Building capacity to help Africa trade better

Global finance and e-trade giants threat to African players


Global finance and e-trade giants threat to African players

Global finance and e-trade giants threat to African players
Photo credit: Institute for Money, Technology and Financial Inclusion

Experts are warning that global financial and e-commerce giants will take over the African market if the continent’s players do not innovate and come up with models that address the real needs of the people.

Although there is some level of digitisation on the African landscape through companies like Jumia, there is still a big gap in well-segmented customer data, which has left millions of people unserved or underserved.

This is something e-commerce giants like Alibaba and Amazon can exploit in Africa, said the programme manager of financial inclusion at Mastercard Foundation Olga Morawczynski.

“The disruption is already happening; some African players like Jumia are digitising but the real strength lies in understanding local needs and responding accordingly,” Ms Morawczynski said at the 2017 Mastercard Foundation Symposium on Financial Inclusion in Ghana recently.

Giving the example of how over-the-top communication platforms like WhatsApp and Facebook have disrupted the telecoms business, forcing mobile network operators to go back to the drawing board, experts said the same is likely to happen in the financial sector.

Amolo Ng’weno, the regional director for BFA for the East African region – a consulting company specialising in financial services – said enabling access and sharing information free of charge on giant data companies like Facebook and Google will give global firms an upper hand.

Strong growth

The strong growth in consumption driven by digital innovations like mobile money – which is growing five times faster in Africa than in any other region – is an attraction for global e-commerce companies.

According to analysts, technology is opening up new doors and companies that hold more consumer data and are digitally inclusive will survive in the market.

For example, Japan’s largest online retail marketplace, Rakuten, also runs one of the country’s largest online travel portals and its own messaging app – which can suggest items based on an individual’s recent chats. It also uses credit cards and gives mortgages to its customers.

Other tech companies are breaking into finance in the West for example Amazon now provides loans for small and medium-sized businesses, Facebook is integrating person-to-person Paypal payments into its Messenger app while Apple is starting to allow iMessage users to send cash to each other.

Experts say the ground is being prepared for these giants to come to Africa, which will render some financial service providers redundant.

The downside about this, according to Chris Locke from Caribou Digital, a research and delivery consultancy, is that they give little to economies they operate in.

“They look more like digital extractive industries, they pay no taxes yet they make huge profits doing business in foreign markets,” he said.


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