What are the big corporates thinking? Raghu Malhotra, the Dubai-based President of Mastercard Middle East &amp; Africa, on developing clear frameworks for the current crisis, and why digital transformation is more important now than ever before.



Addressing the challenges of Covid-19



We absolutely find ourselves in a place where we are mandated to think differently about how we interact with the world around us. And it’s not just the challenge, but the scale of it that’s so astounding. Organizations need to play a vital role in enabling commerce critical to sustain people’s health and wellbeing.



Technology has always played an important role in how Mastercard addresses challenges, and that is even more true today. Through technology, we are better able to support all the partners with whom we interact in this ecosystem – governments, public sector, private companies, small businesses, fintechs, mobile network operators, retailers, merchants and consumers.



We developed a clear framework to address the impact of Covid-19 – containment, stabilization, normalization and long-term plans for eventual growth. We have been accelerating and enhancing our innovative services and solutions that can help businesses and governments in the region and around the world to assess, react and plan through the current crisis. We are now seeing signs that global economies are starting gradually to move into the stabilization phase.



Of course, first and foremost among the many challenges has been the cost to human health and wellbeing. We have committed to no job losses as a result of Covid-19. As an inclusive company, we know it’s paramount to consider diverse perspectives. We are encouraging learning, development and volunteering as our people combat challenges, but also discover new strengths.



Contactless payments and changing consumer behavior



Consumer behavior changes as people adapt to new environments. In order to observe social distancing, people are opting for digital and contactless modes of payment that are safe, secure and fast. While countries and sectors worldwide are at different stages of contactless deployment and usage for daily shopping habits, Mastercard saw the number of contactless transactions in South Africa grew 13X in March 2020 compared to March 2019 in grocery and pharmacy categories.



Contactless is definitely here to stay. In our consumer sentiment study from April this year, 78% of respondents in South Africa said they will continue to use contactless post-pandemic. The study revealed that since the beginning of Covid-19 in South Africa, 89% of South African respondents have been using contactless to pay for groceries, 60% for pharmaceutical items, 39% for other retail items, 15% for fast food, and 8% for transport.



When we look at the trends and data of growth in digital payments and online shopping, it’s significant. According to Mastercard data, for every $100 spent in Middle East and Africa (MEA), half was spent on e-commerce in May compared to a third of this figure in February this year.



Prioritizing inclusion



For everyone to benefit, we must include everyone – that’s why financial inclusion is so important. The digital economy is going to keep growing, and to ensure we advance real, genuine, inclusive growth, we need to make access easier and simpler. Bridging the digital divide is essential to enabling financial inclusion. Cash remains a drawback to financial inclusion and growth, which is why it’s so important for all partners to work together to build communities that are less reliant on cash and better positioned to take advantage of digital growth.



Our goal is to reach 1 billion people by 2025, including millions of small businesses and women entrepreneurs. Over the past five years, Mastercard has already reached 500 million people in 80 countries through 350 collaborative programs, including Kasha, an e-commerce platform in East Africa optimized for women’s health and personal care.



It offers confidential and convenient service, online and offline digital ordering and delivery to both urban and low-income rural areas. The digital marketplace for farmers via the Mastercard Farmers Network (MFN) and a digitized school payment ecosystem through the Kupaa initiative are other examples.



Mobile network operators play an enormous part in financial inclusion as we have a long-lasting partnership with these telcos, as well as fintechs and e-tailers, to reach people – especially those who don’t have bank accounts, as these are the people who will benefit from a digital wallet to transact with mobile money through QR codes and Virtual Card Numbers. Mobile money has transformed the landscape and almost half (45%) of all mobile money activity happens in sub-Saharan Africa. Technology is helping us achieve things previous generations could only dream of.



Helping SMEs reinvent themselves



Nine in 10 businesses in sub-Saharan Africa fall into the SME category, so they are incredibly important in driving growth for African economies and providing livelihoods for millions of people. Their success means sustainable prosperity for Africa’s entrepreneurs and going digital is a crucial part of this process. In Africa, online sales currently represent only 1% of total retail sales, so there are opportunities for Africa’s small businesses as they go digital.



One of the many initiatives we are supporting includes helping small businesses in Nigeria to set up digital money accounts and accept QR payments using Facebook Messenger and a Masterpass QR bot. In addition, we partnered with Letshego in Mozambique to pilot Community Commerce in order to digitize low-value transactions for shopkeepers of informal convenience shops. In South Africa, Mastercard has partnered with fintechs like uKheshe and iKhokha and other financial services providers, to offer low-cost digital payment solutions to SMMEs and the unbanked to fast track financial inclusion.



Over the next five years, Mastercard has pledged $250 million in financial, technology, product, and insights support to small businesses across the globe. These include measures such as helping small businesses with cash flow to sustain operations, providing access to credit, making insights available for decision-making and securing solutions to go digital, or grow in digital.



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;Nine in 10 businesses in sub-Saharan Africa fall into the SME category, so they are incredibly important in driving growth for African economies and providing livelihoods for millions of people. Their success means sustainable prosperity for Africa’s entrepreneurs and going digital is a crucial part of this process.&#8221;</blockquote>



Shaping the digital economy



At its core, the digital economy is an extremely powerful, transparent tool that enables social welfare grants for pensioners, working capital to SMEs, secure revenue streams, more convenience and lower costs for citizens. Our multi-rail approach is at the heart of how Mastercard is positively transforming the future of the digital economy. Through product introductions and acquisitions, we are reinforcing our value propositions in terms of government, account-to-account, and business-to-business payments. Additionally, we have rolled out technology for real-time transfers in bill payments and payouts, and prioritized security technology to help guard against increased fraud risk. We are participating in as many payment flows as we can to stay ahead of the changing landscape, delivering essential choices to banks, businesses and consumers.



Africa remains a top priority for Mastercard and we strive to help create a more connected continent that can continue its digital transformation and reach its full potential. We have been committed to progress in Africa for over 45 years, we are able to stay connected to Africa’s unique challenges and tremendous opportunities, as well as its inherent possibilities to succeed.



– Interviewed by Renuka Methil

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From The C-Suite: ‘The Digital Economy Is An Extremely Powerful, Transparent Tool’

Although Africa is all too often viewed by investors and the public at large as being the “dark continent”, more often than not, they are letting prejudices and misconceptions cloud their judgment about some of the most exciting investment destinations available. In 2018 alone, six of the ten fastest growing economies in the world were in the African continent. 



This prejudice is compounded by the natural tendency for investors to invest in what they know best and are most familiar with, which is often what is in their own country. Globalization has, however, made markets more interconnected, and distance is becoming less of the obstacle it once was. 



The continent is blessed with strong demographics, considerable natural resources, and increasingly, a more stable political and investment environment for multinationals to operate within. Even traditional hindrances such as poor infrastructure can be viewed as a potential opportunity, particularly in the area of financial services and e-commerce. 



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Jiji, is the largest classifieds business marketplace in Nigeria, it was started from scratch five years ago, by a group of seasoned e-commerce professionals. With a market of 200 million people, Nigeria provides enormous upside should a business take off. The horizontal classified business model (any online business using http) does, according to Goldman Sachs, offer one of the most attractive investment models in the world, along with search engines and social networks. 



It’s not hard to see why it’s such an attractive model, when the “winner takes it all” model is applied, in certain markets, the number one online classifieds controls over 80% of market share. The size of earnings opportunity equals 6 b.p. of the national GDP with 60% of long-term EBITDA margin. It is also an asset-light business model that requires minimal investment in heavy machinery and ensures high cash flow conversion.



The potential upside to the classified business model is
particularly evident in a market such as Nigeria that has a young population of
just over 200 million people. Nigeria is a mobile-only country (where 90% of
traffic is on mobile web and is rapidly shifting to apps) with high and growing
Internet penetration. In Africa, classifieds provide
the ideal platform for e-commerce, as it enables people to buy and sell both
second-hand goods and new ones. 



Over the course of the last five years, Jiji has become the largest classifieds marketplace in Nigeria. The platform has just over 6 million unique active monthly users and more than 50,000 professional sellers listing over one million items. In 2018, the Jiji app was rated number one by Android users in the Nigerian shopping category, it is currently the highest rated app in Nigerian e-commerce. 



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Having cemented its leading position in Nigeria, the team have set their sights on expanding into new African markets, and recently decided to redirect OLX users in Nigeria to Jiji and to acquire OLX businesses in Kenya, Ghana, Uganda, and Tanzania. After the transaction is completed, Jiji will have a presence in five markets, with 300 million people. 



In a couple of years, Jiji’s monthly audience is expected to cross the threshold of 10 million users which will make it one of the largest classifieds by traffic. Jiji’s ambition is to build the biggest Africa-based classifieds business, creating a new retail experience for Africa&#8217;s fastest-developing countries with a combined population of 300 million.



The deal will allow OLX users in these countries to benefit from
Jiji’s market-leading products and services. OLX’s reach combined with Jiji’s
own proprietary search and delivery algorithms, will give users a radically
streamlined experience and ensure the experience of buying and selling goods
more convenient and transparent than ever before.



Africa has in the past been viewed very negatively by potential investors and businesses in general, however, as technology breaks down barriers to accessing finance and supply chain infrastructure the potential opportunities have never been greater. 



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This combined with greater access to the internet and mobile phones provides imaginative entrepreneurs and businesses a chance to rethink traditional business models and create different systems that cater to the needs of this young, diverse and commercially underserved region. 



The team at Jiji recognize the potential benefits and opportunities that this region has to offer, only time will tell if other foreign investors recognize the upside African economies have to offer. &nbsp;

Woman in cafe shopping online with laptop

Why Now Is The Time To Invest In African E-commerce

It’s a gloomy summer’s day in Cape Town. A blanket of never-ending dreariness fills the skies. Bleakness has played a big part in Peter Allerstorfer’s journey to entrepreneurship. On this day, he is dressed in blue much like how he felt three years ago when he – and his partners – went into business.
This is a long way from Austria. He is overseeing the remodeling of their offices in the heart of the mother city, just as he remodeled his life when he travelled 13,500 kilometers to Africa. He swapped his well-paid job at McKinsey &amp; Company for building companies around the continent.
“I was missing something. I felt like doing something hands-on and creating something and seeing the results. I got an opportunity from Rocket Internet to build African operations and I took it,” says Allerstorfer.
He moved to Cape Town to start Zando, one of South Africa’s largest e-commerce fashion stores, and later Jumia, Nigeria’s largest e-commerce shop. He did the jobs well.
“It was a difficult thing to do because I had a promising career ahead of me. I wanted to start something entrepreneurial. We got funding and we just had to deliver the work and run the company. The company was running and we were a fully-fledged retailer.”
It was far from enough.
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“I stood there and saw all these things and realized I have put so much work on something that isn’t really mine. That’s when I realized it was time to build something on my own,” says Allerstorfer.
He co-founded Silvertree Capital, an investment company that builds businesses in Africa by bringing together new and old economy business models, with Paul Cook and Manuel Koser.
Starting his own business was hard. It also ushered in his worst day.
“We just left Zando and we didn’t know exactly what we were doing. We knew we are good in tech and e-commerce so we stuck to that… By the end of 2013, things were looking good. We launched our businesses, found an investor we were making progress,” says Allerstorfer.
They launched HealthCart, an online pharmacy, in 2013, launched an online marketing agency to service it and also launched a price comparison site.
Then trouble started.
“The investor in our e-commerce online pharmacy service business wasn’t delivering what they said they would. Also they had more control in the business and we didn’t, even though they knew less about the ecommerce industry and didn’t understand technology,” says Allerstorfer.
Over time, friction developed. To make matters worse, the investor in the price comparison company disappeared.
“He said he would put more money over time but we couldn’t get hold of him anymore. He just disappeared and didn’t fulfil his promise.”
In about six months, they reached a breaking point. July 23, 2014 was his worst day. He found out the investor in the online pharmacy business had taken over the business completely. He didn’t want to work with them anymore.
“This company was our very first baby. We had worked so hard on it and then it was just taken from us. The investor had the controlling hand in the company and there wasn’t much we could do,” he says.
To make matters more catastrophic, the investor in the price comparison business never got back to them and they were left with nothing but mounting bills.
It took them a year to figure out what to do and wasted money they didn’t have. It was these hard knocks that crafted the company’s approach to investment.
Their whole world was crumbling in front of them, so they decided to take a walk down the road for a burger and cold beer.
“We stopped chatting about what we were going to do. Paul and his wife were expecting a baby and we were wondering if we made mistakes by leaving the company we were at for this. We were stressed. If things continued like that we weren’t going to survive. We had invested a year and a half into this and so much hard work,” says Allerstorfer.
Trying to survive wasn’t easy. But they soldiered on so they could pay their 20 employees and make sure their dream didn’t go down the drain.
“We knew we understood technology, we knew how e-commerce works, but the business was just not working. We just decided to stay calm and focus on the business and keep doing what we are good at.”
Fundraising presentations saved them.
“Our first fundraising PowerPoint went out and within seven days we found investors. Things started turning around.  It reassured us in terms of what we do,” says Allerstorfer.
They worked day and night to make sure it stayed that way.
“From that day ‘til now, our revenue grew 10 times. We are happy we had these things happen so we could learn. The biggest thing was learning that, in whatever we do, we should have complete control over the business so we can make decisions and not be thrown out of projects we have worked hard on. ”
The company has now invested in 15 companies across four countries, reaching three million consumers a month. To garnish sweet victory, they managed to gain back control of the online pharmacy business, HealthCart.
“We later found out that the reason they initially pulled out is because they were going through financial troubles and tried to do fundraising but failed. They said they were closing down the business and we said no don’t and we got the company back,” he says.
Through its business-to-consumer e-commerce platforms, which include Click n Compare, Faithful to Nature, Cybercellar and the recently-acquired PriceCheck, Silvertree Capital reached 25 million unique consumers in Africa in 2015, a 50% increase on the previous year.
Not bad for an entrepreneur whose business was crumbling before his eyes on his worst day.

‘We Worked So Hard And It Was Just Taken  From Us’

The end of last year saw a mix of patrons, celebrities and fashion professionals from around the world descended on upscale Victoria Island for the GTB Lagos Fashion and Design Week 2013 (LFDW). In the front row were the founders of luxury retailers Luisa via Roma (Andrea Panconesi) and Browns (Joan Burstein), buyers from Bergdorf Goodman and Barneys, and publications including ELLE, Paper and Grazia. All were there to view collections by some of Nigeria’s most talented designers such as Maki Oh, Jewel by Lisa, Iconic Invanity and Tiffany Amber.
This event is not a first. Suzy Menkes, fashion editor of the International Herald Tribune, attended LFDW 2012 and declared: “The time for Nigeria is now. The development of a middle class means that a larger number of people are able to upgrade from basic necessities to luxury brands.”
<img loading="lazy" decoding="async" class="alignleft size-medium wp-image-6062" src="/wp-content/uploads/2017/05/LFDW-2013_Jewel-by-Lisa-200x300.jpg" alt="" width="200" height="300" />
British luxury department store Selfridges also sent a delegation and hosted the Nigerian fashion pop up, Ndani, in association with LFDW founder Omoyemi Akerele. In her words: “The fashion industry is very much in its infancy here. Ndani gave the designers more exposure abroad, that way they will be better appreciated locally.” The lawyer-turned-fashion consultant established LFDW in 2011 and is riding the crest of the ever-rising wave of interest in Nigeria’s fashion industry.
So why all the buzz? Nigeria has one of the highest growth potential economies in Africa. With a population of nearly 170 million and its youthful inhabitants enjoying rapidly rising discretionary incomes, it should not come as a surprise that there is a large market for fashion. Nigeria’s apparel market is estimated to be worth over $7 billion according to Euromonitor, and it has been growing at 13% per annum. However, many wealthy Nigerians still tend to shop overseas for their apparel needs. Global Blue reported that Nigerians ranked third, ahead of Americans, but are behind Middle Easterners and Chinese in apparel retail spending in the United Kingdom.
There are also many other challenges facing local designers. They struggle with a lack of manufacturing facilities, inadequate infrastructure, textile import bans and very little governmental support. Most find it difficult to produce a consistent product of high standards within the timeframe and price range required to fulfill significant overseas orders. However, some have proven to be up to the task and are quickly developing a name abroad.
“There is a lack of skilled labor, general mediocrity and often a lack of appreciation of our tradition and culture,” says Maki Osakwe, the young designer behind Maki Oh. The label has captured the attention of celebrities like Solange Knowles, Leelee Sobieski and Michelle Obama.
“I am true to myself and am always striving towards perfection while keeping my heritage alive,” she continues.
Her designs are stocked at Maryam Nassir Zadeh, a New York City-based emporium. The local landscape is changing rapidly and there has certainly been an influx of international fashion brands coming into Nigerian malls, a boon to the country’s burgeoning marketplace. Euromonitor estimates that the number of international retailers opening outlets in Nigeria is growing at 36% a year and apparel is one of the leading categories. Lagos has seen the opening of high-end stores Ermenegildo Zegna, Hugo Boss, MAC and mid-range apparel players such as Foschini as well as mass-market chain outlets like Mr. Price. The much-anticipated Alara, Nigeria’s first concept store, opened its doors in late 2013. Designed by critically-acclaimed architect David Adjaye, the store changed the face of retail in Nigeria by bringing authenticity and world-class aesthetics.
<img loading="lazy" decoding="async" class="alignleft size-medium wp-image-6064" src="/wp-content/uploads/2017/05/LFDW-2013_Iconic-Invanity-200x300.jpg" alt="" width="200" height="300" />
E-commerce is another way many are overcoming the real estate and infrastructure restrictions in the country. There are new online retail models tailored to the environment. Internet retailers Konga and Jumia offer payment on delivery options, since most Nigerians are still skeptical about paying online. Additionally, 5th and Quansah, a luxury apparel and accessory e-tailer, offers personal shopping and styling appointments in Lagos.
“Aside from economic growth, what fascinates people are the colors, textures and newness of the collections shown in Nigeria,” says 5th and Quansah founder, Nana Serwah Kankam about international interest in the Nigerian fashion industry.
“Nigerian women are stylish and trendy, proudly owning their own perspective on fashion. I don’t think you see this so often in the world. They are well aware of the global trends, confidently weaving them in with local influence.”
The apparel value chain is quickly developing and the future of Nigerian fashion seems to be very bright. With thoughtful government policies to support investment in the sector, perhaps the country will see indigenous fashion businesses serving the population and maybe even a Mercedes-Benz-sponsored Nigerian fashion week in the not too distant future.

Tag: e-Commerce

FORBES AFRICA SOCIAL MEDIA

From The C-Suite: ‘The Digital Economy Is An Extremely Powerful, Transparent Tool’

Why Now Is The Time To Invest In African E-commerce

‘We Worked So Hard And It Was Just Taken From Us’

Nigerian Fashion Is Flying