Commerce

World Bank’s analysis reveals Djibouti’s digital economy potential and challenges, urging multi-sectoral collaboration for growth. (Image source: Adobe Stock)

The World Bank unveiled an extensive analysis titled “Djibouti Digital Economy Diagnostic,” examining the digital economy’s status in Djibouti 

The study delves into the country’s digital challenges and prospects, underscoring the critical role of digital infrastructure, the urgency to enhance broadband access and affordability, and the essential digital competencies needed for socio-economic advancement. It underscores the significance of telecommunications, data infrastructure, digital platforms, financial services, and entrepreneurship as the digital economy’s core pillars. The report offers a snapshot of the present situation in these domains and proposes directions for their advancement.

Despite Djibouti’s strides in the digital realm, obstacles remain in fully harnessing its tech potential. Constraints in ICT investment and hurdles in digital service affordability and access are notable impediments. Yet, the creation of the Multisectoral Regulatory Authority of Djibouti and the Ministry of Digital Economy and Innovation (MDENI) signal the government’s resolve to surmount these challenges and steer digital progress.

Fatou Fall, the World Bank’s resident representative in Djibouti, remarked, “Djibouti has made significant progress in its digital infrastructure, but there is still room for improvement in terms of affordability, quality and access to digital services. Despite being one of the smallest countries in Africa in terms of size and population, Djibouti plays a crucial role in providing high-speed internet access to neighboring countries.”

The document advocates for a concerted effort from the government, the private sector, and civil society to confront the challenges and harness the opportunities for cultivating Djibouti’s digital economy. It stresses the importance of collaboration, capacity enhancement, and the formulation of explicit governance structures to catalyze digital evolution and realise long-term goals.

The report also touches on data governance and the growing utilisation of data to more deeply comprehend citizen needs and bolster public confidence.

Ilyas Moussa Dawaleh, Djibouti’s minister of economy and finance, responsible for Industry, stated, “The government is dedicated to tackling these challenges and propelling digital transformation forward. Our national flagship initiative, the ‘Smart Nation program,’ represents a move toward a more unified and comprehensive approach of digital transformation. We are devoted to capitalising on Digital Dividends, with a particular emphasis on creating job opportunities for our youth.”

Furthermore, the report accentuates the workforce’s digital skill imperative. It advocates for the establishment of all-encompassing training schemes for public servants and the enhancement of digital literacy among the broader populace, notably recent graduates and business founders.

Dr Reda Helal and group managing director – Processing, Africa and co-head group processing, Network International, and Benjamin Mutimura, CEO, I&M Bank (Rwanda) Plc. (Image source: Network International)

Dr Reda Helal and group managing director – Processing, Africa and co-head group processing, Network International, and Benjamin Mutimura, CEO, I&M Bank (Rwanda) Plc, has highlighted Rwanda’s journey towards financial inclusion through digital payments, mobile wallets, and strategic partnerships, aiming for full inclusion by 2024 

In the heart of Africa, Rwanda’s financial inclusion efforts are gaining traction as the nation’s institutions, businesses, and consumers increasingly adopt digital payment methods. These technological advancements are essential in extending financial services to a broader audience, offering the convenience of cashless transactions, and facilitating swift and secure exchanges.

Rwanda: Pioneering digital finance hub in Africa

Rwanda stands out as a fertile ground for digital finance, with a youthful demographic—69% under the age of 30—and one of the highest population densities on the continent. The country boasts an impressive 87% mobile penetration rate, and the mobile payment sector saw a staggering 450% growth during the pandemic. In 2022 alone, mobile payment channels processed 310 million transactions, with a significant 41% increase in transaction value reported in November, from RWF 4.7 trillion (US$3.6bn) to RWF 6.6 trillion (US$5bn). Rwanda is ambitiously working towards complete financial inclusion by 2024.

The nation’s strategic plans, Vision 2050 and the National Strategy for Transformation 2017–2024, aim to position Rwanda as a central hub for financial services within Africa. The burgeoning fintech industry is key to this vision, promoting the shift towards digital payments and aiding in the quest for financial inclusion.

A recent study by Access to Finance Rwanda revealed a critical challenge: despite the financial sector’s rich data production, only a select few are leveraging this data effectively. This lack of a data-centric approach is a significant obstacle, as it prevents a deeper understanding of customer profiles and needs, optimisation of business operations, and the ability to forecast outcomes.

In Rwanda’s dynamic market, contactless payments and mobile wallets are becoming increasingly important. They offer consumers numerous advantages, including speed, convenience, and enhanced security.

The strategic alliance between Network International and I&M Bank is set to strengthen the bank’s digital-first strategy and its leadership in Rwanda’s market. This partnership will introduce an array of payment products and services, such as card hosting and processing, backed by strong security measures and an advanced API gateway. These offerings will enrich customer experiences with data and analytics, finely-tuned loyalty programs, and tokenisation, among other innovations.

As the global trend shifts towards contactless payments and digital wallets, Rwanda is witnessing the transformative impact of services like tokenisation and data analytics on commerce and payment systems. These innovations are integrating more citizens into the formal financial framework, paving the way for Rwanda to emerge as a significant financial services hub in the region, with banking standards that match international benchmarks.

Embracing cutting-edge technology in digital banking is crucial for realising genuine financial inclusion. The World Bank’s Rwanda Economic Update underscores the potential for financial services to enhance financial inclusion through innovation. While challenges such as the digital divide, infrastructural shortcomings, and financial literacy gaps remain, the report advises policymakers to strengthen regulatory frameworks, upgrade financial and digital infrastructure, and increase government support to nurture a digital-friendly ecosystem.

As Rwanda strides towards its 2024 financial inclusion goal, the dissemination of knowledge will be instrumental in establishing a digital payment culture that is inclusive and robust.

Airtel Africa reports US$89mn loss due to tax bill, despite customer growth and data usage increase. (Image source: Airtel Africa)

Despite an increase in its customer numbers, Airtel Africa faced a US$89mn deficit, attributed to a substantial tax obligation stemming from “exceptional derivative and foreign exchange loss” 

If these extraordinary items were not considered, the company’s profit for the fiscal year ending 31 March, would have reached US$460mn.

The operator saw a 9% surge in its total subscribers, reaching 152.7 million, alongside a 17.8% rise in data users totaling 64.4 million, and a 20.8% hike in data consumption per user.

Investments in capital expenditures remained steady at US$737mn, falling short of projections due to postponed data center investments. The firm allocated US$152mn for renewing licenses and acquiring spectrum, with US$127mn dedicated to renewing its Nigerian 3G license.

Revenues saw a 5.3% decrease, dropping from US$5.2 billion to US$4.9bn, largely impacted by the devaluation of the Nigerian naira.

Olusegun Ogunsanya, CEO of Airtel Africa, stated that efforts to “de-risk our balance sheet and our capital allocation priorities has materially reduced the risks that the currency devaluation has had on our business.” He further mentioned that the company has taken steps to lessen US dollar debt and is concentrating on “reducing our exposure to currency volatility.”

Similarly, MTN reported a decline in profits due to the naira’s devaluation and has unveiled a plan to restore profitability to its local division.

Kaduna State seals telecom masts over $5.8bn tax debt, enforcing compliance amidst revenue targets. (Image source: Adobe Stock)

The Kaduna State Internal Revenue Service, KADIRS, has sealed telecommunication masts in the state owned by MTN, Globacom, and Airtel due to their failure to settle tax debts totaling US$5.8bn

In a statement by the head of corporate communications Kaduna IRS, Zakari Muhammad, “Kaduna State Internal Revenue Service, in the exercise of its powers vested in it by Section 104 of the Personal Income Tax Act, has sealed up the following masts due to huge tax liabilities as established by Kaduna State Urban Planning and Development Agency (KASUPDA).”

“The sealed masts include the MTN mast (IHS) at Tafawa Balewa Way, Unguwan Rimi, Kaduna; the GLO mast at Shehu Laminu road, Unguwan Rimi, Kaduna and the MTN mast (IHS) at Surami road, Unguwan Rimi, Kaduna.” “Others include MTN Mast (IHS) at Etsu Road, Unguwan Rimi, Kaduna, MTN, Airtel, Glo, 9-Mobile Masts (ATC) at Nagwamatse Road, Kaduna, MTN (IHS) at Nagwamatse road, Unguwan Rimi, Kaduna and an MTN mast (IHS) at Shehu Laminu road, Unguwan Rimi, Kaduna.”

Aisha Ahmad, the Secretary and Legal Adviser of the KADIRS Board, further clarified,“we are left with no option but to exercise the powers vested in us by the law to enforce compliance.”

She emphasised that fulfilling tax obligations is a responsibility of citizens and enforcement is a last resort, as the Kaduna State Government aims to achieve a revenue target of US$120bn.