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Driving growth through digital economy

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Data Driven Digital Economy

BY: Ayomide Oriade

The outbreak of COVID-19 and preventive measures enforced by authorities across global borders has further extolled the importance of technology-based connection and communication between people, businesses, organizations and processes; a convergence that makes up a digital economy.

At the last World Economic Forum, global economic leaders predicted that by the year 2022, over 60% of the world economy will be digital, while it was also projected that about 70% of new value created in the economy in the next decade will be based on digitally-enabled platforms.

This signals the fact that those saddled with economic policy formulation and implementation in different countries of the world are focusing on the digital economy as the next growth driver. Nigeria also stands a good chance of boosting economic growth by leveraging the potential of the digital economy.

In 2019, the World Bank stated that Nigeria is uniquely positioned to benefit from the digital economy, with half of the 200 million population of the country being below the age of 30.

Commendably, figures released by the National Bureau of Statistics in May 2020, showed that the digital economy is already making a significant contribution to Nigeria’s economic growth. Non-oil sectors combined contributed over 90% to Nigeria’s GDP in the first quarter of 2020, with ICT accounting for 14.07%. In what could be seen as a move towards actualising the digital economy projection, a National Digital Economy policy was recently initiated by the Federal Ministry of Communication and Digital Economy.

According to the Minister of Communications and Digital Economy, Dr. Isa Pantami, the policy is aimed at developmental regulation; digital literacy and skills; solid service infrastructure; promotion of digital services; software infrastructure; digital society and emerging technologies.

Reports have it that the federal government is set to receive a loan of N127 billion from the China Exim Bank for telecoms infrastructure development. While there is an urgent need for investment in solid and service infrastructure in the ICT sector to further drive digital growth, the crucial space occupied by ecommerce in the digital economy cannot be overlooked. In the thick of lockdown and movement restrictions, firms and businesses with digital presence were having field day. It was a period of business boom for telecommunications companies and internet service providers. The online marketplace gained prominence like never before, even on the African continent.

The sector was arguably what was left of the economy during the lockdown. Those doubting the feasibility cum viability of ecommerce on the continent must be having a rethink after seeing the exploits of Jumia, Konga, Jiji, Njalo.ng and the likes during the period. Hence, it is pertinent that the aspect of the policy that concerns promotion of digital services is given the needed attention.

From all indications, one of the ways to a robust national digital economy is to encourage more entrepreneurs to bring their business online, and Nigeria already has existing platforms to serve as springboard. Thanks to the activities of ecommerce platforms, Jang in Plateau is able to put his wares in the face of an audience based on Imo State.

The tailor in Onitsha, and Shoe Cobblers in Abeokuta are able to sell to customers in Kogi. Sellers and customers are already connecting in a virtual marketplace courtesy of these online stores. All needed is enabling and supportive policies to bring more customers and sellers to this space.

More so, some digital offerings of ecommerce platforms will help to further drive some policies and could also be a revenue collection avenue for the government.  For instance, the ecommerce industry leaders in Nigeria, Jumia and Konga have fintech solutions that enable customers to pay seamlessly for purchases made on their platforms. With JumiaPay, customers can also pay electricity bills, Pay TV subscription, and mobile recharge. These fintech products will help drive the cashless policy of the government and also make VAT collection and remittance easier.

Government promoting digital services will also help to entrench healthy market competition, competitive pricing and customer relations needed for improved services and economic vibrancy. When the market is made attractive, there will be more investment in the sector.

These will most likely spring stronger competition among online stores, product manufacturers and sellers. “We are always informing our sellers on why they need to provide value to customers with competitive pricing. What customers want especially at this period is best deals at affordable prices. They will go for products that help them save more, and one of the advantages of online stores like Jumia is to provide a wide range of assortments to customers at the best market prices possible,” said Operating Officer, Jumia Nigeria, Omolola Oladunjoye.

Another crucial reason why promoting digital services should be prioritized is the immense spiral impact it will have on the logistics business. Many people will agree that an average delivery agent became a lifesaver during the pandemic. People became more conscious of the crucial role of logistics, and this is mostly down to an upward trend of ecommerce activities.  A good example of this is the sudden surge in logistics investment in most commercial cities of Nigeria. Investments of ecommerce players such as Jumia, Konga, Njalo.ng and Jiji has further opened up the space and is also initiating employment opportunities.

It is thus not surprising that Jumia Logistics and Konga’s Kxpress have grown beyond servicing only businesses on their platform. “In 2019 we were able to achieve 25% deliveries in rural areas through a network of direct agents. What this means is that we can accomplish even greater success by opening up our logistics services to the public. We have the right infrastructure people, partnership and technology required to help third parties and partners,” said Jumia Nigeria CEO, Massimiliano Spalazzi.

According to Konga CEO Prince Ekeh, the company has built its logistics platform working with local people to empower them to deliver to the last mile. “This is where you add value by providing service open to the entire industry,” he said.

The pandemic has no doubt shown the importance and inherent potential of a digital economy to national growth. For Nigeria to achieve the digital economy projections and be part of the emerging global economic trend, the pivot role of ecommerce in the chain needs to be properly addressed and fully harnessed.

Ayomide, a Public Relations Executive writes from Lagos

@TechEconomyNG connects past-present-emerging technological impacts on Businesses, People and Cities. All Correspondence to: [email protected]

Opinion

MarketWatch: Can gold mining support Nigeria’s economy?

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economy
Wildcast Nigerian gold miners (Source: Financial Times/ Google)

BY: Lukman Otunuga [Senior Research Analyst at FXTM]

Stratospheric Gold prices and spiritless Oil prices would seem to indicate that the state’s investment in Gold mining is a timely and positive one.

Amid the COVID-19 pandemic, Gold remains a market-moving and safe-haven asset after spot prices hit all-time highs above $1981 in July. The precious metal appreciated almost 30 percent for the year-to-date and is roughly $50 away from $2000 at the time of writing.

Gold mining

Gold draws strength from fundamentals

There are several factors over-and-above the COVID-19 disease that are supporting Gold prices.

Safe-haven buying triggered by fears over tense US-China relations has boosted the metal’s spot and futures prices.

In recent events, the US closed one of its six consulates in China and a Chinese consulate in Houston was closed, raising questions about whether the second phase of trade talks can make any constructive progress.

In addition, the Dollar’s weakness due to low yields on Treasury bonds and exposure to negative COVID-19 sentiment has prompted investors to favour Gold over the USD.

So far this year, the Federal Reserve has followed a dovish approach as fears mount over a second wave of COVID-19 hampering an economic recovery.

Nigeria’s new Gold reserve

For the first time, Nigeria has refined its own reserve Gold bar and paid N268 million for the 12.5 kg bar to start a central bank stock, shining a bright spot amid all the economic headwinds.

Given the previously-mentioned support factors for the precious metal’s prices, Nigeria’s new Gold reserve comes at a promising juncture for the country’s emerging mining industry.

It is also an encouraging development in the diversification of the national economy which the government hopes could lead to a stronger job market. If well harnessed, Gold mining and trading has the ability to potentially generate more revenue than crude Oil for Nigeria.

Looking at the mathematics

The underlying maths in Nigeria’s Gold market show strong potential

Nigeria’s Gold reserve is estimated at 200 million metric tonnes, according to the Nigeria Mining Growth Roadmap. Meanwhile, Trading Economics places Nigeria as the six largest country with Gold deposits in Africa, with an average of 21.46 tonnes from 2000 to 2019, reaching an all-time high of 21.51 tonnes in July 2019. The nation’s current estimated Gold reserves are over 200 million ounces, most of which have not been exploited.

Gold mining

Gold mining

The newly-regulated Gold mining sector is expected to create 250,000 new jobs and provide the Federal Government with an additional estimated annual revenue of $150 million in taxes, $25 million in royalties and $500 million in foreign exchange reserves.

These positive developments in the Gold mining and central bank reserve initiatives may help to improve investor sentiment against the background of COVID-19, low Oil prices and the expectation that Nigeria’s economy could contract by anything from three to six percent this year.

We must also factor in another hit to export earnings caused by the deeper cuts imposed by OPEC on Nigeria and Iraq due to overproduction.

In conclusion, a well-managed diversification into precious metals mining and building a national Gold stock can support the central bank’s foreign exchange reserves long term, as well as boost other wider types of Gold trading like derivative investments and mining stocks.

However, care must be taken to protect the new sector’s reputation and government regulations would need to be seen as enforceable for long-term credibility.

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Opinion

4 ways to ensure your business software provider is doing all it can to protect your data

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data protection (source: Google)

BY: Andrew Bourne [Regional Manager, Africa, Zoho Corporation]

In the past few years, privacy breaches around the world have made technology users conscious about the way their data is being used. You only need to look at the growth of privacy-centric products like search engine DuckDuckGo to see how mainstream privacy awareness has become.

But data privacy issues don’t just affect private individuals. They can have a massive impact on businesses, with the average data breach costing in excess of US$3.8-million.

Zoho

Country Manager, Africa, Zoho Corp., Andrew Bourne

Surveillance companies, which rely heavily on showing ads to survive, collect user information even from adjunct properties (such as websites of service providers) without users’ permission. B2B companies frequently use products and services from these surveillance companies, giving them access to their users’ data.

What can you do to ensure that you find a business software provider that doesn’t drag you into this trap? 

1. Ensure they don’t allow third-party trackers

Many business software providers use third-party trackers that allow them to study their website visitors. However, the apps they use to track them use that data to sell ads. This is known as adjunct surveillance.

With the upcoming macOS Big Sur update, it will be easier for users to know which websites are tracking them.

When it comes to choosing a software solution for your organisation, look for the ones which entirely block third-party companies across all their properties. Another thumb-rule is that vendors who have ad-based revenue model, are dependent on selling your data so it’s best to avoid them, if you are serious about protecting your data.

2. Look for regulatory compliance

While governments around the globe have generally been slow when it comes to enacting protective legislation, they have made up ground in recent years.

In South Africa, for instance the Protection of Personal Information Act (PoPI) recently came into effect, while the European Union’s General Data Protection Regulation (GDPR) has been so since May 2018.

While being able to demonstrate compliance is by no means a guarantee that your business software provider will protect your data, it shows that they at least have basic privacy and security structure in place.

3. Regular communication around data protection

One of the most powerful tools any organisation has at its disposal when it comes to data protection is user education. The data and security landscape is, after all, evolving constantly and your business software provider needs to be on top of that.

If your provider is educating you on the latest data threats, it’s a powerful demonstration that it cares about you keeping your data secure. Moreover, a provider that empowers its clients in this way is a good indicator that it’s doing everything on its end to protect your data too.

4. It’s honest about its revenue streams

In the business software space, the old saying about cheap being expensive can be further extrapolated to “free can prove really expensive”.

If a service is free, think twice before using it in your organisation (no matter how much money you think it might save). Rather look for providers which at least have some form of paid product. This means they’re much less likely to depend on ad-revenue and therefore expose your data to other parties.

Prioritising privacy

Over the past few years, millions of words have been devoted to talking about how valuable user data is. Because of the value, we have probably swung too far when it comes to surveillance and harvesting.

It’s time to swing in the other direction. You should always own your data and, far from selling it, your business software provider should be doing everything in its power to protect it.

About the writer:

Andrew is Zoho‘s Regional Manager for the Africa region and is based in Cape Town, South Africa.

Zoho

Zoho

He has more than 15 years of experience in sales and marketing, and has spent the last five years focusing on the implementation and testing of various business technologies.

He is very passionate about Zoho and has exceptional insight into the business and marketing world.

 

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Opinion

Vox Pop: Is the NIPOST license fee increment a positive move?

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NIPOST Logo

It emerged on Saturday, July 25 that the Nigerian Postal Service (NIPOST) was introducing new regulations for the logistics and courier service industry in Nigeria.

Tasked primarily with postal services in Nigeria, NIPOST also has the right to regulate the courier and logistics under the monitoring of the Ministry of Communications and Digital Economy.

Under the proposed new regulations, courier and logistics services are supposed to pay the following fees for registration:

Logistics companies operating at the national level will pay N10 million for license and N4 million yearly.

Logistics companies operating within regions will pay N5 million for license and N2 million annually.

Logistics companies operating within states will pay N2 million for license, and N800,000 for annual renewal.

Logistics companies operating within the Municipal area will pay N1 million for license and N400,000 for renewal annually.

After the reports emerged, there was an uproar on social media platforms with many Nigerians calling the move insensitive.
Following that, Techeconomy’s Saviour Adugba sampled the opinions of Nigerians on the recent move by NIPOST. Excerpts are below:

Chidera Obiora, Lawyer:

“This is appalling. One thing about most of our government policies is that they keep trying to copy taxation ideologies of sane countries but totally ignore the tactics and plans these countries have put in place to develop their countries. This government has proved that they have no economic plans for the citizens. It will be a disaster to many logistic companies of this tax is implemented because many of them are still struggling in their businesses and I don’t think many of them can afford that fee”.

Cecilia Ogunduyile, Student:

“I was really shocked when I got the information. To be candid, how much are these logistic companies even making per annum for NIPOST to think of punishing them with such a crazy courier license increment. I guess NIPOST is on a mission to push many of these courier service organisations out of business.

John Chisoba, Writer:

“So many of these tax collecting government institutions are nothing but a group of plundering rogues. To what good is the increment going to be for the common Nigerian man. It is one thing to regulate private courier services another thing to make them redundant with outrageous fees and taxes. If we may ask, have they come out with any reasonable blueprint on how the taxes will be used towards developing courier services in Nigeria?

Blessing Enenaite, Entrepreneur:

“If NIPOST has done well in its duties, they would have been an active competitor to the private courier services which would have gone a long way in making the logistics industry more developed but that is not the case. NIPOST has decided to be a parasite doing nothing but feeding on the sweats and industriousness of private courier organisations. This tariff increase makes no sense and must not be allowed to see the light of day.

Kolade Olaniyan, Real Estate Consultant:

“Many Nigerian private organisations including courier service providers are still trying to adjust to the economic disruptions caused by the Covid 19 pandemic. It is really unfair for such an outrageous increment to be placed on these private investors. The government is supposed to ease the pressure off their shoulders rather than inflict more pressure on them.

Onyeka Chiemele, Teacher:

“NIPOST should think of a more sensible way to regulate the courier industry. NIPOST is supposed to be a force to reckon w with in the haulage and courier service sector but mismanagement and corruption has rendered it almost useless. While the private courier services are making strides, NIPOST has been more of a plague. The increment on courier taxes and fees is ludicrous.

Augusta Osamor, Journalist:

“It is evident the Government Treasury is no longer boisterous and the price of oil has fallen drastically. The only way they can generate revenue is to tax its citizens. The proposed increment on logistics companies by NIPOST should be discouraged and prevented from being implemented because I see it as outright robbery.

David Amuge, Content Creator:

“This is a very absurd and insensitive decision by NIPOST. Many businesses are currently struggling to stay afloat and the increase in courier operation fees is baseless. While other countries are granting tax rebates to encourage businesses to grow, businesses are being suffocated with exorbitant taxes and charges. I think NIPOST executives need to be investigated and made to account for reasons being suggesting such outrageous fees and they need to tell the public what they intend to do with the new tariff if implemented.

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