The global impact of Covid-19 pandemic on public health business cannot be underestimated. Policy makers and stakeholders must consider the impact such global disruption of trade poses especially to small and medium businesses (SMEs).
Anticipating and mitigating for the impact of unforeseen global events on supply chain management is crucial if SMEs, who are reliant on goods from an affected area, are to survive.
Due to their size and limited resources, SMEs are often the most vulnerable to unforeseen events and threats. These SMEs also often do not have a plan to deal with supply chain disruptions. Yet, in Africa, SMEs are important drivers of economic growth, accounting for up to 90 percent of businesses in sub-Saharan Africa, an SME Initiatives advisory by the International Finance Corporation reports.
Regrettably, one thing clearly emerging from the global Covid-19 pandemic is that SMEs’ supply chains from hub regions across the globe have been severely disrupted, and with an unpredictable timeframe for resolution as the virus continues to impact industrial production. Companies that would usually import items to sell are unable to continue with business.
So, the question we must ask is, how do these SMEs make their supply chain anti-fragile?
Digital commerce platforms and advances in fields like digital analytics and artificial intelligence can significantly help to mitigate the risks of supply chain fragility.
Flexible cloud computing solutions, data collection and analysis and automation software can all contribute to the success of SMEs in the digital era. Cloud computing also gives businesses the ability to scale, cost-effectively, to new markets.
This is particularly beneficial for SMEs, who often lacked the resources or infrastructure to expand before. Partnerships with companies like Jumia in Kenya and Nigeria has for instance made Microsoft products available to SMEs in local currency.
The challenge now is to establish new supply chain avenues within Africa. The African Continental Free Trade Agreement (AfCFTA) can play the role of unlocking innovation, growth and productivity on the continent, especially for its SME segment, by translating spending power into economic development.
To date, intra-African trade is relatively limited; UNCTAD said it made up only 10.2 percent of the continent’s total trade in 2010. Between 2010 and 2015, fuels represented more than half of Africa’s exports to non-African countries, while manufactured goods made up only 18 percent of exports to the rest of the world.
By creating a single continental market for goods and services, the member states of the African Union hope to boost trade between African countries. Some studies have shown that by creating a pan-African market, intra-Africa trade could increase by about 52 percent by 2022, although these predictions will likely be revised downwards due to the pandemic’s influence on the local and global economy. Regardless, better market access creates economies of scale. Combined with appropriate industrial policies, this contributes to a diversified industrial sector and growth in manufacturing value added.
Digital platforms and the adoption of mobile technology act as effective conduits for the exchange of value, and by aggregating demand across the continent, these platforms give small and medium businesses opportunities to access new markets, and to offer or identify goods and services previously limited by location constraints and marketing costs. These platforms create a diversification effect that boosts the robustness of supply chains.
Start-ups like CoinAfrique, which is based in Dakar, Senegal provide access to markets for SMEs through their free classifieds platform for new and used products, which allows users to make money selling what they do not use and find bargains. The app currently has over one million downloads – and the team are now looking to scale to 10 million active users across francophone Africa. Other platforms, including Biz4Afrika, provide entrepreneurs and SMEs alike with access to valuable business information and resources, finance and markets, providing a boost to small business growth.
A powerful force expediting cross-border trade is the accelerating progress of digital technology in areas spanning from trade logistics, automated processing and e-payments to immediate access and exchange of trade information and documentation.
Cash flow is always a challenge for SMEs, no more so than when trade is constrained due to external factors. It’s always tricky for SMEs to balance working capital requirements with inventory availability. The growth of the fintech sector effectively simplifies any transaction challenges by creating multiple payment channels.
Many fintech start-ups across Africa aim to promote access for SMEs to financing options that were previously not available to them, which also opens opportunities. As an example, Microsoft 4Afrika has partnered with African fintech start-ups, including Flutterwave in Nigeria and the MoVAS Group in East Africa to open access to financing for SMEs.
Diversifying and strengthening supply chains is crucial for SMEs to survive and flourish. When we consider that by 2035, the IMF forecasts that Africa will have added more working age people to our workforce than the rest of the world’s regions combined, it’s essential that we have a thriving SME sector to absorb these workers.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.