Tag Archive for: Economic Development

Andrew Stegmann

Zambian Farmers Gain Access to Digital Banking with AgriPay

Zambia has over two million smallholder farmers and a rural population of about 9.7 million people, with approximately 40% of them being financially excluded

The average rural farmer in Zambia lives several kilometres away from their nearest neighbour and even further away from the nearest settlement where shops, agro-dealers and other services, such as agency banking and mobile money booths, would be located. Because the farmers live in remote locations making payments, sending and receiving money are activities not done at their convenience.

Zambia has over two million smallholder farmers and a rural population of about 9.7 million people, with approximately 40% of them being financially excluded. These rural people do not have adequate access to financial infrastructure and services. Not being able to make payments for supplies, receive digital payments or send money as needed means farmers’ productivity is limited. Subsequently, they cannot plan their next growing season, are unable to manage the shocks they may experience and cannot reach their potential. Therefore, providing smallholder farmers with the services they need to improve their productivity has a ripple effect on their livelihoods and the rural community.

Zanaco Bank recognised that smallholder farmers are an important segment of Zambia’s economy, and partnered with the UN Capital Development Fund (UNCDF) and Agrifin Accelerate (AFA)/Mercy Corps to develop and test the go-to-market strategy for an account that offers farmers services to transact, save, send and receive money. Zanaco will also add features such as agronomic information and financial literacya to help the farmers become more productive, be financially included and better participate in the Zambian economy.

How was AgriPay brought to market?

To bring the account – called AgriPay – to market, the partners undertook several activities. The first was a research conducted by AFA to understand precisely what the farmers needed and what their specific financial challenges were. This research informed the human-centred design process of product development undertaken by Zanaco.

Once a product was available, strategies were designed to bring the product to the rural market. This strategy involved applying the Booster Team model – a concept adapted from UNCDF’s work in Uganda with a coffee value chain. UNCDF championed the use of the Booster Team to onboard agents that would enhance last-mile service delivery and build a strong ecosystem around the use of the AgriPay account. In addition, the Booster Team onboarded smallholder farmers. Zanaco, AFA and UNCDF also analysed what other factors would influence the success of AgriPay. 

One factor identified was collaborating with other players in the value chain that could provide linkages to agribusinesses. These linkages to agribusinesses turns shops or agribusiness locations into agents offering the banking services to smallholder farmers. These partners also leverage their network to onboard customers who could benefit from the services offered by the AgriPay account. By the end of the pilot, 50% of the Xpress Agents onboarded were a result of the partnership with Musika (a non-profit organisation that aims to support private sector development in small-scale agriculture) and 60% of the activated farmers accounts were members of the Cotton Association of Zambia.

The bank piloted the product in six provinces. The Booster Teams, comprising 15 – 20 youths, received adequate training in sales and product knowledge, and approached potential customers with a product they could demonstrate.

Who opened AgriPay accounts?

In May 2019, Zanaco and UNCDF deployed the Booster Team to undertake their sensitisation and on-boarding activities, beginning in Central and Lusaka Provinces, continuing to Copperbelt, Eastern, Luapula, and Southern. Each Booster Team answered smallholder farmers’ questions or concerns in a timely manner. This first-tier support increased the customers’ confidence and comfort levels with the new account. Using the Booster Team enabled 307 Xpress agents to become part of the AgriPay ecosystem.

By September 2019, 3030 customers, 53% female and 31% youth, had been onboarded onto AgriPay, and farmers were pleased with the introduction of the account designed with their specific needs in mind.

Brillian Handondo, a farmer in Southern Province said, “This account has really helped me. Once I receive money, I’m able to easily transact, such as sending money to my child in college.” This simple transaction was not something she could do easily before.

What were the critical factors for AgriPay’s success?

The learnings gained from piloting AgriPay helped in scaling the product. One area of success was pre-sensitisation activities. This critical component was done through partners such as the Cotton Association of Zambia, Vitalite Zambia and the Dairy Association of Zambia and helped to build trust in the product. The partnerships with the various farmers’ associations, non-profit organisations, and other implementing partners meant these organisations could approach farmers as ‘ambassadors.’

These organisations leveraged their strengths to become agents or reach potential customers, for example, Cotton Association savings groups and Vitalite traders became agents for AgriPay.

These relationships were also a key driver to the Booster Team’s success. Having organisations facilitate these partnerships elevates the product because of the inherent trust agribusinesses and customers have in the partner or the agribusinesses they are used to working with. This is an immeasurable success factor for AgriPay.

To successfully scale AgriPay to other parts of Zambia, the sales team has to gain a better understanding of the culture of the communities. Conducting sensitisation activities requires that farmers are available and involves learning the type of farming conducted in the community and planning around the schedule farmers follow.

To improve rollout, the bank might consider using roving agents in some areas who could better reach farmers rather than agents using fixed locations like shops or booths.

The AgriPay pilot achieved what it aimed to do – increase access and usage of digital financial services by underserved segments of the population. AgriPay is also successful because it provides a platform to increase farmers’ financial inclusion, and the account also allows digital expansion for the smallholder farmer and the community in which they live. Schools, hospitals, district or provincial offices can leverage the digital platform to carry out other activities in the community. This digital ecosystem of services greatly improves life in these rural communities and farmers can become more active in the economy.

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], Megan Thomas [2].

Andrew Stegmann

Opinion: Digital Access The Key to Achieving Sustainable Development Goals in Africa

Opportunity2030: The Standard Chartered SDG Investment Map reveals a $197 billion opportunity for private-sector investors in five high-growth markets in Africa to help achieve the UN’s Sustainable Development Goals (SDGs), with improving digital access making up $74.5 billion of that total.

The study highlights opportunities for investors to contribute to three infrastructure-focused goals between now and 2030: SDG 6: Clean Water and Sanitation, SDG 7: Affordable and Clean Energy and SDG 9: Industry, Innovation and Infrastructure across emerging markets.

Across all the world’s emerging markets, Oportunity2030 identifies a $10 trillion opportunity for private sector investors. This represents around 40 per cent of the total funding required to meet specific indicators within the three SDGs – allowing for population growth as well as maintaining current access – with public funds expected to provide the bulk of the investment.

Five African countries are included in the study: Ghana, Kenya, Nigeria, Uganda and Zambia. Key highlights include:

Providing universal digital access represents the greatest investment opportunity for the private sector by 2030 ($74.5 billion), followed by universal access to power ($65.8 billion), transport infrastructure ($46.4 billion) and access to clean water and sanitation ($10.3 billion)

The biggest single opportunity across the African markets in the study is in increasing digital access – a combination of mobile phone subscriptions rates and internet connectivity – in Nigeria (USD47.4 billion). Driven by its large and growing population, Nigeria also offers the greatest overall opportunity across the SDG indicators measured (a total of $114.2 billion), followed by Kenya (USD40 billion)

Zambia and Kenya present a big opportunity to make an impact on SDG 6 (Clean Water and Sanitation): With an average of 43 per cent and 56 per cent of the population respectively currently lacking access to clean water and sanitation, there is a $0.7 billion and $2.3 billion private-sector investment opportunity to help close the gap by 2030

Uganda presents a meaningful opportunity to make an impact on SDG 7 (Affordable and Clean Energy): with just 22 per cent of the population that have access to electricity, there is a USD6.1 billion private-sector investment opportunity to help achieve universal access by 2030

The greatest investment opportunity in Ghana is in achieving and maintaining universal access to electricity (a key SDG 7 indicator), representing a $7.8 billion private-sector opportunity

Sunil Kaushal, Regional CEO, Africa & Middle East, Standard Chartered, said: “The UN Sustainable Development Goals are amongst the most ambitious projects humanity has ever attempted. As well as offering our best hope yet of tackling the world’s most serious challenges, they also offer a unique opportunity for the private sector. For the goals to be met in Africa, the private sector must play a central role in deploying capital to get projects off the ground. Opportunity2030 provides a map of these opportunities, revealing the sectors and markets where investors can best contribute to the SDGs whilst achieving sustainable returns.

“Currently, not enough capital is reaching the countries that need it the most. With the UN’s 2030 deadline for achieving SDGs just 10 years away, the time to act is now.”

With Standard Chartered’s experience and reach into Africa, the Bank uses banking knowledge, products and its unique footprint to fund sustainable development where it matters most.

In June 2019, we launched our first Sustainability Bond, raising EUR 500 million to fund projects aligned to the SDGs in emerging markets, and have worked with clients and partners to create a number of important landmark structured solutions to support the SDG’s.

The Bank has also launched its digital bank in nine markets in Africa, as part of the Bank’s digital transformation strategy for Africa. The digital banking solution provides Standard Chartered customers with affordable, fast and easily accessible banking services that is supporting financial inclusion in the markets.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann

Invest Cape Town: This is Africa’s Tech Hub

This article is the opinion of Invest Cape Town, and was published by Global Africa Network.

Welcome to a wealth of opportunities in Africa’s DigiTech hub.

Cape Town is the undisputed DigiTech hub of Africa and a leading location for technology start-ups, venture capital deals and software companies. The city of Cape Town, including Stellenbosch, is now home to approximately 550 entrepreneurial enterprises that work in software development, e-commerce, information technology and many other DigiTech sectors.

In fact, the Cape Town DigiTech industry employs between 40–50 000 people. This is significantly more than the tech sectors in Lagos and Nairobi, which employ 9000 and 7000 people respectively (Evaluation and Network Analysis of the Cape Town-Stellenbosch Tech Sector Report, 2018).

This part of South Africa also boasts the privilege of being home to the headquarters of global internet giant, Naspers. As Africa’s highest-valued tech company, it is a massive tech investor on an international scale buying into companies like Tencent and many others.

The DigiTech Ecosystem in Cape Town

It’s interesting to note that Cape Town does actually have fewer DigiTech companies, including fewer software start-ups, when compared to either Nairobi or Lagos.

However, even with fewer enterprises, the entrepreneurial and DigiTech ecosystems here have worked in hand-in-hand to accelerate meaningful job creation in Cape Town. Companies in the city generate an objectively higher level of productivity than their African counterparts combined.

“While only 1% of companies founded in the past decade have reached 100 employees or more in Lagos, and less than 1% in Nairobi and Johannesburg. 11, 3% of the companies founded in the past decade have reached this level of scale in Cape Town. This is a critical indicator of the dynamism of the sector, (Endeavor 2019).”

Cape Town’s Competitive Advantages in DigiTech

The dynamism, productivity and high-impact companies of Cape Town’s information technology sector make it stand out as one of the most successful models in Sub-Saharan Africa. Competitive advantages in this industry include:

Competitive advantages of Cape Town as an IT location

  • Cape Town is a largely supply-driven city. The availability of ICT skills and the prevalence of an entrepreneurial culture are key aspects in this regard.
  • There is better availability of venture capital in Cape Town (Endeavor Insight: 2019).
  • Cape Town has established itself as a key technology hub in South Africa with a number of major companies launching their head offices in the city. This is, in turn, attracting other tech companies. There are benefits to agglomeration.
  • In a highly mobile sector, Cape Town’s natural beauty allows for a better working environment and lifestyle is a strong pull factor for skilled employees.
  • The diverse ecosystem of companies across the value chain and a strong presence of supporting institutions provide for ease of business operations.
  • The perception that software developers are more progressive attracts other business operations, creating an environment of innovation, digital connectivity and opportunity.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann
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Mauritius and Ethiopia: Success Comes in Many Guises

Ethiopia and Mauritius show there is no single formula for putting a country on the road to progress.

Both Ethiopia and Mauritius are members of the African Union (AU) and the Common Market for Eastern and Southern Africa (COMESA). Apart from these links, it’s difficult to see much similarity between the landlocked Ethiopia which stretches over more than a million square kilometers and the small island nation of Mauritius.

What they have in common is that they have found a way to improve their economies. To do that, both nations’ politics needed to be less fractious. Mauritius has achieved that. Ethiopia shows signs that it is on the way to stability.

The other common denominator is textile manufacturing, although the two countries approached the opportunity from opposite ends. Mauritius chose to focus on the high-end market and has developed the skills and quality-control protocols needed to supply that niche. Ethiopia is building a sector which can handle huge volumes. A Bangladeshi garment manufacturer has set up a factory in Ethiopia which supplies H&M and a Sri Lankan company, Hela Clothing, has produced and shipped its one-millionth garment from its factory in Ethiopia. This is part of a drive by Ethiopia to increase its annual export earnings in clothing from $145-million to $30-billion (CNN).

In terms of a financial market index published by Absa in 2019, the two countries are at opposite ends of the scale. The survey concluded that Mauritius ranked second in Africa (behind South Africa) in a set of indicators including market depth, access to foreign exchange and transparency. Ethiopia placed 20th but – crucially and typically in the current environment – Ethiopia was sure to improve its position in 2020 because it is about to establish a stock exchange.

Reforms in Ethiopia are just beginning, Mauritius has been a work in progress for several decades.

Ethiopia

The Nobel Peace Prize winner for 2019 was Ethiopian Prime Minister Abiy Ahmed. He won the award primarily for unblocking a post-war stalemate between his country and Eritrea and calming other regional conflicts, but he has also made big changes domestically since taking office in 2018.

In the words of the Director of the Institute for Pan-African Thought and Conversation Adekeye Adebajo, Ahmed has been a “reformist new broom unleashing political freedoms, encouraging foreign investment and promoting reconciliation”.

The peace dividend has allowed the construction of a vital rail link to Djibouti and encouraged a number of new investors to visit Ethiopia, mostly notably from Turkey. Chinese companies have long been present in the country, with the previous rulers of Ethiopia having been close to China.

Ethiopian Airways has used the country’s strategic location between Asia and Europe to build Addis Ababa’s position as a freight and passenger hub. So successful has it been that in 2018 it replaced Dubai as the top transit hub for long-haul passengers to Africa.

The country’s population of about 94-million is young (about 50% are younger than 15 and 70% are younger than 30) and the state is focused on education. Science and technology are emphasised and the number of Ethiopians in higher education in 2017 was five times what it was in 2005 (World Bank).

Spending on public infrastructure has focussed on transport, energy and industrial parks. The percentage of public spending is due to come down, but it will be replaced by the private sector as a vigorous privatisation process begins. Manufacturing currently accounts for 10% of GDP so there is huge scope for growth. Other state-owned assets which will become available to private investors are in the following sectors: maritime, aviation, electricity, logistics and railways. Exports in renewable energy are expected to generate up to $1-billion annually.

Mauritius

Although Mauritius ranked second to South Africa in the Absa Financial Market Index, in almost every other index the island country is ranked number one in Africa.

For “Doing Business in Africa: Sub Saharan Africa 2018”, the World Bank places Mauritius 25th in the world, and first in Africa. The Heritage Foundation’s 2019 “Index of Economic Freedom” has exactly the same result. This trend is repeated across a range of measures; a global competitive index rates the country 45th and 1st, the WEF’s enabling trade report gives scores of 39th and 1st.

Where the country’s GDP per capita was around $400 at independence in 1968, it’s now above $10 000. Between 1977 and 2008, the country’s growth rate performed well above the Sub-Saharan average of 2.9%, at 4.6%.

As a colony Mauritius was a sugar-based mono-culture. Sugar accounted for 20% of GDP and 60% of exports. Today sugar cane is still in the export basket but there are also textiles, clothing, processed fish and cut flowers. Services exports such as financial services and tourism are rising, and medical tourism and higher education are seen as a high-value sectors worth investing in.

The African Development Bank (AfDB) expects growth of more than 5% in several sectors including information and communications technology, retail and wholesale, food processing and financial services. In 2016 the Kenyan economy received $50-million of investment from Mauritius-based banks and financial institutions (AfDB).

Mauritian post-independence politics was not always stable, but a parliamentary system and strong institutions have helped the country move forward. Property rights and an independent judiciary are factors that promote foreign investment. Shrewd investment in an Export Processing Zone helped to turn the economy away from a single commodity. Personal and corporate tax rates are a flat 15% and in 2018 property transfers were simplified and other reforms were introduced to encourage entrepreneurs.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].