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Why Now Is The Time To Invest In African E-commerce

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Although Africa is all too often viewed by investors and the public at large as being the “dark continent”, more often than not, they are letting prejudices and misconceptions cloud their judgment about some of the most exciting investment destinations available. In 2018 alone, six of the ten fastest growing economies in the world were in the African continent.

This prejudice is compounded by the natural tendency for investors to invest in what they know best and are most familiar with, which is often what is in their own country. Globalization has, however, made markets more interconnected, and distance is becoming less of the obstacle it once was.

The continent is blessed with strong demographics, considerable natural resources, and increasingly, a more stable political and investment environment for multinationals to operate within. Even traditional hindrances such as poor infrastructure can be viewed as a potential opportunity, particularly in the area of financial services and e-commerce.

READ MORE | Fewer Billionaires, Poorer Billionaires On African Continent In 2019

Jiji, is the largest classifieds business marketplace in Nigeria, it was started from scratch five years ago, by a group of seasoned e-commerce professionals. With a market of 200 million people, Nigeria provides enormous upside should a business take off. The horizontal classified business model (any online business using http) does, according to Goldman Sachs, offer one of the most attractive investment models in the world, along with search engines and social networks.

It’s not hard to see why it’s such an attractive model, when the “winner takes it all” model is applied, in certain markets, the number one online classifieds controls over 80% of market share. The size of earnings opportunity equals 6 b.p. of the national GDP with 60% of long-term EBITDA margin. It is also an asset-light business model that requires minimal investment in heavy machinery and ensures high cash flow conversion.

The potential upside to the classified business model is particularly evident in a market such as Nigeria that has a young population of just over 200 million people. Nigeria is a mobile-only country (where 90% of traffic is on mobile web and is rapidly shifting to apps) with high and growing Internet penetration. In Africa, classifieds provide the ideal platform for e-commerce, as it enables people to buy and sell both second-hand goods and new ones.

Over the course of the last five years, Jiji has become the largest classifieds marketplace in Nigeria. The platform has just over 6 million unique active monthly users and more than 50,000 professional sellers listing over one million items. In 2018, the Jiji app was rated number one by Android users in the Nigerian shopping category, it is currently the highest rated app in Nigerian e-commerce.

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Having cemented its leading position in Nigeria, the team have set their sights on expanding into new African markets, and recently decided to redirect OLX users in Nigeria to Jiji and to acquire OLX businesses in Kenya, Ghana, Uganda, and Tanzania. After the transaction is completed, Jiji will have a presence in five markets, with 300 million people.

In a couple of years, Jiji’s monthly audience is expected to cross the threshold of 10 million users which will make it one of the largest classifieds by traffic. Jiji’s ambition is to build the biggest Africa-based classifieds business, creating a new retail experience for Africa’s fastest-developing countries with a combined population of 300 million.

The deal will allow OLX users in these countries to benefit from Jiji’s market-leading products and services. OLX’s reach combined with Jiji’s own proprietary search and delivery algorithms, will give users a radically streamlined experience and ensure the experience of buying and selling goods more convenient and transparent than ever before.

Africa has in the past been viewed very negatively by potential investors and businesses in general, however, as technology breaks down barriers to accessing finance and supply chain infrastructure the potential opportunities have never been greater.

READ MORE | How Nigeria Can Attract And Keep The Right Kind Of Foreign Direct Investment

This combined with greater access to the internet and mobile phones provides imaginative entrepreneurs and businesses a chance to rethink traditional business models and create different systems that cater to the needs of this young, diverse and commercially underserved region.

The team at Jiji recognize the potential benefits and opportunities that this region has to offer, only time will tell if other foreign investors recognize the upside African economies have to offer.  

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Opinion

Not Just Equality, But Recognition Of Excellence

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August marks Women’s Day in South Africa, a day commemorating the efforts of more than 20,000 women of all races, who marched to the highest political office in the land, on the morning of August 9 in 1956, to raise awareness around women’s rights and present a petition against the carrying of passes by women, to the then prime minister.

More than six decades on, the call for the equitable treatment and acknowledgement of women’s rights remains a battle for a global community of women – for recognition and also for fair and equitable economic opportunities.

Think back to the recent FIFA Women’s World Cup, where champions, USA, returned home with the trophy but also a very small paycheck for their efforts. During their return tour, their victory was overshadowed by calls from supporters to ensure authorities offer them salaries equal to their male counterparts.

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Whilst efforts have been made in this regard, the discrepancies in pay between men’s and women’s football, much like many other sectors, remain too large to ignore.

FIFA, the world governing body of football, doubled the total prize money for the 2019 Women’s World Cup from $15 million to $30 million but it is still a fraction of the $400 million received by players in the men’s tournament last year.

The disparity across sub-Saharan Africa is even more glaring. Despite a great showing from teams represented by Nigeria, South Africa and Cameroon, the reality for many local players is that there are no local leagues. As such, players are expected to train and perform at a professional level while still managing a separate full-time job to pay their bills and make ends meet.

On closer inspection of recent data, one is hit with the enormity of the task at hand. The Global Gender Gap Report published by the World Economic Forum in December 2018, revealed that at the current rate of change, it will take about 108 years to close the overall gender gap and 202 years to bring about parity in the workplace.

This is a long time to wait for parity of any sort – what more for the sports field, the political sphere and new digital industries that are likely to emerge?

As women, we certainly can’t sit by the wayside in hopes of being rescued from this dilemma.

I believe that our focus and rhetoric need to be adapted and realigned. I believe it goes beyond just empowering females, but unlocking economic opportunities for all through the advancement of women.

It’s well documented that female-headed households lead to the advancement of all and everyone wins.

Beyond this, the recent FIFA Women’s World Cup reminded me that while the battle for gender equality remains a major challenge, the real issue is around equal and fair recognition – on the soccer field, in the boardroom and in places of political leadership.

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As a society, we should be empowering, supporting and rewarding those who go above and beyond to achieve levels of excellence in their respective sectors.

“We should all be feminists,” a popular quote by Nigerian novelist Chimamanda Ngozi Adichie has a lot of truth to it, in driving the awareness and active citizenry for change.

I believe we should take this a step further and we should all be activists who reward excellence, regardless of race or gender.

Let’s reward excellence! And the economic benefits will naturally follow – for all.

– Gugulethu Mfuphi is an award-winning radio broadcaster, financial journalist, conference moderator and CNBC Africa alumni. She was recently named one of South Africa’s 200 young leaders in media by Mail & Guardian.

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Entertainment

Is Celluloid Dead?

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The digital revolution was the move from physical media to digital media, the transition from HD to 4K, but what does this mean for the future of film as a medium of acquisition?

Well, at this point, I think we can safely say that although shooting on 35MM or 16MM film may have become specialist, even niche, it will certainly never die out completely, thanks in part to certain stalwart Hollywood directors like Quentin Tarantino who refuse to shoot digitally.

What digital acquisition of video content has done, is that it has reduced the costs of acquiring footage and essentially democratized the film-making process. Movies can be shot and produced for a fraction of the cost that they were on celluloid. Making a feature film is now accessible to everyone.

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The main issue, however, with digital masters and acquisition, is how we archive and are those archives tried and tested? In a word, no, and herein lies the reason that 35MM and 16MM and film in general will never die out completely.

When we take a look at archiving in general – when high definition revolutionized television content acquisition way back in 2000 and 2001 and DVD became the norm for home video viewers – we all thought that this was the pinnacle of new technology, the picture clarity, the sound, the colors; could this ever be improved upon? It was improved upon in less than five years with the advent of 4K content acquisition.

Take a trip down memory lane and look at some of those early features and TV series shot in high definition (1080p), films like Session 9 and Star Wars – Attack of the Clones – do their visuals hold up to today’s standards? No, they don’t. With 4K and even 8K content acquisition, HD seems positively antiquated and certainly looks that way when viewing these films.

This is where film still trumps these formats as a basic storage format. Movies shot on 35MM or even 16MM stock is a physical frame size. Now this individual frame can be scanned and blown up to any size you want it as, there is no limit in terms of mastering and remastering because it’s a physical medium.

This is the actual frame of film, it exists, it’s organic, you can touch it, as opposed to modern digital acquisition which is merely terabytes of digital ones and zeros – it exists only on hard-drives.

Let me give you an example of bad digital archiving. There’s a whole generation of digital photographs between 2000 and 2010 that have almost simply ceased to exist whether it be attributed to a hard-drive crash – a software upgrade or a computer crash. How are these modern movies going to be archived and stored? Will one be able to revisit one of them, like a film print in over a hundred years’ time and it’s still there, still plays and still exists.

Gone with the Wind and Wizard of Oz, both shot in 1938 and released in 1939 have been remastered in 4K and they look like they were shot yesterday. In another five years, they can still access these prints, digitally scan them again and size them up to 8K if necessary. These films are now 80 years old – will you be able to access a digital feature in the same way?

The truth is that only time will tell, but this does make for an interesting debate.

Another example of retrieving amazing archives is the recently-released documentary Apollo 11 through CNN Films. The national archives in the US had recently discovered 65mm and 70mm film reels of the preparation for and the actual moon landing in 1969. Now the frame size of the film, much like the name suggests, 70mm, is huge.

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These archive films were then scanned into modern film scanners and painstakingly remastered into the new IMAX digital format. Having recently watched the film, I can attest to the fact that the presentation is truly breath-taking. The details, the colors, the clarity, it truly is a sight to behold. One would never say the footage was shot in 1969.

Which brings me to my final point: Until digital can prove to us all that in a decade’s time, all these ‘digital’ masters can still be accessed and stored and made easily available – it hasn’t proved itself as good an archive as good old-fashioned celluloid. Kodak may be all but dead in terms of acquisition but its legacy lives on forever in the archives and will continue to do so.

– Robert Haynes is the Executive Producer of entertainment at CNBC Africa and the owner of film and TV production company, 42nd Street Films, in Johannesburg.

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Opinion

Amid Trade Wars, What Africa Must Do

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In World War II, my granduncle Frans Nyamande was among the people conscripted to fight in North Africa. He was entangled in the combat between Erwin Rommel and Bernard Montgomery. He did not know what this war was about. It was a World War but essentially a European war.

However, with Africa as a colony of Europe at the time, we were entangled and my granduncle signed up. As the old adage goes, ‘when elephants fight, it is the grass that suffers’.

We are living in a dangerous era where the two superpowers are at war. The United States (US) and China, the two largest economies, are in a trade war. Like any other war, trade wars, too, have their own collateral damage. The genesis of this war was a complaint by US President Trump accusing China of unfair trade.

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The problem is the US exports goods to the tune of $60 billion to China whereas China exports goods worth $600 billion to the US. This, according to the US President, is unfair trade. This quid pro quo imposition of import tariffs is already damaging the world economy, and the consequence of this will be devastating.

This trade war has escalated and now includes information and communications technology company Huawei. It started with the arrest of the Chief Financial Officer of Huawei, Meng Wanzhou, in Canada for allegedly violating sanctions against Iran. She is awaiting extradition to the US. In retaliation, China arrested two Canadians for drug-related offences.

When we thought the end was near, the US banned its companies from supplying technology tools to Huawei. The Huawei smart phone uses a software called Android, which was created by the US company Google.

This ban meant that Google could no longer support Huawei. Furthermore, this ban also means that US semiconductor companies can no longer supply semiconductor chips to Huawei.

To understand the implications of this trade war, one ought to understand the strengths and weaknesses of China and the US. China has emerged the most sought-after country in the world when it comes to the manufacturing of hardware. The US leads in the creation of software and computer chips.

The interdependencies of these technological superpowers is extensive. For example, the US multinational technology company Apple makes its hardware in China, whereas many Chinese companies use computer chips made by US companies.

The British political economist David Ricardo in 1817 came up with a theory of comparative advantage. Comparative advantage states that for countries to be mutually prosperous, they should concentrate on those goods that they have comparative advantage over and trade those that they are not good at producing.

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This, therefore, means that trade wars are bad for the overall prosperity of the global economy. Given the fact that trade wars are becoming more likely, how should African countries position themselves so they are not adversely affected by them?

The first strategy African countries should adopt is they should be non-aligned to global superpowers. This essentially means we should not take sides in these trade wars.

The late former Indian Prime Minister, Jawaharlal Nehru, and the leader of Yugoslavia, Josip Tito, introduced the concept of non-alignment during the cold war between the Soviet Union and the US.

They observed that for developing countries to maximize their prosperity, they ought to remain neutral during the cold war and, therefore, not be aligned to either of the two superpowers. African countries are dependent on both China and the US for technology and, therefore, should maintain good relations with both.

Secondly, African countries should develop sovereign technological capacity. When the Ethiopian Airlines Boeing 737 Max 8 crashed earlier this year, the black box from this plane had to be taken to France to be analysed because we did not have the technological expertise to do so.

Naturally, for us to develop sovereign technology, we need to expand educational opportunities across the continent.

– Tshilidzi Marwala is a professor and Vice-Chancellor and Principal of the University of Johannesburg. He deputizes President Cyril Ramaphosa on the South African Presidential Commission on the Fourth Industrial Revolution.

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