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Uganda- the Pearl of Africa

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.Kampala__Uganda

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.MTN-mobile-money-customers

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.

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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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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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The African consumer market is regarded as the Next Investment Frontier with a population of a billion plus people.  In 2012 Africa was home to 7 of the 10 fastest growing economies in the World and was the second fastest growing region of the World next to Asia.  With this growth has come prosperity and rising incomes.  Sub-Sahara Africa currently has a GDP, Gross Domestic Product, of $1.263 trillion as of 2011 according to the World Bank, and that number is expected to grow to $2.6 trillion by the year 2020.

The continent has also seen a steady annual growth of GDP of 4.5% over the last decade, much higher than the developed World during that same time.  It is also estimated that close to 128 million households across the continent will have increased discretionary income and that consumer spending will increase to $1.4 trillion by 2020.  Discretionary income is defined as $5,000 or more per year and where 50% of spending is on non-food items.

Businesses are trying to capture the rising middle classes in Africa.  Euromonitor estimates that there are over 313 million middle class consumers in Africa and that this group is growing.Image

The population is also expected to double by 2050, and is urbanizing rapidly with an expanding working age population.  Sub-Saharan Africa also has a large youth population with 62 percent of its citizens under the age of 25.  These youth consumers are digitally savvy and brand conscious.  They desire quality brand name products and are sophisticated in their knowledge of these products.  Technology is at the forefront for this age demographic and their technology of choice is the mobile phone.

According to a McKinsey & Company African Consumer Insights Survey, 25% of all urban consumers, which is a market of nearly 80 million people, access the internet daily from their mobile phones.

Nigeria is one of the hotspots for mobile and I spoke with Jide Akindele, CEO of MMIT a mobile payment processor based in Lagos on the role of mobile in Nigeria for the West African consumer.  “Our company operates in the Mobile Money space and we are seeing tremendous growth in this area.  Mobile money is shaping up to be something interesting for West African consumers.  Mobile money aggregators are trying to find a niche market that can latch on to these consumers and have a presence in this growing industry.  One mobile money company in Nigeria that has done a great job with this is Paga.  From the beginning Paga put a lot of emphasis on making sure the name Paga was a household name that everyone in Nigeria could recognize, speak about and use has an example when describing the industry. This has been a major plus for Paga and this business model is a wave which all the other mobile money aggregators are trying to replicate.”

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Growth is not only country specific but is regional specific.  East Africa has one of the strongest regional trade blocks on the continent, in EAC, and Kenya has become the IT hub of Sub-Saharan Africa.

Mobile has also played its role in this part of the World.  I spoke with Denis Bogere, a native of Jinja, Uganda and a graduate of the John W. McCormack Graduate School of Policy and Global Studies at UMass-Boston.   “How much would you like to pay? It may seem to be simple logic but that phrase implies that a Ugandan consumer cannot be put in one singularity. Ugandan consumers have diverse needs along the lines of affordability. There are three prime consumers in Uganda: the poor, middle class, and rich and their consumer habits are affected by aspects such as income. However, regardless of their differences in lifestyle, ability and purchasing power of goods and services these consumers share a common thread which is their affinity for mobile technology. The mobile phone has not only become the basis for communication and connectivity, but also for money transfers for daily purchases.  This can partly explain the explosive use of advertising platforms via the mobile.  The growth potential that mobile technology offers the key to unlocking the mind of a Ugandan consumer which may as well help in understanding the future of the mobile industry and its growth potential.”

In this article I have looked at the growth of Africa, the rising middle class, the youth consumer, and the importance mobile technology plays on the continent.  This a 2-part series and I will next look at the obstacles still facing Sub-Sahara Africa and what the continent can do to ensure continued and sustainable growth.

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