EFA at a UN meeting on ecommerce
I attended a meeting of the United Nations Industrial Organisation (UNIDO) Committee on ecommerce and the BRICS countries on 19-20 March in Vienna at their invitation. The Chinese and Russians provided the largest delegations. Brazil, India and SA had 2 delegates each (the other SA delegate was from the SA Institute for International Affairs, SAIIA).
The purpose of the meeting was to discuss 2 initiatives by the Committee – first, a training manual prepared by the UNIDO Secretariat, and, second, the concept of an ecommerce Alliance. Both these programmes were discussed and proposals made. EFA was asked to work on the training manual with the UNIDO staff.
However, the most profitable aspect of the conference was the reports by the different countries and to learn of their challenges. Ecommerce in Brazil, for example, now represents 6% of retail. The Brazilian Post Office has succeeded to bring ecommerce to almost everyone, encouraging both buyers and SME sellers. In India B2C ecommerce stands at $36 billion, but B2B ecommerce represents a whopping $7 trillion. The Chinese encouraged EFA to be more active in the B2B market.
It was also extremely interesting to hear from some of the other UN bodies which attended of their programmes to promote ecommerce globally and aid the developing world. We are obviously the “Johnny-come-lately’ of the 5 BRICS countries as far as ecommerce is concerned, but it was pointed out that ecommerce is primarily for the youth, and Africa is the Continent of the youth!
The Chinese are pushing for ecommerce to be a major issue at the forthcoming BRICS summit which will be held in SA. The Departments of Trade & Industry and Telecommunications & Postal Services (DTI and DTPS) have set up a joint working group to discuss BRICS and ecommerce.
We do not know how far this WG has got, however, it is believed that the DTI has claimed leadership over all other Ministries. We have reported previously on the views of the Trade Minister, Rob Davies. It will be interesting to see how this plays out against the President’s obvious enthusiasm for the African Common Market (AfCFTA – see below).
Agreement on the African Continental Free Trade Area (AfCFTA)
President Cyril Ramaphosa this month signed a declaration supporting the establishment of a free trade area (the Kigali declaration). Nigeria also held back from full signature and only signed the declaration, but 44 countries signed the full free trade agreement (AfCFTA).
The United Nations has estimated that the AfCFTA could boost intra-Africa trade by 53% by eliminating import duties and non-tariff barriers. It could create a market of more than 1.2 billion people with an economy worth $2.5 trillion.
AfCFTA (someone really must come up a better abbreviation) will be the largest free trade area in terms of the number of countries involved.
It may also move towards a monetary union – as President Ramaphosa said “We must rid ourselves of this colonial mentality that demands we rely on other people’s currency. Perhaps the day, the hour and the moment could have arrived for us to create a single African currency”.
A well-functioning AfCFTA would certainly be of enormous assistance to the growth of ecommerce on the Continent. As pundits have pointed out, only 16% of African trade flows cross borders within Africa. Pan-African trade should grow fast if the tariff and non-tariff barriers were removed, but it is essential that both these barriers need to disappear simultaneously, otherwise tariffs will be lowered but NTBs will take their place (as we have seen in the SADAC).
We should be seeing the start of a long but productive process (let’s not forget that the EU took 15 years to become a customs union, and then another 10 years to introduce the Euro!). There will be many challenges and issues to overcome, but it should benefit business (specifically eCommerce) and society if the AfCFTA is entered into with good will.
EFA at the UNCTAD Ecommerce Week
EFA will host a lunchtime panel session on the 19 April on The Ecommerce Business in Africa. As we have reported in previous Newsletters, the United Nations Conference on Trade and Development (UNCTAD) holds an annual ecommerce week in Geneva at which international organisations (such as the World Trade Organisation, International Telecommunications Union, European Union, etc); international bodies (such as the World Economic Forum, International Chamber of Commerce), and business are invited to discuss the opportunities and challenges facing ecommerce at present.
UNCTAD’s eTrade For All programme was the result of this annual event. Our Co-Chair, Dylan Piatti, will be at the event for the whole week, and will be appearing on the World Trade Organisation (WTO) and World Economic Forum (WEF) panels.
There will also be a meeting called by the Ecommerce Foundation and the Swiss Ecommerce Association to agree the founding of a global ecommerce association. This idea has been discussed previously.
As always, the issues rest on:
- The objectives of the body.
Obviously, there is a lot of activity going on at the UN and at the other international bodies, such as the OECD, which needs to be monitored and responded to.
The dichotomy is that those countries least likely to be able to contribute to an expensive permanent secretariat, are those (like Africa) which potentially would gain the most from international funding (eg eTrade for All), while the developed countries are already paying for established sector representation (in the case of Europe for two ecommerce bodies at the EU).
A Unicorn, a “zebracorn” or a gazelle?
(Click for link to article)
How are Africans doing in Silicon Valley? A new Voice of America (VOA) documentary Unicorn subtitled “Africans Making IT in Silicon Valley” explores how some Africans and African-Americans are finding their way in the tech sector’s global capital in California. It is well worth looking at. The documentary (link above) profiles several entrepreneurs and venture capitalists and how they overcome hurdles.
First, a reminder – a unicorn is a private start-up technology firm valued at $1 billion or more. According to Forbes Magazine there are almost 200 globally as of last May, but none in Africa.
Silicon Valley has spawned flocks of unicorns (eg Uber and Airbnb). But Africa has less available funding – the programme suggests that there should be a special $100 million start-up, named a “zebracorn.” or a gazelle.
The good news is that investment in African tech ventures is surging.
Figures vary: Disrupt Africa (a news portal) claims that African tech start-ups raised more than $195 million last year, up from almost $130 million in 2016. Whereas Partech Ventures reports even stronger growth. Partech, a global venture capital firm with offices in San Francisco and Senegal, reports that 124 tech start-ups drew $560 million in equity in 2017, up from almost $367 million for 74 start-ups the previous year
The Pan-African Chamber of Commerce (PACC)
EFA is delighted to announce that we aim for an agreement with PACC to share information and work on some common projects. PACC, which is based in Benin, has tapped into the Franco-African countries, which enjoy strong backing from France and Belgium.
Most are also, of course, part of either the Central or West African franc (CFA) common currency. Ecommerce has been identified as a major driver for greater trade, with leadership from the Ivory Coast in the East and Rwanda in the West.
A free trade area between Rwanda and Burundi and the DRC for ecommerce is in the making. PACC has launched the “Africa Stop Over” platform as its vehicle to tap into and distribute investment funding.
Spending on Cyber Security Projected to Grow
This Newsletter has reported on the need for greater cyber security on a number of occasions. Gartner has now projected that global IOT security spending will reach $1.5 billion in 2018, a 28% increase from 2017.
Gartner forecasts that IOT security initiatives by multinationals will increase from last year’s spending of $1.2 billion to $1.5 billion this year, as organisations seek to improve IOT software and hardware security asset management initiatives.
New Report shows Mergers and Acquisitions in Africa and the Middle East are on the increase.
A report by Baker McKenzie shows the activity in technology and telecommunications sector is likely to accelerate in 2018, driven by a more positive global economic outlook, the expansion of technology across industries, investment from emerging markets, and strong corporate balance sheets.
The Report says “The tech and telecoms sector in Africa and the Middle East was valued at $1.2 billion in 2017, and is predicted to increase to $5.9 billion in 2018 and indicate a further $5.9 billion in 2019, before decreasing to $3.9 billion in 2020. Global M&A values will rise to USD 468 billion, up 60% from USD 295 billion in 2017.
Several trends of embedding new technology across sectors, plus activist investment in technology firms by emerging markets such as China and Saudi Arabia, suggest strong deal activity in 2018”.
The New EU Programme for Supporting Multi-core Processors
The EU has recognised the importance of supporting innovation in multi-core processors.These are computing systems capable of hosting and executing several functions at the same time, while using fewer components, wiring and space. However, they must ensure safety and prioritise between the different functions. A EU-supported project has successfully developed a solution for these mixed-criticality systems which integrate multiple functions of different importance into a shared computing platform.
With an EU investment of €11 million and 16 different partners across 6 European countries, the project has developed a computing architecture and design tools that can be used across many different sectors.
5G Introduction Delayed in Africa due to Regulatory Barriers
According to the Global 5G Market Report by market intelligence firm Netscribes uncertain regulatory environments are stifling the growth of 5G networks in the Middle East and Africa (MEA) region.
The report claims that global 5G market will grow at an overall compound annual growth rate of 97% and will be worth $251 billion by 2025, but the MEA telecommunication industry faces numerous challenges in terms of an uncertain regulatory environment, low coverage of 2G, 3G and 4G technologies, and lack of spectrum.
East Africa Looks to Poach Fintech Leaders from SA
There is tremendous opportunity and growth in East Africa, because of the development of a unique eco-system primarily leveraged by mobile money services such as MPesa.
These services are very advanced in the region, because challenges in the formal banking sector led to the development of services allowing for money to be transferred through alternative channels. Now East Africa, and particular Kenya, are head-hunting for Fintect leaders in SA.
Europe Moves on Fake News, and other Dirty Tricks
The EU has set up an independent Expert Group on Fake News and Disinformation, which has called for a Code of Principles that online platforms and social networks should commit to.
The report complements the first insights from a public consultation and Eurobarometer survey. These contributions will feed into the preparation of a Communication on tackling disinformation online, that the Commission will publish in spring.
Meanwhile, pressure on Facebook to come clean over the leak of 87 million personal records to Cambridge Analytics and other companies involved in both the Brexit and Trump electoral victories continues.
Some pundits are even suggesting that this scandal, as vast as it was, will result eventually in the breakup of FB by regulators, and they might then move to the other big (American) global players. It seems that FB has at last realised that its initial reaction was ‘too little, too late’ and that it is facing a really serious threat to its very existence.
Less than 2 Months to go – the New EU Data Privacy Rules
This Newsletter has reported the on-coming new data protection legislation in the EU, the General Data Protection Regulation (GDPR) which will replace the current Data Protection Directive, with effect from 25 May 2018.
Whereas the current Data Protection Directive of 1996 only applies to organisations which are either established in the EU or European Economic Area, the GDPR will be applicable to organisations that do not have a presence in the EU/EEA or utilise equipment such as servers situated in the EU for the storage or processing of personal information.
The location of the individuals whose personal data is processed, is immaterial, so long as EU nationals’ data is being processed. Thus data bases in South Africa may be affected and need take heed of the GDPR.
The CEO of Walmart comments on the future of retail
Last month we covered Jack Ma’s (Founder of Alibaba) vision of ecommerce. This month we end with the comments of Doug McMillon, CEO of Walmart (and owner of SA’s MassMart):
“Customer satisfaction has always been the number one goal for retailers, and in the future, customers will be more empowered than ever to drive the change they want, as they get more control over their shopping experience.
Technology – the internet, mobile and analytics – is being used to do anything and everything a customer doesn’t want to. Customers want to explore. But they need to have easy access to items they choose to use all the time.
The historic trade-off between price and service has been altered by technology and customers expect to save time and enjoy the experience while saving money. They’ll fulfil their everyday needs – items like laundry detergent, paper, light bulbs, grocery staples and shampoo – in the easiest way possible through a combination of stores, e-commerce, pick-up, delivery and supported by artificial intelligence.
Customer desires – think emerging fashion, fresh produce, and items they’ve never seen before – will still be fun to explore in stores as well as with technology (think virtual reality).
Retailers that provide a truly unique, enjoyable experience and prepare their associates to provide excellent service will have the advantage. At Walmart we already see the value customers place on personalization and convenience, through our success with grocery pick-up and delivery in several markets around the world”.
The Dog Fight over Logistics in the USA
You may have seen that President Trump made a public attack against Jeff Besos of Amazon. Well there’s never smoke without fire, and in this case the issue revolves around Amazon’s use of the US Postal Service (USPS). The dispute stems from how USPS splits up its fixed costs between its two business segments. The two units are its letter business, a government-protected monopoly, and the competitive parcel business, which competes with UPS, FedEx, DHL and other parcel delivery companies.
Under the Postal Accountability and Enhancement Act of 2006, USPS is currently required to cover at least 5.5% of its fixed costs with revenue from its competitive business. Competing logistics providers, however, argue that this low-cost coverage requirement is outdated because of the explosive growth in e-commerce over the last few years — the competitive business now accounts for 30% of USPS’ total revenue, up from only 11% in 2008.
The courier companies argue that the law gave the postal service an unfair competitive advantage because USPS covers a large portion of its costs with its letter business, and therefore can offer lower prices to e-shops than other logistics companies. Amazon routes the majority of its deliveries through USPS as a result of these lower rates, meaning that other logistics providers are losing out on business. Interestingly (but perhaps not surprisingly) USPS is state owned, while the private courier services supported by the President of the USA in this argument are … well private.
Tensions between the Amazon and logistics companies is bound to intensify as Amazon moves further into the logistics market over the next few years. As we have reported in this Newsletter, Amazon has launched a pilot for its own delivery system at the end of last year and has been running “Fulfillment by Amazon” since 2006. This allows third-party sellers to store and ship some of their products in the online retailer’s proprietary logistics network, and now serves millions of retailers around the world.
More Ecommerce News from The USA – Using Crowdsourcing For Deliveries
As we all know, delivery logistics are a major issue for ecommerce – price, realiability and speed are the three key elements. Now in the USA crowdsourced delivery is gaining popularity — it leverages local, nonprofessional couriers to get packages to customers’ doors, sometimes in less than an hour.
This model allows companies to satisfy consumers’ growing demand for faster online deliveries. Younger consumers, in particular, who have grown up in a digital, on-demand economy have high expectations for fast delivery. A survey released earlier this year by American Express and Forrester found that 57% of North American internet users aged 23-27 said same-day delivery would make them more loyal to a retailer’s brand, and 56% of respondents aged 16-22 said the same.
These Gen Z and younger Gen Y consumers will make up the bulk of shoppers within the next decade, with Gen Z alone expected to be the largest generation by 2026, according to A.T. Kearney. Additionally, 25% of online shoppers surveyed in a study by research firm L2 said they’d abandon a shopping cart if a retailer didn’t offer same-day delivery. This growing demand will drive up same-day delivery volumes to account for $200 billion in US online sales — about 25% of the US e-commerce market — by 2025, according to McKinsey.
Many crowdsourced delivery startups, like Postmates, Instacart, and Deliv, have sprung up around the world, and have collectively attracted several billion dollars in investment.
Each works in a slightly different way, but they all follow a similar blueprint for executing deliveries. Once an order is placed on a crowdsourced delivery company’s app — either by the customer or a retailer — the delivery is assigned to one of the part-time couriers using the app. Couriers can either bid to accept a delivery or may be automatically assigned one based on their proximity to the pickup location. After the order is picked and packed, the assigned courier delivers it to the recipient, using their own vehicle.
The pickup and delivery can be made “on-demand,” meaning right away, or scheduled for a specific time window, such as between 5 p.m. and 6 p.m. The recipient or courier then confirms that the order has been safely delivered, and the courier receives compensation from the delivery company.
Are there lessons for Africa? I believe so. Even though we have far greater logistics challenges the concept (and a similar App) could be developed to start to find alternatives to the present alternatives.