Mobile money solutions are showing the way and traditional banks had better take heed as inclusion of the masses is paramount, writes Victor Kgomoeswana.
Johannesburg - Best of luck to Nigeria’s new president, Muhammadu Buhari. Nigerians did well to ensure the first civilian handover of power from a ruling party, the People’s Democratic Party, to the opposition All Progressive Congress went smoothly.
How well Buhari will do will depend on many factors, but Africa has earned a lot of credit for the conduct of Nigerians at the polls this year.
We will now discover if Buhari’s northern Nigerian roots play any meaningful role in somehow containing the threat of Boko Haram.
The reason for my anxiety is that his predecessor, Goodluck Jonathan, left him a curious unfinished project in his work-in-progress folder.
In 2012, the Nigerian Communication Commission attempted to sell the National Public Security Communication System network to OpenSkys Services Limited. The latter is owned by billionaire businessman Chief Emeka Offor.
The impending $470-million (R5.7bn) deal caused a big stir.
His outspoken criticism cost Dr Bashir Gwandu his job as the chief executive officer of the Nigerian Communication Commission.
He had a point because this complex communications system is critical to the fight against crime, more so the enduring threat of terrorism.
It is a pretty sophisticated solution and includes 2 000 security cameras installed in the Federal Capital Territory of Abuja.
Although this was a concept of the federal government, deep in the mix of the transaction was Africa’s new sheriff, China.
The system was built by a Chinese firm, ZTE Corporation,
No prizes for guessing how yet again the Chinese managed to swing this one: China Exim Bank lent $399.5 million for the project, while Abuja invested $70.5m.
That is how China has managed to tighten its grip on Africa’s economic endowment.
It identifies the gap, be it infrastructure or otherwise, provides the finance and in return takes as much as it needs.
Although this was the way the US or the UK operated before the tables of the world economic order turned on them, Africa has to be vigilant not to succumb too readily to the charms of the Chinese.
Give and take is a good business policy, but how good is this deal if it compromises the control of the federal government over its key function?
The Chinese will have their loan repaid, eventually, and their corporation, ZTE, would have added at least $470m to its sales journal, with more to come in the maintenance of the system.
Nigeria’s former Central Bank governor, Salusi Lamido Sanusi – now the Emir of Kano – has warned all Africans to understand that China is in Africa to serve its own interests.
It is up to African leaders and communities to protect their interests in doing business with China, much as we cannot wish China away in the economic rebirth of Africa.
As for President Buhari, this will have to be among the first decisions to make.
Regional integration has never been on the money more than in East Africa.
Rwanda’s Finance and Economic Planning Minister, Claver Gatete, has been named the best finance minister in Africa by the African Development Bank (AfDB).
This was quite coincidental, because the African Bankers’ Awards session, held on the sidelines of the AfDB annual meeting in Abidjan, Ivory Coast, where the outgoing president of the AfDB handed over the reins to his successor, Akinwumi Adesina.
Kaberuka is the former finance and economic planning minister of Rwanda.
Even with stumbling Kenya Airways needing a $42m bail-out from the government of Kenya and the firing of the chief executive officer of Haco Tiger Brands for financial impropriety last week, the region shines bright for others to follow in innovation and the integration of economies.
Here is why.
The World Bank’s 2014 Global Index and InterMedia – a research house in Washington – reported that almost one in four bank accounts in East Africa was inactive because consumers increasingly preferred using mobile money services over traditional banking.
Put simply, the people of Burundi, Kenya, Rwanda, Tanzania and Uganda are finding bank accounts as we know them redundant because their cellphones are more responsive to their practical needs.
Rwanda has the highest percentage of inactive accounts, 37 percent, followed by Kenya, 25 percent, Tanzania, 24 percent, and Uganda 21 percent, InterMedia reports.
An account is classified as dormant or inactive if it is unused for more than 90 days. .
The World Bank gives Tanzania’s bank account dormancy rate as 37 percent, Kenya’s as 21 percent, Uganda’s as 12 percent and Rwanda’s as 7 percent.
Obviously the two organisations used different methods to collect data, hence the discordant rankings. Still, mobile money solutions, especially Safaricom’s M-Pesa, are showing the way to the future for banking.
Traditional banks had better take heed – financial inclusion of the masses is paramount.
If our banks continue to worship processes and procedures over relevance and practicality they will become obsolete.
This is not to diminish the importance of risk management in banks.
Mainly because of the threat of terrorism and other crimes that thrive on poor controls in banking, traditional financial institutions had to tighten their processes.
Unfortunately, this made them less responsive to the needs of entrepreneurs and people in poorly serviced areas of Africa.
The advent of mobile telephony offered banking solutions that went to the people, not asking the people to come to the nearest branch.
There is no branch required if one can pay and receive payments, buy airline tickets and apply for a loan or insurance using a cellphone.
This is what East Africa has done and continues to innovate around.
Whereas in certain countries, including South Africa, it is near-impossible to rent a car or buy an airline ticket without a credit card, not only does one not need a credit card in East Africa, one does not need a bank account.
That is why, of late, the African Banker Awards have been received by people like James Mwangi of Equity Bank.
The South African lower-end retail market on the Choppie-ng block!
I joined several South African investors to buy shares in a new listing on the Johannesburg Stock Exchange on Wednesday.
The new listing, Choppies, is a bottom-end supermarket chain domiciled in Botswana.
The company is not known in Joburg or Pretoria.
Although it is a big player in Botswana and Zimbabwe, having bought the Spar operations there, it is present only in such towns as Swartruggens, Koster, Zeerust, Mahikeng and now Magaliesburg.
Its stealth in entering the South African market required going where the bigger players were not yet established or not focusing.
Whether we will rejoice or regret our purchase of Choppies shares is a matter of stock markets.
What is undeniable is that the market liked the share. It listed at R4.90 and touched highs of up to R5.60 in Thursday trading before closing at R5.40.
Not a bad investment for a retailer that cut its teeth in a retail market of about 2 million people, taking on the market dominated by such celebrity retailers as Shoprite, Pick n Pay and Spar.
They had better look out, their turf is under attack.
Good for Botswana, good for the regional integration story; and good for wannabe stock market investors like me.
Now that we know President Jacob Zuma is not required to “pay back the money”, is it not time to learn to spend our last R5.40 buying a Choppies share?
If it rose from R4.90 to R5.60 within the first few days of its debut at Exchange Square, it will certainly yield better returns for anyone who can afford to buy a handful by the time President Zuma finishes his second term.
Happy Democracy Day to the People of Nigeria!
All of Africa united this week in observing the swearing in of Buhari as the new head of state of Africa’s largest economy, Nigeria.
In the week commencing with the 52nd birthday of the AU, there could hardly have been a more appropriate gift from the vision of our founding fathers and mothers than seeing democracy at work in an economy as promising as Nigeria, Africa’s most populous country.
* Kgomoeswana is author of Africa is Open for Business, anchor of CNBC Africa’s weekly show Africa Business News, and anchor of the daily show Power Hour on Power FM. He writes in his personal capacity.
** The views expressed here are not necessarily those of Independent Media.
The Sunday Independent