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Africa’s booming mobile internet market a draw for big names

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Only about 27 per cent of Africans regularly use the internet but this is growing fast, according to US-based Alphabet, the holding company for brands such as Google and YouTube.

Mobile internet penetration accounts for about a quarter of all internet activity, but will continue to grow to 41 per cent in 2020 with 720 million people, says the global mobile communications body GSMA. Many of these new users will be connecting to the Web via smartphones.

Almost half of all Africans now subscribe to a mobile service with Egypt, Nigeria and South Africa making up the bulk of the users, GSMA says.

So big has mobile become that it now contributes about 7 per cent of the continent’s GDP, and will exceed US$200 billion by the end of this decade.

A study by the mobile technology firm Ericsson is even more optimistic – it says more than 1 billion Africans will be connected within five years, mostly using smart devices. Personal computers will play an almost negligible role in Web access, it says.

Social media is one of the biggest drivers of internet use. Platforms such as Facebook, Twitter and WhatsApp are commonly used. So much so, in fact, that some governments restrict their use for fear they will be used for political activism. Last year, the BBC reported that Ethiopia blocked social media services during a state of emergency to contain protests.

Political activists of all stripes have taken to social media with alacrity. In South Africa critics of the president Jacob Zuma have used these platforms to organise protests and attack his supporters. Mr Zuma’s backers, meanwhile, have carried out their own campaign in his defence.

Internet companies have had to adapt to the often poor bandwidth in many African countries. The South African provider Telkom has still to live down a 2009 test during which a carrier pigeon with a flashdrive with four gigabytes of data delivered the information to a destination 60 kilometres away, faster than the same amount of data could be downloaded.

In 2015 Facebook unboxed Facebook Lite, an app for parts of the world where internet speeds are slow. The Lite is less than one megabyte compared with standard apps in excess of 100 megabytes.

Still, getting unconnected Africans online has some way to go. One of the issues yet to be overcome is that 15 countries out of 54 are landlocked. Coastal countries are increasingly being connected via undersea cables, but for those surrounded by neighbours this option does not exist.

The World Bank says landlocked countries pay an average $232 more per internet user a month for fixed broadband access than those living in coastal areas. The disparity is so great that Somalia has better connectivity than Zambia and Lesotho, in spite of being a failed state.

While the citizens of Ghana on the west coast pay as little as $7 a month for internet, those of Chad in the north and which is surrounded by its neighbours, must pay $3,000, the World Bank says. One attempt to overcome this was made by Facebook when it decided to place a satellite in orbit to provide connectivity. Unfortunately, the SpaceX rocket that was supposed to deliver it blew up shortly after launch late last year. It is unclear when a replacement will be available.

In the meantime, Facebook and Google are also working on other methods, including drones and balloons. Given the potential size of the market for advertising these efforts are likely to gather momentum in the coming years.

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VIDEO: Inside Somali Fishing

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Fishing is a vibrant sector along the Somali Coast. With continued support through investment and improved management, the Somali fishing sector has the potential to boost the Somali economy, ensuring long-term growth and stability in the region.

Learn more at oneearthfuture.org

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A lifeline for millions in Somalia, money remittance industry seeks more support

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LONDON — Every month, Fatma Ahmed sends $200 of the earnings she makes in London to her family in Somalia.

“It’s for daily life. For rent, for buying grocery things, to live over there. Because actually in Somalia, that much we do not have,” she said.

Remittances from overseas diaspora constitute a vital part of the economy of many developing nations, none more so than Somalia, where the inflows add up to more than foreign aid and investment combined. However, analysts warn that the industry is poorly understood by regulators and banks, putting the welfare of millions of people at risk.

The two million Somalis living overseas send an estimated $1.3 billion back home every year. With no formal banking system in Somalia, most of the diaspora use remittance services.

Technology makes that possible, says Abdirashid Duale, CEO of Dahabshiil, one of Africa’s biggest remittance services.

“Now, it is so instant, where we have the latest technology, with the internet, secure channels that we can use to send money back home,” Duale said. “Or we use mobiles … smartphones, technology where it will help us to deliver money quickly, but less costly. Technology is supporting us also with the compliance issue.”

Remittance companies rely on global banks to route the money, and those banks must comply with regulations on money laundering and the financing of crime and terrorism.

Citing those concerns, many banks have chosen to withdraw from the market. Such a move is unnecessary, says remittance industry expert Laura Hammond of London’s School of Oriental and African Studies.

“Very often, it is not based on any kind of empirical evidence that shows that money is going into the wrong hands,” Hammond said. “The fear is just there is a conflict in Somalia, there’s the al-Shabab movement. And so there is a problem in a sense, a real precarious nature of the Somali remittance industry.”

The industry received a high-profile boost last month as the Bill & Melinda Gates Foundation donated $1 million using the remittance firm Dahabshiil, along with mobile phone companies Somtel and eDahab, with the money transferred “live” to 1,000 families suffering the drought in Somalia.

The technology is moving fast. However, the cooperation of the global banking system remains key, and the remittance industry wants regulators to do more to support this lifeline.

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Ethiopia devalues currency by 15 percent to boost exports

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ADDIS ABABA, Oct 10 (Reuters) – Ethiopia’s central bank devalued the Ethiopian birr by 15 percent on Tuesday, its first such move in seven years to boost lagging exports.

The birr was quoted by the National Bank of Ethiopia at a weighted average of 23.4177 against the dollar on Monday, compared to what will be 26.9215.

“The devaluation was made to prop up exports, which have stagnated the last five years owing to the birr’s strong value against major currencies,” Yohannes Ayalew, the bank’s vice governor, told a news conference in the capital Addis Ababa.
The International Monetary Fund (IMF) and the World Bank, have both repeatedly urged Ethiopia to consider devaluing its currency to boost exports as they are mostly unprocessed products and need to stay competitive on price.

Ethiopia has operated a managed floating exchange rate regime since 1992.

The Horn of Africa country is the continent’s biggest coffee exporter but its total export revenue has been falling short of targets for the last few years owing to weaker commodity prices.

Addis Ababa earned $2.9 billion in the 2017-2018 fiscal year, versus a target of $4 billion.

On Tuesday, the central bank also announced that it has raised the main interest rate to 7 percent from 5 percent to stimulate savings as well as to counter inflation.

“The rate was pushed to mitigate the inflationary pressure that could arise from the devaluation,” Yohannes said.

Ethiopia’s inflation rose slightly to 10.8 percent year-on-year in September from 10.4 percent a month earlier, according to figures released by the statistics office on Friday.

Ethiopia’s economy is one of the fastest growing in Africa, with the IMF expecting a growth rate of 9 percent for the 2016/17 fiscal year.

The expansion, however, has mainly been fuelled by huge public expenditure. The government has invested heavily in dams for hydroelectric power, new highways and an electrified railway linking the landlocked nation to a port in neighbouring Djibouti.

The IMF has said Ethiopia needs to attract more private sector investment to maintain growth. But Addis Ababa has in the past tended to brush off such advice and said it would keep charge of key sectors. (Reporting by Aaron Maasho; Editing by John Stonestreet and Andrew Heavens)

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