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AfCFTA and What it Means for e-Commerce

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Nigeria's e-commerce revenue

By Siyanda Makhubo

The current nature of international relations, which is marked by a surge in diverse (economic, political and socio-cultural) crises, demands the mobilisation of joint capacities of states and non-state actors (enterprises and individuals), to find a durable solution that would help to improve the living standard in African countries marks the founding reasons of the Africa Continental Free Trade Agreement (AfCFTA).

In line with agenda 2063 of the African Union (AU) which seeks to build the “Africa we want”, that is promoting intra-regional connectivity between capital cities by creating a single unified market, borders and air transportation network.

A conglomerate of varied states and industries will bring about a considerable shift in poverty alleviation, an influx in human movement via tourism, and a system that will work for women, thus promoting gender equality and women empowerment.

The AfCFTA is Africa’s blueprint and master plan for transforming Africa into the global powerhouse of the future. But what does that really mean for Africans and businesses most especially e-commerce like Jumia?

Prior to this initiative and till yet, Africa counts over fourteen economic blocs with eight recognized regional communities by the African Union. These include but are not limited to: the East African Community (EAC), Economic Community of West African States (ECOWAS), and; the Southern African Development Community (SADC) to name a few.

Many foreign to this concept will think that the AfCFTA will mean less safety for their country, borders and markets. However, the existence of these regional economic blocs may be seen by commentators as a hindrance to the development process of the African continent in its entirety on a continental level.

In reality, with these regional blocs, it is extremely difficult for sellers or enterprises of the East African Community (EAC) for instance in Kenya to easily trade with nations belonging to ECOWAS in Nigeria for instance. In reality, these regional blocs have different trading laws and agreements, using all different currencies with different levels of development and GNPs.

The priority of these economic blocs is to ensure continuous trade among its members, and promote diplomatic ties and security aspects among others. Nevertheless, this “security search” hinders the potential economic growth of the continent.

A perfect example is the case of e-commerce services. Under normal circumstances, e-commerce has delivery capacities of 24 hours to 3 business days on national territories where they operate depending on their operation sites and the land surface of the given country.

This means that one can expect their goods in a relatively short period of time for a much cheaper price compared to someone found in a neighbouring country and worst still one found in a different regional economic community.

Some challenges:

If Jumia, the leading e-commerce platform, for example, operates in Kenya and an online customer from Nigeria wishes to make transactions from their platform, they will generally receive their purchase after a relatively long period and with expensive constraints or maybe never (if there is no air connection) than if they were in Kenya.

This difference exists as a result of economic blockages put in place by regional economic communities. They include custom duties, tax, bureaucracy and just to cite a few. Since the cost of customs duties cannot be incurred by the producer, these costs are pushed down to the final consumer.

In nations where VAT (value-added tax) exists, consumers can see themselves purchasing a good for 1.7 times its original price. This is especially true for the 17 African States using the OHADA (Organization for the Harmonization of Business Law in Africa) accounting system. This generally has devastating effects on consumers who spend more in economies where they earn much less, and also on companies who find themselves shutting down due to lots of bureaucracy to follow and the high cost of existence in some regional blocs.

The Africa Regional Integration Index (ARII) in partnership with the African Union has a composite index that assesses how countries and regional economic communities are making progress towards their integration agendas based on sixteen indicators, grouped into five dimensions. The ARII also measures the state of regional integration of the continent as a whole with finality to make Africa more connected for businesses and persons.

The five dimensions are in respect to the free movement of people; infrastructure integration; macroeconomic integration; productive integration, and; trade integration. They are all pivotal for the success of e-commerce in Africa in particular and for development in general. Free movement means people will move faster and more efficiently thus promoting tourism and interculturalism.

Infrastructure integration means more route connectivity between countries (roads, railways and ports) and also fewer customs duties and bureaucracy. Macroeconomic integration takes into consideration the stabilization of economies, currencies and international conventions guiding the laws of trade. Productive integration supposes quality and quantity in terms of always equalizing demand and supply with respect to each country’s desires.

Lastly, trade integration means the elimination of taxes, embargoes, and the eventual increase in government subsidies to adapt to international trends and requirements.

Looking Ahead

Experts agree that regional integration expands markets and trade, enhances cooperation, mitigates risk, and fosters socio-cultural cooperation and regional stability.

Regional integration has also been shown to maximize the benefits of globalization while countering its negative effects and stimulating development in least-developed countries by improving productive capacity and encouraging investments in those pieces of infrastructure that hold the most economic potential.

This also means an opportunity for e-commerce to leverage profit margins and improve supply chain management on the continent. It is also an opportunity to foster African industries, making African produce more available and accessible to all.

Moving further, this continental agreement coupled with the internet penetration of the continent will exponentially propel e-commerce, as more Africans are beginning to cherish online shopping and home delivery services.

According to the UN International Telecommunication Union’s (ITU) study ‘Connecting Humanity’, this is a representative market of over 700 million persons connected to the internet. A joint African market will also make Africa the largest free continental free trade area of the world, with an investment of about $97 billion in internet infrastructure.

The case made is that Africa will be a thriving market for e-commerce as well as e-commerce companies that will have to make available the necessary infrastructure for business.

Historically, working for the establishment of a common sub-regional market zone was necessary for the encounter of people located in the same regions.

It was also important for the reinvention of social cohesion that was traditionally observed in cultural cohabitation, local or traditional rediscovery and peaceful coexistence in sub-regional parts of the continent. It is of pivotal necessity that states accelerate the implementation of the AfCFTA for a sustainable Africa, which is peaceful and which is economically viable and competitive in the international arena.

E-Commerce as a solution to integration:

The argument made is that the AfCFTA offers the solution for an integrated African market by way of trade through economic regions and countries. This inter-trading through such platforms fosters countries and economic regions to have common regulatory frameworks, policies and laws which will speak to a coherent African market.

It is also true that digitalisation and the AfCFTA will offer new and existing SMEs the opportunity to not only expand nationally but also throughout the continent beyond existing digital divides as a result of existing laws and regulations. Legislators in each country, therefore, have a responsibility to align with the AfCFTA so as to bridge these digital divides.

Siyanda Makhubo is the Group Public Relations and Communications Manager for Jumia since December 2021. He holds a Bachelor’s Degree in Economics, Law and Sociology, an Honours Degree in Marketing and Communications, a Post Graduate Diploma in Business Administration and is currently studying for an MBA with the University of the Witswatersrand.

He has more than seven years of professional experience in Communication, Risk and Reputation, Crisis Communication and PR Advocacy both in the Public and Private sectors. His interests lie in the subject of utilizing the PR and Communications system for social justice

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Schneider Electric: Driving the Digital Transformation of Nigeria with Augmented Reality

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Schneider Electric

The future impact of Augmented Reality (AR) will significantly transform businesses and consumer marketplaces in Nigeria, should its adoption be accelerated across various industries and platforms, says Schneider Electric.

As more breakthroughs in technology continue to take root, the group has remained consistent in sensitizing its partners on the potential of AR, being one of the keys to digital transformation in the industry. Companies must therefore capitalize on AR and pursue the opportunities that can significantly boost operational productivity and enhance efficiency.

Speaking on this innovative technology, Belema Koleoso, Territory Technology Lead, Schneider Electric, says although much progress has been made since 2019 when Schneider Electric’s AR technology EcoStruxure Augmented Operator Advisor (EAO) was launched as a global hero offer, which works to enhance data accessibility for quicker and more accurate decision making, there remains a lethargy in the Nigerian market to adopt this technology.

Company campaigns have been run to sensitize clients to understand how EAO uses AR technology to optimize the operation and maintenance of industrial sites and equipment, AR aids effectiveness, helps to optimize human assets, and bridges the prevalent generational skill gaps. In this regard, she specifically highlighted the workforce crises that Schneider Electric foresees in the next 5-6 years, with the aged industrial population as the search for well-trained workers sometimes poses a challenge.

Belema says with AR, companies do not need to lose the experience plants cultivate with the exit of personnel, instead, years of training and experience can be “retained” through iteration of workforce turnover. For example, templates, assets, and manuals can be aggregated into the EOA application, customizable by the client; it puts real-time information at your fingertips, whenever and wherever it is needed, enabling operators to superimpose current data and virtual objects onto a cabinet, machine, or plant. This software combines contextual and local dynamic information for mobile users, enabling them to experience a fusion of the physical, real-life environment with virtual objects. It becomes a mobile work buddy for employees commencing the learning curve and in all reduces operational cost while increasing plant operational efficiency. This ensures that people who are put into the system meet the experience that others who passed through the system left behind.

AR presents completely new ways of executing tasks, with instant diagnosis, contactless maintenance, increased efficiency, and lower cost. Industries, including construction, aviation, consumer packaged goods, energy and chemical, mining and minerals etc., can use EOA to enhance their operations. The cloud-based software rides on any controller to learn activities and aggregates assets, moving past proprietary original equipment manufacturer parent protocols to focus on the tasks.

Augmented Reality

 

 

 

 

 

 

 

 

 

 

 

 

 

Schneider Electric believes increased industry leaders across sectors can therefore use EOA to their advantage, where data drives processes and decisions metamorphosizing to “smart decision makers,” riding on data to make optimal decisions smarter and faster.

In retrospect, Belema says the pre-covid in Nigeria technologies like AR were seen as typically “nice to have.” She says she highly anticipates a time when more people will understand the immense benefit of this innovation and evaluate this technology as a necessity. “Often, the feedback on this is a nice-to-have, after a review of what AR offers. But I will push for people to look at it like this – When you have something that will optimize your processes, it moves from being a nice-to-have to a must-have.”

To drive this renewed mindset, the AR expert opines policies, such as the environmental sustainability policy, can bolster digital transformation. Stakeholders would need to advocate an optimized use of energy sustainably. Enforcement of which would naturally drive the adoption of technology across industries quicker.

“When people see that sustainability policies are enforced, for example, you are penalized for not meeting a target, or incentivized for meeting a target; you would see that the case would be different. Naturally, people will begin to adopt technology to meet their goals.”

She also advocates for Nigerians to consider AR as a total cost of investment that enhances optimal output, as customers are more prone to adopt a baseline approach, where they are satisfied with running their operations minimally without incurring additional costs.

With technology improving and becoming more widely available, it is undeniable that AR will become essential for businesses to thrive in the upcoming years. Schneider is optimistic that its position as a thought leader and industry partner in the digital transformation of energy management and automation is about to gain new ground, enabling the emergence of a new landscape of energy, paradigm shifts for the industry, and a revolutionized experience.

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Climate Change: Between Harriman and Kayanja Ideologies

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climate change

By Jerome-Mario Chijioke Utomi

The debate on climate change is among the most presently discussed topics on the earth’s surface. All these years, I have, going by the commentaries from the Western world, believed that Africa’s non-commitment to the call for global action on climate change was responsible for the real and imaginary challenges confronting the continent.

Making this perceived climate change challenge look real was the recent news report that to tackle the problems, the World Bank Group has committed about $70 billion and urged governments of different nations to set up structures to engage and access the fund.

However, such a belief system recently underwent a positive transformation while listening to Professor Tosan Harriman of Bayero University, Kano, Nigeria.

Tosan, who spoke at the GbaramatuVoice Niger Delta Economic Discourse series held in Warri, Delta State, among other things, said; “the truth is this, we saw the hypocrisy of these people (Western worlds) recently when, because of the Ukraine-Russian war, they are not talking anymore about clean energy, rather, we see them go back again focusing on coal, getting out coal to drive the heat.”

“Africa cannot give away its resources because Africa doesn’t need the English of climate change. Our continent is blessed, our continent has resources, and our continent is galvanizing on those resources to ensure there’s a global world order. Taking Africa’s resources from Africa is like committing Africa to another new colonial tendency that will finally incapacitate and make it useful in the global situation of things, and that’s exactly what my argument has been.

“So, quickly, therefore, let’s have our mindset reconstructed about the fact that we are not a danger to Europe and America; we are not a danger to politics of climate change. The only grammar behind climate change is the economy.

“If they take from you the resources that offered you a comparative advantage, it opens them up to their economic value in the context of a global chain, in the context of a global productivity chain, it opens them up to their economic value where they now begin to sell clean energy to people like us in Africa who don’t need it. It’s so important we have these facts properly straightened out before we get into this other issue.

“The world has been talking about clean energy, what we call resistance against greenhouse gas emission. The kind of carbon deducted from the exploration of our crude oil, those are the carbons that we have, and that’s what the world has been talking about. They needed clean energy that would help the Arctic Circle maintain its height and then help the entire ecosystem to be properly balanced along the lines of certain determination that they thought had been there from the beginning and all of that.

“In Europe and America, if you actually desire clean energy, you should not in the 21st century be talking about coal because coal is all about greenhouse gas emission. If you go to the home of the Queen, you will see them using coal, and I keep making this argument that if Norway as a nation has the level of oil we have, nobody will be talking about greenhouse gas, nobody will be talking about climate change, and I have always held the position that every nation should be allowed to grow within the context of his own resources.”

He said that the best the world can do, which is an issue he raised at the Cairo 27th conference recently held, is that we should look at the conditions of African nations, what we call the dependent nations and all of that, dependent on the global world situation and all of that.

“We should look at their conditions, and then we can’t take them; we can’t take from them the issues that directly propel their sustenance; we can’t be talking of climate change when the entire nation of Africa depends on what creates a greenhouse. The best we can do is to scientifically, now begin to look at this resource and then redesign it in such a way as to mitigate the fears that are already being expressed by these other groups fighting for climate change. Those are the issues we raised, and it’s so profound that the world needs to hear us,” he concluded.

Comparatively, while Professor Tosan’s ideology/argument made a whole lot of sense to me, I, however, still recall how Mr Ronald Kayanja, Director of the United Nations Information Centre (UNIC), spoke on the same topic (climate change) but maintained a different view.

This was at a function on Friday, September 20, 2019, in Lagos to mark the year’s International Day of Peace, which had as a theme Climate Action For Peace. Kayanja’s understanding and postulations about climate change were the direct opposite of Tosan’s argument.

Apart from Kayanjas’ definition of climate change as changes in these weather patterns over several decades or more which make a place become warmer or receive more rain or get drier, what made the lecture crucial was the awareness of the dangers of and warning on the urgent need to address climate changes which he said have become even clearer with the release of a major report in October 2018 by the world-leading scientific body for the assessment of climate change, the Intergovernmental Panel on Climate Change(IPCC), warning that in order to avoid catastrophe, we must not reach 1.5 C and 2oC.

In a similar style, Kayanja in that presentation used an analytical method and properly framed arguments to underline how; the current conflict in North-East Nigeria is not unrelated to the changes in climate in that region over time. As well as provides a link as to how; the climate change challenge also sets the stage for the farmer and herder violence witnessed in parts of West Africa and many countries that face violent conflicts in Africa: Somalia, the Democratic Republic of the Congo, South Sudan, Sudan (Darfur), Mali and the Central Africa Republic.

He argued that local tensions over access to food and water resources could spill over into neighbouring countries as people seek to find additional resources and safety – placing more strain on the resources of those countries, which could amplify tensions. In these instances, climate change does not directly cause conflict over diminishing access to resources, but it multiplies underlying natural resource stresses, increasing the chances of a conflict.

As to what should be done to this appalling situation, the UN boss said that the UN Secretary-General had made climate action a major part of his global advocacy, calling on all member states to double their ambition to save our planet.

For me, as the debate rages, it is important to underline that Kayanja’s position looks alluring in principle. But then, this piece holds the opinion that African leaders and policymakers must not allow the propositions canvassed by Tosan go with political winds.

Utomi Jerome-Mario is the Programme Coordinator (Media and Policy) at Social and Economic Justice Advocacy (SEJA), Lagos. He can be reached via jeromeutomi@yahoo.com/08032725374

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Economy: Simplistic Thinking in Africa and African American Communities

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African American communities

By Nneka Okumazie

There is caution in African American communities not to criticise each other to avoid appearing to take the side of others against the community. This agreement, useful in a few cases, has become part of the problem of the community where there is an appearance to condone horrible things.

If the problem is to avoid sounding like others, then another channel to criticize but not sound like others should have been sought.

In the community, the killings of the same kind, even for some who have made it, sometimes over absurd things, meets mute responses or fierce firestorm from the leaders of the community.

Do not criticize has allowed all kinds of comments and behaviours to fester in the community, and it keeps getting worse, but everyone minds their business because black people come first even if it is evil.

There is a limit to protests. There is a limit to heightened sensitivity over the past. There is a limit to ignoring internal responsibility. Proclamation of emancipation is a starting point, but every other way, as a people, to ensure more strength has to be sought. Civil rights are great but there is a need for the kind of economic success of Asia to be strong and not act or be seen as a victim because victimhood is limited.

There is a limit to entitlement for the sake of it, in a time when economic concerns are a priority for all. An individual success story is already old for a people with the majority on the lower economic and social side. A charity that benefits a small number of people in a small community is negligible for people. Speaking out for the sake of it, against oppression by other races, is also limited for a successful black. Whatever feel-good story on history or origin may promote fantasy, but ensures backwardness in reality.

As more blacks, everywhere, are getting prominent and failing in some positions, the other races have been able to lob criticisms without getting racial, something that many blacks do not attempt for each other.

There are streams of simplistic thinking that are static ends for a people, and breaking out of it, as a people is important for progress.

In Africa, most people keep saying the government is the problem or corruption. But there are different countries, structures, regions, states, governments, etc. yet there is hardly a major success story comparable with some in Asia.

Asian success is different people in different sectors making progress ahead and above the government so that government gets to adopt those into policy. If everyone with some responsibility or a few in different fields pursues major progress, the government does not have the power to crush all of them. The government would have to adopt or enable some. The excellence that made those would have them draw others. The government too would promote some policies whose success or adoption would meet the advancement the people are seeking, so it would work.

But what is obvious in most African countries is that the government often has the best answer, which is often really low, so from other sectors, things are lower, so most things are worse. And whenever there is a crisis, it is even far worse, because those who could try have failed, so left to the government, everything goes down.

Government is not the problem in any African country so long they have sectors and people who hold responsibility. Simplistic thinking says it is government.

Some have also said that they should use African religions for swearing officials into the office to prevent corruption. If enacted, some people would find a way around it, so it solves nothing.

There are desperate Africans who migrate to other continents, by the sea, desert and other ways, to find survival. Their move is parallel to professionals who run away too, because the place is bad, as a belief, not because they are actually in some dire situation.

There is a comment on brain drain, but brain drain is not a problem for professionals who are replaceable. Many of them would not do better than what government would do, so leaving or staying makes little difference, so no matter the certificates or certifications, it is not a brain drain if their work had not been consistently aiming at progress.

For many, success is seen as location or position when success is time or other things not related to material or resources. The things that are needed for progress, like courage, fairness, sincerity, honour, and selfless diligence for all that is not available, makes many to point to the wrong things.

[Psalm 144:4, Man is like to vanity: his days are as a shadow that passeth away.]

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