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Intra-Africa Trade Success: The Role Of African Diaspora and Multinationals

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Tucci Goka Ivowi, Deputy Chief Executive Officer at the Ghana Commodity Exchange

The framework for successful Intra Africa trade already exists. The seven action points highlighted are both my recommendations and my current views on the status quo. I surmise (unsurprisingly) that what is remaining is to continue to add value, improve the quality of goods and services, and then increase the scale.

 

1. Recognise the role Diasporan play.

I don’t know if I still classify today, but once upon a time, I was a diasporan. I came to Ghana from the UK on holiday about 18 years ago, and never went back, except for on holidays. On one of these trips back to London I received a Christmas hamper which tickled me and I’m not sure I’ll ever forget it. One of my sisters-in-law gave me a large delightful hamper with lots of goodies in it. One of those goodies was a pack of ‘Chocomilo.’ For those who don’t know what that is, it is a confectionery product produced by Nestlé in Ghana and Nigeria only.

Now the irony for me was that I was the person responsible for the brand and product business in Central and West Africa. But I travelled to another continent and received it as a gift, unbeknownst to my sister in law. I was excited to know that ‘my product’ was so valued that she bought and carted boxes of it from Nigeria during her last holiday. And many others do the same. But it also highlighted for me the relevance and role that diasporans (and multinationals) play in the global trade of African or any country of origin products.

 

2. Learn from multinationals who successfully contribute to intra-regional Trade  

That was just one product. That product is made in two countries using mainly locally sourced raw materials, and mainly local labour from the respective countries. That product is then sent across the ECOWAS region so that consumers in other countries can enjoy it too. They have found audience in multiple countries, they understand the customs, taxes and other legal frameworks of the countries they do business in. African companies can learn a lot from multinationals like Nestlé. They play a positive and beneficial role in Intra-African trade!

So diasporans and multinationals help by:

  • Contributing to increase in exports – large volumes of goods are exported and responsible multinationals pay large sums in taxes
  • Contributing to introducing goods and to increasing demand in foreign markets – market expansion.

I can’t leave out the strong influence and impact that other aspects of culture have in expanding markets. Thanks to diasporan presence globally, modern African music and film has steadily been expanding its footprint. If Intra Africa trade is supposed to benefit Africa, it sometimes has to reach beyond the shores of Africa. What is attractive globally, becomes attractive locally. Once African film, for example, is appreciated by global markets, it becomes less taken for granted in its home markets.

 

3. Build Alliances, one person, one country, one step at a time 

Alliances are key to any successful venture; even individuals who are establishing their own companies need a string of alliances to succeed. Those alliances may come in the form of investor, advisory, connections, advocacy… These are all useful and in some cases instrumental to business success.

A former team member organised an Innovation Forum bringing together start up business owners from across central and west Africa. At first the participants were a bit suspicious as to why a multinational would bring them together. Did the host organisation want to steal their ideas? At the end, they were most grateful for the opportunity to exchange with people facing similar triumphs and, particularly, hurdles as they were and realised they could learn from each other as some were further ahead in the process.

They even started to recommend to one another suppliers of raw and packaging material and what they had learnt working with trans-border companies. What these types of alliances do is they help create scale leading to better pricing, they provide opportunities for market expansionand so many other softer opportunities. If you can be successful in Cameroun, why not expand into Burkina Faso, perhaps with a local partner? African companies can become global too if they see the benefits and capitalise on strategic partnerships.

African countries are far behind today, making the need to form strategic alliances with one another even more pertinent. There is no solid argument in favour of waiting until all countries are on board, or until ‘everything is ready’ before being able to benefit from synergies and partnerships. Strategic alliances can be formed between one or two countries in strategic areas. With reference to Ghana and Cote d’Ivoire’s recent stance on cocoa, it’s not only the act or the outcome, but it’s the collaborative nature of the bilateral ‘teams’, (from the two Heads of State, to the Ministers, to the technical teams), that we can learn from.

What this type of alliance will do is foster a long running collaboration and start strengthening a country’s position to position it better for growth.  As the old adage goes, “too many cooks spoil the broth.” You are are potentially stronger if you develop smaller alliances and build on them. If you wait for everyone, too many different priorities will slow down the process and consequently, progress.

Also Read Black Space App CEO, April Jefferson on entrepreneurship and connecting black travelers to their culture

4. To Function effectively, negotiate trade-offs at the onset

A big country like Nigeria being subject to influence by albeit a consortium of smaller countries, will arguably always be a barrier to the effective functioning of a regional trade bloc. It will slow down the take-off of any policy or real initiative. It must be agreed upon that to function in unity, there must remain a certain level of autonomy for individual countries, particularly when it comes to making macro-economic decisions. It is the same for business alliances. Determine the roles each will play before jumping in.

 

5. The Integration of Infrastructural development within the trade zones should form part and parcel of the Efforts

Even without a trade bloc, African nations would benefit more greatly from trade if transport networks (road and rail infrastructure for one) was better. The increase in the exportability of goods may generate more revenue than that to be derived from tax benefits. Informal trade is everywhere. Reducing structural barriers will propel trade further. So countries shouldn’t limit their infrastructure to within their borders. They should integrate the region as part of their infrastructure planning and development.

 

6. Stop bemoaning the plight of Africa and become globally Competitive

Until it happens, we won’t stop hearing that what stops Africa from being competitive is the lack of value add that our products and even services offer. Any country that has thrived through trade, has thrived because of value addition. Nation states can start by investing in infrastructure, whilst scaling up industrialisation efforts as a first point of call. Although Africa indexes slightly higher in intraregional trade of manufactured goods vs raw commodities, the value is still low.

And even where commodity trading is still needed, markets can be better structured through, for example, the intervention of a commodity exchange. Commodity exchanges, such as that recently established in Ghana, seek to provide efficient and risk free trading solutions, establish fair and transparent price discovery mechanisms, develop product standards and contracts to protect producers and traders, amongst other things. Lack of structure disturbs markets; exchange rates and nothing else dictate trading behaviour. This is limiting and myopic behaviour which curtails growth in business value for countries and for the continent. Africa should be the originators of many more recognisable quality brands which are the result of adding value to commodities which have African countries as their home.

As the African Continental Free Trade Agreement comes into effect, a good starting point will be to look at the harmonisation of the regulatory frameworks which will be a pre-requisite for smooth implementation of intra-Africa trade and then ultimately, once scale increases, to international trade.

 

7. Take Action now; refine later

As an entrepreneur, one should:

  • Learn more about other African countries; study those markets
  • Understand customs and legal frameworks of the countries you are interested in doing business with
  • Produce goods and services that will have an audience within the continent
  • Create partnerships
  • Get going – you will refine your products and services as you go along.

 

Credit: Tucci Goka Ivowi

 

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Kwik Delivery reaches 2000 verified customers 2 months after its launch in Lagos

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kwik verifies its customers through mobile phone OTP as well as email verification

LAGOS, Nigeria, August 22, 2019 – Just two months after its launch in Lagos, the kwik Delivery platform reached 2000 verified customers and is already well on its way toward 3000 verified customers.

“We are thrilled by the response from Lagosians to our on-demand B2B delivery service. Among the 2000 verified customers are several large corporate accounts as well as numerous merchants relying on our service to deliver good and documents to their suppliers, customers, business partners and so on”, explains Romain POIROT-LELLIG, Founder & CEO of Africa Delivery Technologies (ADT), developer of the kwik app.

kwik is seeing a very wide typology of customers signing up and using its platform, from pharmaceutical companies such as Medsaf to construction companies like SPIE to automotive companies such as Mitsubishi. Kwik is also used by hundreds of merchants who use it to make deliveries to their suppliers and to their customers in Lagos.

Also Read Cycles, Nigeria’s No.1 Bike-Sharing Platform Achieving The United Nations SDG Goal 11 – Damilola Soladoye

kwik verifies its customers through mobile phone OTP as well as email verification. In addition, Corporate customers need to provide their corporate registration number and are brought on board by a dedicated team that checks their background.

“We are also thrilled to observe that not only our customers return, but that they are using the service for farther and more complex delivery use cases as they gain confidence in our ability to deliver to them a great service. Average order value is going up! ” continues Romain POIROT-LELLIG.

“We will continue to work hard to expand and improve our service for them”, concluded Romain POIROT-LELLIG.

Kwik

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5 Ideas to shape your focus on Business Partnerships or Collaborations

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Picture: Rawpixel

Business collaborations or partnerships are a great way to create more value for our business, clients, and consumers. However, here are five (5) things to keep at the back of your mind when pursuing business partnerships:

1. Partnerships should be meaningful.There should be a reason why you would want to partner or be partnered. From my experience having started a new business, the essence of collaborating with another company is to create more value for your clients and your business towards a certain goal or vision. It is also important to note that, there should be a clear revenue model created for business partnerships so that you would know exactly how financial value can be measured. On the other hand, know what you would also be bringing to the table. You should be bringing some great value to your partner’s business too. Understand their current goal for the partnership and be sure it is in alignment with yours. It’s a win-win.

2. Choose a partner who respects you.

I have collaborated with partners who didn’t respect me as a person and all of such partnerships even when they made us some good money, didn’t bring us fulfillment because we had to bend the rules quite too often. There are a lot of entrepreneurs and business leaders out there who are selfish, disrespectful and mean. Be on the lookout because when someone disrespects you and your processes, it affects how you run your business in general.

3. Choose a partner that is aligned with you.

Once you partner with another company whose work culture is not aligned with yours, you would always have problems executing projects because you two may not believe in the same processes and principles. Even though every organization has a distinct work culture, it becomes more difficult working with another company whose work culture doesn’t marry yours.

4. Choose a structured organization.

Before marrying with another business, be sure and certain on their organizational structure and processes. It is not an easy experience working with an organization that isn’t well structured. An unstructured organization says a lot more about the business. It translates into an unserious organization with no clear vision, people and principles. This simply means the partner is not really ready for long-term business collaboration.

Also Read GO Ads: A hybrid Ad Network pushing adverts on every screen in Africa – Boluwa Olojo

5. Collaborations should bring results.

If it is all about the money, then probably it is just a short-term contract on a project. If it is about the value you intend to create towards a certain goal or vision, which is often ideal for a business partnership, then it should bring great results. For a startup, I would recommend having someone on your team to take care of business partnerships and collaborations. The entire marriage between your company and another should be results-oriented, sustainable and successful.

Overall, business partnerships or collaborations should make you stronger, better and greater with better value and offerings, as an organization. 

 

Author

Derrick S. Vormawor

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Economy

Nigeria’s informal economy: A catalyst for economic growth

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Balogun market, Lagos, Nigeria. Pic: Megainsights

In a country like Nigeria that lacks social safety nets and has a minimum wage of less than US$98, a significant section of the population have no choice other than to turn to the informal sector as a survival strategy. However, there is every potential for the informal sector to be more than just a means of survival.  If carried out effectively, government engagement with the informal sector can lead to an invaluable economy boost.

The informal sector: What are its contributions?

In a nutshell, an informal sector business is an unregistered business owned by one or more members of one or more households selling goods and services. Informal workers are workers engaging in work without formal employment contracts or workers producing goods for final use by their households. Jobs under this category include paid domestic workers, drivers, subsistence farmers and artisans. Over 61% of the world’s working population work in the informal sector. 85.8% of employment in Africa is in the informal sector. Over 65% of the working population in Nigeria is in the informal sector. In the 2016 fiscal year, 41% percent of GDP came from the informal sector and the informal economy also accounted for 73.7% of created jobs.

Whether the numbers tell the full story or not, the contribution of the informal sector to economic growth is more than negligible. Notwithstanding, the informal sector does not figure as prominently as it should in economic growth plans, even in previous administrations. The seven point agenda of the Umaru Musa Yar’adua administration did not consider the informal sector; neither did the transformation agenda of the Goodluck Jonathan administration.

Why must we pay more attention to the informal sector? Simple. The present and projected demographic of the Nigerian population demands it. Nearly 65 percent of Nigeria’s population is between the age of 15 and 64. Only about 8% of the adult population is formally employed.25% of Nigerian children aged between 5 and 17 are engaged in labour, all of whom are most likely in the informal economy. About 43 percent of women in Nigeria, particularly Northern Nigeria are married before the ages of 18 and in all likelihood have little to no chance of obtaining higher education. The chances of such individuals ending up in the informal economy are very high.

There are about 44.3 million small business owners in the sector employing about 22.9 million people. It is important to harness the potential contributions of the informal economy, which is responsible for the employment of such a significant section of the working population, to the fullest.

How can we remodel the informal economy? Two points will be made here. First of all, greater attention should be paid to proper regulation and structuring of activities in the informal economy. In doing so, the government could create an organization responsible for the registration of businesses in the informal sector all over the country. Such organization would be established by law and its activities monitored by established bodies. Subdivisions of such organization(s) at state and local government level could be established for effective monitoring at all levels. The Economic Growth and Recovery Plan (ERGP) developed by the Muhammadu Buhari Administration in 2017 places the responsibility of monitoring the informal economy on the Ministry of Industry, Trade and Investment. It remains to be seen whether this function will be carried out effectively by this organization.

Also Read Interview: African Energy Chamber Executive Chairman, NJ Ayuk on Transforming Africa’s Energy Sector

Any formalization processes that will be carried out under the ERGP or any other economic plan should comply with International Labour Organization (ILO) standards in that it provides opportunities for income security, livelihoods and entrepreneurship. If the informal economy can be formalized through registration of informal businesses and workers, an obvious dilemma would be how to develop a proper taxation regime. If formalization does not result in taxation, government revenue from a significant aspect of the economy is reduced. Taxation on the other hand may discourage business owners and workers from being registered. A possible solution may be granting tax reliefs to registered businesses and workers below a certain income or profit level with income derived from taxation of formalized units being redirected towards investment in such sectors.

Furthermore, effort should be directed towards removing any ‘stigma’ associated with the informal economy. 61% of all workers worldwide are informally employed and as discussed earlier, the informal sector makes significant contributions to the Nigerian economy. Concerted effort must be made towards promoting the informal sector as a viable economic growth/poverty reduction mechanism. Informal workers are also skilled workers and the informal economy is also a skilled economy.

Accordingly,the government can create and sponsor low-cost well-equipped skill platforms that connects individuals willing to work in the informal sector and experts together. The current government appear to be taking steps in this regard. In 2015, the government approved the establishment of Vocational Enterprise Institutions(VEIS) and Innovative Enterprise Institutions(IEIS), secondary schools which work with businesses to provide vocational and technical training. There are now about 82 VEIs and 152 IEIs in Nigeria.

However, these institutions, as with other educational institutions in Nigeria, suffer from funding problems and are also expensive for many of the prospective beneficiaries. The government could provide assistance in this regard by subsidizing costs for prospective attendees. Alternatively, the government could collaborate with private organizations to organize periodic technical training programmes for members of the public. The allocations to the Ministry of Education in the 2019 budget proposal and projects listed under it do not indicate that the government is willing to make significant investment in this regard anytime soon.

It may be unheralded but the strong contributions of the informal economy to employment and economic growth cannot be easily discountenanced. With proper structuring, it could be an economic goldmine.

 

Author

Oluwafifehan Ogunde is a research specialist and legal consultant. He has a PhD in Law from the University of Nottingham and is a qualified barrister and solicitor of the Federal Republic of Nigeria.

 

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