high status.

There is also a growing middle class, albeit nascent, with rising spending power. By 2030 Nigeria will be home to almost 12 million middle-class households. Going by the National Bureau of Statistics’ average of 5.7 people per household, this would account for over 68 million people. The Mckinsey Global Institute is forecasting 35 million households to be earning more than $7500 a year by 2030, greatly expanding the middle-income bracket. This provides great promise for merchants looking to enter the market and appeal to a broader segment.

There are tremendous opportunities for modern and westernized products due to Nigeria’s relatively young population and their love of western brands. This young and trendy segment of the population has an intrinsic demand for products that appeal to them in a more modern retail setting or outlet. Sales via informal channels such as open markets will decline, while sales via formal retailing channels will increase with the changing population needs and rising demand for convenience.

The key offering of both kinds of new retailing concepts is convenience: modern retail store channels offer hassle and haggle free shopping in a comfortable environment, while internet retailers also offer stress free shopping. Convenience will be a key benefit as shoppers do not have to brave the heavy traffic of major cities in Nigeria. They can now visit modern retail facilities at malls or buy something online and have it delivered to them at their home. The future of retail in Nigeria is in the here and now and will continue to see an upward trend.

Mobile Market Look: Zimbabwe

           Zimbabwe

Zimbabwe, formerly Rhodesia, was one of the last countries to gain its independence from colonial rule in 1980. Prior to independence Zimbabwe had a diversified economy, well developed infrastructure, and an advanced financial sector. It is now one of Africa’s poorest countries.

The current president, Robert Mugabe, has been in power during most of Zimbabwe’s short history. Mugabe’s time as leader of Zimbabwe has been controversial. Mugabe faces claims of human rights violations, corruption, and his economic policies have been questioned. The Mugabe administration redistributed commercial farms owned by non-black-African farmers to native Zimbabweans and many in the international community have also claimed he is racist to minority whites because of his “Indigenization” policies, which gave Black Zimbabweans the right to take over and control many foreign and white owned businesses.

Mugabe recently gained a new term as president during heated elections in 2013. Leaders of the opposition party, the MDC, claimed that Mugabe and his party, the Zanu-PF, fraudulently stole the election even though results showed a landslide victory for the 91 year old Mugabe.

Business Environment

Zimbabwe has a population of over 13 million and English is the official language with multiple dialects being spoken throughout the country. Zimbabwe, like much of Africa, has a large youth population with 62% of the country under the age of 24.

Zimbabwe remains one of the world’s least free economies. The labor market is one of the most restricted in the world, and business licensing forces most workers to seek employment in the informal sector. The violent seizure of land through the indigenization policy has underscored poor government land reform policies and upset investor confidence in a once-vibrant agricultural sector. Prior to the land reform Zimbabwe was a major tobacco producer and a bread basket for surrounding countries.

 Zimbabwe’s economy had a decade of contraction from 1998-2008 followed by hyperinflation in 2009. The country  was ravaged by hyperinflation, which officially reached 500 trillion per cent in 2008. The economy started to stabilize between years 2009-2012 but appears to be backsliding at this time.

Zimbabwe does not have its own currency and uses eight others as legal tender, with the US dollar and South African rand most commonly used. By 2009 the worthless Zimbabwe dollar was replaced by a multi-currency system based largely on the American dollar. The switch to the American dollar brought stability, but at a cost. As the dollar rises in value against other currencies in the region, such as South Africa’s rand, it makes Zimbabwean business less competitive.

Zimbabwe has a huge informal economy with unemployment as high as 95%. 80% of the population lives below the poverty line. Zimbabwe has its share of problems from political violence, human rights violations, land reforms, and an economic collapse but it also has hope and opportunity. Zimbabwe has one of Africa’s highest literacy rates at over 90%. The population is usually better educated than the African average, making the people one of the greatest assets of the country. It also has a growing telecommunications and mobile money industry.

Zimbabwe mobile market look

Zimbabwe has a mobile penetration rate of 104%. There are currently 13.5 million subscribers and the largest telecommunications company is Econet, with 9 million subscribers. There are over 5 million mobile data subscribers with 98% of those subscribers accessing the internet via their mobile device. The current internet penetration rate in Zimbabwe is 64%.

Zimbabweans have very little confidence in their formal banking sector. A record number of banks have failed in the last decade. Apart from that, many account holders lost fortunes to the banking sector when the Zimbabwean economy crashed in 2009. Not a single penny of the Zimbabwean dollar value held by the banks was paid to account holders when the country changed over to the US dollar. The adoption of the US dollar has brought about its own headaches to the Zimbabwean economy. Major problems include illiquidity and the lack of small denominations. Getting change when transacting is therefore a problem. This kind of environment has favored the widespread use of mobile money –which is cashless.

Zimbabwe is one of nine countries in the world where more people use mobile money than have bank accounts. According to a study conducted by FBC Securities in October 2014, only 14% of Zimbabwe’s 13 million population have bank accounts (approximately 1.8 million Zimbabweans). The country’s three mobile network service providers (Econet, Telecel and Netone) dominate the mobile money sector. Econet through its EcoCash brand is by far the biggest mobile money service brand in Zimbabwe. EcoCash pioneered the service in the country and enjoys all the first mover advantages. It has made a significantly higher investment into brand and platform awareness than any other player allowing EcoCash to become a household name. Econet Wireless has 3 million registered users for its mobile money product and now accounts for about 20% of payments and purchases in Zimbabwe.

EcoCash, offering domestic P2P money transfer services, is just the first step towards a much bigger goal: becoming the dominant payment system in Zimbabwe for the banked and unbanked alike. EcoCash is currently targeting two pain points with major commercial opportunity: enabling retail payments to merchants and creating a bridge between the informal and formal sectors. To capitalize on these opportunities, EcoCash is building two important structures: a merchant acceptance network and full interoperability with Zimbabwe’s banks. EcoCash sees interoperability with banks as the key to linking Zimbabwe’s formal and informal economies. There is substantial demand for payment services between these sectors, with money flowing between banked and unbanked families, and between unbanked individuals and the formal sector in the form of retail payments, school fees, and utility bills.

The key regulators in Zimbabwe include The Reserve Bank of Zimbabwe for the financial sector and Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ) a telecommunication regulator for the communications sector. Regulation has lagged behind the technological innovations happening in the telecom/mobile money sector. Initially, the Post and Telecommunications board had oversight over the activities of the mobile network service providers but with the emergence of the mobile money –the central bank has also become involved. The responsibilities of the two regulatory authorities overlap and of late they have been fighting for turf at the expense of developing the mobile money sector.

In the last decade Zimbabwe has seen the worst and is hoping the future will be better. Things are still on the brink, as the current backsliding of the economy has shown, and many are confident things will change once Mugabe is no longer in power, which may happen soon considering his advanced age. There can be no question that certain policies, such as the land reform policy, have hurt the Zimbabwean economy and its people. The growth of the telecommunications and mobile money sector gives the country hope that it is turning a corner and that the future will truly be better than the recent past!

Growth of E-Commerce 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.

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.

One 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.

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.

MMIT is attending Money20/20!

Las Vegas, NV November 2^nd-5^th 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.

Mobile Market Look: Uganda

The next country we are visiting in our “Mobile Market Look” series is the East African country of Uganda. Uganda is a small landlocked country surrounded by the Sudan to the North, the Democratic Republic of Congo to the East, Kenya to the West, and Rwanda and Tanzania to the South. An English speaking country, with many local dialects also spoken, and a population of 37.5 million, Uganda has experienced a period of political stability and economic growth. Under the leadership of President Yoweri Museveni, who came into power in 1986, Uganda has seen steady economic growth and currently has a GDP of $21 Billion USD. GDP grew by 5.8% in 2014 with expected growth of 6.6% for 2014 and the economic prospects for this country are looking up.

Business and Economic Environment

Uganda is well endowed with natural resources and agriculture and fishing are two of the biggest industries in Uganda. Up to 80% of Ugandans are farmers and agribusiness is big. Uganda is among the leading producers of coffee and bananas. It is also a major producer of tea, cotton, tobacco, cereals, oilseeds, fresh and preserved fruit, vegetables and nuts, essential oils, orchids, flowers and silk.

Uganda also has its own issues. With a weak infrastructure, lack of education, lack of training, high unemployment (as high as 62% amongst the youth), Uganda ranks 132nd on the World Bank’s Ease of Doing Business List out of 189 countries. The government is also facing an increasing threat from civil unrest. Protests commonly occur in Kampala and have turned violent although foreign interests are not generally targeted. There are moderate risks in areas of terrorism, health, crime, poor transportation infrastructure and Uganda is prone to flooding. Even with these challenges things are looking bright, especially in the area of mobile technology.

Uganda’s Mobile Landscape

Uganda has a young population, the second youngest in the World according to the World Bank. 70% of the population is under the age of 25 and mobile technology is their technology of choice. Uganda has 16 million mobile subscribers and most Ugandans own multiple phones to save money when calling different networks. Mobile providers do not offer contracts to consumers, so consumers purchase calling cards for a set amount of minutes or airtime. Uganda has a huge agency network of kiosks throughout the country where consumers can top up. Street hawkers also sell calling cards on the road, or side of the road, and Ugandans can purchase calling cards from even the remotest part of the country.

The mobile penetration rate in Uganda in 51%. Internet use is also growing as over 6 million people use the internet in Uganda, and of those 6 million people, 95% access the internet via their mobile device. Smartphones are not yet as prevalent in Uganda but Ugandans are still able to access social media via 2G and 3G technology. Ugandans use their phones to check social media, listen to the radio, and check news. Some of the most visited sites in Uganda are Facebook, Youtube, Twitter, Google, and Yahoo.

Mobile money and mobile banking are areas that have a lot of potential and have experienced major growth. Only 20% of the population is banked and 27 million Ugandans are unbanked due to poverty, bank fees, amount of documentation required to open an account, and travel costs. Mobile money has stepped in to meet the needs of this underserved part of the population. 68% of all mobile subscribers in Uganda are aware of and have used mobile money and mobile money applications. Mobile money transfers have grown from 87.5 million transactions in 2011 to 242 million at the end of 2012. The number of mobile money users has grown from 2.9 million in 2009 to over 17 million in 2014. There was an increase of 46% mobile money users from 2013 to 2014 and from June of 2013 to June of 2014 there were 445 million mobile money transactions valued at 22.2 Trillion Ugandan Shillings ($8.4B USD).

Ugandans prefer mobile money because it is a fast service and its’ accessible. Ugandans use mobile money not only to transfer money, but to pay water bills, school fees, and other utility payments such as Pay TV. Utility providers such as Umeme and National Water and Sewerage Corporation (NWSC) have partnered with mobile money service providers to ease payment systems and concentrate on their core businesses of power and water distribution.

The list of current money transfer and mobile money providers include Airtel (Airtel Money), Africell, Uganda Telecomm (M-Sente), MCash, Yo!Payments , and WorldRemit. The biggest player in the market is MTN Uganda. MTN’s Mobile Money records 25,000 transactions per month and has a subscriber base of 8.8 million consumers.

Mobile money operators are doing well and to increase the levels of awareness for their services they have started to integrate with the banks. MTN joined a partnership with Crane Bank last year to offer MTN Mobile Money as a cash out ATM service. Other banks such as Centenary Bank and UBA (United Bank of Africa) have also gone into partnerships with MTN and other mobile money providers such as Airtel also have their own bank partnerships with financial institutions such as Equity Bank. Mobile money is continuing to grow and as technology and security becomes better will offer more value for their consumers. There is still room for value added services from the mobile money providers and financial institutions for the consumers, but overall the mobile technology space, especially mobile money and money transfers, is expanding and the future of this sector in Uganda is looking promising.

Please visit our “Mobile Market Look” series for Kenya, Nigeria, and Ghana

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Mobile Market Look: Ghana

Ghana’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.

The 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 4^th 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.

The 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.

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.

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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CFI nominates MMIT for 2014 Best Mobile Banking Solution Nigeria!

September 17th 2014 London, UK – MMIT is pleased to announce its nomination for the 2014 CFI Best Mobile Banking Solution Nigeria. CFI, Capital Finance International, is a print journal and online resource that has been in existence for over 170 years and reports on business, economics, and finance. MMIT with our M-Iflo product, pronounced M-EE-Fee-Leo, has been nominated and allows African consumers to purchase and pay for virtual content and physical goods via their mobile wallets. MMIT acts as a mobile payment processor platform for mobile wallets across West and East Africa.

CFI annually announces its CFI.Co Awards Programme that identifies individuals and organizations that add value and demonstrate best practices across the World. Previous award winners include Emirates Airline, BASF chemical company, Santander Bank, and BNY Mellon to name a few. To follow CFI and the announcement of its 2014 award winners please visit www.cfi.co.

 

MMIT Executive Announcement

Kim Fraser CEO

MMIT is happy to announce the promotion of Mr. Kim Fraser from COO to CEO. Mr. Fraser brings over 21 years of telecommunications experience, covering executive, business and operational management, and core network engineering. Mr. Fraser’s expertise covers business operations, market strategies, business plan development, funding, network planning and dimensioning, implementation, and technical operations for the telecom industry. A Canadian native, he has been working in the Sub-Saharan African region since 2001.

Tokunbo Osilowo CFO

MMIT is pleased to announce the addition of Mr. Tokunbo Osilowo as our new CFO. Mr. Osilowo is a fellow of the Institute of Chartered Accountants of Nigeria and a member of the Institute of Internal Auditors USA. Mr. Osilowo’s professional career began at KPMG, where he serviced numerous clients in the areas of accountancy consultancy, tax consultancy and auditing of financial statements. Tokunbo was appointed by the former Central Bank of Nigeria Governor as executive director of Intercontinental Bank, where he facilitated a billion dollar merger between Intercontinental Bank and Access Bank.

Abdul Ojomu Managing Director UK

MMIT is also happy to announce the addition of Mr. Abdul Ojomu as the Managing Director for MMIT’s UK office. Mr. Ojomu has worked in the IT and telecoms sector for over 12 years. Abdul has substantial experience in the UK public and private sectors and has significant commercial and international experience in both West and East Africa. Abdul has held various senior roles at both strategic and tactical levels as a business analyst, including business development, product and service development, and has managed business pipeline portfolios.

“Mobile Market Look: Kenya”

This will be the first in our new series, “Mobile Market Look”, where we look at mobile markets in Africa and other emerging countries around the World. Kenya is one of the hotbeds in terms of mobile innovation and sophistication and we hope you enjoy this article and please feel free to leave any comments you may have.

Kenya

Africa has been growing at an unprecedented rate and Kenya is one of the fastest growing tech and mobile markets in the World. Known as “Savannah Silicon Valley”, Kenya is home to over 500 startups in the mobile and digital industries. Kenyans are extremely tech savvy and 70% of the population owns a mobile phone, with 16 million Kenyans accessing the internet through their phones. Nairobi, the capital of Kenya, is home to the ihubs, incubator space for the tech community that includes 10,000 members an over 150 incubator start-up companies. Companies such as Google, Intel, and Samsung have a presence in Nairobi and IBM set up its first African Innovation Lab in Kenya. If you are in the mobile or tech industry, whether as a company or an investor, Kenya is a country you should get to know and want to do business in.

Kenya is the most developed economy in East Africa with a good education system and a strong business environment. Kenya is a young country with 70% of the population of 44 million people under the age of 35. Kenya also has its issues as 50% of the population lives in poverty and unemployment, although officially listed as 10.5%, can be as high as 40%. There are obstacles, but there are also opportunities. And no opportunity is bigger in Kenya at this time than the mobile money and mobile payment market.

Kenya’s Mobile Market Landscape

Kenya has the most sophisticated mobile money ecosystem in Africa, and maybe the World. Infrastructure improvements, and lack of rigid regulations by the Central Bank of Kenya and the government, have led to market growth and an increase in digital services. M-Pesa, established by Safaricom in 2007, started the current mobile payment revolution and now transacts over $5 billion annually which accounts for 17% of Kenya’s GDP. Over 2 million mobile money transactions take place every day and according to MEF studies mobile money and mobile payments still present the greatest opportunity for growth in Kenya. It is estimated that 85% of the population has used mobile money at some point and most Kenyans prefer mobile money to cash because of the ease of use and the safety. Most African nations are cash-based and people still carry large sums of cash on them, especially when they are sending money to relatives in remote parts of the country, so mobile money offers a safer and easier alternative. Kenya’s financial institutions have picked up on this and are jumping on the bandwagon and creating their own mobile money products. Equity Bank has its own M-Kesho mobile money product and I&M Bank has its own prepaid Safari Card available on the M-Pesa platform.

Even with growth and prosperity Kenya faces security issues and economic problems. There have recently been terrorist attacks on the Kenyan coast by Al-Shabaab, a Somali terrorist group associated with Al-Qaeda, and no one should forget the terrorist attacks that took place at the Westgate Mall in Nairobi over a year ago. The country has a high poverty rate and weak infrastructure and on the business side there is a lack of capital and belief and faith by investors towards the Kenyan market, and also the Sub-Saharan African market as a whole. Even the mobile market is experiencing its own issues. There is a current price war which has benefited the consumers by leading to decreased prices and more mobile subscriptions, but has created lean profit margins and less profitability for the mobile operators. There is also the concern of the dominance of Safaricom and M-Pesa who currently has the dominant mobile marketshare of 70%. Other mobile operators such as Airtel, Yu, and Orange have a presence but pale in comparison to Safaricom.

Obstacles do exist, but even with these problems and many others the mobile industry in Kenya is experiencing good times. Mobile phone penetration is 78% in Kenya and Africa had an annual mobile growth rate of 82% between 2000 and 2013, highest in the World. There are currently 500 million mobile subscriptions in Africa and there is expected growth in subscriptions of 50% over the next 5 years. Kenyans have also taken to smart phone technology and 67% of all phones sold in Kenya are smartphones. Kenyans like to listen to music, play games, look for sports updates, and watch TV and video on their phones. They also like social media and Kenya has the second most Twitter users in Africa behind South Africa and the second most Facebook users in Africa behind Nigeria. So the promise and potential is bright and the opportunities for business and investment is maybe the best it has ever been. Kenya is definitely a place you should want to be!

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Window of Opportunity: Business in Africa

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 3^rd 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.

 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.

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