- Nigeria’s e-Commerce Market Worth $12bn
Aramex, one of the leading global providers of e-Commerce, logistics and transportation solutions, with a presence in 60 countries, recently expanded its operations to Nigeria. Its Global Chief Executive Officer, Hussein Hachem, in this interview with Obinna Chima, expresses confidence in the ability of the Nigerian economy to regain its place as Africa’s biggest and fastest growing economy despite the headwinds. Excerpts:
At a time when a lot of foreign firms are exiting the country as a result of the shortage in foreign exchange, Aramex has decided to expand its operation to Nigeria. What is the attraction of your firm to Nigeria?
Firstly, for us, our strategy is a long term strategy. Look at Nigeria, it has a population of over 180 million people. Out of this, 62 per cent are youths and they are highly connected on the internet and there is massive usage of mobile phones. So, we believe that the time is ripe to really connect the Nigerian communities to the global revolution of e-Commerce. What we want to do is to ensure that a lot of Nigerians are able to access the global connection of e-Commerce and be able to buy anything he or she wants from the global e-Commerce market and we would do the supply chain.
That is one component. We believe Nigeria is the hub of the region and we would like to connect more Nigerians to their neighbors. So, that is the value we are looking for. Foreign exchange scarcity is a global issue. The challenge in Nigeria is also what they are facing in South Africa, the same thing in Europe as well. If you look at the Pounds, it has depreciated by 22 per cent. So, it is a global phenomenon. However, our outlook is beyond the short-term. We have a long-term business strategy for Nigeria. Foreign exchange scarcity is just a short-term challenge.
So, Aramex has been public in the Dubai financial market. We have been in operation for the last 35 years. Our core geography is the Middle East, North Africa, Sub Saharan Africa, Asia specific, with footprints in Europe and the United States. We believe growth markets are quite interesting and we believe Aramex’s footprint in this market would help facilitate trade. However, trade is changing and it is changing because of technology and acceleration of technology is changing lives.
We believe that through the quantum leap in technology, there are lots of opportunities to be captured globally as well as in Nigeria. So, we believe there are lots of interesting business opportunities within the Nigerian economy. Through start ups, Lagos is becoming in Silicon Valley of Africa. There are great ideas happening here and we would like to support that. Similarly, Nigeria is the largest economy in Africa and there is a lot of trade happening between Nigeria and its neighbours, Nigeria and China, Nigeria and South Africa, and we want to be involved in that. So, Nigeria is the latest in our African expansion.
We have been covering Africa for several years and we currently operate all across East Africa, with Kenya as the hub. We are in South Africa and Angola. So, out of 53 African countries, we have a direct and 100 per cent presence in 28 of the countries and we connect the rest through partnership agreements. We believe in this economy and we believe that the GDP of the Nigerian economy has the possibility of becoming $6 trillion by 2050 because the economy has all the right components for growth and we are willing to participate and accelerate that growth.
Clearly, you must have done your research before coming into the country. What are the opportunities you see for e-Commerce in Nigeria?
The e-Commerce market in Nigeria is in the range of $12 billion. But, that is only at the tip. The challenge is in ha aving a proper payment gateway that would allow people to pay online. We are working on that and I think a partnership between us, the payment gateway and the telecoms would do that. You will see more people participating in the e-Commerce solutions that we are bringing into the country.
What is your partnership with the Nigerian Postal Service all about?
We work very closely with the public sector, not only in Nigeria, but wherever we operate and NIPOST is one of such. So, we look forward to expand our relationship with the post. We believe the post is evolving globally. We believe the post office is the natural solution for e-Commerce because it has the reach. The postman is highly recognized by the community and he is a secured person by design.
Everybody knows him and they have the network. So, it is quite natural for us to work with several post operators to ensure that an e-Commerce shipment is delivered to the right address anywhere across the country. We believe in an ecosystem whereby Aramex would work very closely with the post so that we can extend our solutions and technology across Nigeria. We have done something similar in Australia. We have an agreement with Australia Post, which is a joint venture, whereby we are filling the global capacity of e-Commerce through a hybrid system. So, we recognise the importance of post and we are exploring the opportunity of a partnership with NIPOST.
We have other firms in the sector you wish to play in, what is the unique selling point of Aramex and what is that special offer you are bringing to the Nigerian market?
We understand that the demand on service is changing, we understand that supply chain is evolving and we do understand that our current model, which is the traditional model, where you have a company that controls technology and its deployment, does not fit into the digital economy. So, what is different is that we are working on a concept that would involve the communities. That means you would see us investing in startups and working with technology start ups to enhance the ecosystem. There is a problem we are having presently and it is not a Nigerian problem.
It is a global shortage of capacity. And we believe that the growth of e-Commerce is surpassing the growth of infrastructure. What we have built is a technology that allows anybody to become and Aramex delivery man. We have an online billing system that is sophisticated and that would be extended and deployed in Nigeria. We are launching our addressing system, so you don’t have a challenge on your address anymore. It is an app that is fully integrated and as soon as you get into any street.
So, I think the technology component is unique, the mindset that we have about the Nigerian market is unique, the idea of youth and community participation are unique. So, that is what we are bringing into Nigeria. If you go to Amazon right now and you do any online transaction, there is 99 per cent probability that if would be an Aramex delivery. We have mail box solutions that allow anybody in Africa to shop from 18 cities and we would bring the package to you. We have really passed on the power to our agents and they can do third party billing. That is a great way of exporting our service and also part of efforts of encouraging Nigerian companies to do either imports or exports.
How would your service support the activities of exporters and how do you intend to drive awareness of your brand with the stiff competition in the industry?
There are thousands of courier companies in Nigeria as well as thousands of logistics companies. And we have been going from city to city meeting with the CEOs and management. The main issue we see today is that a lot of companies are focused on domestic deliveries, whereas Nigeria is known to be an import-dependent nation. We have already started listing multiple agents. What we have done is that we have installed our technology, we have given them access to be able to operate in training and today any company that is linked to our system is able to independently request a pick up to any of our globa, distribution lines. We have really passed on the power into our agents and they can do third party billing, which means that if a customer or company has a shipment they want.
For awareness, one way that we can reach everybody is through mobile and digital. The economy has changed, so social platforms and digital tools are the best ways to drive awareness. You can authorise from Twitter, Facebook and different platforms and from there reach everyone.
Increased Demand Paves The Way for Expansion of Africa’s Sugar Industry
Africa, June 2021: A new focus report produced by the Oxford Business Group (OBG), in partnership with the International Sugar Organization (ISO), explores the potential that Africa’s sugar industry holds for growth on the back of an anticipated rise in regional demand. The report was presented to ISO members during the MECAS meeting at the Organization’s 58th Council Session, on June 17th 2021.
Titled “Sugar in Africa”, the report highlights the opportunities for investors to contribute to the industry’s development by helping to bridge infrastructure gaps in segments such as farming and refining and port facilities.
The report considers the benefits that the African Continental Free Trade Area (AfCFTA) could deliver by supporting fair intra-African sugar trade efforts and bringing regulatory frameworks under a common umbrella, which will be key to improving competitiveness.
The increased international focus on ESG standards is another topical issue examined. Here, the report charts the initiatives already under way in Africa supported by green-focused investment with sustainability at their core, which will help to instil confidence in new investors keen to adhere to ESG principles in their decision-making.
In addition, subscribers will find coverage of the impact that Covid-19 had on the industry, with detailed analysis provided of the decrease in both worldwide sugar production and prices, as movement restrictions and social-distancing measures took their toll on operations.
The report shines a spotlight on sugar production in key markets across the continent, noting regional differences in terms of output and assessing individual countries’ roles as net exporters and importers.
It also includes an interview with José Orive, Executive Director, International Sugar Organisation, in which he maps out the particularities of the African sugar industry, while sharing his thoughts on what needs to be done to promote continental trade and sustainable development.
“The region is well advanced in terms of sugar production overall, but several challenges still hinder its full potential,” he said. “It is not enough to just produce sugar; producers must be able to move it to buyers efficiently. When all negotiations related to the AfCFTA have concluded, we expect greater investment across the continent and a clearer regulatory framework.”
Karine Loehman, OBG’s Managing Director for Africa, said that while the challenges faced by Africa’s sugar producers shouldn’t be underestimated, the new report produced with the ISO pointed to an industry primed for growth on the back of anticipated increased consumption across the continent and higher levels of output in sub-Saharan Africa.
“Regional demand for sugar is expected to rise in the coming years, driven up by Africa’s population growth and drawing a line under declines triggered by the Covid-19 pandemic,” she said. “With sub-Saharan Africa’s per capita sugar consumption currently standing at around half of the global average, the opportunities to help meet increasing domestic need by boosting production are considerable.”
The study on Africa’s sugar industry forms part of a series of tailored reports that OBG is currently producing with its partners, alongside other highly relevant, go-to research tools, including a range of country-specific Growth and Recovery Outlook articles and interviews.
Global Demand for Investment Gold Plunged by 70% YoY to 161 Metric Tons in Q1 2021
Last year, investors flocked to gold as stock markets crashed on a gloomy economic outlook due to the spread of the COVID-19 pandemic. In the second quarter of 2020, global demand for investment gold surged to over 591 metric tons, the second-highest level since 2016. However, the investors’ demand for gold has dropped significantly this year.
According to data compiled by AksjeBloggen, global demand for investment gold plunged by 70% year-over-year to 161 metric tons in the first quarter of 2021.
The Lowest Quarterly Figures after Record Gold Investments in 2020
In 2016, the global gold demand amounted to 4,309 metric tons, revealed Statista and the World Gold Council data. By the end of 2019, this figure rose to 4,356 metric tons. Investment gold accounted for 30% of that amount. Worldwide gold jewelry demand volumes reached 2,118 metric tons that year. Central banks and technology followed with 648 and 326 metric tons, respectively.
Statistics show the global demand for investment gold surged amid the COVID-19 outbreak, growing by 35% YoY to almost 1,800 metric tons in 2020. Demands for gold used in technology also rose by 17% to 383.4 metric tons, while central banks and other institutions bought 326.2 metric tons of gold in 2020, a 50% plunge in a year.
However, after record gold investments in 2020, the global demand for gold for investment purposes dropped to the lowest quarterly level in years.
The Price of Gold Dropped by 5% Since January
The average gold value tends to increase during a recession, making it an attractive investment in uncertain times. In February 2019, a troy ounce of gold cost $1,320.07, revealed the Statista and World Gold Council data. By the end of that year, the price of gold rose to $1,479.13.
The gold price continued growing throughout 2020, reaching an all-time high of over $2,000 in August. By the end of the year, the precious metal price slipped to $1,864 and then rose to over $1,950 in January 2021.
However, the first quarter of the year brought a negative trend, with the price of gold falling to $1,684 by the end of March. Statistics indicate the price of gold stood at around $1,860 last week, a 5% drop since the beginning of the year.
Gold, Other Safe Haven Assets Plunge Ahead of Fed Rate Hikes
Gold and other safe-haven assets plunged last week as the Federal Reserve signals the possibility of raising interest rates twice in 2023 given the ongoing economic recovery post-COVID-19.
The price of gold dropped by 6.04 percent last week as investors rushed to move their funds out of safe-haven assets including the new gold, cryptocurrency.
The entire crypto space sheds $898 billion in market value to hover around $1.625 trillion last week, down from $2.523 trillion recorded on Wednesday 12, 2021. Its highest market capitalisation till date.
The Federal Reserve raised inflation expectations to 3.4 percent and shifted the year it is expected to increase interest rates from near-zero to 2023 from the previously projected 2024.
The new hawkish stance of the central bank led to capital outflow from safe havens and subsequently boosted dollar attraction.
The United States Dollar gained across the board with the dollar index that tracks its performance against six major currencies, rising by 0.63 percent to 91.103 last week.
However, on Monday morning the gold showed signs of recovery, gaining 0.5 percent to $1,772.34 per ounce following the retreat in U.S. treasury yield that boosted the attraction of non-yielding metal.
Bitcoin, the most dominant cryptocurrency coin, pared losses to $33,245 per coin, up from the $32,658 decline it posted last week.
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