Thomas Pays, CEO and co-founder Ozow
Unless we ensure digital inclusion for all South Africans, any efforts to build a vibrant and growing economy will fall flat.
South African consumers and businesses need safe, convenient and accessible cash alternatives that simplify the payments process. As it stands, too many are excluded from online and other value-added services simply because they lack access to a bank card. While there are lower levels of banking services penetration in other African countries, 80% of South African citizens are banked, a commendable increase from only 46% in 2004. However, only one in eight adults have access to a credit card. For the rest, many online services remain inaccessible. The over-reliance on card payments to facilitate online and other transactions continues to exclude a large portion of the country’s consumer market.
Cash still dominates the South African economy. Even though it is still growing change is sweeping through the ecosystem. Market-led payments companies are introducing new innovations that enable non-card users to transact safely and conveniently, greatly improving digital inclusion especially in underserved markets. Judging by recent developments, government is also searching for solutions that replace cash with more convenient and safer forms of electronic payment, and bring opportunities for underserved communities to access new payment and financial services options.
Digital inclusion a national priority
The South African government has set its sights on fostering greater digital inclusion, as is evident in the President’s State of the Nation address in February, which highlighted the need for improved digital literacy among the country’s citizens. The SA Reserve Bank’s Vision 2025 has also emerged as a roadmap to establishing a vibrant open banking ecosystem in the country.
In a bold step earlier this year, regulators instructed South Africa’s mobile operators to adjust their pricing in order to reduce inequality in digital inclusion. The Competition Commission found that lower-income mobile users were disproportionately disadvantaged by higher per-MB costs than larger data bundles for higher-income users. This will certainly aid greater adoption of online services and alternative payment types among the country’s large middle- to lower-income groups, who were previously unable to afford high ad-hoc data costs.
Solutions to low adoption of new payment types
In a 2019 global report, McKinsey identified cloud-based, API-driven architectures built on open banking principles as accelerators of innovation and competition in the payments industry. And that’s one vital role Thomas Pays believe companies such as Ozow fulfil in the African market: combining new technologies and new thinking to offer simplified payments to all. This is evident in how some of the main barriers – lack of data, low-end smartphones – are being overcome with innovative workarounds.
While South Africa’s smartphone penetration is currently over 80%, a lack of data means many consumers are often locked out of using online services and alternative payment methods such as QR code based payments. One solution is to zero-rate mobile data costs. In our experience, this helps ensure consumers can make electronic, mobile or app-based payments even when they have no data on their devices, and directly contributes to greater adoption and usage.
Many of the smartphones used by lower-income consumers also lack sufficient space for the growing list of apps used to facilitate electronic payments. Here, offering the option of a progressive web app that can be accessed via a browser allows consumers to pay without having to permanently store a native app.
South Africa – and the rest of Africa – needs to put concerted effort into driving digital inclusion among the continent’s 1.3 billion citizens. I’d suggest starting with improving access to simple, safe payment options that remove the reliance on cash.
Africa’s youth unemployment challenge needs a revolution in order to sustain global development
Opinion By Dr Dennis Rangi, Director General, Development at CABI based at its regional centre for Africa in Nairobi, Kenya. (Africa’s youth Image credit: CABI).
It’s a startling statistic but by 2050 Africa’s population is expected to double to around 2.6 billion. This creates greater pressure to feed so many mouths amid the challenges of economic, political and societal instability let alone the impacts of climate change.
When one considers that almost 60% of Africa’s population in 2019 was under the age of 25, making Africa the world’s youngest continent, it’s clear that Africa’s youth holds the key to the continent’s very survival and the burden to sustain wider global development
In 2019, more than a third of the population was aged between 15-34. By 2100, Africa’s youth population could be equivalent to twice Europe’s entire population.
According to the UN, the median age in Africa is 19.8 in 2020. On the continent, Mauritius is expected to have the highest median age, 37.4, and Niger is expected to have the lowest, 15.1.
However, in youthful Africa, just 56% of the population is of working age, which translates to about 1.3 people of working age supporting every dependent (mostly youth) – versus a global average of two workers to every dependent. This in essence is the ‘youth bulge’, and addressing it has never been more of an urgent task.
According to the World Bank, in 2020, 14.5% of 15 to 24-year olds in Sub-Saharan Africa were unemployed. This is among the lowest rates globally among young people in this age bracket. But the International Labor Organization says most of them work informally, are underemployed or stay in poverty because of low wages.
Quite simply, the growing youth unemployment and underemployment – especially in developing countries – is one of the greatest challenges of the 21st century.
Agriculture has long been the dominant sector in much of Africa in terms of output, employment and export earnings. Indeed, agriculture is arguably the most important business opportunity for our young people to embrace. As such, any meaningful change in the continent’s future must involve agriculture.
A ‘revolution’ in agribusiness involving Africa’s youth is therefore required so they can capitalise on the sector’s contribution to around 25% of the continent’s Gross Domestic Product (GDP) and 70% of its employment. They, with our support, need to meet these challenges head on so they can leave a lasting and sustainable legacy for their own children and their futures.
This is especially true when thinking of young people’s roles in agricultural value chains. We need to take a ‘two-pronged’ approach to enhancing their skills not only in producing safer foods free from crop pests and diseases but also in helping to involve them as village-based advisors – giving crucial information to help increase yields.
It may also be that they can combine both roles as part of a dual approach to the ever-increasing food crisis.
The time is ripe for Africa’s youth to lead the technological realisation of digital agriculture – recognising this a key driver for economic development within the agricultural sector.
This is particularly so in Kenya where digital innovations have eased trading barriers in certain value chains by providing trade platforms that directly connect farmers to traders enabling them to get competitive returns on their yields.
The African Centre for Women, Information and Communications Technology (ACWICT)-led Maudhui Digiti (Digital Content) project, for example, recently assessed the access and use of digital content.
This included evaluating opportunities for women and young people’s employment in the digital sphere for farmers, particularly the underserved agricultural communities and organizations in Laikipia County.
Youth play a pivotal role in agriculture and rural transformation. One of the findings in a book recently published by CABI titled ‘Youth and the Rural Economy in Africa,’ recommends a targeted technology promotion aimed at young people, most of whom are ‘digital natives’.
These youth can catalyse the realisation of digital agriculture in Sub-Saharan Africa due to their innovativeness and fast adoption of new technologies.
One example where CABI has extensively supported agricultural production, especially amongst smallholder farmers including the youth in Africa and beyond, is the Good Seed Initiative.
This ran in East Africa from 2013 to 2016 and sought to promote good production of quality African Indigenous Vegetable (AIVs) seeds and vegetables so as to improve the income of seed producers.
It also aimed to contribute to food and nutritional security of smallholder farmers and other actors in the seed and vegetable value chains of seeds.
The project enabled women and youth in Uganda and Tanzania to engage in market-driven profitable value chains that required minimum capital, capital and other factors of production.
This was achieved by empowering women and youth with requisite skills for seed entrepreneurship of indigenous vegetables which continued to be in high demand.
In research conducted by CABI – which focussed on Zambia and Vietnam – we sought to understand the nature of youth participation and identify barriers and opportunities for youth engagement in agriculture and agribusiness in Lusaka, Zambia and Vinh Phuc, Hung Yen, Dak Lak and Tien Giang in Vietnam.
We found that while a majority of youth were engaged in agriculture – primarily production – few were involved in input supply, trading, transportation and the provision of advisory services.
For instance, the study in Zambia found that almost all the youth (99%) were engaged in farm production, producing crops and animals for home consumption and local markets – yet hardly any were involved in valuable extension services.
This is where initiatives such as the CABI-led PlantwisePlus global programme can engage youth in non-formal extension services and help fill in the missing linkages within the agricultural value chain.
CABI in partnership has trained – through the preceding Plantwise programme – millions of professionals in 34 countries over 10 years. This includes extension staff, agro-dealers, quarantine officers to provide improved quality services to farmers.
In Uganda, where 70% of those unemployed are youths, CABI partnered with Zirobwe Agaliawamu Agri-business Training Association (ZAABTA) in Luwero district. This was to skill youth to enable them to provide various services in major agricultural and profitable value chains in the country.
Implemented under PlantwisePlus, the training sought to increase the supply of safer food through enterprises driven by women and youth to meet the growing demand by consumers in rural, urban and peri-urban markets.
We believe helping to enable youth to provide services as ‘village-based advisers’ in this way will be an attractive option to our youth and call for it wholeheartedly – even if they wish to engage in this activity alongside regular farming activities.
We simply cannot rely upon young people to be only producers of food. They may also need to be involved in the safe production of it in the first place and be part of a ‘knowledge exchange.’
In terms of open access learning, CABI’s ‘plant doctor’ training modules have been adopted by various academic institutions across the world. Plant doctors work at ‘plant clinics’ held in communities to help farmers diagnose their plant health problems and suggest remedies so their crops can grow more successfully.
In Uganda, for example, CABI’s practical hands-on course on field diagnostics and plant clinic operation is giving good recommendations to farmers to students at various years of study.
The course was first introduced in Makerere University in 2013 and is now offered by Uganda Christian University, Bukalasa Agricultural College, Busitema University and Gulu University.
We need to build our capacities and strengths in partnership to help address the ‘youth bulge’, and also the growing demand for youth and their role in agriculture to feed the rising population.
African Risk Capacity Group and African Development Bank provide US$5.3 million to Zambia
Representatives from the African Risk Capacity Group and the African Development Bank presented a symbolic US$5.3 million cheque to the Zambian Government, to aid in the country’s recovery from the extreme drought event during the 2021/2022 agriculture season.
The payout is the result of drought insurance taken out by the Government of Zambia under the Africa Disaster Risk Financing Programme Multi-Donor Trust Fund, a fund supported by the Governments of the United Kingdom, through the Foreign, Commonwealth and Development Office, and Switzerland, through the Swiss Agency for Development and Corporation. The fund is managed by the African Development Bank. The payout will enable the country to carry out timely emergency response activities in communities affected by drought, through the provision of cash transfers and food assistance to ensure food is available for the targeted households during the lean season period.
Zambia’s Acting President, Her Honour W.K Mutale Nalumango, received today the payout cheque on behalf of the Zambian Government. In her keynote address, the Acting President welcomed the payout from ARC to the Republic of Zambia, stating that the funds would help the government to meet the relief and livelihood reconstruction requirements of the most vulnerable households impacted by the 2021/22 drought.
Her Honour W.K Mutale Nalumango expressed gratitude that her government, through the Ministry of Finance and the Disaster Management and Mitigation Unit (DMMU), took up insurance as a mitigation measure against drought.
“With the national treasury experiencing unlimited demand for the provision of public goods and services, the government stands ready to support disaster risk transfer initiatives that lighten the burden on government. I urge other organisations such as the World Food Programme and other international and local civil societies to come on board to help expand the ARC insurance coverage in Zambia by partnering with my government to take up replica and micro insurance,” the Acting President further stated.
The adverse impacts of climate change and climate variability caused droughts in Zambia in 2021 and 2022. Substantial lack of rain impacting crop production resulted in severe food insecurity in districts in the southern and western parts of the country.
The Government of Zambia had earlier signed a memorandum of understanding with the African Risk Capacity Group to participate in the 2021/2022 drought risk pool to better deal with the drought and protect vulnerable populations from its adverse impacts. The Zambian Government made a premium budgetary allocation from its national budget and sought additional premium financing support from the Swiss Agency for Development and Corporation and the African Development Bank to maintain the insurance policy for the 2021/22 agriculture season.
“The African Development Bank is pleased to see this African Risk Capacity Group payout to the Government of Zambia. We expect this to be the beginning of continued support to help the country enhance their resilience to the shocks of climate change. The Bank’s support has brought assistance to farming communities hit hard by drought and poor crop yields, by enabling Zambian authorities to provide them with cash payments and sustaining them from eating their seeds as food, quitting farming as livelihoods, or migrating in search of food and non-existent jobs,” said AfDB Vice President for Agriculture, Human and Social Development, Dr. Beth Dunford.
“ARC offers an African solution to one of the continent’s most pressing challenges, the shocks of climate change, transferring the burden of climate risks away from governments to ARC through sovereign insurance,” said Dr Abdoulie Janneh, ARC Group Deputy Board Chair and ARC Ltd Board Chair. “The Government of Zambia is our privileged partner, and we stand with them to ensure their vulnerable population and livelihoods are protected against extreme weather-related disasters,” he added.
The funds disbursed to the Government of Zambia will also boost the local economy and help communities build back better.
“We are extremely honoured by the trust vested in us by the Government of Zambia. We are confident that this payout will assist the country in supporting its affected population to recover from the effects of the drought and prevent them from resorting to negative coping mechanisms,” said United Nations Assistant Secretary-General and ARC Group Director General, Ibrahima Cheikh Diong.
Fast-track urbanization to spur growth, shelter Afrique urges African Countries
Shelter Afrique Head of Policy, Research and Partnerships Dr. Muhammad Gambo leading a panel discussion on financing Urban development at the 9th Africities Conference in Kisumu. With him are (from left to right) Dr. Kamal Ben Amara, Mayor of Bizerta, Tunisia; Hashting Chikoko Regional Director, Africa at C40 Cities; and Kevin Ouko, Director of Corporate Banking at Ecobank. (Photo: Supplied).
Pan- African housing and urban development financier, Shelter Afrique has urged African countries to fast-track urbanization to stimulate economic development across the continent.
Speaking at the 9th Africities Conference held in Kisumu, Kenya between 17-21 May, 2022 and attended by over 11,000 people, including 8,000 official delegates from across Africa and globally, Shelter Afrique’s Head of Policy, Research and Partnerships Dr. Muhammad Gambo said urbanization could play a major role in economic and social progress, if well managed.
“No country has grown to middle income without industrializing and urbanizing and none has grown to high income without vibrant cities. China, for instance, is widely held up as an example of how urbanization can fuel industrialization and transform living standards. This is why we strongly believe African countries should put more emphasis on effective urbanization if they intend to lift their people out of mass poverty, and doing so, fast,” Dr. Gambo said.
A report by the Organization for Economic Co-operation and Development (OECD), Africa’s Urbanisation Dynamics 2020: Africapolis, Mapping a News Urban Geography”, the pace of urbanization and urban population growth in Africa has changed significantly across the continent generally as well as within its various regions.
According to the report, Africa’s urbanization rate will continue to grow among the fastest of the world regions in the coming years as its population grows, which is expected to double by the year 2050.
“We urge policymakers across the continent to enact policies that will encourage urban growth modeled around economic development and poverty eradication,” Dr. Gambo said.
Dr. Gambo, however, noted that funding urban growth still remains a formidable challenge for many countries, but believes it’s achievable.
“Shelter Afrique recently completed a debut ₦46 billion (US$110.7 million) Series 1 Fixed Rate Senior Unsecured Bond Issuance in Nigeria’s capital market under its ₦200 billion (US$481.3 million) bond issuance programme for housing and urban development in Nigeria. This issue was 60.7% oversubscribed, meaning there is an appetite for such bonds, not only in Nigeria but also in other countries like Kenya, South Africa, Morocco, etc. What African countries need is the know-how to create financial ecosystems that can support the mobilization of municipal and subnational finances for urban infrastructure development,” Dr Gambo said.
The African Development Bank estimates that the continent’s infrastructure financing needs will be as much as US$170 billion a year by 2025, with an estimated gap of around US$100 billion a year.
Africities is a Pan Africa conference that is convened by the United Cities and Local Governments of Africa’s (UCLG-A) and brings together the leadership of cities and sub-national governments and their associations for the advancement of decentralization and local governance aimed at improving the living standards of the citizens. This year’s conference discussed the role of Intermediary Cities of Africa in the Implementation of Agenda 2030 of the United Nations and the African Union Agenda 2063.