Kenya – the busy african

In a trend reversal, African technology has migrated to Europe with the launch in Romania of Kenya’s popular M-Pesa mobile money transfer system.

Mobile payments have changed the way many Africans — and the humanitarian community — do business. It remains to be seen, though, whether it will enjoy the same success in Europe.

Meaning “mobile money” in Swahili, M-Pesa is credited with transforming the lives of millions of Africans who have little or no access to conventional banking services. The concept is simple: M-Pesa customers can receive and send money through their mobile phones using simple text messaging technology.

From its debut in Kenya seven years ago, the mobile phone transfer system has since expanded to half a dozen African countries – including in the Democratic Republic of Congo. Telecommunications company Vodafone, which developed the technology, also has introduced it to India and Fiji. Now Vodafone has set its sights on Europe with the rollout of M-Pesa last month in Romania.

European focus

“We chose Romania because there was, and there is still, a large part of the population which doesn’t have a bank account,” said Claire Alexandre, who leads M-Pesa’s Commercial and Strategy team within the Vodafone group. “Only about 50 percent of the population of Romania has a bank account. And the other half is mostly still using cash.”

Alexandre said even Romanians who have bank accounts mostly use them to withdraw their salaries. They then depend on cash transactions for the rest of the month.

That’s a habit Vodafone wants to change. The company says it’s too early to talk about the number of M-Pesa customers there, but it’s clear that Africa — where mobile phone use has exploded — offers a lesson for Europe.

“Looking at how people communicate with each other, how they interact with each other, we realized that people talk to each other, but often they need to send or to receive money from each other,” said Alexandre. “So we’ve expanded that further. So if you look at those basic needs, then there are other markets where those needs haven’t been met either. And we saw that was actually the case in Romania.”

So far, Vodafone hasn’t announced any plans to expand elsewhere in Europe. Experts suggest it might be eyeing other markets, though, in eastern and central Europe. Whether M-Pesa will thrive there, as in Africa, remains to be seen.

Along with ordinary people, the humanitarian community also is adopting M-Pesa technology as a handy way to offer cash assistance to needy communities, including refugees and those hit by disasters. There’s one constant in all these scenarios. Alexandre said markets seem to like the brand name. So wherever it next travels, M-Pesa will keep its moniker and its Swahili roots.

Source: http://www.voanews.com/

Here you go! Part 2 of the 5 part series, What Africa needs: Increased Inter- Africa trade.

According to the Economist, “The bulk of the Africa’s trade is with Europe and America: only 12% is with other African countries, according to research by Ecobank, a Togo-based bank. By comparison 60% of Europe’s trade is with its own continent. The same is true in Asia. In North America the figure is 40%.”

According to Reuters Africa, it costs South African grocer, Shoprite $20,000 a week to secure import permits to distribute goods in one country. As if that isn’t enough, in order to send one of its trucks across the border to neighboring Zambia, 1600 additional documents are required.

An excessive amount of border check points are yet another problem. To transport goods from Nigeria to neighboring Ghana, you have to go through about 5 border checks. Ghanaian President, John Dramani Mahama admits that he is aware of the problem and states that Ghana is working to reduce the number of border posts to just one. In my humble opinion, zero would be better but you have to start somewhere right? The legal and illegal payments made at these borders are all costs that are passed on to consumers in order for the traders to make a profit. At one checkpoint in Mali, border agents extort as much as $4,000 every day. In addition to the aforementioned high costs of trade, unclear policies are another hindrance. Seeds from Kenya can be held indefinitely at an Ethiopian border because they don’t meet Ethiopia’s standards. Tanzania may ship corn to Kenya only to find out there is now a ban on the importation of corn.

The issue of infrastructure also needs to be addressed. Lack of adequate road, rail, and other physical infrastructure continue to impede trade within and between African countries. According to a report from the UN Economic Commission for Africa, only about 30% of African roads are paved and, as a result of this “shipping a car from Japan to Abijan costs $1500 while shipping that same car from Addis Ababa to Abijan would cost $5000.” Some of these unpaved roads have potholes big enough to swallow an SUV. The railways in Kenya and Uganda face multiple constraints, including ageing equipment and infrastructure with some over a century old.

These are just some examples of red tape and trade barriers that are costing Africa billions of dollars and depriving the region of new sources of economic growth. However, in spite of all this, there is reason to be optimistic. It seems that for the past few years, this issue has become too dire to ignore and strides are being made to rectify it.

In 2012, South Africa’s President Jacob Zuma unveiled a plan to spend $97 billion on infrastructure by 2015 to upgrade roads, ports, and transportation networks. At the World Economic Forum held this May in Abuja, Kenya’s President Uhuru Kenyatta called on African leaders to work together in removing obstacles that hinder movement across the continent. In his speech, he said free movement would help Africa meet its development targets. He also announced plans for Kenya and Nigeria should sign agreements that will boost trade and investment between the two countries. Since then, the Nigeria Export Promotion Council, NEPC, and its Kenyan counterpart have pledged to explore the vast market opportunities in Africa to promote trade and investment

Also at the 2014 World Economic forum, Africa’s richest man, Aliko Dangote spoke on the matter of visa issuance stating that presently, he and other Nigerian businessmen are required to obtain visas to enter about 38 African countries but a foreigner has more access to these same counties than he does because all they need to do is get a visa at the airport and pass through.Steps are being taken to streamline the visa process so that African businessmen and investors can invest in other countries with ease.

In Kenya, barriers that formerly prevented professionals like doctors and lawyers from practicing in Rwanda have been removed. Now, a Kenyan lawyer can practice law in Rwanda without sitting for the bar all over again. This will also lead to a reduction in unemployment because new graduates will have more job options and not so new graduates will have more opportunities to provide services.

At the end of the day, increased inter Africa trade is the best way for Africa to use all of its resources and talent become self sustainable, grow and thrive. The less cumbersome the trade process is, the lower the cost of goods and services will be. The lower the cost of goods and services, the more people can afford them. The more people can afford them, the more people will be empowered and gradually lift themselves out of poverty.

Tag: Kenya

Africa’s M-Pesa Mobile Payment Method Debuts in Romania

What Africa Needs – Part 2