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The US risks being handed over to the African e-commerce sector


Africa has long been a battlefield for China-US influence, and the final stage in this rivalry is digital.

Huawei – as the largest producer of mobile telescopes in Africa (about 70%), the manufacturer of the most popular mobile phones in Africa and a key player in the development of 5G technologies in the region – stands on the path of digital ambitions of America in Africa. This is why it is the natural target of Thunder's horror.

Huawei's dramatic growth in Africa is not a lonely phenomenon, but is part of a wider Chinese digital strategy that has just reached maturity. China has built digital infrastructure in the region over the past decade. Two Chinese companies – Huawei and Transsion – have almost half of the African mobile phone market.

Transsion has made great efforts to understand African consumers, set up research centers in Nigeria and Kenya, and an assembly plant in Ethiopia. This has enabled the creation of telephones tailored to local market demands and revenue levels.

Transsion's "smarter phones" (Internet-enabled phones) cost only $ 20, and their quality improves with each repetition. They come with dustproof screens, long battery life and multiple SIM card slots that are critical to African markets. Last year, Transsion sold over 10 million of its Tecno and Itel phones in Africa, giving it a third of the smarter telephone market in the region.

The drop in costs and the availability of Chinese mobile phone technology has been a key driving force in promoting mobile connectivity in Africa. The share of Africans with mobile phones increased from about 1% in 2000 to about 50%, and in many cities it is 100% or more (so many Africans have more SIM cards).

Mobile phones also provide a platform for 10 percent of Africans receiving financial services, and this share is increasing every year. For this reason, Chinese technology is a key component of digital and financial inclusion and has provoked credibility for Chinese companies in Africa.

The Belt and Road (BRI) initiative, which is a very bargain, is also a digital game of China. Every physical center in the BRI chain is a digital node that directs data over a large network that is fed back to China. A large part of Asia is included in this digital network with land hubs in Bishkek and Tehran and maritime hubs in Kuala Lumpur, Jakarta, Kolkata and Colombia.

East Africa – centered on Kenya – is the next link in this digital chain. As a trade infrastructure that is well integrated in eastern, central and southern Africa and one of the most digitized and mobile economies in Africa, the city of Kenya in the digital BRI could provide an entry point for China in order to digitally access all African markets.

With the established digital network and the millions of Africans associated with it each year, the basis for the next wave of Chinese technology giants waiting for wings – BAT. Baidu, Alibaba and Tencent have more than 1.5 billion users on their platforms and are the key reason that more than half of all e-commerce in the world takes place in China.

The BAT digital offer is unrivaled as it combines on one platform the range of services offered by Amazon, eBay, Uber, Google, Airbnb and many others, while providing chat, payments and more recently digital banking. All three BATs have their own e-banks – aiBank (Baidu), MYbank (Alibaba) and WeBank (Tencent). Their strength and experience in providing services in China are strongly emphasized to serve the African generation of e-consumers who are developing.

Alibaba was the first in 2017 to set up Alipay service for Chinese tourists in South Africa. Last month, we did not lag behind when we launched a partnership with the Kenyan omnipresent payment platform, M-Pesa. The combined networks of both companies can cover the vast majority of billions of dollars of goods and payments running annually between China and East Africa, most of which are managed by freelance traders and SMEs. In this process, we could help digitize billions of dollars of informal trade, which is currently running in cash, barter or the informal money transfer system of hawala.

In this context, the efforts of Trump's Huawei Insulation Administration could lead to feedback in Africa, where US companies face serious competition. Chinese mobile brands are rooted, and the low cost and availability of Chinese phones give them a dominant market edge. BAT is ready to attack and can rely on the network of more than a million Chinese entrepreneurs who have set up trade in Africa over the last decade to promote Chinese platforms and link them to African businesses and consumers.

The US also faces opposition from African governments that are not keen to return their relationship with China. The African Union has denied allegations that China has collected confidential information from its headquarters in Addis Ababa and in May signed a three-year agreement with China on ICT cooperation. This program focuses heavily on cutting-edge technologies such as 5G, AI and cloud computing in all areas where China will compete with US technology giants in the coming years.

Probable losers In this digital stand-off, American technological giants will be. Google has committed to limiting Android's services offered by Huawei following an executive order issued by President Donald Trump, which will affect millions of African Huawei users.

Facebook and its very popular WhatsApp can also be found at the crossroads. WhatsApp has become a key means of communication for millions of Africans and is a platform on which Facebook plans to introduce financial and other chat-based services (including your own crypt, Libra). However, WhatsApp's overwhelming dominance and Facebook ambitions could be prevented by efforts to prevent Huawei from using US software or technology.

Such a move would be the opposite of Huawei's impact. Instead, competitors, such as Google, Facebook and WhatsApp, would be removed from the competition to win the African ecommerce market. For the first African mobile phone buyer, choosing between the phones they can afford does not use WhatsApp, and the one that can not afford it is a choice between the phone and without it.

The best available technologies are ready to provide all possible data, search, e-commerce or chat services via their own platforms, enabling the next generation of African e-consumers to easily migrate to China's digital network. Partnerships, such as those between WeChat and M-Pesa, which allow African consumers to buy goods directly from China, rather than from Western companies, will further exclude e-commerce platforms in the US.

The African e-commerce sector is ready to dramatically expand over the next decade. No company currently has the advantage. By effectively preventing US technology giants from competing exactly when the battle is about to begin, Washington could end up surrendering to China on a plate.

Edward George is an independent expert on African technology and a former head of research at Ecobank. Twitter: @DrTeddGeorge

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