eCommerce awareness, confidence and capability in Africa
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2018 07 – EFA Mailer

The African Union (AU) Conference on Ecommerce

The AU and the UN Economic Commission for Africa (UNECA) held a 3 day conference in Nairobi from the 23-25 July. The Ecommerce Forum Africa was invited to contribute, and I moderated one panel and sat on another (my presentation will be available on the EFA website).


The conference, in the form of panels, was attended by a mix of national, regional and international government representatives, civil society and business. The aim was to prepare proposals for an AU strategy on Ecommerce in the light of the African Continental Free Trade Area (AfCFTA). A report is presently being prepared with recommendations. This will certainly recommend that AU member states collect more market information (a recommendation of the UNCTAD Ecommerce Week in April), encourage greater skills development and prepare for a more friction-less customs/border processes in order to promote pan-African trade. There was a strong support for more harmonized legal structures, particularly for more on privacy (see below)

As EFA has discovered (the Legal Fact Pack) legal instruments differ greatly between countries on the continent, and this will lead to uncertainly and cross-border non-tariff barriers. It was interesting to note that a number of countries have already come up with their own national ecommerce strategies (Egypt, Nigeria, Kenya and Senegal). Other countries are actively preparing strategies. South Africa does not have a strategy and the DTI appears not to have the resources presently to prepare one.

As the AU event was going ahead in Nairobi, President Cyril Ramaphosa, speaking at the 10th BRICS Summit held at the Sandton Convention Center in Johannesburg, appealed to the fellow BRICS countries to become the innovators of new technologies in the digital fourth industrial revolution.

For more information on how the AfCFTA is progressing take a look at the new African Trade Policy Centre (ATPC) online platform which will provide daily monitoring of national, regional and international trade policy news, current affairs, and related developments of interest to Africa’s business.

Link: African Trade Policy Centre (ATPC) online platform

Joint Statement on Ecommerce at The World Trade Organisation (WTO) –
An Appeal for Help

EFA is now allied to the Digital Trade Network, a business network created by the International Chamber of Commerce (ICC) in Paris and others. The DTN has brought to our attention that although more than 80 countries are attending the WTO meetings on digital trade, only a dozen are really contributing. We have been asked to encourage more engagement by African countries in particular.

We understand meetings of the whole WTO group are scheduled for 27-28 Sept, 31 Oct-1 Nov, 28-29 Nov, and intersessional meetings in addition. There may be a December ‘stocktaking’ meeting. The areas where industry engagement is needed include:

  • Information sessions / seminars for delegations. Small groups of delegates brainstorming on specific issues. At least some delegations are open to some industry participation.
  • Our Strategy. Industry needs to discuss what its views are with respect to the structure and timeline of the final agreement. For example, does industry favour a monolithic agreement, or a framework approach with a set of subjects that will be addressed and binding deliverables at regular intervals?
  • In some key subject areas industry should consider hosting seminars or meetings to go over the technical issues and why commitments matter in that area – and why they matter to both developed and developing economies.
  • There are some NGOs (like South Centre) which have been very active. Recently they have encouraged an India/South Africa proposal to get rid of the moratorium on customs duties on ‘electronic transmissions.’
  • In particular, we, the African ecommerce sector, need to develop a coherent position.

We appeal to members to join our Legal and Representation Committee to help with input into these issues.

EFA will host a roundtable debate at the annual WTO Public meeting in October. For more information email me (alastair@ecomafrica.org).

The Lessons from China’s Great Digital Leap Forward

Recently, I came across a very interesting article in MITSloane Management Review. The author was trying to explain why Chinese digital companies have grown so rapidly. Today, 5 of the 10 largest public internet companies in the world (Tencent Holdings Ltd., Alibaba Group Holding Ltd., Baidu Inc., JD.com Inc. (aka Jingdong), and NetEase Inc.) are Chinese. Furthermore, Chinese companies account for 33% of the world’s unicorns (privately held startups valued at $1 billion or more), with almost 75% of them targeting digital or online market.The digital market in China, a country with more than 700 million internet users, offers a $1 trillion market.

In the process these new Chinese dragons have wiped the floor with their Western competitors – eBay entered the Chinese market in 2002, gained 70% of the market which last year had shrunk to 10%; Amazon bought the Chinese online book retailer Joyo.com in 2004, by 2008 it had a 15% share of the market, now its share is less than 1%; Microsoft’s MSN crashed out in 2014; and more recently both Uber and Airbnb have fared no better. Uber sold its subsidiary in 2016 after just 2 years of operations, and Airbnb just hangs on.

Critics point to protectionism as the unfair tool used to keep the Chinese market Chinese, but the author disputes this as being far too simplistic. He points out that, unlike many Western economies, China’s economy was not mature when the digital tsunami broke on its shores. In many of the industries most affected by digital technologies, offline offerings were limited, physical infrastructure was lacking, and other essential market components, such as payment systems, were missing. Therefore, in China, digital technologies offered a solution to fundamental bottlenecks in consumption, rather than a disruptive alternative to existing solutions. And the digital market developed in an exceptionally rapid and dynamic manner, one based on need rather than preference.

The winning game plan for dominating digital markets also turned out to have some unique characteristics with regards to localization, speed, online and offline integration, and local ecosystem development. The global market, in other words, met its limitations.
This may provide Africa with something of a role model. Just as Africa embraced and outshone other continents in both the mobile phone market and online banking/fintech. We all recognise the challenges for Africa to become the next digital lion…. but just saying….

The EU General Data Protection Regulation (GDPR) one month on

Initial research on the effects of the GDPR are (not surprisingly) finding that people are ignoring privacy emails. As we have seen in past editions of the Newsletter, the EU’s data privacy law which came into effect in May seeks to apply extra-territorial control on the processors of Europeans’ data.

This has lead, for example, to many USA companies sending out emais to their marketing data bases asking for consent. Under the US “Can-Spam” law, consent is not required but an opt-out or refusal to opt-in must be followed. Internal research from the US digital agency Huge found about 38% of Americans are ignoring these emails, and 23% have used them as an opportunity to unsubscribe.

Email marketing firm PostUp has estimated that only 25 to 30% of recipients globally, and only 15 to 20% in the U.S., are opening the emails at all. Put into perspective, the email marketing industry was projected to be worth $22.16 billion worldwide by 2025, according to Transparency Market Research, and approximately 82% of consumer goods companies use email marketing, according to marketing research firm Ascend2.

In South Africa I believe many companies ignore opt-out requests by consumers. Given that POPIA, if it is ever implemented, applies not only to individual persons but also to companies, a strict application of the law could decimate both the BtoC and BtoB markets unless marketers wise up and start to apply best practice. This issue was discussed at the AU ecommerce conference (see above), and concern was expressed that:

  1.  Only 14 African countries have POPIA-style laws on their statute books;
  2. The AU’s guidelines on data protection need to be applied across the continent  (the AU adopted in 2014 the Convention on Cyber Security and Personal Data Protection, often referred to as the Malabo Convention;
  3.  But those guidelines are now outdated by the EU’s GDPR;
  4. the EU’s rules are therefore becoming de facto the norm for African companies trading into the EU. They are agreeing ‘model contracts’ to ensure that European data they process is adequately protected in accordance with the EU’s level of protection.

Miscellaneous

Skills – The Need for Business/Academic Collaboration

Ecommerce is particularly needful of both specific skill sets (eg logistics, payment systems, warehousing, marketing, web design, etc) and broad, over-arching knowledge. It was interesting to read the recent USA Bloomberg Next survey on collaboration and differences of opinion between business and academia (Building Tomorrow’s Talent: Collaboration Can Close Emerging Skills Gap).

According to this, 90 % of corporate respondents and 88% of academics surveyed said new recruits have the hard skills, such as computer literacy and written communication, to do their jobs successfully. But both groups were far less satisfied with new employees’ soft skills (teamwork, analytical reasoning, complex problem solving, agility, adaptability, and ethical judgment). Nearly 4 in 10 corporations and almost half the academic institutions said new hires lack the soft skills they need to perform at a high level.

The survey found that 55% of corporations plan to evolve job responsibilities to reflect future needs, which means existing employees will need to be re-skilled because their jobs will change.

However, less than 50% of corporations surveyed said they will re-skill rather than replace employees when technology change requires it. Only 30% of corporations and 39% of educators said they are collaborating to help re-skill and retrain employees. Just 38% of businesses are working with their academic counterparts to shape curriculum.

Academic institutions are doing better, with 66% of survey respondents collaborating with business to build education-to-work training, and 66% are working with corporations to align skills with business demands. As the survey concludes: ” Business and academia need to address this critically important [skills gap] issue to ensure that the workforce is prepared”

Big Data and the Fashion Market

One of the major categories of ecommerce sales to consumers are clothes. EFA has just welcomed to membership two new start-ups offering clothes and accessories.

So, what are the trends? I should not have been surprised to read that Ralph Lauren is leveraging the power of big data by attaching sensors to their polo shirts to track buyers’ fitness level. With the help of a smartphone application, buyers can keep track of their health whenever they wear a Ralph Lauren polo. A Fitbit in a polo?

As we know, the fashion industry appeals to everyone in the world on one level or another, but each item of clothing sells to different types of customers. Obviously, in order to stay relevant amidst the growing competition in the fashion industry, it is important for designers to come up with the most unique items.

By integrating big data with similar technologies such as artificial intelligence, machine learning, and the Internet of Things, retailers can analyse real-time insights to create the next generation of innovative fashion trends. So, Big Data is changing the way designers create and market their clothing more effectively.

Google’s Loon Plans Launch of Internet Balloons over Kenya, Nigeria gets free WIFI, and Rwanda strides ahead

While I was at the AU Ecommerce conference in Nairobi last week I could hardly miss the news that Loon has announced its first commercial agreement together with Telkom Kenya, starting next year, to provide internet service to parts of central Kenya connecting the citizens of a country where presently coverage is mainly limited to the major population centers. The balloons ride way up in the stratosphere, and each can cover an area of 2,000 square miles.

In Nigeria Google Station, a public WIFI service, has gone live in 4 locations in Lagos. Plans are for Google Station locations to include malls, airports and schools. The service will be expanded to 200 locations across 5 additional Nigerian cities—Port Harcourt, Abuja, Kaduna, Enugu, Ibadan—by the end of 2019. Nigeria is the fifth country with Google Support free WIFI areas. India, Indonesia, Mexico and Thailand also enjoy the service. Google partners with local service providers for infrastructure and locations while it offers a cloud-based platform and devices to provide and manage hot-spots. Google also launched Project Link in Ghana and Uganda, which are fiber-optic networks to help local internet service providers and mobile operators provide faster broadband.

Meanwhile Kenya’s small neighbour, Rwanda, has attracted an International Trade Centre project to promote ecommerce in the country, and is attracting innovation hubs thanks to its strong internet structure (the latest is for engineering). Readers will recall that Rwanda was an innovator of drone deliveries. Using drones to deliver medical supplies to rural areas and pick up samples.

The World Wide Worx Annual Study on Internet Access in SA is Out

Arthur Goldstuck’s annual report ‘The Internet Access in South Africa 2017 study’ has some very positive information. The report suggests that online shopping has started to pick up rapidly in the last 12 months with 58% of online adults in South Africa making a purchase online. An estimated R37.1bn has been spent online in the last year alone. It is predicted that South Africans will spend upwards of R53bn this year.  However, according to the report there are 29 million smartphone users but only 22 million internet users. Arthur Goldstuck commented “[This] tells us a quarter of the smartphone user base cannot afford data.” (source Bizcommunity).

It is useful to bear in mind that, according to the latest Mobile Connectivity Index compiled by the GSM Association (GSMA) 4 billion people worldwide do not have access to mobile broadband services. The majority of these (3.9 billion) live in developing nations. We have reported on the GSMA index last year.

It uses an analytical tool to measure and track the performance of 163 countries (99% of the world’s population), against 4 key enablers of mobile Internet adoption: – infrastructure, affordability, consumer readiness, content and services. This year GSMA found that 44% (3.3 billion) of the global population are connected to the mobile Internet – an increase of almost 300 million compared to 2017. The index shows that mobile broadband networks still do not cover 1 billion people globally, and approximately 3 billion people who live within the footprint of a network are not currently accessing mobile Internet services. In low-income countries, around two-thirds of rural populations are not covered by 3G networks (source ITWeb).

Amazon’s Back in Town

Amazon has announced that it will be opening up in Cape Town with its cloud infrastructure services. Whether it will also be selling its other product lines is not yet clear. According to ITWeb, the global cloud infrastructure services market was worth nearly $55 billion in 2017 and are expected to exceed $155 billion by 2020.Cloud services accounted for 73% of Amazon’s $1.9 billion operating profit in the first quarter, but just 11% of its revenue.

Meanwhile Cape Town City has said that it has saved 2.1Rm with its paperless invoicing system and improved accuracy to 99% (which for the citizen is probably even better news). I was impressed by the Kenyan e-visa system which took just two days to get me my visa and avoided a long wait in the airport.

Continuing Our Look at AI and Banking

Over the last year, this Newsletter has reported on the pace at which companies (particularly the financial sector) are investing in artificial intelligence (AI). According to research by global management consultancy Accenture, banks that invest in AI and human-machine collaboration tools could boost their revenue by 34% by 2022, and a recent PwC survey shows that 72% of senior management see AI and machine learning (ML) as key sources of competitive advantage. The PWC survey also highlighted that 52% of companies in the financial services sector are already making substantial commitments to AI, with 66% projecting significant investments by 2020.

According to analyst firm Frost & Sullivan, automated proactive fraud detection solutions have been experiencing high adoption across the entire banking and financial services sector for some time. Understandably the technology has become accepted as integral to a bank’s defenses, and organizations such as Morgan Stanley and HSBC have even set up AI fraud detection ‘teams’. As readers of this Newsletter know, AI can spot anomalies and patterns in transactions better than the human eye.

AI can aso spot a growing volume of false positives for ‘suspicious’ card use. AI’s ability to detect subtle patterns in data enables it to provide detailed customer profiling. This has led to a growth in robotic advice services for everything from pensions and general wealth management through to mortgages.

For example, JP Morgan has a recommendation engine that tells clients what to do with their equity, while Morgan Stanley is expanding the work of its 16,000 financial advisers as the result of the introduction of AI agents. Customer care and customer services are also benefiting greatly from AI adoption.

Meanwhile, at Google’s annual conference Cloud Next 2018, which took place last week in San Francisco, AI was very much on the agenda, with Google stressing the three pillars it is deeply involved in: – Automated assistance, for example the use of chatbots to respond to customer service inquiries; Process efficiency, examples include predictive maintenance and demand forecasting; Creating structure, e.g. extracting structured data from unstructured sources, such as archived documents, audio, video and images (Google Photos).

Facebook, Google and Twitter attempt to prevent the future misuse/abuse of their services

Facebook has announced that it has put together an Intelligence team to spot and remove abusers of its system. Other digital giants have done the same. Apparently, if you follow the story in the press releases, it has taken the scandals caused by the likes of Cambridge Analytica & the Russian trolls to make the giants realize they cannot simply assume the best of their users and must be prepared for the worst behavior imaginable. Google, for instance, has set up an “Intelligence Desk” at YouTube to detect controversial content before it mushrooms into crisis.

And Twitter recently started limiting the visibility of tweets from people whose behavior indicates they might be trying to abuse its service. Meanwhile the UK Parliament has come out with a damning report on the activities of some Facebook staff, of Cambridge Analytica, and of the Russian interference in UK politics. As we move towards next year’s elections the question must be – will there be interference and which party(ies) will it favour? Scary stuff!

Cybersecurity

Last month I mentioned a conference in India on Cybercrime – here is the link for those interested http://cyberlawcybercrime.com/sponsors-supporters.

Wouldn’t Happiness Classes be a Good Idea Here?

Finally, the government of Delhi has added a new subject to the school curriculum in the hope that it will transform the educational outcomes of children – happiness. Pupils in Delhi’s government schools from pre-primary age up to 14 years old are receiving daily lessons in happiness, which include yoga, meditation and teaching children to take pride in their work. The 45-minute classes start with mindfulness, followed by stories and activities.

While there won’t be any exams associated with the new subject, teachers will make periodic assessments of children’s progress using a “Happiness Index”. The Delhi authorities hope that a more rounded education will mean that knowledge and values will balance trump the current focus on exam results.

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