eCommerce awareness, confidence and capability in Africa

2018 02 – EFA Mailer

Breaking News
Ecommerce Africa Safe.Shops to launch on 5 March!

Last month we outlined how our trustmark, which is called Ecommerce Africa Safe.Shop, will operate, and why it is important for the ecommerce sector in SA.

We emphasized that creating greater trust in e-shops leads to increased turnover. Consumers who trust a shop or a brand buy more than consumers who mistrust that shop or brand. This is one (of the very few) infallible truths in marketing!!

The trustmark provides assurance to the consumer that the e-shop they are considering buying from is trust worthy. That the e-shop follows the rules and that, in the case of a complaint that is not solved between buyer and seller, there is a dispute resolution system which they can contact to get a solution to their problem.

There will be three levels to our trustmark. The first (Three Star) ensures that the e-shop applies a general code of practice www.safe.shop/uk-en/consumers/the-code-of-conduct , which is verified by Safe.Shops. The Four Star trustmark requires that a law firm verifies that the e-shop applies the SA ecommerce related laws (Consumer Protection, Electronic Transactions, Protection of Personal Information Acts). Finally, the Five Star requires that in addition to the legal verification, there is a check on the security of the website, a basic financial check and a check on fake products.

Dispute resolution is an important element to build trust. At present e-shops selling goods are subject to the Consumer Goods Ombudsman (www.cgso.org.za/what-we-do/). EFA is entering into discussion with the Ombudsman to discuss its views on online shopping and I will be reporting back to members on how that discussion goes. Safe.Shops in the Netherlands can also provide a dispute resolution for complaints as a neutral body.

We will be sending you the Press Release on the launch of the Trustmark.
Please forward this to your colleagues, contacts and friends who might be interested in applying for a trustmark.

Investment in Startups

A couple of months ago we reported in this Newsletter on an international survey which showed that Cape Town came out the best in Africa for financing startups followed by Lagos and the Johannesburg. Now South African research from the Venture Capital and Private Equity Association, shows that in the last three years, about 75% of venture capital transactions were concluded in the Cape Town, with Johannesburg accounting for only 20% of venture capital-type deals.

In another study covering the African continent, Partech Ventures’ latest annual funding report shows that venture capital funding in 2017 reached $560 million, recording 53% year on year growth. The scale of growth in funding is seen in the number of investment rounds participated in by startups: in 2017 124 startups participated in 128 funding rounds, compared to 77 rounds in 2016 (Partech’s reports include startups that have a primary market in Africa whether or not they are headquartered or incorporated on the continent).

In line with previous years, South Africa, Kenya and Nigeria continue to dominate as investment destinations accounting for 76% of total funding this year, slightly lower than the 81% of last year’s total. Similarly, the three leading tech startup ecosystems lead the way with number of startups funded per country.

Startups in Francophone Africa have also seen more investment, accounting for $55.5 million—10% of the total funding, and nearly 14% of the total transactions in 2017. That progress seems set to continue as, last month, Partech Ventures has launched a pan-African fund based in Dakar, Senegal and plans to pay closer attention to startups in French-speaking countries.

The end of EFTs? The Banking Disruption continues

Virgin Money Spot has been launched in SA in partnership with the SA mobile software company, wiGroup. Virgin Money Spot does away with EFTs and provides a peer-to-peer (P2P) payment application, allowing users to exchange money.
How does it work? According to the notes on the launch “users download the app, link their Internet-enabled card from any South African bank, enter a security PIN and exchange money with friends – instantly, securely and free of charge”

Virgin Money is a franchised brand operating in the UK, Australia and SA (it no longer operates in the USA), with each branded company operating independently, so the products vary from country to country. Virgin Money Spot is only available here in the SA so far.

According to Statistica, EFT is the third most popular payment method of online shoppers in SA, behind credit and debit cards.

On another disrupter, according to a new report out this week by BI Intelligence, Artificial intelligence (AI) is one of the most commonly referenced terms by financial institutions and payments firms when describing their vision for the future of financial services. AI can be applied in almost every area of financial services, but the combination of its potential and complexity has made AI a buzzword, and led to its inclusion in many descriptions of new software, solutions, and systems.

ICT Gets Mention in the SONA

It was great to hear our new President’s SONA speech in which he announced plans to establish a Digital Industrial Revolution Commission, which will include the private sector and civil society, “to ensure the country is in a position to seize the opportunities and manage the challenges of rapid advances in ICT”. Let’s hope that includes Ecommerce.

As a reality check, the research company IDC’s recent study shows that South Africa’s overall ICT market is expected to reach $21.4 billion (R248 billion) by the end of 2018, and $23.4 billion (R273 billion) by 2021, representing a compound average growth rate of 2.9%. This is slower than some other African countries, and more in line with growth in Europe.

IDC sees strong interest in third platform technologies such as cloud, mobile, data analytics and social, especially as they form a foundation for the Internet of Things (IoT), cyber security and artificial intelligence (AI) applications.

The World Economic Forum (WEF)’s Closing the Skills Gap Programme

Last month we reported on the 2018 WEF Summit in Davros. EFA has subsequently been in touch with the WEF to discuss a number of inticatives, including the WEF’s new programme, Closing the Skills Gap 2020. WEF says it aims to fund the reskilling ofl 10 million people by 2020, and has started a global call for top global businesses to lead training, reskilling and upskilling initiatives between 2018 and 2020.

The drive for skills development was inspired by new research that suggests 96% of all workers at threat from technology could find similar or better work with adequate training.

The issue of job losses due to new technology is particularly acute on the African continent. At the Davros summit PWC unveiled its study on jobs and technology. An average of 18% the CEOs worldwide expected a significant loss of jobs due to new technology, but in SA 41% of CEOs expect to reduce their headcount in the next year. Two-thirds of the respondents said that this is mainly due to automation and other technologies.

EFA Attends the Financial Service Board Ecommerce Advisory Committee

EFA was invited to attend a meeting of the FSB Ecommerce Advisory Committee (ECAC) on 21 Feb. I gave a presentation on the ecommerce sector’s key interests, which was well received. The FEB ECAC has members from a wide range of government bodies, including the Reserve Bank, ICASA, SAPS, the National Consumer Commission, the Dept of Telecommunications and Postal Services; and also some industry groups, such as PASA and SABRIC.


Miscellaneous

South Africans want to ditch passwords in favour of biometrics.

According to a report done for Visa by AYTM Market Research (survey size 500), 72% of respondents said they are interested in using biometrics to verify identity or make payments. New forms of authentication, such as fingerprint, facial and voice recognition, can make unlocking accounts and payments more convenient than traditional passwords or PINs. The survey also notes local consumers are interested in being offered fingerprint or facial recognition-based systems from a variety of providers, including their bank, card network, mobile phone provider and major online brands.

As an aside, under the Protection of Personal Information Act (POPIA) biometrics as a means to identify someone is considered sensitive, or special data and cannot be collected, processed, shared or stored without the specific consent of the person. Thus biometrics are provided in law more protection than a humble password.

Bitcoin’s recent hiccup has focussed regulators’ interest in crypto-currencies

Bitcoin’s woes last month, when after surging on world markets by 1,300%, its value dropped by half, has encouraged calls for regulators to do something.

Financial regulators have been raising the alarm over crypto-currencies for a long time. They claim that crypto currencies may aid money laundering and terrorist financing, hurt consumers and undermine trust in the global financial system.

We have already reported in this newsletter of the threat hackers pose to crypto currencies. In the latest case $530 million worth of digital currency was stolen from the Japanese exchange Coincheck last month.

In addition to these concerns, there are territorial arguments in some countries between official bodies vying over who is responsible for control of virtual currencies – in the USA, for example, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Treasury Department, the Federal Reserve and individual states all claim responsibility, which is encouraging Congress to consider new laws.

A number of European countries are calling for crypto-currencies to be put on the G20 agenda. SA is a member of G20.

China – the largest market in the world for Apps

China’s app market is currently the largest app market globally, with revenues projected to reach $42 billion by 2020, up from $25 billion in 2016. Consumer spending in China through Google Play, the iOS App Store, and third-party Android stores in 2017 jumped 270% over the last two years to roughly $33 million. This equates to more than 38% share of total global consumer spending on Apps in 2017. Meanwhile, consumer spending in app stores in the USA, the second-largest market by consumer spend, increased by a modest 57% in the last year to roughly $15 million.

Consumers in China download more apps than consumers in other markets. While the average smartphone user globally has 80 apps on their phone, the average smartphone user in China has over 100 apps stored on their phone. And they spend significantly more time in apps than consumers in other markets. Chinese app users spend roughly 225 billion hours on apps in 2017. That’s more than 4.5 times the next largest market, India, which clocked in close to 50 billion hours in the use of apps in 2017.

Developments in Drones

Vodafone, the European parent of our Vodacom, has announced that it is expanding out of pure telcoms into other, related, areas – one of these is drones. It is experimenting on using its 4G network to control a 1.3m wingspan, 2kg X-UAV drone. The first flights, at the end of last year were in Spain. Further trials are being scheduled in Spain and Germany through 2018, with the intention of making the technology available for commercial use from 2019. The  tests required that the drone transmit a real-time HD video feed and flight data, including speed, RPS location and GPS coordinates.

Worldwide drone spending is estimated to be $9 billion in 2018 and is expected to grow at a faster rate than the overall market with a five-year annual growth estimated at nearly 30%, according to IDC.

This Newsletter has reported on the use of drones in Rwanda and Tanzania to deliver medical supplies to rural areas. I was reminded recently during a discussion on bringing the digital economy to Africa that control of the air in many African countries falls to the military which refuse to allow drones to operate

The US Federal Communications Commission Proposes Changes to Internet Access

The US FCC has proposed changes to internet access by nullifying the so-called ‘net neutrality’ rule. In effect, critics claim, internet providers will be able to charge for access to their services. Internet users will have to choose an internet access service, rather as they contract a cell phone operator, in order to access the net.

Years ago, when I first started using the internet I paid a monthly fee to AOL based on the number of emails I sent, and this was the original business case for the internet. However, things changed, the access providers moved to advertising funded models and we have enjoyed free internet ever since. This proposal reverses the freedoms internet users have got used to.

The Latest from Amazon – Amazon Delivery on its way

According to the Wall Street Journal, Amazon is getting ready to launch its own delivery service, named “Shipping with Amazon” (SWA), which will rival DHL, UPS and FedEx. The service will allow Amazon to handle delivery for other businesses, and will start in Los Angeles, where it will work with third-party merchants that sell on Amazon’s marketplace.

There are plans to expand to other cities and businesses in the near future. ‘Shipping with Amazon’ claims that it will offer lower prices than competitors by achieving better logistics for shared loads.

We hope to see you at the Seamless Africa event next week in Cape Town where the Trustmark will be launched!

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