When it comes to support, from PayPal’s perspective, your value is worthless. PayPal is a terrible company to deal with; they will withhold money for quasi-fraudulent reasons, that have long been suspected to be pools that are linked to high interest-earning fixed deposit accounts or something along that line. When they withhold your money, they are actually playing monopoly with your money, and the reasons are always obscure. Your account will be shut down for even more obscure reasons.
PayPal never points to a specific issue, and since they are a near-monopoly, they are above the law, and you, in a third-world country, can only wait and pray. PayPal can act with impunity and there are no mechanisms for third-world individuals to hold PayPal accountable, and they know this, so it’s not implausible for them to take advantage. They do.
Stripe on the other hand is the king of double standards. When it comes to engagements with Westerners, Stripe is your friend through and through, but the minute you, a third-world resident, control a USA entity, the double standards come out. You can’t do certain things that other Western companies are free to do, and if you have a chargeback as a foreign-held entity, Stripe will hold and eventually shut down your account because it is deemed as high risk, even though you or your company might be a target of fraud.
Again, Stripe takes advantage of the lack of accountability. If you acquire Stripe through a 3rd party like Shopify or Woocommerce, then you will NEVER get your account approved, regardless of however clean and legitimate your paperwork is. They will always say their risk department is assessing your paperwork, and if that goes past 3 months, you will almost certainly give up. They want that. However, the double standard is worse, since Stripe is financing Westerners to come build fintech in Africa (e.g. Wave).
As for Flutterwave, it is a better experience. You are treated like an actual human being. You talk to people who speak your language, understand your problems, help you solve them and treat you like an actual human being. You have an actual telephone number you can use and talk to someone who will actually be concerned and help you overcome your hurdles. Flutterwave makes you feel like you belong, and it might be business at the end of the day, but it’s how it’s supposed to be done. With empathy!
Comment by a company founder who moved to Flutterwave.
Dalberg has released a report titled Kenya’s Digital Economy: A People’s perspective. It finds that, in terms of digital transformation, Kenya is a lower-middle/income country that shows some characteristics of a higher middle-income economy.
The survey is based on in-depth responses from 2,456 people in Kenya’s 47 counties. It was done in 2020 to assess their perceptions on the state of the supporting ecosystems, digital infrastructure, enabling resources, applications and services.
The report differentiates between the uptake of “basic” digital services (sending money, buying airtime/data) and “advanced” digital services (e-commerce, paying for goods and services – health, education, agriculture, supporting livelihoods). It notes that some challenges to the next step of Kenya digital economy including exclusion and digital safety (fraud/harassment, cybercrime when using devices).
A stunning finding is that there is a low demand for advanced digital services, beyond mobile money, digital communication and social media. This is because non-users and 30% of current basic digital users do not find digital products or applications that are relevant.
Some of the sectors it touches on:
Agriculture: Kenya is one of the most advanced agri-tech markets with approximately 30% of agri-tech startups in Sub-Saharan Africa operating here and with 18% having their headquarters in the country But the awareness of landowners of digital services is low. 45% of those surveyed are not aware, while just 13% use digital services for their livelihoods – mainly to communicate with customers, suppliers and vendors while 10% use it for inputs and 15% for knowledge sharing. Half of those who do, use it as a result of assistance from field agents who are strong support factors for rural digital economies. Also half of adult female farmers face challenges in affording devices and accessing the internet which makes them hard to reach with interventions.
Health: There is low use of digital health services with only 15% of respondents aware, and of those, 35% use it mainly to consult health workers and pay for medicine with mobile money. The challenges cited are high costs and mistrust of doctors they can’t see while a quarter are concerned about sharing health information online.
Ecommerce is urban: 23% use e-commerce in urban areas compared to 9% in rural ones, and in Nairobi and the central region, uptake (24%) is twice as popular as in other counties in the rest of the country where it ranges between 1-12%.
On Financial Access:
Mobile Money has (+) and (-) aspects. The usage of mobile money is near-universal with 95% of lower-income and 93% of rural people using it as Kenyans have good user experiences with it, unlike some other countries. And while there have been concerns about fraud, 80% have trust in mobile money, but also 53% cite high costs as a reason not to use mobile money, more so with lower-income Kenyans.
Easy Credit: The report cautions that government should watch for debt traps from increase ease of digital credit in the country. Half of the respondents have had to sell assets, borrow more or reduce food & education expenditure to repay a loan – and this increases the chance of financial exclusion. Also, basic digital users lost an average of Kshs 1,470 to fraud while advanced users lost twice as much (Kshs 2,996) over the past three years. This is a risk that can grow as more unexposed people turn to advanced services and may face devastating losses that they cannot absorb.
Social safety nets: People with government stipends or pensions are more likely to use e-government services (such as eCitizen, iTax NHIF) than other Kenyans in general.
Entrepreneurs use it little: Among self-employed and business owners half use digital services and mainly for basic reasons like communicating with customers and vendors. Only 15-18% use it for advanced reasons like keeping business records, tracking stock, paying taxes, selling services and buying supplies through e-commerce platforms.
The report by Dalberg, done with support from the Omidyar Network, along with its data sets, can be downloaded here.
All data indicates a new age of interest in retail investing. Across the world more people than ever are starting to trade for the first time, with reports of retail participation in the US stock market, for example, increasing from 10% in 2019 to 25% in 2020. Even during a public relations disaster, Robinhood- the U.S retail-focused trading app- onboarded 600k new clients in a single day. Our brokerage, Equiti Group/ FXPesa, saw volumes and client numbers increase by multiples across all our key markets and this will continue through this year.
The pandemic created an environment where people were looking for an income in the safety of their own home and, logically, that trading/ investing answered that need. Anything that brings a heightened awareness of financial literacy is a great thing, but it’s also something that we need to nurture. With millions entering the financial markets for the first time, unfortunately, scams, misinformation and false promises follow, and we must increase consciousness of this.
Social Networks: Most of the world has been following the journey of a supposed war between those on a Reddit forum called r/WallStreetBets and hedge funds betting on the demise of American electronic games supplier GameStop (going ‘short’). This battle was trending on all major social networks, such as Twitter, Facebook, Telegram and Instagram. These networks are powerful, Reddit has 160 million unique visits to its site each month.
People that had never invested before frantically set up trading accounts and placed trades with as much capital as they could put their hands on. Some naïve first-timers often had very little notion of risk or what they were doing, but instead paid full attention to the latest funny meme or influencer that told them that this stock was ‘going to the moon’. It did, and then it came back again leaving a lot of people losing a lot of money.
Ignoring Fundamentals: Social networks and online personalities have an increasing amount of influence over investors. Recently, Elon Musk the CEO of Tesla added 12% to the value of Bitcoin simply by changing his bio to the bitcoin Twitter hashtag. With the wave of memes, online ‘experts’ and celebrities pushing their agendas, the fundamentals of great companies are becoming secondary. We need to acknowledge this and attempt to educate differently.
A perfect example of this was the recent movement in the Silver price. Silver is widely regarded as an undervalued metal, mainly because of its increasing utility in ‘green technologies’, such as solar panels. Various reports declare solar panels and wind turbines will require three times more silver than what is used today. Silver is also used in electric car production and other tech of the future. When the silver price jumped 12% (its biggest intraday rise since 2008), it was not because of these fundamentals. The price jumped primarily because social media declared the same war with hedge funds and decided to try to do the GameStop ‘trick’ again, making the Twitter hashtags #shortsqueeze and #silvershortsqueeze trend across the world. The silver market is huge and not as easily manipulated as a relatively small stock such as GameStop, and so this attempt was doomed, with silver retracing back very quickly and lots of retail traders losing more money.
All this focus away from fundamentals, meant that the market was quite late to understand the stellar Q4 earnings shown by some great companies, especially Big US Tech firms. Amazon posted $126 billion Q4 revenue and shows no sign of slowing. Google saw a 23% revenue growth in Q4. Unfortunately, the circa 4-6% share price increases these saw due to these results aren’t considered attractive enough to those only seeking the 16x returns GameStop gave some in just 2 weeks. There is so much real opportunity in the markets, especially now.
Scams: If you were to investigate your junk mail (don’t!), you would have probably been sent a scam email within the last 24hrs. It is most likely centred around cryptocurrencies, where it is promising huge returns from trading obscure crypto that you have never heard of. Some of the recent scams are from hackers sending out tweets from reputable, businessmen like Jeff Bezos and even former presidents such as Barack Obama’s certified accounts. They ask for the trusting public to send bitcoin to a wallet and then wait for 2x back.
Unfortunately, as unlikely as these scams may seem, the public is losing millions of dollars to them daily. In today’s ‘at once’ society, many aren’t thinking of growing knowledge and wealth over a long period. Instead, they want instant gratification and huge profits, as is the expectation in most walks of life now. Now, if you want something, you want it immediately- but my experience of wealth generation is the very opposite of this. It takes time to do it right.
Long-term side-effects: Social media has been an excellent source of information for new traders, keen to improve their financial futures. However, there is cause for concern if these young and new entrants blindly follow investment ideas that they do not understand, just because the herd are doing the same thing. We have a huge wave of first- time traders ignoring great companies that have incredible distribution channels and solid, multiple revenue streams, instead opting to follow a funny meme of Elon Musk and a Shiba Inu dog (DogeCoin).
A glaring issue is I don’t see how it can work out for these traders. If they make money in these pump-and-dump Reddit schemes, for example, they will invariably put more into the next one and continue until they lose everything. In this search for increasing returns, they are also susceptible to false promises and scams. On the flip side, if they lose their money in the first attempt, they are likely to shut their accounts and never think about their financial futures again. That is a tragedy.
It is far better to work with a brokerage to diversify your investments across global asset classes, regions and short and long-term plays, concentrating on sound fundamental and technical analysis…improving your knowledge day by day, year by year. Understanding this gives you a great chance at achieving real wealth. This has always been exciting enough for me, no meme needed.
A guest post byBrian Myers (@bjmyersUK), the CEO at Equiti Capital UK.
Huge potential financial returns from global markets:
The financial markets have started like a rocket this year. The main global indices have incredible resilience through the current pandemic and political turmoil. The German Stock index (DAX30) started this year up 80% from its March 2020 low. The US NASDAQ closed off last year with a gain of 43.64% and since the opening of 2021 all the main US indices (Dow Jones, S&P500, NASDAQ) keep relentlessly printing new all-time highs.
Some of the strongest performing global stocks continue to be those that are servicing the needs of a planet in lockdown. For example, ZOOM (ZM), a video communications company that has kept the world connected and has benefitted from a 2020 share price increase of 396%. Peloton (PTON) brought health and fitness into the planet’s living rooms and was rewarded with a 434% increase.
While these stocks are striving to improve lives during the pandemic and beyond, Tesla (TSLA) continues to fight against the global climate crisis. Traders from across the world have bought into the Tesla story, and those that have held the stock since 2019 are smiling with a return of well over 1,000% (none more so than the newly crowned richest man on Earth – Tesla CEO, Elon Musk). On Friday 8th January an incredible $62 billion of Tesla shares were traded, one of the largest daily stock trading volumes in history.
These volumes and returns are not just concentrated on equities. Bitcoin, considered by some as ‘digital gold’, has had an incredible run over the past few months, recently smashing through $40,000. The ‘digital gold’ has returned over 40% to investors in the first trading week of this year alone. Actual gold also performed well, giving a 19% return over the past year. So, equities, indices, commodities, cryptocurrencies- most global asset classes can reward those with access.
Don’t miss out on the global bull-run:
African investors are wise to compare these potential returns to local markets. Many of the African stock exchanges were negative over the past 12 months, with some of the larger ones finishing 2020 down 7 – 15%. The issue here is that most investors in these regions are still predominantly trading local shares/ equities and bonds. Fixed income products are showing extremely poor returns across the world, so the net result for these people is that they are missing the huge global bull-run and it just isn’t fair. It is the mission of my company EGM Securities/ fxPesa to help resolve this issue. The era of holding solely long positions in local stocks and bonds has gone. Africans need and want so much more- and we are determined to give global access and education to anyone that seeks it. We see it as our responsibility to help improve financial literacy across the continent by relentlessly educating the population.
Expect more volatility this year:
On the topic of financial literacy, it is important that we note that we are certainly in a bubble fed by several factors, not least the incredible amount of stimulus from global central banks – more than $9 trillion has been pumped into various markets. There is certainly a disconnect between the global economy symbolised as ‘Main Street’ and the Stock Markets, or ‘Wall Street’. Last week there was a poor jobless claim print (Non-Farm Payroll or NFP) showing unemployment increasing, but in parallel main indices were at record highs. Commentators are calling this a ‘Rational Bubble’, as prices are inflated but with there not being an expected end to the money printing, the bubble looks set to continue.
However, a correction (10% stock market drop) or bear market (over 20% drop) is inevitable. A correction occurs, on average, yearly. A bear market occurs every 3-5 years. We must remember Warren Buffett’s most well-known advice- “Be fearful when others are greedy and greedy when others are fearful”, and for sure the world is being incredibly greedy with the returns they are getting. This is the reason why Tesla and Bitcoin volumes are through the roof. So, if a downturn is inevitable, Africans need the ability to trade and profit from falling markets (going short) – something unknown to many traders in the region.
If you’re an African investor you must think global:
Taking this all in, my point is this – if you are an African investor you must think global. By doing this, the investor can tap into heavily traded markets moving with potentially larger returns. You should find a brokerage that you trust and that, like mine, allows access to global indices, foreign exchange (fx), commodities and shares, so that you can diversify your portfolio away from just local equities and bonds. It’s important that you educate yourself in financial products that will allow you to benefit from falling markets. By doing this and constantly learning, you will be on a great path towards financial freedom.
Follow me @bjmyersUK
A guest post by Brian Myers, the CEO at Equiti Capital UK.
The findings of the 2020 African Financial Markets Index (AFMI) report were highlighted in Nairobi today for a year in which countries face economic and medical challenges from COVID-19.
The fourth edition of the AFMI report by the Absa Group and the Official Monetary and Financial Institutions Forum (OMFIF) now measures 23 countries that encompass two-thirds of the continent’s population and 80% of its GDP. The countries are ranked by six assessments of investment attractiveness and this year, Eswatini, Lesotho and Malawi were added to the Index.
South Africa remained on top, followed by Mauritius, and surprisingly Nigeria, which, along with Morocco, Ghana and Seychelles, made great strides to improve. Kenya, which was number three in 2019, dropped to number seven this year. Overall, 14 of the 23 countries scored above the median mark, a great improvement from the first index when only 6 of the 17 countries achieved this.
COVID-19 has had different impacts on African countries, but as Jeremy Awori Absa Kenya CEO said, even with the slowed-growth in the first half of the year, much was still expected from the continent that has a rising middle-class, and rising urban population. He added that growth would come from developing open, transparent and well-regulated financial markets.
Absa Economist, Jeff Gable said Africa cited some developments on the continent towards financial inclusion and making exchanges accessible to retail investors. These included Eswaitni’s automated trading platform and the Nairobi Securities Exchange’s revamped mobile app for retail investors with Dar es Salaam also working on a similar one. He spoke of moves to encouraging more funds to invest within the continent that saw Lesotho require its pension fund managers to invest locally (currently just 3% of assets are in the country), the launch of a derivatives market in Nigeria, and Ethiopia drafting legislation for a stock exchange.
In terms of sustainable finance, Kenya had its first green bond, Egypt had the first one in the MENA region, and Nigeria is working on its third green bond. Also, the African Development Bank was one of the first institutions to issue a financial instrument to fight the COVID-19 pandemic as it issued a $3 billion social-bond tranche.
Danae Kyriakopoulou of OMFIF spoke of Kenya’s drop which was mainly in the “access to foreign exchange” measure where which it was ranked tenth after having topped the pillar just two years ago. This was partly due to the perception of the currency exchange rate. And on market transparency, she said that Kenya has few firms that have global credit ratings, compared to Nigeria, South Africa, and Mauritius.
She added that a strong local investor base was a source of long-term capital and a financial markets shock absorber of volatility, and that Namibia has the highest pension assets under management per capita on the index. In terms of protection of minority shareholders, Kenya does well on that but it also needs to adopt enforcement of international financial master agreements (ISDA) as a key area of improvement. Kenya is also part of a pilot Africa Exchange Linkages Project to promote intra-African investment flows between the stock exchanges of Nairobi, Johannesburg, Casablanca, Egypt, Nigeria, Mauritius and the BRVM in West Africa.
George Asante, Head of Global Markets at Absa, said that the impact of COVID-19 was not as drastic on African financial markets as they had developed more resilience through having regulators work in uniform. This was in comparison to the 2008 global financial crisis which had a big disruption on African markets resulting in bond yields shooting up 30%. But he cautioned that African governments should work hard to remove the uncertainties that are still in the prices of their bonds, to attain lower borrowing costs in future.
The 2020 AFMI report by Absa Group and OMFIF can be downloaded here.