Technology & Information

Will telcos ever replace banks as financial institutions?

The rise of telco-led mobile money services across Africa has blurred the lines between the types of companies that can offer financial services.

Whereas banks were previously the sole custodians of most financial transactions, a wide range of non-traditional players – including fintechs and neobanks – have diversified the sector.

Telcos allow their users, as it stands, to send and receive money on a digital wallet.

The most common uses of the USSD-backed services are transactions between family members and paying utility bills.

But the entrance of the new players into the financial services sector begs the question of whether telcos will continue an advance into other areas like savings, loans, investments and insurance.

As banks face rising competition on multiple levels they risk losing market share to the new players unless they are able to improve the services they currently offer.

Situation in Africa

Africa is a global leader in mobile money services – its domestic banks are therefore under even more pressure to innovate and compete.

According to GSMA, an industry-association of mobile money operators, there were 310 live mobile money services in the world last year and 55.2% of them were in Africa.

The report found that mobile money services were more available in markets where access to financial services is low.

Mobile money has been expanding rapidly over the last decade, growing at an accelerated rate in 2020 due to Covid-19.

In 2020, mobile money accounts grew by 12.7% globally to 1.2bn with sub-Saharan Africa adding 43% of all new accounts.

Mobile money players have also slowly been creating new services.

Airtel Africa, an Indian-owned service predominantly in East and Central Africa, partnered with MoneyGram last year to receive transfers from more than 200 markets that the US-based payments company is present in.

Although this still involves the transfer of money from one party to another, it represents a move towards more complicated financial services like remittances.

Different business models

However, some experts believe that telcos are unlikely to replace banks because both service providers have markedly different business models.

“The main role of banks is to mobilise local savings to finance the local economy,” says Yves Eonnet, chairman and cofounder of Skaleet, a Paris-based company that provides core banking services to financial institutions in Africa, Latin America and Europe.

Yves Eonnet
Yves Eonnet, chairman and cofounder of Skaleet.

“The telcos will never play that role except if they become official banks complying with the central bank regulation. Otherwise, they will stay as limited payment and money transfer service providers.”

One of the first differences is that banks, in line with regulation, have much stricter know your customer (KYC) checks than telcos, allowing them to perform a far greater range of functions.

On the reverse side, banks struggle to roll out services in comparison to telcos, which will have networks of distributors and operators in any given country.

This is the reason why telcos have been heralded as a vehicle for financial inclusion in Africa; they can easily provide services in even the most remote locations.

The telcos will, to a certain extent, also view mobile money products as a way to push users on to mobile networks where they can charge dramatically more for other services like data and airtime.

“The cost related to mobile money services is viewed by telcos as a marketing service which is it is absolutely not by a bank,” says Hervé Manceron, CEO of Skaleet.

“In a bank, it must have a positive profit and loss (PNL)”.

Hervé Manceron, CEO of Skaleet.

Banks strike back

In fact, rather than telcos moving into banking territory there are signs that banks could move the other way.

Skaleet, for instance, has worked with banks across Africa to help them build out their own mobile money services.

The service-provider has worked with a large variety of financial institutions ranging from French banking giant Société Générale to Mauritania’s Banque Mauritanienne pour le Commerce International (BMCI).

Standard Bank, Africa’s largest lender by assets, is currently rolling out a mobile money product called Unayo that it hopes to launch in all its markets by the end of 2023.

Previously banks had used telcos to get access to wide distribution channels and telcos had partnered with banks to offer sophisticated financial services.

Industry insiders believe that future partnerships between telcos and banks will have to be based on a much clearer value-proposition than in the past.

Agribusiness & Manufacturing

Corps Africa and Mastercard Foundation partner to create 30,000 work opportunities for young Africans

The OCP Group is very pleased to announce that the Mastercard Foundation, a dynamic and highly-respected private foundation with a strong and impactful presence across the African continent, has committed almost $17m over the next three years to broaden the presence and impact of CorpsAfrica, an innovative and dynamic non-governmental organisation of which OCP is proud to be the founding funder.

CorpsAfrica, first incubated in Morocco with OCP support, was inspired by the US Peace Corps and founded by Liz Fanning, a former Peace Corps Volunteer in Morocco.

The organisation recruits and trains young African women and men and sends them to high-poverty communities in their own countries for one year to address the community’s self-identified needs in education, health, small business development, agriculture, and other sectors.

The impact is double: on the communities, and on the young African volunteers who learn priceless lessons in leadership that they will carry with them throughout their professional lives.

The OCP Group has been proud to support CorpsAfrica’s expansion beyond Morocco to Senegal, Rwanda and Malawi with the help of several other generous donors, hosting roughly 300 volunteers over the last eight years.  OCP is committed to remaining a financial and programmatic partner to CorpsAfrica across the continent, reflecting its strong belief that Africa’s greatest resource is its people, and especially its young people.

The substantial investment by the Mastercard Foundation is a wonderful validation of the value and impact of CorpsAfrica, and OCP is grateful for their generosity.

More information about CorpsAfrica, and about the Mastercard Foundation commitment, is available at

Trade & Investment

Private sector is crucial to Egypt’s recovery

After managing to sustain economic growth even at the height of the pandemic, Egyptian GDP looks set to continue increasing over the next three years. Big government projects have underpinned recent growth and although Cairo has promised a change of emphasis from the public to the private sector, the transition is likely to be a slow process.

The economy grew at an annualised rate of 7.7% in the three months to the end of June, boosting growth for fiscal year 2020-21. A Reuters poll of economists forecasts GDP growing 5.1% in the year to the end of June 2022, rising to 5.5% for both 2022-23 and 2023-24.

Inflation is rising but the annual rate still stood at 6.6% in September, the highest figure for 20 months but comfortably within the central bank’s target range of 5-9%. 

According to the IMF, high liquidity levels in the banking system and strong reserve levels have helped Egypt recover from the pandemic. The government has also been supported by $8.5bn in IMF financial assistance in the early months of the crisis, with a further $2.8bn due by the end of this year.

Government announces move to New Administrative Capital

A monorail will connect Egypt’s New Administrative Capital with Cairo. (Photo by Tamer Adel Soliman / AFP)

In early November, President Abdel Fattah al-Sisi announced that the government would start moving administrative operations to the new capital that is being built 45km east of Cairo. 

The long-term aim is to create homes for 6.5m people as well as play host to the government. The entire project carries a price tag of $45bn, although it will be developed in phases, with the private sector expected to finance and build most of the residential areas.

The New Administrative Capital project is designed to reduce congestion in what is one of the world’s biggest cities. It will be connected to Greater Cairo by a monorail. Whether Egypt’s economic reality keeps pace with its sprawling ambition remains to be seen. 

Construction work on Egypt's new administrative capital.
Construction work on the business and finance district of Egypt’s New Administrative Capital megaproject, some 45 kilometres east of Cairo. (Photo by Khaled DESOUKI / AFP)

Jihad Azour, the IMF director of the Middle East and Central Asia Department, said in October: “I think what is very important for Egypt going forward is structural reforms that will allow Egypt to create jobs.”

Growth has also been maintained by limiting the range and duration of lockdown measures, with obvious effects on the Covid-19 fatality rate. The official Egyptian pandemic death toll stood at just under 20,000 by November but even Egyptian ministers have admitted that the real figure is at least 10 times higher than the official toll.

According to a World Bank report published in October, the actual death rate is about 13 times higher than official figures, which would give a current figure of around 260,000. 

Much depends on how fast the vaccination programme is rolled out. The health ministry aims to ensure that 70% of the population have been double vaccinated by the end of this year but just 7% had received both doses by October.

Until the virus is brought more fully under control, tourism and other parts of the service sector will continue to struggle.

Tourism, which accounts for 15% of GDP, has undoubtedly been one of the hardest hit industries as a result of much lower visitor numbers. As a result, tourism revenue dropped from $9.9bn in 2019-20 to $4.9bn over the most recent fiscal year but has just begun to pick up.

Hotels had been obliged to run at 70% capacity since July but were allowed to operate as normal from mid-October.

It has long been recognised that a big switch from public to private sector economic activity is required to create employment for the more than 1m young people who enter the job market every year.

“Those jobs can only be created by the private sector. And for this to happen we need to increase productivity and also we need to increase access to market, access to talent, access to finance, we need to increase investment,” noted Azour. 

At the start of November, minister of finance Mohamed Maait said that the government had set a target of boosting the private sector’s share of GDP to 50% within three years.

However, it is difficult to assess the real size of the private sector because a huge part of economic activity takes place in the informal economy – about 50% according to many estimates.

Gas production soars

The dramatic turnaround in Egypt’s gas fortunes is continuing to turn an economic weakness into a strength. Rising domestic consumption, buoyed by subsidies, combined with falling output on some fields, had seen Egyptian liquefied natural gas (LNG) exports decline and LNG import projects sanctioned.

However, improved terms of upstream investment resulted in the discovery of new reserves, including Eni’s massive Zohr field in 2016. As a result, LNG imports have been halted and in the early part of 2021 output in Zohr rose to over 7bn cu ft/day. 

Gas processing plant lit up at night.
The gas processing plant for the Zohr gas field in El-Gamil, Egypt. (Photo: Dulaaz / Shutterstock)

Meanwhile the government has wound down power subsidies, resulting in higher power and gas prices, thereby depressing demand.

As a result, Egypt has been able to boost its own exports, including through the resumption of production at Egypt’s Idku LNG plant.

An extension to the Arab Gas Pipeline, which was built to export Egyptian gas to Jordan and Syria, will allow the country to sell up to 65m cu ft/day to Lebanon to supply a 450 MW power plant by early next year. The spur pipeline has been built but additional infrastructure and checks still need to be completed. 

Tapping solar potential

The government has confirmed its target of ensuring that 42% of electricity is produced from renewable energy projects by 2030, just as it was announced that the Egyptian resort town of Sharm El-Sheikh will host the United Nations Climate Change Conference (Cop27) in 2022. 

Cairo is also keen to highlight the fact that Africa’s biggest solar project is planned at Benban in Egypt, although proposed generating capacity of 1.8 GW will actually be spread over 32 plots of land, each of which will be developed by different investors. 

All, however, will be able to take advantage of the same transmission link to the national grid and long-term power purchase agreements with Egyptian Electricity Transmission Company.

Solar panels in front of the pyramids.
Solar panels near the pyramids in Giza. (Photo: Egd / Shutterstock)

British development-focused operator Globeleq has bought a 66 MW plant at Benban that has already been built by Italian companies SECI Energia and Enerray, plus Saudi Arabia’s Desert Technologies. 

The country already has 1,650 MW of solar generating capacity but much more rapid development is needed to achieve the 42% target.

Solar photovoltaic (PV) construction and operation and maintenance (O&M) costs are falling sharply at the same time as PV panels are becoming more efficient, resulting in big falls in the levelised cost of energy (LCOE).

However, the Egyptian grid needs to be upgraded and energy storage added in the longer term if it is to make the most of its huge solar potential.

Expanding water production

While most international interest in the Egyptian water sector has focused on Cairo’s opposition to the construction of the Grand Ethiopian Renaissance Dam on the Nile, less attention has been paid to the launch of 17 tenders for new desalination plants, which are designed to provide 2.8m cu m/day of drinking water, boosting national desalination capacity by 300% within five years. 

While the government has generally agreed to wind down the level of subsidies in other parts of the economy, it will continue to subsidise water production. It is expected that power will be supplied to the energy-hungry water plants by solar projects. One bidder, KarmSolar, hopes to develop integrated power and water projects.

Sweeping digitisation plans

The government has also embarked on a big digitisation programme to allow more payments to be made by government agencies, private sector companies and individuals, with most taxes and invoices to be handled by electronic platforms. 

In October, an initial public offering was launched for a 16.1% share in the state-controlled digital payment company, e-finance for Digital and Financial Investments, for sale to both public and institutional investors.

Ernst & Young and Microsoft have both worked with the government to unify tax procedures as part of the Digital Egypt project, while the cabinet’s Information and Decision Support Centre is working to create a cashless economy as part of Egypt’s Vision 2030. 

Pandemic restrictions have certainly helped speed up the transition, with the number of active debit and credit cards in the country growing by almost 60% in the year to August 2020, while Egyptian banks have now issued 7m prepaid cards, called Meeza, free of charge.

In November, the central bank approved regulations to ease electronic mobile payments and create a new network to allow customers to manage all electronic payments, including topping up prepayment cards and electronic wallets, through a single platform that will be launched by the end of this year.

The central bank announced that it would issue licences for operators to offer contactless payments through mobile phones.

The process is also supported by growing access to digital technology. The national mobile penetration rate reached 98% in April 2021, although this does not mean that 98% of Egyptians have mobile phones as some people have two or three handsets, often to separate business from personal life.

In addition, most people do not have smartphones. Nevertheless, falling smartphone prices are leading  to a rapid uptake in penetration rates, which should support the government’s digital rollout.

Technology & Information

Kenya urged to amend compulsory Covid vaccine rules

The Kenyan government has been urged to amend a compulsory Covid-19 vaccine mandate for citizens seeking to access government services.  

On 21 November Kenya’s cabinet secretary for health, Mutahi Kagwe, announced that authorities will require anyone seeking government services to provide proof of full Covid-19 vaccination. Services affected will include public transportation, education, immigration, hospitals, and prison visitation.

Proof of vaccination will also be mandatory for entering national parks, hotels, and restaurants.

Measures risk undermining human rights, claims NGO

On 14 December, the order was temporarily suspended by the High Court pending a challenge from a businessman who called it a “gross violation” of the constitution.

Human Rights Watch (HRW) said that the proposed measures, which had been due to go into effect from 21 December, should be amended to avoid “undermining basic rights”, given that only around 10% of Kenyans had been vaccinated by the end of November, according to government figures.  

In an intervention that could prompt a wider debate about appropriate government restrictions in Africa as the Omicron variant spreads, HRW said that the measures risk violating the rights to work, health, education, and social security for millions of Kenyans. 

“While the government has an obligation to protect its people from serious public health threats, the measures must be reasonable and proportional,” said Adi Radhakrishnan, Africa research fellow at Human Rights Watch.

“Vaccination coverage hinges on availability and accessibility, and the government’s new measures could leave millions of Kenyans unable to get essential government services.”

Accessibility to vaccine not assured 

The Kenyan government has stated that the new policy aims to persuade more people to receive vaccines, but Kenya does not have a sufficient supply of Covid-19 vaccines to ensure that all adults can be vaccinated by the Health Ministry’s deadline, says HRW.

With an estimated adult population of 27.2m and a total population of 55m, as of 11 December the country had received approximately 23m doses since the start of the vaccination programme. 

“The November 21 Kenyan vaccine requirement announcement does not provide details of how these new measures will be carried out and enforced nor does it provide alternative procedures for those who are ineligible for vaccinations or have a medical exemption, further risking arbitrary denial of access to services,” says HRW.  

The majority of vaccines currently available in Kenya require two doses for full vaccination, with the second dose administered 4 to 12 weeks after the first, depending on the type of vaccine. It is likely that even people who get their first shot by the 21 December deadline will still face restrictions.  

“Although vaccine mandates may be useful, they ought to be implemented within a broader public health strategy that emphasises accessibility of vaccines and other preventive measures for Covid-19,” Radhakrishnan said.

“A vaccine mandate should not arbitrarily create undue burdens for any population group, or disproportionately infringe on human rights.”

Accelerating vaccination will save lives  

The stance is likely to spark debate as cases again begin to mount. Africa recorded an 83% surge in new Covid-19 cases during the past week, driven by the Delta and the Omicron variants, according to the World Health Organization (WHO).

The continent recorded more than 196,000 new cases for the week ending on 12 December, up from around 107,000 in the previous week.

The number of new Covid-19 cases is currently doubling every five days, the shortest reported this year, although deaths dropped by 19% last week compared with the previous week.

“In a world where Africa had the doses and support to vaccinate 70% of its population by the end of 2021 – a level many wealthy countries have achieved – we probably would be seeing tens of thousands of fewer deaths from Covid-19 next year,” said Dr Matshido Moeti, WHO regional director for Africa.

“But we can still save many lives if we can accelerate the pace of vaccination in early 2022.”

Finance & Services

The outlook for crypto and blockchain in Africa

Cryptocurrency exchange Coinbase’s listing on Nasdaq at $86bn pushed bitcoin to an all time high of $65,000 BTC to USD in February 2021. Other cryptocurrencies, or altcoins, such as ether and dogecoin have also seen all-time highs alongside stellar prices for blockchain-based digital assets such as non-fungible tokens (NFTs).

Bitcoin’s extreme volatility is often cited as a reason not to invest, but this is a nascent ascent class, and as such, its volatility is understandable. However, with speculative alternative investments such as these you probably shouldn’t be playing with the house money anyway – you should only invest with what you can afford to lose. 

Indeed, on seeing the unprecedented flows into and returns from the asset class, the UK Financial Conduct Authority (FCA) issued a warning to investors on 11 January 2021 that they could lose some or all of their money investing in bitcoin.

The FCA is concerned that consumers may not be protected from money laundering given the incomplete regulatory framework for cryptoassets; the price volatility puts consumers at risk of extreme losses; the complexity of the products, particularly with crypto-derivatives, make it difficult for consumers to fully understand the risks; and there may be liquidity issues when trying to convert crypto back to cash. 

Nonetheless, while the regulator is right to defend consumers and market integrity, the aforementioned recent developments means the asset class is undoubtedly professionalising. It is also slowly becoming a more generally accepted means of payment. Companies such as PayPal allowing for payment in bitcoins and altcoins will only accelerate this.

The potential for bitcoin in Africa is particularly good, with 60% of the world’s mobile money already passing through the continent, and Nigeria being the world’s second-largest bitcoin market after the USA. 

The next frontier:Central bank digital currencies

The next frontier for crypto is central bank digital currencies. Sovereigns are already positioning to create digital fiat in the form of central bank digital currencies (CBDCs) as crypto begins to challenge bank issued currency.

In fact, crypto does particularly well in those countries with macro headwinds. This is the point, really – in economics there has long been the concept of “money illusion”.

If you believe that fiat money is real or well-governed, you clearly haven’t thought through quantitative easing properly or spoken to any Zimbabweans and Argentinians lately. 

Some magic internet blockchain money may just give central banks the challenge they need to start thinking about ways in which they could make money as a public good more efficient.

The announcement that the UK is to investigate creating its own “Britcoin” alongside the efforts towards digital yuan and euro, means the crypto and blockchain are here to stay.

Insights from the experts

For IC Intelligence Insight 4, I asked some of the leading experts in the space to provide us with their view on the above developments. The highlights of their articles are summarised below.

• Are cryptocurrencies the answer to Africa’s payments problem?

Owen Odia, country Manager for Nigeria at Luno, looks at how cryptocurrencies could provide an ideal antidote to Africa’s costly cross-border payments as well as mitigating currency instability and helping to extend financial inclusion.

“With the right infrastructure, cryptocurrencies could provide the gateway to a much-needed transformation of the financial systems of many African countries,” she says. Read more.

• Central bank digital currencies and the future of crypto and blockchain in Africa

Prof Monica Singer, South African Lead for Consensys Solutions, explores the reasons why so many Africans remain unbanked and underbanked.

“The time is now for African central banks to integrate the already present mobile phones and implement CBDCs supported by blockchain technology to bring financial inclusion and the safety privilege of e-commerce to all,” she says. Read more.

Listen to our podcast interview with Monica Singer:

Crypto and Blockchain in Africa with ConsenSys

• How NFTs will revolutionise Africa forever

Erikan Obotetukudo, the cofounder and president of Crypto for Black Economic Empowerment (CBEE), takes a deep dive into the value of non-fungible tokens (NFTs) for artists and fans.

“Without getting too technical, think of NFTs as a key that represents unique ownership for a digital asset. Assets can range from online media and intellectual property (like art, games, music, books, films), infrastructure (like titles, deeds), identity (like ID cards and passports), and more,” she explains.

“If Burna Boy released a song as an NFT today with a limited supply of only 1000 available for purchase, 1000 owners anywhere in the world could claim exclusive access to one of Burna Boy’s rare songs. This makes it a collectible. If one of the NFTs is purchased by many people, this is an example of ‘fractional ownership.’ This means that several people pool their money together to own one NFT. If Burna sells each NFT for the equivalent of $50, then he earns $50,000 for the one song that he released directly to his audience.”

She looks at four different value propositions of this NFT use case for Africans:

  1. Ownership & Wealth Creation
  2. Revenue & Royalties
  3. Liquidity, Collateral, and Financial Freedom
  4. Creator Economy, African Youth, and Global Perceptions. Read more.

• Some practical applications for blockchain and crypto in Africa

Oliver Oram,CEO of Chainvine, explains why he believes that Africa has the potential to be the world’s most exciting region for blockchain and crypto.

“This type of technology would boost trade exponentially in Africa… we have used the technology in the arts/media, industrial and legal sectors, reducing what I like to call the cost of trust and thereby increase business margins and… this could be used in many different sectors in Africa for economic gain. Not the least in the form of micropayments which will further drive trading across Africa and from Africa,” he says.

“At Chainvine and with our recent work with the UK government, we have seen that cross border trade regulatory burden can be reduced by up to 50 to 60% saving billions using technology such as Blockchain and tokenisation.”

Read more.

Technology & Information

Is Tesla charging up for an Africa push?

Moroccan web developer Khalil Amar was already fixated with the technological prowess of Tesla cars before he imported a Tesla Model 3 from Holland to his home in Casablanca in 2017. Putting the car through its paces over the next four years, Amar would drive 60,000 miles.

“Like when you own an iPhone, if you drive a Tesla you enjoy following a brand that continues to innovate, to show the direction of where we’re travelling as a society,” says Amar, who was taken in by the green credentials of Tesla’s electric vehicles, use of code in its software, gadgets and the end of his gas bills.

The Tesla Model 3, the company’s first mass market electronic vehicle. (Photo: TierneyMJ / Shutterstock)

Amar founded Tesla Club Morocco four years ago and has been petitioning Tesla’s co-founder and CEO Elon Musk on social media for Tesla Supercharger infrastructure to be installed in the country, yet until recently Musk and his company had been tight-lipped over Tesla’s strategy for Africa.

In October, Tesla made its first move on the continent when the first Supercharger stations were spotted near the main highway at Tangier Al Houara Hilton Resort, and at the Onomo Hotel in Casablanca, where four 150 kW Supercharging stations were installed at each location.

Before Tesla provided its own charging infrastructure, six Moroccan Tesla owners clubbed together to raise €25,000 in 2017 to build a 50 kW fast charger, installing it at a Shell service station in the city of Kenitra. They agreed to exchange data about electric vehicle (EV) use in the kingdom for free electricity from Shell.

“In the early mornings, Tesla drivers going from Casablanca to Tangier or Spain would stop for breakfast in Kenitra and use our home-made fast charger,” says Amar.

As their car batteries charged, the drivers would tuck in to pancakes and bread coated in apricot jam as sunlight scaled the Atlas mountains.

Meals were interrupted by fans keen to take selfies in a Tesla, before the owners would drive along newly-laid asphalt to Tangier or take a short hop with their cars on a ferry to Spain.

Charging times slashed

The establishment of official Tesla charge points in Morocco has now slashed previous charging times. Most Tesla Superchargers can now recharge up to 200 miles of range in just 15 mins, and by establishing networks in the economic centres of Casablanca and Tangier, the car manufacturing giant looks set to attract further Moroccan customers, as well as encourage tourists to drive their Teslas from Europe to Morocco. 

There are some 30,000 Supercharging stations dotted across North America, Europe, East Asia, parts of the Middle East, Australia and New Zealand, but they were completely absent in Africa before the two stations in Morocco were built. 

A Supercharger is an electric car charger designed for “rapid charging”. Superchargers only work with Tesla Model S, Model X, Model 3, and Model Y cars, and are built, owned and operated by Tesla. 

The Tesla app and an in-car navigation system tracks the nearest Supercharger locations, and while the fees for charging are automatically billed to online accounts for drivers in most worldwide locations, Tesla’s Moroccan Superchargers are free.

Establishing charging networks is usually the first step Tesla will take before directly selling cars into a market, setting up showrooms and rolling out service centres.

“Opening the Supercharger network will allow Tesla to study the demand, and to demonstrate their global ambitions, by making it possible to drive Teslas not only in rich countries but now also in developing countries as well,” says Amar.

Tesla is the world’s most valuable automaker with a market cap topping $1 trillion, and Elon Musk remains the richest person in the world, even after a 6 November tweet announcing that he would sell 10% of his stake caused Tesla stock to plummet. 

A Tesla logo is seen on a 250kW electric vehicle charging station.
A Tesla charging station. (Photo by Patrick T. Fallon / AFP)

Morocco’s supply chain role

Tesla cars are sold in some 40 countries worldwide and the company has a chance of delivering 1m electric vehicles in 2021, having mostly skirted around global semiconductor shortages by sourcing from different chip manufacturers. 

One such supplier, STMicroelectronics (ST), is expanding its site at Bouskoura, just outside Casablanca, to keep up with global demand.

In Bouskoura, ST assembles SiC Mosfet chips used in Teslas and other EVs to manage the flow of electricity from the grid to the battery, converting charges to power fans, pumps and other functions in a car, and facilitates traction in the main inverter, improving the efficiency and range without altering battery capacity.

“ST had been the trailblazer for silicon carbide in automotive electrification, improving overall EV performance which has led to 5-10% improvements in range, as well as being the key technology making the move to high-voltage fast chargers possible,” says Ronan Mulvaney, ST’s corporate spokesperson.

With Morocco having already established a thriving aeronautical ecosystem, analysts say the kingdom is positioning itself to become a centre for chip and battery production for Tesla and other EV manufacturers.

“Discussions have been initiated with the largest suppliers including Tesla, for the production of batteries in Morocco,” says Othmane Kotari, a senior adviser on Morocco and North Africa with Albright Stonebridge Group. 

“Even before the crisis Morocco was considered a best cost destination with its direct proximity to Europe, the best infrastructure in Africa and a young population. I think that this kind of initiative can have even more weight to attract Tesla to serve the European market and the African market thereafter.”

When Tesla opens its Gigafactory in Berlin – the firm’s first manufacturing location in Europe – Moroc­cans will be able to order cars for import but will have to pay 20% VAT and import duties of 2.5%. Tesla’s latest Model 3 sells from $57,000, but with a GDP per capita of $3,000, the demand for expensive Teslas is relatively low.

German automaker Opel will soon begin producing EVs in Morocco, giving Opel and its parent company Stellantis a production base for the future cost-effective export of electric vehicles to markets in sub-Saharan Africa. Their Rocks-e vehicle is to be priced at around €7,000.

Demand set to grow

Although the number of Tesla owners in Morocco will develop slowly, the growing footprint of Tesla in Africa will stimulate local demand for EVs, says Michaël Tanchum, an associate senior policy fellow in the Africa programme at the European Council on Foreign Relations.

“If Tesla Superchargers in Morocco lead to readily available and user-friendly charging stations then it will have been a very important development in spurring wider EV adoption, and Morocco already has a good ecosystem for automotive manufacturing thanks to careful planning by Rabat,” says Tanchum.

The Moroccan government recently scrapped a tax on luxury and EV vehicles, and a ready local supply of cobalt can be easily mined for use in EV batteries, helping lay the foundations for future growth in the sector.

For now, prospective buyers must continue to jump through hoops to get in the driving seat of a new Tesla and import privately, paying a distributor to ship from Europe.

“We still have a decade and a half before gas cars will stop being made, but we’re on a mission with Tesla to accelerate the transition to electric mobility,” says Amar.

Technology & Information

African artists join the NFT gold rush

When 30 year-old artist Osinachi was growing up in Aba, a city in southeast Nigeria, he was obsessed with screens. His father was an early internet adopter and took his son to cyber cafes, and evenings were spent playing video games on his Sega Megadrive before he discovered how to make digital art on Microsoft Word 15 years ago. 

In 2017 Osinachi was working as an academic librarian at the University of Nigeria, Nsukka, when a Google alert informed him about the crypto art scene – a category of art related to the Ethereum blockchain – where non-fungible tokens (NFTs) are used as a type of digital asset to record the unique ownership of property such as images, videos, music and other collectibles.

Non-fungible items can include paintings, song files or even tweets – like Twitter CEO Jack Dorsey’s first ever message. These things are not interchangeable with other items because they have unique properties and no two units are the same. The growing popularity of NFTs has puzzled many, but it has opened the door for artists and creators from Africa to sell their content to a global audience. 

In March, Osinachi sold art for $75,000 worth of NFTs in 10 days, before selling Becoming Sochukwuma – a painting showing a black dancer wrapped in a tutu swirling on a computer screen – for $80,000 on the crypto-art market in April.

“Digital art has a place on the same shelf as traditional art,” Osinachi told African Business. “Collectors are making huge returns on investments. [Traders are] buying digital pieces for $1,000 and selling for $20,000 within a short period of time, so I would say that purchasing with NFTs is just like buying traditional pieces – it’s just that how you store and display it is different.”

NFT collectors can flaunt their digital collections at online NFT marketplaces like SuperRare or Showtime, which allows viewers to like or comment on individual pieces. Collectors are displaying their digital artwork files – jpegs, gifs, MP4s or 3D digital models – in virtual reality platforms online or at home on HD screens uniquely designed to showcase digital art.

Becoming Sochukwuma by Osinachi.
Becoming Sochukwuma by Osinachi. (Reproduced courtesy of the artist and Daria Borisova)

Art galleries, auction houses and art exhibitions are following suit. In November, at the sixth edition of Art X Lagos – West Africa’s biggest art fair – digital art was auctioned online in partnership with SuperRare, while art lovers visited around 30 physical galleries on show from Africa and the diaspora.

“Each piece in the NFT exhibition sold for not less than one Ether, which was around $4,500 or $4,600,” says Osinachi, who curated the show. 

The value of an NFT can be set by the artist or bid for at auction. NFTs can be bought or sold using virtual wallets that exchange the cryptocurrency Ether, which can be exchanged for fiat currencies like the US dollar and withdrawn as cash. 

“It hasn’t been a walk in the park,” says Tokini Peterside, Art X Lagos’ founder. “Any time there is a significant change in any sector, there is always some pushback and we know that some collectors worry NFTs will have a negative impact on their traditional collections.

“For this reason we included within our Art X Talks programme a special conversation on NFTs, to help demystify NFTs, and reframe the debate around meaning, intention and the creative drive that lies at the core of this revolution.”

Digital artists are the new rock stars

The global NFT marketplace has experienced an exhilarating year to date, with trade surging to $10.7bn in the third quarter of 2021.  

Mike Winkelmann, the American digital artist who goes by the name Beeple, sold his Everydays: the First 5000 Days for $69.3m in March at Christies in New York. It was a digital collage of every piece of work he had created daily since 1 May 2007 and was minted – the process of turning a digital file into an NFT on the Ethereum blockchain – at Christies, making Beeple the highest-grossing digital artist in the world. 

For Nigerian multidisciplinary creative Niyi Okeowo – who goes by the name HelloMrColor – artists entering the scene expecting overnight success will likely be disappointed, and should instead focus on building a story around their work.

Okeowo’s Afro-futurist art combines photography, 3D and graphic design, and his piece Indigo Child – inspired by the new-age concept of indigo children born with supernatural abilities and powers – sold at SuperRare’s marketplace in November for 1.2 Ether ($5,387).

“Digital artists are becoming the new rockstars,” says Okeowo. “The most successful people are able to embrace new technology and human beings were made to adapt. But I think the attitude of the older generation of Nigerians towards digital art needs to change. They shouldn’t be upset that the young generation is benefiting from technology.”

In June, the Nigerian government banned Twitter after the US social media company removed a controversial post from President Buhari, cutting off one important channel to engage with potential collectors and market their art. In February, a directive from the Central Bank of Nigeria had asked commercial banks to stop facilitating cryptocurrency transactions, creating additional anxieties for digital artists.

Man in a Pool II by Osinachi.
Man in a Pool II by Osinachi.(Reproduced courtesy of the artist and Daria Borisova)

When an artist sells work on the blockchain they sign a smart contract, a self-executing agreement between buyer and seller directly written into lines of code, that ensures royalties – often between 10% and 30% – on all future sales, which has provided a degree of financial security as the scene goes mainstream. 

Yet the ever increasing “gas fees” – the term given to the fee that most NFT trading platforms charge to mint their NFTs though the Ethereum blockchain – is prohibitive to many emerging artists from Africa, says Peterside. Art X Lagos covered the costs associated with minting NFTs at November’s auction, although the boarding process around minting needs to change so more artists from Africa can ride the NFT wave.

“I can afford to pay a gas fee of say $200. But new artists entering the space can’t afford to do that. They haven’t set a workflow as much as $100 yet, so they can’t actually afford to pay such huge gas fees, but in time Ethereum’s network upgrades will provide higher speeds and lower gas fees, and art fairs like Art X will play their part,” says Osinachi.

Environmental impact

With the digital art market flourishing, a laser-focus is being shone on the environmental impact of NFTs.

The Proof of Work (PoW) security model on which Ethereum runs requires extensive computer power, graphics cards and electricity. The ecological cost of a single Ethereum transaction is estimated to have a footprint on average of around 35 kWh, roughly equivalent to an EU resident’s electric power consumption for four days, says Jason Bailey, founder of Artnome – an analytical database of the world’s leading artists.

Bailey analysed 18,000 crypto art NFTs and found that on average a single edition NFT on the blockchain used 340 kWh, which is the equivalent of driving a petrol car 1,000km or boiling a kettle 4,500 times.

Ethereum’s developers have planned a shift to the alternative Proof of Stake (PoS) security model, via a blueprint called Ethereum 2.0 which will require dramatically less energy for artists and collectors looking for an environmentally friendly alternative. A present strategy is to try and offset some of the carbon cost of minting NFTs by purchasing carbon credits.

Planning ahead now before the market takes shape will help to lay the groundwork for more sustainable NFTs, says Bailey.

“Humans are social creatures and we like to collect things and express ourselves through those collections, and this is a chance to rethink what a more inclusive art world might look like.”

Finance & Services

Botswana’s removal from financial greylist spurs optimism

In its plenary held on 21 October 2021 in Paris, the Financial Action Task Force (FATF) removed Botswana from its greylist of jurisdictions.

The intergovernmental body concerned with money laundering, terrorism financing and other illicit money flows cited improvements in Botswana’s handling of its anti-money laundering (AML) and counter-terrorist financing (CTF) regimes, having initially greylisted the country in October 2018. 

That listing prompted Botswana to make a high-level commitment to work with the FATF to strengthen its AML and CTF regimes and address further technical deficiencies identified by the organisation. The commitment to bring its regulations in line with world standards was brought about by the establishment of a new legal framework. 

That led the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), which implements FATF recommendations in the region, to complete its assessment of Botswana’s systems, prompting the FATF to remove the country from its greylist.

Implications for foreign investment

Botswana’s removal from the greylist will come as a relief to the government. The greylisting by the FATF meant automatic inclusion in the European Union’s list of non-cooperative jurisdictions and the United Kingdom’s list of high-risk countries.

With all transactions linked to Botswana requiring extra scrutiny, the listing had implications for the country’s foreign investment environment. Cross-border transactions were impacted, with foreign businesses needing to consider the risks of working with Botswana banks and other businesses. 

“NGOs for example had to send more know-your-customer [KYC] documents to their donors who were vigilant and had increased the degree and nature of the monitoring of Botswana-based NGOs and were reluctant to send money to Botswana to avoid potential sanctions,” says Thuto Senwedi, head of risk and compliance at Bookbinder Business Law. 

“The listing constrained the efforts of attracting foreign businesses into Botswana, cross-border transactions, and financial transactions flows, and increased the costs of local financial institutions doing business with international banks and other organisations due to the higher due diligence that is applied to them.” 

Botswana’s removal from the greylist also decreases the chance of future sanctions from other multilateral organisations. FATF greylisting can be the first step in a series of increasingly stricter sanctions from the World Bank, the IMF and the European Bank for Reconstruction and Development.

Instead, the FATF’s decision should lead to an exit from the EU’s non-cooperative list and the UK’s list of high-risk countries. Gaborone has been putting pressure on the European Commission to remove it from the EU list given the dampening effect on foreign direct investment and the impact on the creation of a business-friendly environment. 

“Since both the EU and the UK benchmark on the FATF action plan implementation, it should be a matter of time before Botswana is removed from the UK and EU blacklists”, says Senwedi.

Diversifying the economy

The listing is a major obstacle to attracting foreign investors and companies, and a removal from the EU and UK lists would give the government of Botswana more room for manoeuvre in its effort to diversify the economy.

That bodes well for Botswana’s economy, which relies heavily on diamond mining but is keen to grow the financial sector and local stock exchange. The mining sector accounts for around a fifth of gross domestic product and diamond production constitutes 80% of exports.

“The financial sector was identified as a conduit for economic diversification and under the Economic Diversification Drive strategy, Botswana aspires to be a regional financial centre”, explains Thapelo Tsheole, CEO of the Botswana Stock Exchange.

The government has also adopted a strategy including tax incentives, government support for export promotion activities and the establishment and expansion of special economic zones. The country is also looking to diversify mining away from diamonds, including by exploiting its valuable copper reserves. 

“The country has numerous assets in the mining sector that it intends to use to shift away from its dependence on diamonds,” says Charles Siwawa, CEO of the Botswana Chamber of Mines. “A number of companies are investing in expansion and development of coal, nickel, manganese, iron ore and silver mines.” 

Rare earth metals are also found in abundance and Botswana plans on taking advantage of the rise of electric cars and subsequent high demand for battery minerals as part of its effort to attract non-diamond extraction.

Recovery from pandemic

Diversification is critical if the country is to emerge from the economic disruption of the global Covid-19 pandemic. Botswana’s economy was dragged into a severe recession due to the pandemic-induced economic crisis, with a GDP contraction of 8.9% in 2020 and the worsening of youth unemployment and inequality. 

Before the pandemic, Botswana was characterised by strong economic growth, averaging 5% a year over the past decade. There are already signs of a recovery. At the end of 2020, Botswana projected growth of 7.7% in 2021 thanks to the recovery of the diamond industry. This recovery is now stronger than expected, with growth projected at 9.2% by the IMF. 

Botswana is ranked as the third-placed sub-Saharan African nation in the UN’s 2020 Human Development Index, behind Mauritius and the Seychelles. It has become an upper middle-income economy and aims to transition to a high-income economy by 2036. 

A $250m loan by the World Bank in July and a $137m loan by the African Development Bank in September have boosted Botswana’s efforts to bounce back from the pandemic.

With the country expected to implement new programmes attracting investment and the government taking action to protect investors, staying off the lists of non-cooperative jurisdictions is now an essential condition to ensure the success of these programmes. 

It is likely to be an ongoing challenge and Botswana will have to continue to work with ESAAMLG to improve further its legal foundation to fight financial crime.

Trade & Investment

De Beers eyes Angola’s reformed diamond mining sector

The world’s largest diamond producer, De Beers Group, has applied to conduct exploration activities in north-eastern Angola.

The move comes after the country passed “substantive and consistent reforms” in its diamond mining sector that will drive “transformative socio-economic growth for local communities,” the mining giant said in a statement on Tuesday.

Following the submission of the exploration application the South African group hopes to kick-off negotiations with the Angolan government for a diamond mining investment deal, the company said.

If De Beers exploration licence is granted, Angola will be the only diamond producer in which three of the world’s largest diamond miners operate, including top Russian diamond miner Alrosa and fourth largest Rio Tinto, says New York-based diamond analyst Paul Zimnisky.

Untapped potential

Angola is the world’s sixth-largest diamond producer and the third in Africa, but its extensive diamond reserves, estimated to be 300 million carats, remain vastly untapped and under-explored. A 27 year civil war and a business environment considered secretive and difficult to navigate previously held the industry back.

Angola produced 8 million carats in 2020, a 15.4% decrease from 2019’s 9.4 million, according to the Ministry of Mineral Resources and Petroleum.

In a bid to attract investment, President João Lourenço unveiled plans to reform its diamond industry in 2018 in order to attract investment, boost production and drive higher revenues.

The reforms included overhauling the regulatory frameworks governing the sector, and the creation of the National Agency for Mineral Resources tasked with regulating, inspecting and promoting diamond mining, the president said.

The gleaming new headquarters of the Geological Institute of Angola was also inaugurated in Luanda last year, built by Chinese state-owned CITIC Construction Co. Ltd, and equipped with state-of-the-art labs for the treatment of mineral and petroleum resource samples.

“The Institute is in a position to provide the State, companies, investors and universities with credible geological information that was previously produced outside the country,” the government said.

In Angola’s eastern extremity, in the province of Lunda Sul, the construction of Saurimo’s Diamond Development Hub is also underway, which will be home to new diamond-cutting factories and two training centres specialised in diamond mining, evaluation and polishing. The hub hopes to propel regional industrialisation and generate job opportunities for young people.

The reforms are an important step in creating a “stable and more predictable investment environment in which the people of Angola can directly benefit from increased foreign direct investment”, Bruce Cleaver, the CEO of De Beers Group said.

“Should we discover an investment opportunity in the region, we will apply the same proven governance, social impact and environmental framework that has contributed to long-term and sustainable socio-economic development in the neighbouring countries of Botswana and Namibia,” he said.

The move expands the miner’s sprawling operations across Southern Africa. De Beers renewed its 10-year diamond sales agreement with Botswana last year.

The London-based firm also signed a new 20-year deal with the government of Namibia in October with perks to help their joint venture Namdeb to weather the storm of Covid.

After a tough year, Africa’s diamond industry is regaining its sparkle after the pandemic decimated consumer markets, paralysed supply chains and led to the closure of mines.

Trade & Investment

How Africa can surf the wave

When asked about their reasons for seeking second residencies or passports, African business people’s main motives seem to be largely the same, and based on four key aspects:

Mobility – Most African passports are quite limited when it comes to travel, and as such represent a serious constraint when developing a businesses. This was even more noticeable during the Covid pandemic, where most of the world’s borders were closed unless you were a resident or citizen of the country (or group of countries). As a result, we saw an increasing demand from African applicants to Portugal, the United Kingdom and even to Antigua and St Lucia.
Education – Most African businesspeople still look favourably at the UK, continental Europe, Canada and the USA for education, and naturally they will opt for those destinations when considering immigration, especially if they have children.
Safety – Political or economic instability, rising insecurity and crime… these are some of the reasons that are given to us from African, and other, applicants. It is therefore no surprise to see Portugal, Canada and Australia ranked highly among the choices of second residencies, since these countries get top marks for keeping their citizens safe.
Taxes – As a businessperson, a key aspect of consideration is managing one’s finances and tax liabilities. Conversely, many countries are competing for talent and want to attract high-skilled professionals and entrepreneurs. We are seeing countries like Malta, Ireland, Bulgaria attract entrepreneurs through corporate incentives, and Portugal and to an extent the Caribbean islands through personal incentives (offering a tax residency scheme in addition to citizenship).

It is interesting to note that the African continent is yet to establish a business immigration programme, despite being home to over one billion people, many of them young, and having the world’s largest free trade area.

To some extent we saw Morocco and other countries develop free zones in order to attract foreign capital, while offering promising conditions to foreigners willing to retire there. Rwanda, South Africa, Kenya, Ethiopia, Mauritius have all developed some sort of tax incentives to bring fresh capital to their economies (and to enlarge their business borders), while western African countries have created a monetary union to facilitate economical exchange, as well as the capacity to obtain residency easily for citizens of the union. But still to this day there is no established business immigration programme in Africa – Seychelles are considering it but no official announcement has been made.

What if African nations granted citizenship to business entrepreneurs, or long-term residency programmes? It is something that they should definitely consider, and it might increase foreign investment in strategic sectors.

Caribbean nations that have adopted similar schemes have been able to significantly supplement their state budgets through these schemes, with many infrastructure projects being financed through those programmes. It is true that most African passports have limited mobility, so the impact might not be quite the same, but I still believe that there is room to implement a business immigration scheme in Africa.

With visa-free travel to 146 countries, a friendly business environment, and easy path to opening a business (not to mention a 15% corporate tax rate and tax-free dividend distribution, high levels of safety and a good education system), Mauritius is certainly the readiest candidate to develop such a scheme.

The country is greatly appreciated by anyone who has visited it and known for its good infrastructure and hospitality, as well as its progressive government when it comes to ease of doing business.

Another candidate is South Africa. With visa-free travel to 102 countries it has room to improve its mobility by negotiating more visa-free agreements, but South Africa remains a very attractive destination, both as a place to live with appealing cities such as Cape Town and first-world infrastructure.

Botswana has established a good map for growth, with a great track record when it comes to governance, security, education and health. Many foreign companies are already establishing themselves in Botswana, which is considered a safe country where the tax environment is relatively friendly.

Other countries such as Egypt, Morocco, Senegal, Ethiopia, Kenya, Rwanda are economically dynamic and offer good infrastructure and services but their lack of global mobility holds them back in terms of appeal, at least for golden visas. I remain convinced however that the opportunity is there to develop these services.

Nicolas Salerno is Managing Partner of Golden Visa Consultancy. In a career spanning 18 years he has helped over 2,000 families to acquire a second residency or citizenship.