For companies in Nigeria currently battling the recession, the challenges are slowing sales and reduced earnings due to spiraling costs from high inflation and forex rates. To manage cash flows, businesses may have had to reduce or halt spending totally.
However, the companies that will come out of the recession stronger must master the delicate balance between cutting costs to survive today and investing to grow tomorrow. According to a survey by the Harvard Business Review, companies that deploy a specific combination of conservative and progressive strategies have the highest probability—37%—of breaking away from the pack.
These companies reduce costs selectively by focusing more on operational efficiency than their rivals do, even as they invest comprehensively in the future by spending on marketing, R&D, and new assets. This multipronged strategy is believed to be the best approach to surviving a recession and growing stronger into the future.
How can businesses enhance their operational efficiency, while investing selectively? What options does digital technology offer African Enterprises? What impact does outsourced technology have on businesses, especially on cost-savings and efficiency? How is colocation and cloud computing a business optimisation strategy?
West Africa’s leading connectivity and data center services company, MainOne notes that managers must aim at achieving the right balance between the technologies they want and the ones they need.
MainOne has outlined some of the ways outsourced data center and cloud services have helped their clients to maintain long term profitability:
Adopting digital technologies is a cost effective strategy to optimize processes and drive new and improved measurable business results.
Outsourced data center and cloud services speeds up a company’s time to market and improves service delivery.
Companies can be reassured that their data is protected according to the highest standards thus minimizing their risk.
Leading enterprise businesses in Nigeria have confirmed how MainOne’s data center service has helped reduce their operational and capital expenses while enhancing flexibility and agility.
About MainOne:
Few companies in West Africa can provide the right data center services for always-on enterprise businesses today; MainOne is the clear leader in Nigeria, offering secure and reliable outsourced data center services for enterprises in-country.
MainOne’s MDXi Tier III Data Center is the only Data Center in Nigeria certified to PCI DSS, ISO 9001, ISO 27001 and SAP Infrastructure standard. MainOne’s MDXi Data Center also recently announced a partnership with the Nigerian Internet Exchange (IXPN) which will boost internet performance in Nigeria by enabling traffic originating and terminating on any network in Nigeria to remain in-country.
The International Air Transport Association (IATA) urged governments to support the vital role aviation plays in connecting people and commerce around the globe.
“Our world has grown much wealthier through trade and travel. Air travel liberates people to live better lives and makes our world a better place,” said Alexandre de Juniac, IATA’s Director General and CEO. In the US, the aviation sector contributes $680.1 billion dollars to GDP and supports 6.2 million jobs. “Aviation is the business of freedom and we must continue to work together to make it so,” said de Juniac.
Looking to the agenda for the Trump Administration, de Juniac called for a reduction in the tax burden on aviation and air travelers, and a new approach to the provision of air traffic services.
Taxes:
“The tax burden needs to be reduced. Airlines for America estimates that taxes account for more than a fifth of the cost of the average domestic ticket. In a country as big, beautiful and full of opportunity as the US, why have a taxation policy that discourages travel? Travel stimulates the economy with tourism dollars and business development. We hope that the Trump Administration will create jobs by dramatically reducing the tax burden on travel.”
Air Traffic Services:
“Airlines and their passengers suffer the impact of the unpredictable federal budget process on the Federal Aviation Administration’s (FAA) provision of air traffic services. The US is falling behind in the introduction of new and more efficient technology. Now is the time to move forward with innovation in the provision of air traffic services. IATA supports the creation of an independent, corporatized non-profit entity to manage US skies. IATA hopes that this will be one of the achievements of the Trump Administration and the 115th Congress.”
De Juniac also urged the Trump Administration to return the country to the principles of airline deregulation.
“The Airline Deregulation Act of 1978 unleashed competition and spurred innovation by letting market forces drive commercial decisions. And today consumers benefit from more travel choices than ever. Deregulation has benefited travelers, the US economy and the competitiveness of its airlines. I hope that the Trump Administration will keep that in focus.”
De Juniac made his remarks at the US Chamber of Commerce 2017 Aviation Summit on 2 March, where he also focused more broadly on the need for industry and government to align to support innovation. “Delivering the benefits of an ever safer, efficient and sustainable air transport system in the face of a doubling of demand by 2035 will require quick, constant innovation. At the industry level, governments play a particularly important role as partners and regulators.”
He highlighted three areas where airlines and governments need to innovate together:
Safety
“Safety is our top priority, which is why flying is the safest way to travel. Innovation plays a role in helping make it safe and it is most successful when industry and government work together. The IATA Operational Safety Audit (IOSA), which is a requirement for membership in IATA, is an example of such innovation. IATA worked with government safety regulators, including the FAA, to develop IOSA. And it is always evolving to make sure that the latest global best practices and technology advancements are incorporated into IOSA’s 900+ standards,” said de Juniac.
Security
“Security is the responsibility of states but the industry is playing a role. The threat is real and is constantly evolving. We must innovate to be more effective and more efficient,” said de Juniac.
IATA has partnered with Airports Council International (ACI) to promote Smart Security, which aims to reduce the hassle factor while making security more efficient and effective. Last year, IATA and ACI signed a Memorandum of Understanding with Hartsfield-Jackson Atlanta International Airport to deploy Smart Security concepts.
“Partnership with governments is critical for the success of Smart Security. And collaborative innovation is the only way to stay a step ahead of those intent on doing aviation harm. It is the only way to secure our vulnerabilities—landside, overflying conflict zones, insider threats or our IT infrastructure,” said de Juniac.
Distribution
The New Distribution Capability (NDC), launched by IATA and supported by industry—is an innovation that will bring greater transparency to the air travel shopping experience when using a travel agent or online site.
Based on XML, rather than the pre-internet standard common today, NDC standards will enable airlines to deliver much more information about their products through the agency channel.
But a regulation proposed in the last days of the Obama Administration to require airlines to display certain ancillary information through the travel agent channel could have the unintended consequence of locking consumers into the older, less flexible and less transparent distribution model.
“I hope Secretary of Transportation, Elaine Chao will take a fresh look at whether the US government should be dictating to airlines how and where they must display their products,” said de Juniac.
L-R: Sola Tinubu, Deputy President, Nigerian Council of Registered Insurance Brokers (NCRIB); Bola Onigbogi, Vice President, NCRIB; Pius Apere, MD/CEO. Linkage Assurance Plc; Emmanuel Okunoren, President, NCRIB; Feyisayo Soyewo, Past President, NCRIB, and Joyce Ojemudia, GM, Marketing, Linkage Assurance Plc during the February 2017 members evening of NCRIB hosted by Linkage Assurance Plc in Lagos.
Determined to increase its market share and compete effectively for growth, Linkage Assurance Plc has moved to strengthen its relationship with insurance brokers.
Brokers according to industry statistics control over 70 percent of the market share, particularly in the corporate, private and public sector businesses.
The Linkage chief executive says coming to work with brokers more closely is in line with its vision to increase visibility, deepen penetration and provide insurance to nook and crannies of the country.
Dr. Pius Apere, Managing Director, Linkage Assurance Plc speaking at the February 2017 Members Evening of the Nigerian Council of Registered Insurance Brokers (NCRIB) said brokers have a big role to play in helping to ensure that insurance takes deeper root in the economy of Nigeria.
L-R: Sola Tinubu, Deputy President, Nigerian Council of Registered Insurance Brokers (NCRIB); Bola Onigbogi, Vice President, NCRIB; Pius Apere, MD/CEO. Linkage Assurance Plc; Emmanuel Okunoren, President, NCRIB; Feyisayo Soyewo, Past President, NCRIB, and Joyce Ojemudia, GM, Marketing, Linkage Assurance Plc during the February 2017 members evening of NCRIB hosted by Linkage Assurance Plc in Lagos.
Apere said insurance sector is the backbone of any economy, and that without insurance no economy can grow because insurance sector help other business to survive, particularly in a period of economic recession.
“Without insurance, many businesses will die in this recession, that means we have a role to play by ensuring that we help businesses remain on the part of growth and sustainability, Apere stated.
The Linkage boss further stated that the company recently launched seven new products targeted at low income earners to enable them to manage their risks and enhance their standard of living. There is economic recession, so these products have been considered to alleviate the plight of ordinary citizens such that they are affordable with a lot of benefits for individual and small businesses.
While thanking the brokers for their patronage in the past, he urged them to support the company to have an exciting and beneficial journey in 2017 and going forward.
Among the products recently launched by the Company are Linkage Purple Motor Plus; Linkage Third Party Plus; Linkage Shop Insurance; Linkage Event Insurance; Linkage Estate Insurance and Linkage SME Comprehensive.
South Africa’s Nedbank says that Ecobank Transnational Incorporation (ETI) remains vital to its expansion elsewhere on the African continent despite booking a $293 million write-down on the value of its stake in the sub-Saharan lender. Ecobank has operations in nearly 40 countries outside its home market. Nedbank Chief Executive, Mike Brown, told reporters ““It’s obvious that we would be disappointed. But we still, however, remain optimistic on the long-term growth prospects in the rest of Africa.”
ETI’s operations in Central and West Africa are exposed to some economies that have been pressured by the commodity price slide and unfavourable currency swings since Nedbank bought a 20 per cent stake for $500 million in 2014.
Brown forecast another tough year for Ecobank, which makes the bulk of its earnings in Nigeria, before improving in 2018 and beyond. Nigeria, Africa’s biggest economy, has been hit by a currency crisis and its first recession in 25 years following the slide in oil prices since the middle of 2014.
Nedbank, a subsidiary of Anglo-South African conglomerate, Old Mutual, said its diluted headline earnings per share rose 4.8 per cent to 2,350 cents in 2016, the slowest pace of growth since 2009 when its EPS fell by nearly a third. Headline EPS is the main measure of profit in South Africa as it strips out certain one-off items.
Nedbank also said its results were affected by slack demand for loans as slowing economic growth and higher interest rates hit consumption and investment spending across Africa.
Brown forecast at least 7 per cent growth in 2017 annual headline EPS, saying a peak in interest rate cycle in South Africa would lift demand or loans.
Old Mutual is in the middle of an overhaul in which it will carve itself into four parts and cut its 54 per cent stake in Nedbank to a minority holding to simplify its structure.
Nedbank competes with Standard Bank, FirstRand, Barclays Africa and Capitec.
Red Star Express Plc, on March 1st, 2017 commenced a food delivery service through its subsidiary, Red Star Support Services. Aptly known as the “Express Food Delivery Services”, the product has been designed to create a seamless process for people with time constraints and limited opportunity to order for breakfast, lunch or even dinner at the comfort of their offices or homes with guaranteed delivery within the shortest period.
At the click of a button, you can make orders for any food of your choice (from various eateries and Restaurants) without initial payment and then wait for just 10 minutes of ordering, you get your order right at your door step, then you can make payment once the food is delivered.
Already, some of the prominent eateries and fast food companies in Lagos are on board as they have the EFDS delivery men stationed around their delivery-request hubs on the Island and on the Mainland.
The EFDS, as a product, is divided into two forms; the Corporate account and Individual orders. The Corporate accounts include requests from fast food outlets, restaurants and hotels, while the individual orders include requests from private persons who simply call the EFDS office and make order from participating restaurants of their choice.
Red Star Express Group is a premium logistics solution provider in Nigeria with an unrivalled local network coverage and a large market share in the domestic and international market. It enjoys a domestic strength of over 240 offices in Nigeria, delivers to additional 1,800 communities, with over 2,400 highly trained personnel and over 600 delivery vehicles in its fleet.
The company has four business units including The Red Star Express which is a licensee of FedEx, the world’s largest express transportation company with over 650 aircrafts and more than 250 delivery destinations globally.
FedEx has consistently been rated among the top 10 most admired companies in the world over the past 10 years. Red Star Express has four subsidiaries – Red StarFreight, Red Star Logistics and Red Star Support Services.
The Minister of Finance, Mrs. Kemi Adeosun has stated that the Development Bank of Nigeria (DBN) is being positioned to galvanise the Small and Medium Scale Enterprises sector for the overall development of the nation’s economy.
According to her, the present administration is aware of the role of SMEs in national economy, hence the resolve to position the DBN as a catalyst for the development of the SMEs. The wide range of SMEs is a reflection of our economic diversity.
The Minister, who spoke during a Board/Management/Development partners’ retreat of the DBN in Abuja, also assured the Board that the Federal Government is ready to provide support for the new development financial institution.
The DBN had convened its Development Partners and incoming management team and Board of Directors for an inaugural strategy retreat, in order to ready itself for immediate operation upon the issuance of its licence by the Central Bank of Nigeria (CBN).
She decried the present situation where SMEs account for 45 per cent of the Nigeria’s Gross Domestic Product (GDP) but just 10 per cent of bank credit.
She pointed out that currently, Nigeria’s financing of MSMEs lagged significantly behind other countries, including Brazil (63 per cent), Ghana (36 per cent), China (30 per cent), Kenya (24 per cent), and South Africa (21 per cent).
However, the Minister who disclosed that the operating licence for DBN is expected imminently also believed that through the activities of the DBN, some of the problems currently discouraging the growth of the SMEs sector would be effectively tackled.
She stated that DBN would lend to microfinance banks, which will in turn develop specific products for specific markets at a lower interest rate than currently available to SMEs.
She stated that the Finance Ministry is in discussion with the Central Bank of Nigeria on the need to use the Development Bank as a vehicle for any of its subsequent SMEs intervention.
The Development Bank of Nigeria (DBN) is a wholesale financial institution, which aims to increase access to finance for Micro, Small and Medium Enterprises (MSMEs) through eligible financial intermediaries (“participating financial institutions”).
The DBN will have access to US$1.3bn (N396.5 billion), which will be provided by the World Bank (WB), KfW (German Development Bank), the African Development Bank (AfDB) and the Agence Française de Development (French Development Agency).
The National Bureau of Statistics (NBS) released its Q4:2016 GDP report yesterday. In line with expectation, Nigeria’s FY: 2016 GDP contracted 1.5% Y-o-Y, beating our projection of -1.6% for the year. Despite the continued rally in select financial services stocks, the Nigerian equities market closed lower amid more FY: 2016 earnings releases. The All Share Index slid 0.2% to 25, 329.08points while YTD loss worsened to 5.8%. Major drags to performance were NIGERIAN BREWERIES (-2.1%), GUINNESS (-3.9%) and FORTE (-5.0%) while market capitalisation trimmed N15.3bn to N8.8tn. Activity level strengthened as volume and value traded rose 74.5% and 43.7% to 444.5m units and N3.6bn respectively.
DANGCEM Releases Impressive FY: 2016 Result
Performance across sectors remained mixed today. The Insurance index advanced the most, up 0.3% on account of AIICO (+3.4%) and CONTINUSRE (+1.0%). Similarly, the Oil & Gas and Banking sector indices advanced 0.2% apiece. On the flipside, the Consumer Goods index declined 1.4% following sell offs in GUINNESS (-3.9%) and NIGERIANBREWERIES(-2.1%). The Industrial Goods index closed flat for the second consecutive trading session notwithstanding the impressive FY: 2016 result submitted by DANGCEM. The Cement maker’s Gross Revenue and PAT grew 25.1% and 2.9% Y-o-Y to N615.1bn and N186.6bn respectively and proposed an N8.50 dividend per share for the reporting period.
Investor Sentiment Strengthens
Market breadth (advancers/decliners ratio) improved to 1.3x (from 1.0x yesterday) as 15 stocks advanced while 12 declined. UACN (+5.0%), OKOMUOIL (+5.0%) and VITAFOAM (+4.9%) topped the gainers’ list while FORTE (-5.0%), HONYFLOUR (-4.8%) and TRANSCORP (-4.2%) led the losers’ chart. In line with our equity recommendation report published earlier today, we see significant 12-month upside potentialin ACCESS, UBA, ZENITH, MANSARD, DANGCEM, DANGSUGAR, NESTLE and CONTINSURE.
NASD OTC Exchange Market Activities
In the NASD OTC exchange, the total volume of trades fell 78.2% to settle at 152,943 units while total value fell 91.5% to N7.6m. CSCS PLC was the most traded stock, representing 65.3% total volume traded.
L –R: Hon. Salisu Zakari Ningi, Dep. Chairman; Mr. Adekunle O. Onafowokan, MD, Ladgroup Ltd; Hon. Sir Jones Chukwudi Onyereri, Chairman, House Committee on Banking and Currency; Prince (Dr) B. A. Onafowokan, Chairman, Ladgroup Ltd; and Mr. Bashir M. Wali, Acting MD/CEO, NEXIM Bank at the LADGROUP Shea Butter processing factory in Ikenne, Ogun State during the House Oversight Function visit on Thursday, February 23, 2017.
“…the interest of NEXIM Bank in Shea Nut processing for export was borne out of the very high demand for Shea Butter with the impressive potentials for foreign exchange revenue stream as well as massive job creation at various levels of its value chain.” – Bashir Wali
The House of Representatives’ Committee on Banking & Currency led by its Chairman, Honourable Sir Jones Chukwudi Onyereri visited the Ladgroup Limited as part of their ‘Oversight Functions’ to Ladgroup Limited in Ikenne, Ogun State.
Ladgroup is the foremost indigenous Nigerian conglomerate with a state of the art Oil Mill Extraction factory, which is the largest Shea Nut processing factory in Africa, with an intake capacity of 40,000 Metric tons per annum.
The factory is dedicated to sourcing of Shea Nuts and processing them into Shea Butter of the highest quality, for sale to both domestic and export markets, but with a special bias for the export market. The firm has set its target on major European importing companies in the Confectionary/ Chocolate industry and Cosmetics/ Pharmaceutical industry based in Netherlands, Denmark, Sweden and the UK that import well over 95,000 MT annually.
L –R: Hon. Salisu Zakari Ningi, Dep. Chairman; Mr. Adekunle O. Onafowokan, MD, Ladgroup Ltd; Hon. Sir Jones Chukwudi Onyereri, Chairman, House Committee on Banking and Currency; Prince (Dr) B. A. Onafowokan, Chairman, Ladgroup Ltd; and Mr. Bashir M. Wali, Acting MD/CEO, NEXIM Bank at the LADGROUP Shea Butter processing factory in Ikenne, Ogun State during the House Oversight Function visit on Thursday, February 23, 2017.
Commending the NEXIM Bank for its relentless contribution to the Nigerian non-oil export sector, especially in funding factories such as Ladgroup Limited, Hon. Sir Jones Onyereri stated that “…the current economic recession facing the country has opened our eyes to the immense opportunities and abundant blessings God has heaped on Nigeria, not just in oil and gas, but more especially in agriculture and solid minerals….”
He called on the Federal Government to increase funding support to institutions like NEXIM Bank, promising that the House Committee on Banking and Currency, which he is the Chairman, would continue doing all within its jurisdiction and mandate to ensure that such funds are applied very judiciously.
The Acting MD/CEO, Mr. Bashir Wali said NEXIM Bank had in March 2015 approved the sum of $5,786,163.00 (Five million, seven hundred and eighty six thousand, one hundred and sixty three US Dollars) only to Ladgroup Limited to set up a Shea Nut Processing factory. The facility was made up of Equipment Finance of $2,786,163.00 and Working Capital Facility of $3,000,000.00 and has enabled the Company to purchase and install a Shea Butter Refining Unit, a step down transformer and augment its working capital base.
Addressing the occasion, Wali stated that “…the interest of NEXIM Bank in Shea Nut processing for export, was borne out of the very high demand for Shea Butter with the impressive potentials for foreign exchange revenue stream as well as massive job creation at various levels of its value chain.”
Citing available statistics, Wali said that nearly 2 billion Shea trees grow naturally on parklands in 21 African countries stretching from Senegal to South Sudan with more than 16,000,000 women living in rural communities individually collecting the fresh fruits and the kernel which they process to extract a healthy vegetable oil known as “Shea Butter.” With approximately 600,000 tons collected each year, the industry provides a critical source of jobs and incomes to millions of often poor and underserved communities.
Responding to concerns on the viability of the Bank’s intervention, Wali stated that the global demand for Shea Butter is worth about $10billion and is projected to be more than $30billion by 2020, hence the interest of NEXIM in providing funding for increased proactive measures to reposition agricultural products such as Shea as part of its non-oil export sector interventions in the agro-processing sub-sector. According to him, it has been estimated that over 680,000 metric tons of Shea Nuts are produced annually in West Africa, with about 56% of the Nuts exported, while the remaining is consumed locally. Available data shows that Nigeria is the world largest producer of Shea with the wildly grown Shea trees predominant in 21 states across the country.
This accounts for over 53 percent (or 370,000 MT) of the production in West Africa as confirmed by the reports of the Central Bank of Nigeria (CBN) and Oil Seeds Association of Nigeria (OSAN). Sadly, nearly N345 million is lost in the smuggling of Shea products out of the country every year.
The Chairman, Prince (Dr.) B. A. Onafowokan, expressed immense appreciation to NEXIM Bank for the quality of loan given to Ladgroup Ltd; and also thanked the House Committee on Banking & Currency for their ‘Oversight Function’ stating that more of such activities is required to curtail misapplication of such funds provided by the Government to assist local entrepreneurs keen on manufacturing for export.
According to him, “…Ladgroup’s relationship with NEXIM Bank has been very cordial from the onset; and the level of professionalism displayed by the Bank and its staff in disbursing the loan underscores its commitment to contributing to Government’s effort in diversifying the revenue base, especially through promotion of export-oriented investments in the non-oil sectors.” Continuing, he indicated that the Company will create at least 300 direct jobs and more than 600 indirect jobs; and earn USD5million in the first year, and USD100million in the next 5 years. He disclosed that in addition to its traditional uses such as cosmetics, soap, moisturizer, oil, wax, ointments and candles, Shea Butter is commonly used in the production of Cocoa Butter equivalents or improvers; and up to 5% content by weight is allowed under EU regulations in chocolate, other confectionaries and margarine, creating even larger international markets for Shea products.
Besides the Ladgroup Limited, NEXIM Bank has also provided working capital for Shea Butter processing to Karite Oil Limited (formerly Fagow Oil & Gas Nigeria Limited) in Akure, Ondo State. The Company has a 20-22MT Shea Butter processing plant.
About NEXIM Bank –
The Nigerian Export-Import Bank was established by Act 38 of 1991 as an Export Credit Agency with the broad mandate of promoting the diversification of the Nigerian economy and deepening the external sector, particularly the non-oil export sector through the provision of credit facilities in both local and foreign currencies; risk-bearing facilities through export credit guarantee & export credit insurance as well as business development and financial advisory services etc.
In pursuit of its mandate of promoting export diversification and deepening the non-oil export sector, the Bank’s current strategic initiatives are targeted towards boosting employment creation and foreign exchange earnings in the Manufacturing, Agro-processing, Solid Minerals and Services (Tourism, Transportation and Entertainment) sectors. NEXIM Bank embraces the exchange of information on best practices in trade and project finance as an important value addition to its operations.
Nigeria received with great excitement the announcement by Roberto Azevêdo, Director General of the World Trade Organisation of entry into force of the Trade Facilitation Agreement (TFA) on February 22, 2017.
Mr. Olusegun Awolowo, Executive Director/CEO of the Nigerian Export Promotion Council said:
“This is particularly gratifying as Nigeria submitted its ratification earlier in January through the Honourable Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah. The ratification of the TFA is indeed a major milestone for global multilateral trade. I am optimistic that Nigeria would go ahead to domesticate and implement the agreement to the letter.”
He said the NEPC expects remarkable outcomes for international trade through TFA, which aims to expedite the movement, release and clearance of goods including goods in transit. It will reduce bureaucracy at the borders for faster, cheaper and easier trade and is expected to increase trade and investment.
The agreement promotes trade by establishing harmonised rules to further expedite the movement, release and clearance of goods crossing borders, including goods in transit. It offers opportunities especially for SMEs to engage in formal export of goods, which have so far, been informally traded across borders. With TFA, a larger number of exporters to partake in global value chains, thereby enabling all businesses to tap into the huge potentials of trade.
Of particular importance for non-oil export is the commitment to accept electronic documentation (SW), test procedures and method of handling perishable/rejected goods.
For Nigeria, the much-advocated National Single Window (NSW) initiative would bring about faster services at the borders for both imports and exports. It will also ensure correct revenue collection and create room for transparency in governance, better public service and modernization through e-legislation, thus creating a win-win situation for both government and business.
‘NEPC is therefore committed to support and work closely with the relevant government agencies, private sector and international organizations to ensure full implementation of the Agreement. We will maximise the benefits of TFA especially to make export trade the catalyst for achieving national economic turn-around for sustainable development, enhanced annual GDP growth job creation, higher incomes, improved welfare, reduced trade costs, and ultimately landmark improvements to the ease of doing business index for the country. It is hoped that many small businesses that hitherto have found it impossible to trade internationally due to complex regulatory requirements will henceforth be able to be part of global trade which leads to sustainable growth; and growth that results in prosperity.’
Cross-border online retail predicted to grow at twice the rate of domestic e-commerce (CAGR: 25%) until 2020
Retailers can grow 60% faster with a premium service offering
DHL Express, the world’s leading international express services provider, has published research highlighting the significant growth opportunity for retailers and manufacturers with an international online product offering.
The report – The 21st Century Spice Trade: A Guide to the Cross-Border E-Commerce Opportunity – looks in detail at the markets and products that offer the highest growth potential, the motivations and preferences of customers making international online purchases and the success factors for online retailers that wish to expand overseas. It focuses in particular on the opportunity for premium products and service offerings, with higher basket values accounting for a significantly higher proportion of orders in cross-border transactions.
The report reveals that cross-border e-commerce offers aggregate growth rates not available in most other retail markets: cross-border retail volumes are predicted to increase at an annual average rate of 25% between 2015 and 2020 (from $300 Billion to $900 Billion) – twice the pace of domestic e-commerce growth.
Online retailers are also boosting sales by 10-15% on average simply by extending their offering to international customers. An additional boost comes from including a premium service offering: retailers and manufacturers that incorporated a faster shipping option into their online stores grew 1.6 times faster on average than other players.
“Contrary to what many retailers think, cross-border shipping is actually simple and retailers in Sub Saharan Africa are perfectly positioned to take advantage of international opportunities. ‘Brand Africa’ is something that has increased exponentially in popularity in recent years and it’s time for retailers to remove the boundaries and open up their business to seamless international trade. Often, retailers choose not to promote their businesses internationally, and worse yet, will turn down international sales interests due to the misconception that it’s too difficult to manage and deliver,” says Hennie Heymans, CEO for DHL Express Sub Saharan Africa.
“Globally, our experience is that virtually every product category has the potential to upgrade to become premium, both by developing higher quality luxury editions and by offering superior levels of service quality to meet the demands of less price-sensitive customers. The opportunity to ‘go global’ and ‘go premium’ is available to retailers in all markets and our global door-to-door time definite network is well-positioned to support retailers looking to develop a premium service offering or directly reach new international markets without the need to invest in distribution or warehousing. In Sub Saharan Africa, the opportunity for Intra Africa trade should not be ignored. ‘Going global’ does not only mean trading outside of the African continent, Africa is home to one of the world’s fastest growing middle class, with an appetite for quality products and services. There are also a number of trade blocs in place to support Intra Africa trade growth and retailers should take advantage of this captive market.”
The report is based primarily on research and in-depth interviews conducted by a leading global management consultancy, as well as more than 1,800 responses to a proprietary exporter survey of retailers and manufacturers in six countries.
It casts a light on the evolving face of e-commerce, with both supply and demand becoming more sophisticated Manufacturers are increasingly taking advantage of e-commerce to move to direct retail models – bypassing the ‘middleman’ and offering their products online to the end customer – and expect to grow 30% faster in cross-border e-commerce than other retailer groups. Customers in many markets are also becoming more discerning, citing product availability and trust, as well as attractive offers, as the motivating factors for shopping with overseas online retailers.
The main challenges highlighted by consumers to cross-border purchases relate to logistics, trust, price and customer experience. At the same time, online retailers can take a number of relatively easy steps to identify, cultivate and service demand from abroad.
The report noted that the e-commerce trend has given birth to a new eco-system of facilitators and off-the-shelf solutions (such as payment providers and programs that localize a website’s check-out experience for the visitor), helping retailers to adapt their offering to the digital world and to transact with customers in foreign markets.
Global logistics partners can provide support in identifying the right trade-off between centralized and local warehousing and fulfillment, while fast, reliable and flexible delivery options can be an important tool in turning speculative interest into long-term customer loyalty.
The Broadband Commission for Sustainable Development’s Working Group on Digital Health, co-chaired by the Novartis Foundation and Nokia, has launched the report “Digital Health: A call for Government Leadership and Cooperation between ICT and Health.”
Key recommendations include: the importance of senior government leadership with committed financing, effective governance mechanisms with defined roles, and a national ICT framework to facilitate alignment between the ICT and health care sectors.
The Novartis Foundation and Nokia have joined forces with a number of Broadband Commissioners and partners representing digital and health experts and policy-makers, to produce an extensive collaborative effort which aims to break silos between the technology and health care sectors.
The report identifies three key observations:
1: The critical importance of senior-level government leadership with committed financing
2: Effective governance mechanisms, and
3: A national information and communication technology framework which includes connectivity, interoperability, and common standards.
Digital health, the use of information and communication technology (ICT) to provide health services, has the potential to advance the goal of universal health coverage and improve the quality and efficiency of health services. Key challenges remain in making digital health a reality, including fragmentation in digital health solutions, risks to funding continuity and capital expenditure, workforce capacity constraints, and effective collaboration across the health and ICT sectors. “Despite the promise and potential of global connectivity, we cannot lose sight of the fact that nearly four billion people have no access to the Internet. We need to look at innovative cross-sectoral strategies that can leverage the power of high speed networks to improve education, healthcare and the delivery of basic social services to everyone, especially the poorest people, who need healthcare most urgently. Without significant improvements in people’s health, and equally, without information and communications technologies, we cannot achieve the SDGs.” said ITU Secretary General, Houlin Zhao.
Ann Aerts, Head of the Novartis Foundation, emphasizes, “With digital health solutions, we must address the priority health needs of a country. To do this, we need continuous committed leadership from government with sustained financial resources to ensure a strong national digital health strategy. A growing number of technology-based health initiatives have taken shape in recent years. Only a few of those have reached scale and achieved long-term sustainability – the majority of projects have not made it past the pilot phase. That is why sustained leadership of policy makers and intra-governmental collaboration must guide the progress of designing and implementing a national digital health strategy, beginning at the planning stage.”
Rajeev Suri, CEO of Nokia, adds: “Technology is helping us move to a more human-centric approach to health care. It gives us an enhanced, sophisticated, detailed capability to track even the smallest changes in our health, allowing us to trace trends in heart rate, blood pressure, or blood sugar. Today we are capable to push the frontiers of health care by using technology to reach the remotest of locations, harnessing the power of mobile devices to help health professionals bring the most efficient medical techniques and highest quality of care to every community. But the true power of technology is felt when people are empowered to protect and preserve their own health.”
The Broadband Commission for Sustainable Development was established in 2010 and comprises more than 50 leaders from across a range of government and industry sectors. They are committed to actively supporting countries, UN experts and NGO teams to fully leverage the huge potential of ICT to drive national Sustainable Development Goals (SDGs) strategies in key areas like education, healthcare, gender equality and environmental management.
The initial financial results for Q4 2016 indicate a continued solid performance for the air transport industry, albeit with on-going signs that momentum in the profitability cycle has weakened.
Global airline share prices began the year on a positive note, rising 1.5% in January and a healthy 6.8% over the past year. However, the industry has lagged the overall performance of global equities on both measures.
Brent crude oil prices have been broadly stable around $US55/bbl since the start of December and spent January trading in a tight range. Prices are expected to rise only gradually.
Downward pressure on industry-wide pax yields remains, despite increases in key cost components, particularly fuel and, in some markets, labour. The aggregate, however, masks differences in individual markets.
Both pax and freight demand ended 2016 on a strong note, delivering above-average growth for the year. Likewise, load factors also performed strongly in 2016, with the passenger measure registering a record annual outcome.
Premium airfares continue to generally hold up better than those of the economy cabin, helping to support airline financial performance.
A tripartite agreement spare headed by the Dangote Rice Limited to create jobs for 16,000 outgrower rice farmers in Sokoto was yesterday signed amid excitement and a pledge by all parties to ensure the success of the scheme to make Nigeria self sufficient in rice cultivation.
The agreement was signed during the launch of the Dangote rice outgrower scheme in Goronyo, Goronyo Local government, Sokoto, which was witnessed by the Sultan of Sokoto, Alhaji Sa’ad Abubakar. Farmers were presented with rice seeds, fertilizers, nets, agro-chemicals.
Chairman of Dangote Rice Limited, Aliko Dangote said he was mover to go into rice cultivation because of the genuine interest of the Federal government to revive agriculture as the mainstay of the economy, and reduce importation of foods that could be produced locally.
He lamented that Nigeria consumes 6.5 Mtn of rice which costs the nation over 2 billion dollars annually, pointing out that it is heartening that the government now has policy direction that encourages private sector’s active participation in agriculture.
“Buoyed by the policy direction of the federal government, we at Dangote decided to key into this by establishing Dan gone Rice Limited to partner with states to redress the present situation where a huge sumo forex is spent on importation of rice.
“In the next three years we want to produce one million tons of quality rice and make it available and affordable to the people. We hope to do 150, 000 ha and when we are done, Nigeria will not have anything to do with importation of rice.
“Dangote Rice outgrowers scheme is committed to creating significant number of jobs, increasing the incomes of smallholders farmers and ensuring food security in the country by providing high quality seeds, fertilizers and agro-chemicals as well as technical assistance on best agricultural practice to farmers.
“This Scheme will help to diversify the economy, alleviate poverty and reduce the nation’s import bill. The scheme has been designed as a one stop solution for the rice value chain,” he stated.
The Dangote Rice Project Director, Robert Coleman, said the Sokoto operation was a demonstration phase to familiarize the farming community with the programme, train extension workers and lead farmers as well as test modern technologies.
He noted that they would have 25,000 ha cultivated by nearly 50,000 outgrowers in 2017 in addition to hundreds of jobs expected to be created by the end of that year.
In his remarks, Governor Aminu Waziri Tambuwal expressed delight at the event, saying the coming of Dangote to invest in the state was as a result of his sustained effort towards inviting prospective investors to the state.
He said the state under the scheme, just as it had done with the federal government, would distribute nets, water pumping machines and fertiliser T subsidised prices to help the farmers have good yield.
The National President of Rice Farmers Association, Alhaji Aminu Goronyo described the scheme as one of the potential means of making rice available and at low cost to the people because the farmers are encouraged to put all their best into it.
He said he has no doubt the scheme would success because it a private sector driven and that given the pedigree of Dangote in business, he was sure there the scheme would be sustainable and sooner than later other states will key into it.
The Minister of Finance, Mrs. Kemi Adeosun says the Federal Government is determined to expand the coverage of the Treasury Single Account (TSA) to cover more agencies in 2017.
Speaking in Abuja at the opening of a two-day retreat on the TSA, the Minister, who described the implementation of the policy as a success story, said the Federal Government would expand the programme and continue to persuade statutory agencies to come under the Treasury Single Account.
The Minister, who disclosed that the Federal Government is already discussing with service providers said Government would improve the implementation and functionality of the TSA because of its huge benefits.
She also stated that the Government would be reaching out to TSA service providers in order to allow other e-commerce and e-payment providers access the platform, which, according to her, is very important to make the TSA as competitive as possible, in terms of pricing.
“One of the challenges that we have is who should bear the cost of the TSA? Currently, it is being borne centrally but that is not sustainable. We are now working on how to stratify the various agencies. Those who should bear their own costs and costs that should be borne by the Government. This will be rolled out in this year,” the Minister stated.
Speaking to the broader benefits of the TSA, the Minister stated that the Federal Government, through the Office of the Accountant General of the Federation, has issued Circulars to banks arising from revelations through the implementation of the whistleblower policy, that some banks have not fully remitted Government funds in their possession.
She stated, “There are still funds in commercial banks and we have written to the banks, giving them a window to come forward-where in doubt, they have been asked to consult us. We also have an audit team that has started the process of checking the completeness of monies that were transferred into the TSA and already, they have been able to recover a significant amount of money”.
She stated that the TSA policy is here to stay, saying the policy, which she described as an important reform of the current administration, allows Government to reduce its borrowing costs.
“The policy allows us to manage our treasury functions with far more accuracy than what we had in the past. There is still a long way to go but overall, we are very satisfied with the progress we have made and we look forward to it being extended and utilised far more as the year goes on,” the Minister stated.
Mr. Ahmed Kuru, Managing Director of Assets Management Corporation of Nigeria (AMCON) has told the Senate Committee on Banking, Insurance and Other Financial Institutions that the corporation was forced to take over Arik Air over the sum of N146 billion owed the Corporation by the airline. He said the N146 billion was part of over N352.5 billion debt profile of Arik Air.
Kuru accused the airline of huge non-performing loans dating back to 2011 from two banks namely Union Bank (N71 billion) and Keystone Bank (N14 billion). He said is also indebted to other banks in the country.
“As at December, 2016, Arik’s debt in AMCON stood at N146 billion due to mounting interests and unpaid principal. The consolidated exposure of debtor companies in which Mr. John Arumemi-Ikhide is the principal promoter in AMCON stands at N263.7 billion. This figure excludes Arik’s indebtedness to other banks, aviation authorities (local and foreign), vendors, contractors and workers. Arik has about 30 aircrafts, the largest fleet in Nigeria and holds approximately 55 per cent to 60 per cent of the air transport market in Nigeria. “It serves 18 domestic and 11 international destinations, including Johannesburg, London, Dubai, and New York, with estimated revenue at N7 billion monthly,’’ he said.
