Finance (93)
The adoption of blockchain technology is swiftly gaining momentum throughout Africa. While the continent may not currently lead in resource mobilization, investments in the sector are rapidly gaining speed, benefitting numerous companies in the region.
On Monday, October 23, Uganda's Presidential Advisory Committee on Export and Industrial Development (PACEID) signed a memorandum of understanding with a TA-CargoX technology consortium comprising Technology Associates and CargoX, a blockchain-based document transfer company. The MoU aims to create TradeXchange, a national digital trade facilitation platform.
"The TA-CargoX Consortium will provide a robust, globally compliant digital trade platform as the surest means to integrate Uganda into the global trade network. This platform shall automate the import and export value chain, provide visibility in the trade supply chain, ensuring transparency, traceability, authenticity, and reliability in trade processes, as well as save cost directly for all participants," said Girisch Nair, Chairman of Technology Associates.
The new partnership is part of Uganda's ambitious goal to double its exports by 2026. PACEID aims to leverage this collaboration to support exporters, resolve trade bottlenecks, and easily comply with global trade standards, among other things.
TradeXchange will therefore be a blockchain-based collaboration platform that will streamline processes and improve the flow of information between farmers, producers, traders, and government agencies.
Once up and running, it will help the government reduce cargo release times, cut import compliance costs, and improve the efficiency of risk assessment when importing goods, tax revenue collection, and overall transparency of goods flow.
Samira Njoya
The funds announced by the Gates Foundation will complement ongoing investments in the use of artificial intelligence to develop the healthcare sector worldwide.
The Bill & Melinda Gates Foundation pledges $30 million to support the development of a new artificial intelligence platform for Africa. American billionaire Bill Gates (photo) made the announcement on Tuesday, October 10, at this year's "Grand Challenges" meeting in Dakar, Senegal.
According to the donors, the platform will provide African scientists and innovators with the technical and operational support they need to turn promising health and development ideas into real, scalable solutions.
It is a step towards ensuring that the benefits of AI are relevant, affordable, and accessible to all and that these essential tools are developed both safely, ethically, and equitably.
"The world needs to make sure that everyone—and not just people who are well-off—benefits from artificial intelligence. Governments and philanthropy will need to play a major role in ensuring that it reduces inequity and doesn’t contribute to it. This is the priority for my own work related to AI," Bill Gates said in an interview last March.
According to the Foundation, this latest investment aligns with its recent focus on funding technological innovation, particularly as it relates to AI, in the world's low- and middle-income countries. Last August, the Foundation announced that it would spend $5 million to fund nearly 50 AI projects in the said countries.
These investments aim to increase funding for healthcare R&D (research and development) worldwide to make development easier and faster and enable the next generation of scientific and technological breakthroughs that are relevant and accessible to all.
According to the Foundation, only 2% of R&D funding is devoted to diseases affecting the world's poorest populations.
Over the past decade, the Kenyan government has invested heavily to make the country a technological hub in East Africa. It wants to reach even greater heights with the support of various partners.
On Thursday, October 5 in Nairobi, the European Union (EU) Commission launched a €430 million digital package aimed at extending connectivity in Kenyan schools, creating a green digital innovation center, and supporting the government in its digital transition.
The package, unveiled during the official visit of the European Union's Commissioner for International Partnerships, Jutta Urpilainen, underlines the EU's commitment to Kenya's technological transformation.
"Expanding digital connectivity, upskilling jobs, and driving digital governance and services is at the heart of what our investment strategy is about: Creating sustainable connections and local added value while cutting unsustainable dependencies," said Jutta Urpilainen.
The launch of this digital package in Kenya is part of Europe's Global Gateway strategy, an initiative of the European Commission to advance the dual digital and green transition and provide reliable, sustainable connections to partner countries.
In Kenya, the initiative will reduce the digital divide by providing Internet access to around 1,300 schools in remote areas. A grant of 9.8 million euros will fund the development of infrastructure and digital educational skills and services in schools in 47 counties. These will benefit over 219,000 children as part of the GIGA program, a global initiative set up by the United Nations Children's Fund (UNICEF) and the International Telecommunication Union (ITU).
The package will also enable the creation of a green digital innovation cluster supported by the EU and Germany, as well as e-government initiatives in partnership with Estonia and Germany, and participation in Govstack, an innovative community project formed as part of a multilateral partnership between Germany, Estonia, ITU, and Digital Impact Alliance.
According to William Ruto, President of the Republic of Kenya, the aim of the partnership with the European Union is to create a link that will contribute to sustainable development, the empowerment of the most disadvantaged, and the promotion of good governance and the rule of law in the country.
Samira Njoya
Cryptocurrency and blockchain adoption is growing rapidly around the globe. To stay relevant in the market in such context, global fintechs are committed to expanding their services and bridging the gap between fiat and digital currencies.
On Tuesday, September 26, US financial services company MoneyGram announced plans to launch its digital wallet, which enables conversion to fiat currency, next year.
The wallet, which will officially debut in the first quarter of 2024, will enable consumers worldwide to leverage stablecoin technology to seamlessly switch between fiat and digital currencies or the other way around, all via Moneygram.
"Our vision to connect the world's communities, by empowering our customers through innovative financial solutions, takes another step forward today. [...] We're thrilled to have the vision, strategic plans, innovative technology, and expansive retail network in place to continue offering consumers access to the digital economy, but now further backed by our global reputation for speed, efficiency, and trust," said Alex Holmes, MoneyGram CEO.
The launch of Moneygram's crypto wallet is part of a partnership signed with the Stellar Development Foundation. The agreement became effective last year, with the launch of an initial service aimed at offering a bridge between cash and cryptocurrency. The service has been extended to eight digital wallets on the Stellar blockchain, offering consumers the ability to make withdrawals in over 180 countries and cash-ins in more than 30 countries worldwide.
As such, the new non-custodial wallet will use the Stellar network and MoneyGram's fiat transfer services to facilitate instant transactions. It will be a “zero-fee service” until June 2024, redefining cross-border payments and giving MoneyGram customers new ways to send and receive money.
Samira Njoya
Last May, the government imposed new taxes aimed at increasing national revenues and reducing the budget deficit, in response to the current cash crunch.
The Blockchain Association of Kenya (BAK) announced on Friday, September 1, that it had officially filed a petition, in the High Court of Kenya, challenging the implementation of the Digital Asset Tax (DAT) introduced by the Finance Act 2023.
The new regulations, which came into force on September 1, impose a 3% tax on revenues generated by the transfer or exchange of digital assets in the country.
"Our petition aims to address concerns about the DAT’s impact on both our industry and the broader economy. Enforcement of this harsh DAT could potentially lead to adverse effects on the industry’s growth and innovation. The core focus of the petition is to thoroughly examine the legal and constitutional dimensions surrounding the imposition of this tax on digital assets. The matter will be mentioned before the court on September 28, 2023," states a BAK press release.
The petition introduced by the BAK comes a few months after a press release issued by the same organization, in which it set out seven reasons for opposing the digital asset tax. Among other things, BAK criticized the unclear classification of digital assets, the ambiguity surrounding transfers of digital assets, and the failure to take into account loss-making transactions.
According to Allan Kakai, BAK's legal and policy director, DAT was introduced as an income tax, but it is taxed on the gross value of the asset, not on gains and profits. This means that those in a loss-making position will still pay the tax.
The new tax regulations also require crypto exchanges, as well as those facilitating the exchange or transfer of digital assets, to retain tax deductions, and transmit them to the country's tax authority within 24 hours of the transaction.
For BAK, the government should review the texts, hence the request. Kenya is ranked 5th worldwide for peer-to-peer crypto transactions and 19th for cryptocurrency adoption, according to the Chainalysis 2022 report.
Samira Njoya
Nearly half of the African population lacks access to digital financial solutions. To address this issue–meeting the needs of financially excluded and disadvantaged people– the African Development Bank (AfDB) and its partners have taken several steps.
India will contribute $2 million to the African Digital Financial Inclusion Facility (ADFI), a fund hosted and managed by the African Development Bank (AfDB). The Bank disclosed the news on August 2.
According to the AfDB, the money will help tackle bottlenecks to the growth and adoption of digital financial solutions, as well as accelerate financial inclusion in Africa.
#India pledges $2M to @ADFI_AfDB for digital financial solutions in Africa. India's #financialinclusion success offers valuable insights to scale up initiatives to meet the needs of the financially excluded. Learn more: https://t.co/v34gM3EpY1 #IntegrateAfrica pic.twitter.com/DAF80VDaQf
— African Development Bank Group (@AfDB_Group) August 2, 2023
"India's pioneering role in digital financial services, the extension of financial inclusion to remote rural areas, and the creation of infrastructure for digitizing financial services offer India an excellent opportunity to work within the ADFI partnership to share learning and expertise on public digital infrastructure to promote digital financial inclusion across the continent," said Manisha Sinha, Deputy Secretary to the Department of Economic Affairs and Principal Board Member of the ADFI for India.
Due to Covid-19, Africa’s need for greater digital financial inclusion expanded. As a result, less expensive dematerialized financial services were deployed to support those who have no or low access to formal banking services.
In 2019, the AfDB launched the ADFI fund with an initial endowment of $40 million from the Bill & Melinda Gates Foundation, the Government of Luxembourg, and the French Development Agency: the African Digital Financial Inclusion Facility (ADFI).
By 20230 the fund hopes to devote $400 million to support the digital financial inclusion of 332 million people in Africa, 60% of whom are women.
India is recognized worldwide for having a thriving public digital payment system; a system that transformed governance, financial inclusion, and resilience for millions of people. The financial support of the Asian giant should thus advance AfDB’s goal regarding digital financial inclusion.
Samira Njoya
Over the past few years, mobile money has become an increasingly important financial tool for a growing segment of the African population. As the service becomes more diversified, it continues to gain maturity and conquer new markets across the continent
In 2022, Africa was the fastest-growing mobile money market in the world. In its "State of the Industry Report on Mobile Money 2023", the GSM Association (GSMA) reveals that the continent recorded 166 active services (out of 315 worldwide) and 781 million active accounts (48.81% of the world's 1.6 billion registered users), up by 17% compared to 2021.
The continent also accounted for 44.9 billion (+21%) financial transactions estimated at $836.5 billion (+22%). The amount represents 66.39% of the $1.26 trillion mobile money transactions recorded worldwide in 2022.
East Africa remained the most dynamic sub-region on the continent with 390 million active accounts, 28 billion transactions, and $491.8 billion in transaction value. North Africa, due to its small size, recorded the lowest performance with 18 million active accounts, 97 million transactions, and $4.7 billion in transaction value.
Infographic: Mobile Money Market in Africa (2022)
Source: GSMA
According to the GSMA, despite this positive performance, there are lingering challenges that threaten financial inclusion. “Some countries have introduced taxes on mobile money transactions and fees that do not align with their financial inclusion objectives. Fraud also remains an industrywide issue, which many regulators are aiming to overcome through improved consumer awareness and capacity building,” the report indicates.
Since 2020, the U.S.-based international organization has been providing additional capital to associations working for digital inclusion in three countries around the world. For this edition, six countries are concerned, including Ghana and Senegal.
The Internet Society Foundation, an organization that promotes the development of the Internet worldwide, announced on April 30, the opening of applications for the 2023 edition of its Strengthening Communities, Improving Lives, and Livelihoods (SCILLS) program.
The organization will award up to $250,000 in grants for projects that leverage the Internet to promote economic inclusion and boost education opportunities. In Africa, two countries are eligible, namely Ghana and Senegal.
"Internet access has increased significantly in Indonesia, however, access to Internet knowledge and skills remain out of reach for some. This new round of SCILLS program grants will support organizations that connect underserved communities with the critical digital skills needed to unlock economic growth and educational opportunities," said Sarah Armstrong, executive director of the Internet Society Foundation.
Interested parties are invited to apply with complete applications by May 31st.
Let’s note that at the of end 2022, the Internet penetration rate was 99.03%, up from 94.82% the previous year, according to a report by the Senegalese Telecommunications and Postal Regulatory Authority (ARTP).
Samira Njoya
The partnership comes a month after Mastercard partnered with Egypt to digitize the local economy. It aims at giving consumers faster access to digital loans.
Egyptian software development company egabi FSI and Mastercard recently signed a partnership to expand access to digital lending solutions across Africa, Eastern Europe, and the Middle East. The information was disclosed by Mastercard on Thursday, April 27.
This agreement will lead to the digitization of the lending ecosystem and the introduction of innovative products for “growing segments such as BNPL, microfinance and SME.”
According to Ahmed Sameh, CEO of egabi FSI, the partnership with Mastercard "reflects the confidence of global financial institutions in egabi FSI as a fintech facilitator and the quality of egabi's products. This partnership will pave the way for greater market coverage and together with Mastercard, we will be able to redefine the digital lending industry in the region."
Under the partnership, “Mastercard will activate egabi’s digital-lending capabilities and assets to provide an end-to-end lending proposition to financial institutions and fintech companies.” The proposition will be “further enhanced by offering Mastercard’s Digital First products to issuers willing to enter the digital lending space.”
This strategic partnership follows partnerships initiated by Mastercard in Egypt to connect and power an inclusive digital economy that benefits everyone, everywhere with secure, simple, smart, and accessible transactions. In March 2023, Mastercard announced a new partnership with the National Bank of Egypt (NBE) to “bring next-level digitization into the Egyptian economy.” Five months earlier, in October 2022, the company partnered with some Egyptian banks to bolster the local fintech ecosystem and boost financial inclusion.
Samira Njoya
This acquisition comes months after Autochek bought the car sales platform CoinAfrique, in Q3-2022.
Nigerian car financing provider Autochek announced, Monday, the acquisition of majority shareholding in Egyptian car dealer AutoTager.
According to the company's statement, the acquisition aims to strengthen Autochek's presence in North Africa and support the company's continued growth.
Commenting on the transaction, Olajide Adamolekun, group CFO and co-founder of Autochek said: “Amr’s -ed. note: Amr Rezk founder of AutoTager- background and track record are as impressive as it gets and I am delighted to have him on board. His experience will be invaluable as we enter the Egyptian market and continue on our mission to improve the automotive finance value proposition on the continent and catalyze more growth across the automotive ecosystem.”
Autochek launched the acquisition of automotive platforms a while ago. In July 2022, the car financing company acquired CoinAfrique. In September 2021, it acquired Cheki Kenya and Cheki Uganda.
With this majority shareholding acquisition, the company now has a presence in nine countries in East Africa, West Africa, and North Africa, with more than 2,000 partner-run dealerships and workshops, according to its release.
By targeting AutoTanger, Autochek is aiming at North African markets, mainly Egypt - which is the third largest economy in Africa according to the African Development Bank (AfDB), and the third largest automotive market on the continent (according to 2021 data from the International Organization of Motor Vehicle Manufacturers-OICA).
Samira Njoya
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In recent months, South Africa’s digital sector has attracted several important investment pledges. Earlier, Amazon committed to investing in tech services in the country. It is now followed by pan-African digital solutions Cassava Technologies.
Last Friday, Pan-African tech company Cassava Technologies announced its commitment to investing ZAR4.5 billion ($250 million) in its South African operations over the next two years. The initiative was unveiled at the fifth South Africa Investment Conference (SAIC) held the previous day in Johannesburg.
The investment will be made through Cassava Technologies' business units, namely Liquid Intelligent Technologies, Africa Data Centres, and Distributed Power Africa. It is aimed at supporting the expansion of Liquid Intelligent Technologies' fiber network, the expansion of Africa Data Centre’s capacity and footprint, the enhancement of cloud and cybersecurity capacity, and the deployment of clean, renewable energy by Distributed Power Africa in South Africa.
“South Africa accounts for the largest proportion of Africa’s industrial GDP with a sophisticated and growing ICT sector. The country’s unique combination of highly developed first-world economic infrastructure and a stable macro-economic environment affords businesses like ours a conducive investment environment in which we can partner with government to drive economic development and create jobs,” said Hardy Pemhiwa, President & Group CEO of Cassava Technologies.
The initiative is in line with the ambitions of South African President, Cyril Ramaphosa, to stimulate the country's economy and attract ZAR2 trillion in investments over the next five years to achieve development objectives.
Cassava Technologies has eight subsidiaries, namely Liquid Intelligent Technologies, Liquid Dataport, Liquid C2, Africa Data Centres, Distributed Power Africa, Sasai Fintech, Telrad, and Vaya Technologies.
Samira Njoya
In recent years, Senegal, like most African countries, has accelerated its digital transformation. To successfully implement that transformation, the country is relying on support from valued partners like the World Bank.
The World Bank recently approved a CFAF91 billion ($150 million) to support Senegal in the implementation of its Digital Economy Acceleration Project (PAEN). A financing agreement was signed to this effect on Thursday, April 6, between Mamadou Moustapha Bâ (photo, right), Senegal's Finance Minister, and Keiko Miwa (photo, left), Director of the World Bank Regional Office for Cape Verde, Gambia, Guinea-Bissau, Mauritania, and Senegal.
"For the population’s benefit, it is essential to leverage digital technologies in critical sectors such as health where digital solutions, including electronic medical records, telemedicine, and immunization campaign management can have a tangible impact," said Keiko Miwa after the agreement was signed.
According to the Finance Minister, the funds will help improve the legal, regulatory, and institutional frameworks governing the digital economy. It will support the digital transformation of the public sector by strengthening the technical foundation and e-government services. It will also promote digital adoption by improving digital literacy and skills -particularly among women and youth- and increasing access to health information to improve the delivery of health services.
PAEN is the first axis of the Plan for an Emerging Senegal (PSE) adopted in 2014 by the government to make Senegal an emerging country by 2035.
Samira Njoya
In 2019, the Moroccan government launched a national strategy to improve financial inclusion across the country. To achieve the objectives set in that strategy, the executives are working with public and private partners.
Last Friday, the World Bank’s board of directors approved a third Development Policy Loan (DPL) of $450 million for Morocco.
According to an IMF release dated April 3, 2023, this DPL aims to support the Moroccan government in the implementation of reforms to improve financial inclusion, digital entrepreneurship, and individuals and businesses’ access to infrastructure and digital services.
“This third financing is in line with the recommendations of the New Development Model (NDM), which emphasizes the need for a paradigm shift to promote inclusive, private sector-led growth to improve public services and reduce social and spatial disparities,” indicated Jesko Hentschel, Country Director for the Maghreb and Malta at the World Bank.
The first DPL, amounting to $500 million, was approved in 2020. In June 2021, a second one -$450 million- was approved. Combined with the new one, the total DPL secured by Morocco amounts to $1.4 billion.
It is a continuation of the $700 million financing the World Bank approved, in 2019, to support financial inclusion and the digital economy in Morocco.
The various funding enabled Morocco to significantly push back the barriers to financial and digital inclusion. Today, 44% of Moroccans have a bank account compared to 29% in 2017, and 30% of them use digital payments compared to 17% in 2017, the IMF release reported.
“The infrastructure for digital payments has expanded with 31% of rural districts now covered by mobile payment networks and 19 mobile payment providers in operation,” the IMF indicates.
Samira Njoya
Liberia's financial sector faces several challenges, including inadequate ICT infrastructure. The existing payment infrastructure deployed in 2016 has served the country well over the past six years but requires urgent upgrading.
The African Development Bank (AfDB) will finance the Liberia Payments Infrastructure and Systems Upgrade Project. For the said project, the Board of Directors of the African Development Fund, the AfDB's concessional lending window, approved a $3.9 million grant on Friday, March 17.
“The modernization of Liberia’s payments infrastructure and systems to improve payments efficiency will not only strengthen the formal financial sector but contribute to greater financial stability and improved private sector development,” explained Benedict Kanu, African Development Bank country manager for Liberia.
According to an AfDB release, the financing will target the automated check processing and automated clearing house systems, as well as the real-time gross settlement systems that form the backbone of payment processing in the country's financial sector.
It will also finance the upgrading of the Central Bank of Liberia's main data center and “impact the institution and government ministries involved in the payment.”
The main objective is to strengthen Liberia's payments ecosystem for increased efficiency and to foster growth and innovation, as well as financial inclusion, which currently stands at 44.2 percent according to the World Bank's Global Findex 2021 database.
Samira Njoya