11 Oct

Islamic finance could be the answer to Africa’s growth problems

Access to finance and infrastructure funding can help Africa’s economic development journey. Islamic finance can increase access to finance and can help bridge the infrastructure gap in Africa.

The G20’s German Presidency introduced a new initiative for sustainable economic development in Africa known as the G20 African Partnership. The partnership offers various tools and strategies for Africa’s development and the rapid growth of Islamic finance in Africa offers a great opportunity to support it.

What is the G20 Africa Partnership?

Looking at sustainable economic development in Africa in a holistic way, the partnership seeks to bring together diverse stakeholders on one platform, including G20 countries, multilateral development finance institutions, private investors and international organisations, all with an aim “to support private investment, sustainable infrastructure and employment in African countries”. In June 2017, the G20 welcomed 10 African countries to join the Compact with Africa – a country-specific investment framework as part of the partnership to advance various existing regional and global initiatives focused on Africa.

Islamic Finance today

The G20 Antalya Summit supported Islamic finance “to facilitate better intermediation for SMEs and infrastructure investment”, referring to it as asset-based finance. B20’s Infrastructure and Financing Growth Taskforce Policy Paper 2017 considers Islamic finance to be one of the key tools that can help boost sustainable economic development in Africa. It is already a US$2tn industry and most global financial institutions are part of this niche market. With its unique asset-oriented structure, Islamic finance is quite relevant to the financing of large infrastructure projects.

Islamic finance transactions do not include interest but instead, use risk sharing to justify earning of profit. Other main considerations include avoiding businesses that could be deemed as harmful, such as tobacco, liquor, pornography, and those that deal with excessive uncertainty, such as gambling. Islamic finance investments also avoid highly leveraged businesses as payment of interest is one of the main financial activities for such businesses.

Read more: Islamic finance could be the answer to Africa’s growth problems

06 Oct

Commercial Bank of Africa (CBA) secures Sh9bn funding by Africa bank

Commercial Bank of Africa (CBA), the country’s largest privately-owned lender, has secured a Sh9.297 billion ($90 million) facility from the African Development Bank (AfDB) for on-lending largely to credit-starved small and medium-sized enterprises.
The two institutions signed this important deal on 5th October.

About $50 million (Sh5.17 billion) of the cash is in the form of a line of credit, while the remainder $40 million (Sh4.13 billion) has been committed under the Trade Finance Line of Credit (TFLoC).

“The funding will be geared towards helping finance small and medium enterprises (SMEs) and local corporates involved in value-addition,” African Development Bank said. The facility targets firms in some of the sectors which have suffered a drop in credit, according to the latest data from the Central Bank of Kenya.

Commercial Bank of Africa, associated with the wealthy Kenyatta family, will be extending the funds to firms in trade, manufacturing, agriculture, infrastructure, transport, and construction. The deal comes at a time when year-on-year growth in private sector credit has slowed to 1.6 per cent in August from 21 per cent in August 2015.

Risk-averse banks have blamed the year-old cap on loan charges and rising non-performance of loans for the sharp slowdown which has hit dominant SMEs hardest.
NPLs rose to 10.7 per cent, or more than Sh250 billion, in August of gross loans from 9.9 per cent in June largely due to layoffs in the private sector and delayed payments to suppliers by the government, latest CBK data shows.

Most banks are expected to experience a drop in their capital base when the International Financial Reporting Standards (IFRS) 9 take effect next January.
The new rules require lenders to set aside cash for expected rather than incurred (which they already do under CBK’s prudential guidelines) credit loss based on historical loan performance data.

[Via] Commercial Bank of Africa secures Sh9bn funding by Africa bank

03 Oct

Fintech space – what you need to know from a legal perspective

The fast-growing fintech industry is best described as the use of technology in the financial sector to assist consumers and other parties involved in that space. Essentially, entrepreneurs use software and modern technology to “disrupt” the way that commerce is done in the financial sector.

A significant amount of fintech disruption has occurred in South Africa over the last few years, as devices such as smartphones have become increasingly accessible to the public. In fact, it has become such a fast-growing industry that UCT now offers a “fintech degree” which is a master’s in data science, specialising in financial technology. This is a significant sign that fintech is becoming increasingly important in the South African context.

Some successful South African start-ups in the fintech arena that are worth mentioning are SnapScan (a point-of-sale solution using cellular phones), Yoco (a point-of-sale solution using very simplified tech to allow credit/ debit card sales for vendors of any size) and Luno (a Bitcoin exchange and Bitcoin wallet service).

Due to the vast number of lucrative opportunities in the fintech industry, it has arguably become saturated with start-ups who are trying to enter it with similar or overlapping initiatives. The fintech gold rush is alive and well.

Another challenge within the fintech space is legal compliance. These initiatives are often regulated by legal principles that are not cognisant of the nuances of the latest developments in commerce. This means that the legislators are constantly playing catch-up and the pace is getting faster every day. This has resulted in the cost of legal advice being exceptionally expensive. Attorneys often have to liaise with regulatory bodies to get certainty as to where the regulatory framework around an initiative is heading, as the existing laws may be a few steps behind the latest developments.

Here are four tips for entrepreneurs or start-ups on how to overcome the legal challenges of entering the fintech market.

Read more: Entering the fintech space – what you need to know from a legal perspective

03 Oct

Meet Mwiya Musokotwane, the CEO of Thebe Investment Management

Mwiya Musokotwane is the CEO of Zambia-based investment firm Thebe Investment Management. The company’s key initiative is Nkwashi, a planned 3,100-acre satellite town 36km east of the capital Lusaka.

What entrepreneurial achievement are you most proud of?

The one thing I am most proud of is building a great team that is able to manage any challenge that they face; always be entrepreneurial in their outlook; always relish new experiences and challenges; and that are very dynamic and relentless. What is probably true of most great and enduring companies is that they have a great team around them – people who are able to really forge ahead and build a great corporate culture, people who buy into the company’s values, people who buy into the company’s vision, and, where need be, as a team can reinterpret that vision as time progresses and bring new life to it in each generation or in each cycle of the business environment.

And for me that’s my greatest achievement and I feel, especially being a millennial, that the other millennials I have around me are really class A. In a context like Zambia, that is very hard, because any person who operates in Zambia will tell you that the biggest challenge they face, outside of access to capital, is finding the right people.

Describe your greatest weakness as an entrepreneur.

I’m an introverted person – very logical in basically everything I do, and at the same time very perceiving. And so these characteristics are both a strength and a weakness for me in that I find it very easy to rationalise ideas and quickly figure out whether something is going to work or something is going to fail. But at the same time my process is extremely iterative in that I think very externally. I will bump ideas around a lot of people before I settle on a particular path forward.

Read more: The journey so far: Mwiya Musokotwane, CEO, Thebe Investment Management

21 Sep

Africa: Overcoming the challenges for manufacturing

During the period of relative stability since the start of this century, Africa has experienced rapid growth and has indeed outperformed global growth trends. As a result, its gross domestic product (GDP) has significantly increased and has brought wealth to many countries. However, most African countries that have enjoyed high growth recently, are mainly mono economies. Blessed with many natural resources, their economies have greatly improved, but they still remain at a subsistence level and have not moved beyond.

Despite the high growth rate, industrialisation in Africa has barely taken root. Besides South Africa, the most industrialised African country, and barely a few others, large-scale industrial manufacturing is practically nonexistent. Thus, for Africa to grow to the next level, it is critical to examine the reasons why the continent does not seem able to gather momentum for high value-added manufacturing activities.

Political stability and relevant economic strategy

The main reason cited by foreign and domestic investors for putting off or even avoiding major investments in the manufacturing sector, is the perceived lack of political stability in Africa. While the development of the capital-intensive manufacturing sector requires a long investment cycle, the political lifecycle may be very short-term. As a result, it is very difficult for the government of the day to implement a coherent long-term economic strategy with all the relevant economic frameworks and policies that will only bear fruit long after their term in office has expired.

Although Africa has great potential to develop its manufacturing sector, the political leaders need to have a clear economic vision to develop sectors in which their respective countries have sources of competitive advantage. Without a conducive environment supported by the relevant economic framework, there are no significant incentives for potential investors to commit themselves.

Most of the time, political factors trump economic factors. African political leaders conduct their own type of populism, where they need to satisfy their majority supporters to win elections and remain in power.

Read more: Overcoming the challenges for manufacturing in Africa

29 Aug

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


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

22 Aug

Nigeria: Government Joins 71 Countries to Combat Tax Evasion

Combat Tax Evasion

Lagos — Nigeria has joined 71 other countries to combat tax evasion as the Federal Inland Revenue Service has signed two major multilateral instruments.

These instruments are the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) and the Common Reporting Standard (CRS) Multilateral Competent Authority Agreement‎ (CRS MCAA).

Chairman, Mr. Tunde Fowler, Executive Fowler signed the agreements on behalf of Nigeria in Paris, with Mr. Ben Dickinson, head of global relations and development division of the Organisation for Economic Cooperation and Development (OECD), in attendance.

A statement issued by Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration (CTPA), said the signing of the agreements makes Nigeria the 71st jurisdiction to sign the MLI and the 94th jurisdiction to join the CRS MCAA.

The agreements will give Nigeria automatic exchange of tax and financial information among 101 tax jurisdictions and enhance the country’s ability and those of the other countries to contain tax avoidance and evasion as well as share financial data.

The MLI is a legal instrument designed to prevent Base Erosion and Profit Shifting (BEPS) by multinational enterprises. It allows jurisdictions to transpose results from the OECD/G20 BEPS Project, including minimum standards to implement in tax treaties to prevent treaty abuse and “treaty shopping”, into their existing networks of bilateral tax treaties in a quick and efficient manner.

The text of the MLI, the explanatory statement and background information are available on OECD website along with the list of the 71 jurisdictions participating in the MLI and the position of each signatory under the MLI.

The CRS MCAA is a multilateral competent authority agreement based on Article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which aims to implement the automatic exchange of financial account information pursuant to the OECD/G20 Common Reporting Standard (CRS) and to deliver the automatic exchange of CRS information between 101 jurisdictions by 2018.

The text of the CRS MCAA, background information and the list of the 94 signatories are available on OECD website. Saint-Amans explained that the agreements will provide “automatic exchange of tax and financial information among 101 tax jurisdictions and enhance the ability of countries to contain tax avoidance and evasion.

It would be recalled that Fowler has said with the introduction of Voluntary Assets and Income Declaration Scheme (VAIDS), no Nigerian can evade tax payment.

According to him, the board has received positive response so far on the scheme. To improve tax compliance, the Federal Government said tax offenders stand to enjoy 29 per cent waiver on overdue taxes if they take advantage of VAIDS. The VAIDS programme is aimed at reducing tax payers’ liability and creates more awareness on the statutory function of every working citizen to pay tax.

The scheme which started July 1, offers a window for those who, before now, have not complied with extant tax regulations to remedy their positions by providing them limited amnesty to enable voluntary declaration and payment of liabilities.

source from allAfrica

08 Aug

Earthport partners with Access Bank in Africa

Cross-border payment network Earthport partners with Access Bank

Cross-border payment network Earthport announced on Monday that it partnered with Access Bank, one of Africa’s foremost financial institutions, to provide delivery of cross-border payment services into Nigeria.

The AIM-traded firm described Access Bank as one of Nigeria’s ‘leading financial institutions’, and had a strong focus on servicing the Nigerian diaspora.

“It is with great pleasure that Access Bank is partnering with Earthport, a reputable global payment network, to meet the needs of our customers who require a sound and reliable international payment platform,” said Access Bank Nigeria executive director Victor Etuokwu.

“As a top player in the remittance industry in Nigeria, our wide branch network and large customer base will be invaluable to this partnership and we are confident that this relationship will be a mutually beneficial one to both parties.

“This alliance also supports the bank’s vision of being ‘the world’s most respected African bank’ and our mantra of speed, service and services.”

Earthport said the new payment channel had been created in direct response to the need for more effective servicing of remittances and low-value payments sourced from outside the country, which now totalled an estimated $19bn per year, representing 4.7% of the country’s GDP.

The partnership was part of Earthport’s longer term strategy of expansion into the African continent.

“We are delighted to be partnering with Access Bank to extend our global payment network into Nigeria, which is undergoing a rapid transformation,” said Earthport CEO Hank Uberoi.

“With this comes a growing demand for efficient cross-border payment services, which Earthport will deliver to this important market, together with innovative solutions for financial inclusion.

“This is also a significant step in the expansion of Earthport’s global footprint.”

via digitallook

08 Aug

Senegal start-up trains young coders

Senegal starts training young coders
Senegal’s tech scene has been slow to get off the ground due to a lack of qualified coders. But a locally-run company is trying to change that, while also helping young people find jobs.
Local tech start-ups are tackling day-to-day conveniences in the capital, Dakar. Firefly, a digital advertising company, places TV screens in public buses, but has struggled to find qualified web and mobile app developers in Senegal.

“They are trained in technologies we do not work with,” explains Mafal Lo, the co-founder of Firefly. “For example, all engineering schools in Dakar work in Java. We work mostly with PHP and Python, with new front-end technologies like Bootstrap. These are not things they learn in school.”

Until recently, that is.

At Volkeno, students learn web development, digital marketing or graphic design. At the end of the one-month training programme, they will spend two months interning with a local company.

The classes are free. Volkeno is supported by companies like Firefly in exchange for hiring interns. At least 15 of those interns have landed full-time contracts.

CEO Abdoul Khadre Diallo initially set up Volkeno to provide tech services to local entrepreneurs. The training programme was launched later when he realised none of his interns were sufficiently qualified.

“Here, young people are not encouraged to be interested in these skills. Most schools remain too classical. The training is too classical. You see schools where in five years, there is no decent practical training, in my opinion,” says IT professor Babacar Fall who taught the workshop in St. Louis.

There are efforts to change that. At a coding workshop in the northern city of St. Louis, high school students are introduced to coding and web development.

The Next Einstein Forum’s Africa Science Week is held in 13 African countries to promote interest in STEM fields, science, technology, engineering and mathematics.

“For me, the problem lies in the content of university courses,” Fall says. “Because you can start by teaching HTML, but then you evolve and teach HTML5. For me, we must simply update everything.”

Volkeno has registered more than 40 functioning start-ups in Dakar, all of which operate through websites and mobile applications.

“If you are trained in technology, you can find work after you graduate,” explains Fatim Sarah Kaita, a digital marketing trainee at Volkeno. “Because it is very difficult to find internships and everything here, and your relations play a big role. But for example, if you learn programming you can set up your own project, create an application. If you know digital marketing, you can do all the promotion yourself, so it is important to get training.”

The founder of Senegal’s next big start-up may be sitting right here in this room. – VOA

Source from HowWeMadeItInAfrica

08 Aug

Nigeria: Govt Announces 27 Industries to Enjoy Tax Break Under Pioneer Status (Full List)

The federal Nigerian government on Monday released the full list of the 27 key industries and products who will enjoy a tax break

The federal Nigerian government on Monday released the full list of the 27 key industries and products who will enjoy a tax break, being included in the revised list of ‘pioneer status’ incentives for prospective investors.

At the end of the meeting of the Executive Council of the Federation, FEC, last week, the Minister of Industry, Trade and Investment, Okechukwu Enelamah, disclosed the approval given to the 27 industries.

Mr. Enelamah did not, however, list the 27 industries.

The Minister of Information and Culture, Lai Mohammed, later confirmed that the creative industry was among the 27.

Earlier, the trade and investment ministry announced the lifting of the administrative suspension on processing pioneer status incentives, PSI, applications for prospective investors in the country.

Some of the benefits of the pioneer status include tax relief, mainly for corporate income tax.

Here is the full list of the 27 industries to enjoy the pioneer status.

Mining and processing of coal;

Processing and preservation of meat/poultry and production of meat/poultry products;

Manufacture of starches and starch products;

Processing of cocoa;

Manufacture of animal feeds;

Tanning and dressing of Leather;

Manufacture of leather footwear, luggage and handbags;

Manufacture of household and personal hygiene paper products;

Manufacture of paints, vanishes and printing ink;

Manufacture of plastic products (builders’ plastic ware) and moulds;

Manufacture of batteries and accumulators;

Manufacture of steam generators;

Manufacture of railway locomotives, wagons and rolling stock;

Manufacture of metal-forming machinery and machine tools;

Manufacture of machinery for metallurgy;

Manufacture of machinery for food and beverage processing;

Manufacture of machinery for textile, apparel and leather production;

Manufacture of machinery for paper and paperboard production;

Manufacture of plastics and rubber machinery;

Waste treatment, disposal and material recovery;

E-commerce services;

Software development and publishing;

Motion picture, video and television programme production, distribution, exhibition and photography;

Music production, publishing and distribution;

Real estate investment vehicles under the Investments and Securities Act;

Mortgage backed securities under the Investments and Securities Act; and

Business process outsourcing

Via AllAfrica