24 Nov

Global Chocolate Binge Has Olam Predicting Smaller Cocoa Surplus

The world just can’t get enough chocolate.

With “tremendous” demand in emerging markets looking set to continue this season, the world’s third-largest cocoa processor is projecting a sharply smaller global surplus. Excess cocoa supplies that reached a record last season will probably drop to about 50,000 metric tons, said Gerry Manley, head of cocoa at Olam International Ltd.

Demand has picked up in Asia particularly, where countries including the Philippines, Indonesia, India and China are consuming more cocoa powder used in products like cookies and ice-cream, Manley said. And while West African growers may reap a second year of bumper crops, top producer Ivory Coast is unlikely to repeat last season’s record harvest.

“We are very positive on demand,” Manley said in an interview at the company’s London offices Thursday. “We are seeing good demand for cocoa powder across the world, but mainly emerging markets are in a leading position there.”

Benchmark cocoa futures traded in London tumbled 23 percent last year, the biggest decline since 2011, as output climbed to a record in Ivory Coast, while Ghana, the No. 2 grower, also reaped a big crop. The large African harvests helped push the global surplus to 371,000 tons, according to estimates from the Abidjan-based International Cocoa Organisation.

This season, global cocoa processing will probably rise by more than 3 percent, Manley said, adding that the forecast is conservative. Processing exceeded 5 percent growth in 2016-17. About 8,000 new products were launched in the confectionery market last year, Manley said.

Lower costs are boosting demand, with the global chocolate confectionery market expanding 2.3 percent in the three months to June and 2.2 percent the following quarter, the world’s top cocoa processor Barry Callebaut AG said earlier this month, citing data from analytics firm Nielsen. The rebound came after at least six consecutive quarters of contractions.

Underestimating Growth

Changing consumer habits mean some traders may be underestimating growth. Trends including online shopping as well as the rise of artisan shops and bakeries are often missed by traditional data sources, Manley said.

Global cocoa powder demand is forecast to grow at 5 percent and Olam is looking to capitalize on that. The Singapore-based company is investing to increase its capacity to mill cocoa cake into powder in Asia and is also planning a new milling facility just outside Chicago, Manley said. The factory should be commissioned later this month.

Demand for cocoa butter and cocoa liquor, used to make chocolate bars, is also growing and the market is tight despite last season’s record surplus, Manley said. That has helped boost cocoa-processing margins, with the so-called combined ratio — the price of cocoa products relative to beans — reaching the highest in more than a decade this year, according to KnowledgeCharts.

To read the full article, click here. 

26 Oct

Additive manufacturing: Implications for African economies

Global trade, the merchandise exports component of which was about US$15.5tn in 2016, according to World Trade Organisation (WTO) data, is expected to shrink by at least half over the next half century due to 3D printing or additive manufacturing (AM). In tandem would be global value chains (GVCs), which were set to give African countries perhaps their last fighting chance at industrialisation. At $346bn in 2016, African merchandise exports were just 2% of the world total. And 32% of these were oil exports.

Still, African manufacturing has actually been on the ascendancy, growing in real terms by 3.5% a year to $157bn in 2014, up from $73bn in 2005, with exports doubling to more than $100bn in the period.

But what is additive manufacturing? Simply put, as the name implies: it is manufacturing by adding. Unlike the conventional manufacturing process, where an object having been designed is put into form by “cutting, drilling, and milling”, “a 3D printer starts with nothing and add stuffs to it”. With the aid of a computer programme, a 3D printer is able to produce a three-dimensional physical form of what was hitherto no more than a virtual representation. However, relative to traditional manufacturing, the additive kind is slow and expensive. In addition, the quality of produced objects can sometimes be doubtful. But it is fast evolving to overcome these constraints.

Bespoke specialist products or prototypes are better suited, therefore. For now. Incidentally, there are indications that improvements could come about faster than expected. Take polymer-based manufacturing, for instance: digital light synthesis pioneered by Carbon, an American producer of 3D printers, allows for a process 100 times faster than conventional printing. And objects produced are of far greater quality and strength. For metal printing, better methods are beginning to emerge as well. An example is “bound-metal deposition”, which produces objects 500 times faster than traditional laser-based ones. Thus, the ascendancy of additive manufacturing to mainstream production is only a matter of time.

Read more: How We Made it in Africa

29 Aug

Automotive outlook for Africa: Bumpy roads ahead?

Automotive

The author, Richard Li, is a Singapore-based partner with Steel Advisory Partners, a management consulting firm that serves clients across industries. This article was produced for the NTU-SBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation.

In 2000, the overall African gross domestic product (GDP) was US$616bn. Since then, the continent has enjoyed a period of high economic growth and its GDP has risen massively by 245% to reach $2.1tn in 2016. Moreover, the World Bank recently started classifying countries according to their gross national income (GNI) and there are in fact 25 African countries that are in the middle income category in 2016.

To further sustain economic growth in Africa, there is a significant need for the transportation of goods and people. This means that there will be an accelerating demand for automotive vehicles in Africa, particularly in those middle-income countries that have a huge population mass, as well as a relatively high growth rate.

Africa, the last frontier market for automotive

According to the International Organisation of Motor Vehicle Manufacturers, there are only 44.8 million vehicles in Africa, representing only 3.5% of the global market. For Africa, with its population of about 1.2 billion, there were only 42 vehicles per 1,000 inhabitants in 2015. Compared to the global average, Africa is about 4.3 times less. This signals that there is an immense upside for market penetration in the automotive sector. Moreover, between 2014 and 2015, the automotive market in Africa grew at a relatively fast pace of 5.8%, compared to 1.9% and 2.4% for Europe and the United States respectively.

In terms of sales, in 2016, there were about 1.3 million vehicles sold in Africa, representing only 1.4% of the global market. The market is mainly dominated by two regions – Northern Africa and South Africa – with an 85% market share. South Africa sold about 547,000 vehicles, whereas for the Maghreb countries – AlgeriaMorocco and Tunisia – together with Egypt, 575,000 vehicles were sold.

As for manufacturing capabilities,there is a lot of room for improvement, since Africa produces slightly less than 1% of all the vehicles in the world. Although South Africa has the biggest production capability with nearly 600,000 vehicles produced in 2016, manufacturing is stalling and is on a decline. Morocco is next with a capacity for 345,000 vehicles. These two countries represent about 91% of all vehicles manufactured in Africa. With increasing demand in other parts of Africa and with only small assembly facilities elsewhere, there are indeed many potential opportunities for automotive companies to further tap.

Challenges faced by the automotive sector

Africa is definitely not an easy market to deal with. The continent is not only geographically vast, but it is also a very fragmented market with 54 independent countries, each with their own market characteristics. In addition, since many African countries are still in the process of development, there is a dire lack of clarity in terms of soft infrastructure, such as proper regulatory frameworks, as well as economic policies for the development of industries.

The automotive sector is a capital-intensive industry that requires a long cycle for its development and for returns on its initial investments. On top of that, the captive market within specific countries may be too small to justify large-scale production facilities. Besides the lack of clear guidelines to attract investors in the automotive sector, the political instability in many African countries increases risk, thereby stifling and eventually halting the development of automotive manufacturing.

South Africa was the only African country that had been able to realise all the conditions needed for manufacturing automotive vehicles. With its population of nearly 56 million and a GNI per capita of $5,480, South Africa is the biggest automotive market in Africa – in terms of both production and sales of new vehicles. However, the recent political instability in South Africa is making global automotive companies think twice about whether they should invest further in the country. As a result of this inertia to reform and stimulate this sector, automotive companies may decelerate their future development plans there.

The Maghreb countries leading the way

The three Maghreb countries – Algeria, Morocco and Tunisia – are progressively focusing on boosting their automotive sector. Morocco has been the most successful, attracting French car manufacturers with the development of special industrial and economic zones. Renault and PSA Peugeot Citroën have committed €1.6bn ($1.9bn) and €600m ($705.7m) for their own production facilities respectively.

The Moroccan government is definitely steering the automotive industry in the right direction with the necessary framework and conducive environment needed for its development within the country. Morocco is pushing hard for the industry to rally further, aiming to produce one million vehicles by 2020. By then, its automotive exports will represent $10bn worth of vehicles to Europe and other parts of Africa. This sector will eventually represent 20% of the Moroccan GDP and create 160,000 jobs locally.

Algeria and Tunisia are also locations where French car manufacturers are setting up assembly plants. Germany’s Volkswagen is opening its plant in Algeria as well. With their close proximity to Europe, coupled with the right incentives and regulatory framework, European car manufacturers are finding it very appealing to be in these countries. Moreover, with a captive market of more than 87 million people among these three countries, selling locally helps to justify the necessary investments as well.

Potential opportunities in Africa

Africa can offer great opportunities to automotive companies, since more countries are slowly but steadily becoming more affluent. According to data from the World Bank, there were 12 countries in 2000 that might be considered as middle-income countries. Nowadays there are 25 middle-income countries across the continent. This represents a potential market size of approximately 656 million people. From 2006 until 2016, some of the countries that have significantly raised their GNI per capita are EthiopiaNigeria, Egypt, Kenya and Ghana, with an increase of 267%, 188%, 166%, 134% and 130% respectively.

Besides South Africa, the other top five most-attractive middle-income countries that have big populations, are Algeria, Egypt, Kenya, Morocco and Nigeria. These are probably the most promising markets since they have a combined population size of about 462 million, with a significant percentage being able to afford their own vehicles. The automotive industry can potentially crank and rev the growth engine of these countries further.

The African marketplace is gradually looking more attractive with the continent potentially being able to absorb many more vehicles than what it does currently. However, there are many obstacles that first need to be overcome. And African governments have to be committed to provide the right conditions for the automotive sector to flourish within their countries. With the right framework, this industry can not only be lucrative for the automotive companies, but at the same time, it can turbocharge the economic growth of African countries.

Richard Li is a Singapore-based Partner with Steel Advisory Partners, a management consulting firm that serves clients across industries. Having spent his working career in strategy consulting, he worked with various global clients and covers themes such as Corporate Strategy, Transformation, Digital Innovation and Risk Management. He can be contacted via the Steel Advisory Partners site. This article was specifically written for the NTU-SBF Centre for African Studies.

source from how we made it in Africa

29 Aug

Weathering Africa’s commercial real estate storm

real estate

The brilliant thing about working in Africa is the continent’s ability to change – and adapt – almost instantly. While at first glance this is often interpreted as a challenge or a risk, the importance of adopting a “glass-half-full approach has never been more essential than in Africa’s current real estate environment”, says Gerhard Zeelie, head of Africa property finance at Standard Bank.

In Africa, things can change very quickly.

In May last year, for example, Nigeria was in the throes of a US dollar liquidity crisis. Barely 12 months later this is largely resolved. Just as tweaking foreign exchange regulations along with positive market changes improved liquidity in Nigeria, an uptick in the oil and copper prices coupled with market-friendly, transparent forex regimes could, equally as easily, change Luanda or Lusaka’s commercial real estate prospects – overnight. Similarly, large global energy investments touted for Mozambique are currently dispelling default-driven negative sentiment as investors again turn positive about the region.

“The variables that threaten risk in Africa are equally what contributes to making the continent such a rich landscape of opportunity – especially in the continent’s real estate sector,” says Zeelie.

Africa’s commercial real estate sector is currently, without doubt, a tenants’ market. Despite a more settled Naira and easing USD liquidity in Nigeria, challenges importing goods – until recently prohibited for foreign currency allocation – is keeping smaller businesses and retailers under pressure, forcing landlords to continue offering tenants discounts, or capped USD-based deals. New malls remain at 50-60% occupancy levels as “tenants shy away from the more expensive USD-based rentals, or remain unsure of whether they will be able to get prohibited, non-essential, stock through ports”, says Zeelie.

Similar concerns follow the office rental environment as businesses adopt a wait-and-see attitude, deferring office moves, upgrades and corporate office expansions.

These kinds of challenges mean that commercial real estate developers are struggling to convert Africa’s resilient consumer demand into competitive rentals. “This is not only constraining income in the sector but also leading to a depreciation in the value of the continent’s real estate stock as, increasingly, space in new developments stands empty or achieves lower rentals than before,” observes Zeelie.

The intensity of the storm in the continent’s commercial real estate sector varies.

In Nairobi, for example, “a better regulatory setting, an easier business environment more generally, and a more diverse economy – with multiple earners of foreign exchange – collectively contribute to a more resilient tenant profile and higher occupancy, even though vacancies exist in certain nodes and sectors”, says Zeelie.

Kenya, or, more correctly, Nairobi’s commercial real estate market, is, however, the exception rather than the rule in Africa.

When projects don’t perform as anticipated, African commercial real estate developments require more patient funding structures which can be achieved through the correct ratio between debt and equity.  “Projects conceived in earlier, more positive, business environments on very different numbers, for example, should be restructured,” says Zeelie. While a restructure will often involve a higher level of equity finance, “the bank should also display some flexibility in its approach”, he adds.

For example, if financiers have a view on how long negative conditions may last in certain markets they may be able to extend the tenors or repayment terms of financing facilities – provided there is not a significant deterioration in the risk. Or, if clients have access to shareholder funds, it might be cheaper to put more hard currency into the structure. There may also be options to convert debt into local currency, provided there is enough liquidity in the market.

“Another solution could be to negotiate upfront payment of the present value of all lease payment with key tenants,” says Zeelie. Over the long term this provides these tenants with predictability – and probably a discount – while injecting much needed capital, now, into commercial real estate financing structures, enabling landlords to manage rentals with smaller clients in the short term.

source from How We Made It In Africa

29 Aug

How a new cruise ship terminal could boost Durban’s economy

cruise

While sub-Saharan Africa is on the map for foreign investors in many other sectors, the cruise ship industry mostly passes the region by. It is hoped that this situation could change once the new Durban Cruise Terminal opens for business.

According to Andrew Pike – head of the ports, terminals and logistics division at law firm Bowmans – the facility, expected to be completed in 2019, could be just what the African cruise industry needs. He heads the Bowmans team advising KwaZulu Cruise Terminal (KCT), the preferred bidder for the tender to develop and operate the project.

How we made it in Africa asked Pike about the expected economic impact of the terminal and opportunities to grow the regional cruise industry.

MSC Cruises SA, part of one of the world’s largest passenger liner operators, is a joint-venture partner of KCT, the entity that will build and operate the new Durban Cruise Terminal. However, MSC already operates a number of cruises from Durban, which raises the question whether the terminal will give preference to MSC, or if it will accommodate all operators equally?

No, the terminal concession will be offered on a common-user basis, meaning that the terminal operator, KCT, will be obliged to give reasonable equality of access to any cruise liner wishing to use the terminal. Accordingly, there can be no positive discrimination towards MSC Cruises ships.

Is the rationale behind the new terminal to: 1) Entice operators to develop entire new cruises that stop at Durban; 2) Motivate those currently passing Durban to dock at the city; or 3) To give passengers of liners already stopping at Durban an improved experience?

Ideally, and as far as possible, all three, but the principal motivation at present is to improve the experience for passengers already passing through the existing terminal at N-Shed. The existing terminal is not a world-class facility and the new terminal will give them a far better experience. This in turn will hopefully drive other cruise operators to call in Durban on an ad hoc basis or even to schedule new cruises to Durban because of their confidence that they will be received in a world-class facility. So the bigger picture is to increase tourism to Durban.

Is one modern cruise terminal enough to lure operators to the southern tip of Africa? Don’t you need facilities such as these all along the coast of the continent?

One may be insufficient, but it provides an anchor for cruises on the African coast. Once there is one modern terminal in southern Africa which is successful, it may well prompt other cruise operators to develop similar, or at least complementary, facilities in other jurisdictions such as MozambiqueTanzaniaand Kenya.

How will the new cruise terminal impact Durban’s economy?

In the short term there will be some employment creation during the construction phase. In the longer term there will be further employment and tourism benefits as the new terminal will have a retail component and will also link through to the Point precinct, meaning that the terminal plus all of the other facilities in the area become an attraction for tourists and boost local businesses.

One would also hope that the whole package will result in increased passenger throughput and consequently provide opportunities for tour operators into the greater Durban and KwaZulu-Natal province, such as Valley of a Thousand Hills tours, eco-safaris to small reserves in the area, and of course increased pedestrian traffic through markets such as Wilson’s Wharf, Victoria Street Market and the like.

Overall, the facility will put Durban more on the map for foreigners who know nothing about the city. CNN once described Durban as “The coolest city you’ve never seen”. The new terminal will get Durban seen and, whether foreigners pass through the terminal or not, word of mouth from those terminal passengers will provide a strong boost for Durban tourism.

from How We Made It In Africa

29 Aug

Kwale titanium miner rebounds to Sh1.71bn full-year profit

titanium

Base Resources has rebounded to full-year profit of Sh1.71 billion (AU$21 million) for the period ended June 30 from $20.9 million (Sh1.70 billion) loss a year earlier, the Kwale-based miner announced on Monday.

The Australia-owned large-scale mining firm attributed the performance to increased sales volumes, rise in commodity prices and cost management measures.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 81 per cent to AU$109.7 million (Sh8.94 billion) from A$60.6 million (Sh4.94 billion) the year before.

The firm said sales revenue from the Kwale mine exports rose 28 per cent to AU$215 million (Sh17.53 billion) from AU$169 million (Sh13.78 billion) in June 2016, hitting a new record since it made first shipments in February 2014.

Ilmenite volumes rose by a marginal 4.4 per cent to 501,676 tonnes, rutile increased to 91,991 tonnes from 85,536 tonnes, while shipments of zircon climbed to 34,566 tonnes from 33,062 tonnes last year.

The company said it also sold 9,501 tonnes of low grade zircon, volumes which it did not ship last year. The minerals were sold at an average price of AU$338 per tonne (Sh27,560), a 19.86 per cent jump, it says.

In Summary

  • Base Resources attributed the performance to increased sales volumes, rise in commodity prices and cost management measures

source from Nation

29 Aug

Nigerian Investor Sets Up $135 Million Commodities Exchange

commodities exchange

A Nigerian startup is developing a new agricultural commodities exchange in Africa’s most populous country to take advantage of the government’s efforts to boost farming output to reduce reliance on oil.

The exchange, Integrated Produce City Ltd., will be located near the southern city of Benin, about 300 kilometers (186 miles) east of Lagos, Nigeria’s commercial hub, a site accessible to nearby growers of cocoa, palm oil, rubber and cassava, Chief Executive Officer Pat Utomi said in an interview.

“The concept of a wholesale-produce market is to enable the farmer to fully dispose of his produce, instead of today where he loses 80 percent of his output” that rots before it can reach the market, Utomi said on Aug. 18 in the capital, Abuja.

Nigeria is boosting investment in agriculture to increase exports and cut food imports that cost it $3.2 billion in 2015, according to the National Bureau of Statistics. The economy of Africa’s biggest oil producer has been hit hard by lower output and prices of crude, which accounts for more than 90 percent of foreign income and two thirds of government revenue.

Export Hub

Integrated Produce City will have storage facilities, including refrigerated warehouses, and host processing plants on its 100-hectare (247-acre) site in Edo state’s Ugbokun village when it starts operating by the end of 2018, Utomi said. “It will be an export hub for produce,” where exporters will have access to large quantities stored in one place rather than sending agents to individual farmers to collect small amounts, he said.

The company has put up 20 percent of the required $135 million and is in talks with lenders and investors from South Africa, China and Australia for additional capital, Utomi said, declining to name them. Integrated Produce City signed an agreement with KPMG LLP’s Nigerian unit on Monday to help it raise more capital, Vitus Akudinobi, a spokesman for the new exchange, said.

Cocoa, palm produce, cashew nuts and rubber are among the products to be traded on the exchange. Others are fresh fruit and vegetables, grains and tubers such as cassava and yams. Local manufacturing companies will be able to buy agricultural goods at the exchange, he said.

Chocolate Factories

“Among the factories we’re trying to attract are chocolate makers,” he said. “The entire cocoa value chain will be represented.”

The exchange aims to provide services to six states in southern Nigeria, Utomi said.

A likely rival is Abuja-based Afex Commodities Exchange Ltd., which started providing warehousing and trading services in four of Nigeria’s 36 states in 2013. Integrated Produce City plans to offer daily auctions as well as an industrial park for manufacturers.

Nigeria is Africa’s fourth-largest cocoa producer and the seventh worldwide with a 2015-2016 output of 190,000 metric tons, according to the International Cocoa Organization.

In addition to cocoa, other major exported products during the last quarter of 2016 were sesame seed, frozen shrimps, soy beans, cashew nuts and crude palm kernel, figures from the statistics agency showed.

(A previous version of this story was corrected to remove reference to the first commodities exchange in lead.)

 

via Bloomberg

29 Aug

‘Solar key to sustainable energy supply in Nigeria,’ says report

solar

In the oil-soaked West African nation of 187 million people, solar is slowly infiltrating every part of society in Nigeria. It is awakening entrepreneurial instincts, giving life to innovative payment models, and promising to restore at least some faith in the government’s ability to bring electricity to citizens used to frequent blackouts or no power at all.

A recent report produced by Power Nigeria, which is taking place from 5-7 September at the Landmark Centre in Lagos, highlighted the need for additional solar capacity in the country and what challenges the country faces to achieve this.

In 2017, financial closure is expected on at least some of the 14 solar plant projects announced in July 2016. If successful, they’ll bring a total of 1.2GW to Nigeria, largely in the north, far from most conventional generation capacity.

Nigeria is Africa’s most populous country and has power capacity of roughly 5GW (at peak in February 2016), but dropped to less than half that in January 2017.

Half of Nigerians have no access to grid-based electricity. About 40% of Nigerian grid-powered businesses use supplemental energy. The rule of thumb is 1GW is needed per million people, in a fully developed economy. That means Nigeria has a 181GW deficit. The 1.2GW of solar doesn’t make a dent.

Yet Nigeria aims for renewables to supply 30% of output by 2030. The social consideration is significant in a country suffering terrorist violence in the north, energy vandalism in the south, and poverty levels of 70%. One business solution is to initially provide smart metres only to those who pay bills, and use that revenue to build the infrastructure and subsidise other end-users. Instead, there is a push to get everyone a smart meter at once.

Despite the push for utility-scale solar, much of Nigeria’s solar power may start off-grid. As Nigeria’s growing community of solar PV entrepreneurs will tell you, anyone with a diesel or petrol generator is a potential solar client. In 2016, Nigeria imported US$23m worth of solar panels, not including integrated or plug-and-play solar kits. That makes Nigeria the world’s second largest solar panel importer among emerging economies, behind India, according to Bloomberg New Energy Finance.

Most of those panels weren’t meant for utility-scale projects. Nigerians have long sought out their own electricity sources, but for most, solar is not an obvious solution. It’s deemed expensive, they can be serviced poorly, and public awareness is low.

To help tackle these issues and bring the discussion of solar to the forefront, the Power Agenda conference at Power Nigeria will dedicate a day of discussion to different aspects of the solar chain. Verticals such as rural, urban and hybrid solar will be covered, as well as a session on supporting solar in Nigeria and how pay-as-you-go and mobile payment systems are changing the power business model.

Some of the key speakers on the day are: Olu Ogunlela, co-Founder, Gridless Africa; Tinyan Ogiehor, technical advisor (Solar PV), Solar Nigeria Programme (UK DFID programme); Suleiman Yusuf, CEO, Blue Camel Energy; Ifeanyi Odoh, regional sales manager – solar business, Schneider Electric; and Wale Rafael Yusuff, head of sales – Nigeria, Clarke Energy.

The 2017 edition of Power Nigeria will be the largest to date and is set to attract over 100 exhibitors from 11 countries, offering visitors a first look of some of the latest products available on the market covering a range of products relating to power generation, transmission and distribution. This year, there has also been a significant increase in country pavilions from one to three with representation from Turkey, China and India.

Some of the standout exhibitors this year include Cummins, Polycab, GWB Energy, Schneider Electric, Sterling & Wilson and Skipper Seil.

Power Nigeria draws on the strengths of Informa Industrial Group’s geographical foothold in the Middle East and Africa through its partner events Electricx and Solar-Tec in Cairo, and Middle East Electricity in Dubai, which holds the title of world’s largest power event.

Power Nigeria will take place at a new purpose built exhibition venue in Lagos – Landmark Centre, Nigeria from the 5-7 September 2017. Visitor pre-registration can be done online at www.power-nigeria.com

 

from how we made it in Africa

29 Aug

eBay opens U.S. platform to Africa with MallforAfrica.com partnership

allforafrica.com

Americans can now buy African goods on eBay through the company’s partnership with MallforAfrica.com.

Starting this week, products from select vendors in six African countries are available on eBay’s U.S. shopping site. The collaboration starts in style, with opening merchandise categories of fashion, art, jewelry, and clothing.

For the new program, MallforAfrica selects the sellers and handles payments on its proprietary platform. DHL is the shipping partner. Online shoppers can browse the entire collection on eBay’s Mall for Africa Store.

The new online channel expands an existing relationship between the two e-commerce companies. In  2016, they launched the eBay Powered by MallforAfrica platform allowing U.S. vendors to sell in Africa.

“A year ago our focus was about how we could work with a partner to overcome shipping, payment, and trade barriers to offer eBay’s selection in Africa,” Sylvie de Wever, eBay’s General Manager of Latin America and US exports, told TechCrunch.

“If you think about our purpose, which is connecting millions of buyers and sellers around the world and creating economic opportunity, it makes sense to open up the American market to sellers in Africa,” she said.

To start, the program taps goods from merchants in Nigeria, Kenya, Ghana, South Africa, and Burundi, according to de Wever. “We’ll be adding more sellers and more countries,” she said.

On the selection of African vendors, “The main criteria are that the products be made in Africa and quality―making sure it’s a quality product that we can ship within the categories selected,” said MallforAfrica CEO Chris Folayan.

To ensure both, MallforAfrica created a new association, the Africa Made Product Standards(AMPS), to verify made in Africa status and merchandise standards. Initial vendors include African art and craft site Qeturahand accessory brand Eclectic Chique.

Both MallforAfrica’s Folayan and eBay’s de Wever underscored the partnership to sell select African products on eBay is not charity. “This is very much about expanding the reach of African sellers, enabling their platforms, and allowing them to earn and compete globally,” said de Wever.

Folayan sees value for the continent in connecting African sellers to the global digital market. “We’re going to help Africans get on the e-commerce roadmap and make sure people see there are amazing products coming out of Africa,” he said.

“The end result is not just artisans getting known, it’s about giving them a platform expand their businesses, to make money, to send their kids to school, to impact their families,” he added.

MallforAfrica was founded in 2011 to solve challenges global consumer goods companies face when entering African markets. With a unique payment and delivery system, it serves as a digital broker and logistics manager between U.S. retailers and African consumers. The venture has backing from UK private equity firm Helios Investment Partners and alliances with companies such as clothier Hawes and Curtis and department store Macy’s.

While digital sales revenue in Africa is expected to exceed $75 billion by 2025, there’s no reliable estimate of the potential marketplace for online African goods in the U.S., according to Chris Folayan.

Still, he’s optimistic. “We know this will be a pretty big market,” he said, noting demand at two levels. “There’s this wave of interest in African centric designs in mainstream fashion. You’ve seen brands such as Chanel and Dolce Gabbana elevate that. Then you have Africans in the U.S. who want to reconnect with their heritage.”

In addition to being one of the most educated demographics in America, Africans have become one of the fastest growing immigrant populations, according to data from Pew and the U.S. Census Bureau.

eBay’s new partnership has another interesting tech angle: the ability of e-commerce to leapfrog government trade policy.

The last major legislation expanding trade between the U.S. and Africa dates back to 2000. E-commerce partnerships don’t wait for congressional approval.

“We’ve seen people all over the world want to trade, regardless of regulation” said eBay’s Sylvie de Wever.

 

via techcrunch 

29 Aug

How to realistically start a business in Africa with little or no capital

business

The last decade has seen a tremendous rise in the number of young Africans venturing into business. Although that can be attributed to several factors, advancements in areas such as information and technology have certainly played a major role.

The internet has helped facilitate for an easier execution of tasks which were highly complicated not too long ago. For instance, anyone today can start an online business without any coding expertise or having to hire expensive developers; such a task can be easily accomplished using platforms like WordPress and Shopify.

Marketing campaigns of all magnitudes can be carried out by a non-marketer through social media. Accounting tasks can be performed by a non-accountant through Quickbooks. Information regarding anything can be quickly pulled up using a smartphone and some connectivity.

The challenges that many entrepreneurs are struggling to cope with are often money-related.

Starting a business may actually be the easy part, but how do you scale it? Let us look at a few strategies that you can adopt when starting a business in Africa with little or no capital.

Form strategic alliances

“Every mind needs friendly contact with other minds, for food of expansion and growth.” – Napoleon Hill, The Master Key to Riches.

A strategic alliance is a fundamental element that must be in place before any business can experience exponential growth. There’s only so far that one can go single-handedly. Strategic alliances may comprise of partners, mentors, advisors, skilled employees – essentially anyone whose association can potentially help the business achieve its objectives.

When starting a business in Africa with little or no money, you absolutely need the association of other people to help you grow. Strategic alliances create pools which are comprised of skills, knowledge and the experience of all the minds in the team. With such in place, you may have little reason to outsource work or seek external capital.

A mentor can serve the purpose of a paid consultant. A business partner can help with the internal operations. Another partner can help with marketing. And as the business scales, so do their perks and benefits.

Focus on bootstrapping

The idea of bootstrapping has always been a hot topic in the start-up world, but the concept is applicable to most businesses. What it means is essentially growing a company by only using its internal team and resources.

That means leveraging the skills of each team member instead of hiring, using personal savings as capital instead of seeking a loan, working from home instead of renting an office, etc.

Bootstrapping calls for entrepreneurs to make sacrifices until the company is stable and can afford to stand on its own feet. For instance, they may have to sell their personal belongings to raise money, do the door-to-door sales themselves, endure sleepless nights working, etc.

The idea is to do whatever it takes to get the venture up and running at a budget. Entrepreneurs that use this strategy to scale their operations may in the long run avoid having liabilities such as bank loans or investors that dictate every move.

If bootstrapping is no longer practical

The people closest to us in many cases would like to see us prosper. Some of them would not even mind chipping in if they know that it’s for a good cause. Asking friends and family for money is a daunting prospect for most people, but they are nonetheless a viable source of capital.

Many people fail at raising money from friends and family due to failure from their part in presenting well-defined proposals and business plans, including how they intend to repay their money. They usually present in a casual and informal manner – but that hardly does justice reflecting the seriousness of the matter.

You are more likely to win over the confidence and trust of your friends and family by presenting to them as you would to an actual investor.

Take advantage of free advertising and marketing

Many start-ups in Africa have failed to gain traction due to inadequate marketing budgets. Although marketing expenses are usually one of the highest, there are a number of ways to generate a buzz for without having to break bank.

Platforms like Google and Yahoo often give free ‘trial’ credit to new businesses. And what’s the catch? You just have to sign up to their marketing programmes. For instance, LinkedIn gives users US$50 advertising credit for signing up to ‘LinkedIn Marketing Solutions’.

Google Adwords gives $100 credit after signing up and spending $25, and so does Bing Ads and Yahoo Gemini. Perfect Audience gives $100 dollars just for signing up. That is almost $500 dollars in free advertising credit to help get you up and running.

Another avenue that can be used to advertise inexpensively is social media. From a marketing perspective, social media can represent a gathering of a company’s prospective customers in one convenient location. It really couldn’t get better than that.

Entrepreneurs can leverage social media to get their word out by building highly-targeted followings on platforms such as Facebook and Twitter, and then inducing their marketing messages directly to them.

Even paid social media campaigns often provide a better ROI than campaigns through other mediums. With a budget of $5 per day, Facebook can show an advertisement to an audience of up to 1,000 highly-targeted people.

We are fortunate to be living in an era that is so fertile for nurturing a small business in Africa. But here’s the thing; the easier it gets, the easier it will be for more people to board the bandwagon. That means competition can only get tighter every day. You are better of focusing on working things out using what you have and gaining an early advantage, rather than sitting back and making excuses for your shortcomings.

Emmanuel Soroba is the founder and CEO of FiveSok, editor-in-chief of GrowthStrategies101 and a growth hacker for start-ups and SMEs.

 

via how we made it in Africa