General

You will undoubtedly find humility woven into your business journey in Africa. Africa will indeed ground you. It has taught me humility, keeps me down to earth, and my entrepreneurial journey has brought me lessons in modesty, remaining unassuming in the estimation of anyone’s abilities, for the most unassuming person you meet in Africa can wield the greatest of powers. Basically, doing business in Africa will humble you. The sprawling continent of Africa, with its diverse economies, rich natural resources, promising markets, and unique challenges, paints an intriguing picture for entrepreneurs and businesses around the globe. It is a land where potential and pitfalls walk hand in hand, a landscape where each interaction tests one’s resilience, shatters assumptions, and offers immeasurable lessons in humility and growth.  The lure of Africa as a commercial frontier lies in its size, being the second-largest continent with 54 varied nations, and its rapidly changing demographics. The continent’s population is set to double by 2050, making it the region with the youngest and fastest-growing populace worldwide. This signifies a vast consumer base and an ever-increasing labour force, presenting unique opportunities and challenges. Doing business in Africa is akin to navigating through a complex maze. The game’s rules continually evolve, shaped by rapid urbanisation, technological advancements, a rapidly growing middle class, and geopolitical influences. Yet, at the heart of it all lies a central, humbling truth: to succeed in Africa, one must understand Africa. This understanding transcends mere statistics and projections; it involves immersing oneself in the African people’s culture, history, socio-political climate, and aspirations. The Business Landscape in Africa The business landscape in Africa is as diverse as the continent itself, with each of its 54 countries harbouring unique economic climates, growth trajectories, and entrepreneurial ecosystems. Africa is not monolithic but a patchwork of distinct economies with distinctive strengths, weaknesses, opportunities, and threats. One common myth about Africa is the notion of ‘The African Market’ as one homogenous entity. Such a view can be misleading and not reflect the continent’s economic diversity. Each African country has its unique blend of resources, infrastructure, regulatory systems, and consumer behaviour. For instance, whereas Nigeria’s economy mainly depends on oil exports, Kenya’s is more diverse, including agriculture, manufacturing, construction, and the service industry. Yet, despite this diversity, shared challenges transcend national boundaries: infrastructure deficits, regulatory complexities, political instability, and access to finance. These challenges necessitate a degree of innovation and adaptation often unseen in more developed markets. African entrepreneurs have demonstrated an impressive capacity for innovation and adaptation. From leapfrogging technologies to pioneering unique business models, the entrepreneurial spirit across Africa is alive and thriving, driven by a persistent urgency to cater to the deficiencies of our people, today’s and tomorrow’s. Mobile banking serves as a prime example of this innovative spirit. In areas where traditional banking infrastructures were scant, mobile banking emerged to fill the void, providing financial services to millions of unbanked Africans. This ability to adapt and innovate according to local needs has been a critical factor in African businesses’ successful growth and expansion. The diversity and dynamism of Africa’s business landscape offer challenges and opportunities. Success in this landscape requires humility, a deep understanding of local contexts, and a willingness to learn from and adapt to ever-changing circumstances. Learning through Navigating Diverse Markets One of the most salient examples of how businesses have navigated and succeeded in Africa’s diverse markets is the story of mobile money, epitomised by M-Pesa in Kenya. M-Pesa, a mobile money transfer service launched by Vodafone for Safaricom and Vodacom in 2007, is a testament to understanding and adapting to local needs. Within a decade, M-Pesa transformed the financial inclusion landscape in Kenya, reaching the unbanked populations and serving as a lifeline for small businesses. The success of M-Pesa is grounded in its response to a local challenge: the high number of unbanked people coupled with high mobile phone penetration. Safaricom identified this gap and crafted a solution that bypassed the need for traditional banking infrastructure. This isn’t just a business success story – it’s a parable of adaptation, innovation, and the value of understanding the unique needs of diverse markets. However, navigating these diverse markets is not without challenges. Language barriers, cultural differences, regulatory issues, and infrastructure are among the hurdles international businesses may face. For example, Africa’s linguistic diversity can be daunting for companies, with over 2000 languages spoken across the continent. Similarly, cultural nuances and different ways of conducting business can be challenging for businesses accustomed to Western methods of operation. Regulatory complexities can create bureaucratic hurdles, while infrastructure, particularly within rural areas, can be a barrier to delivering goods and services. Yet, these challenges present their lessons. They teach humility, resilience, and the importance of local knowledge. They compel businesses to listen, learn, and adapt rather than imposing preconceived business models or strategies. Overcoming these obstacles often results in more substantial, robust companies well-integrated into their local markets. The Power of Partnership and Collaboration Building successful ventures in Africa often hinges on the power of partnership and collaboration, a lesson embodied by the e-commerce platform, Jumia.  Jumia, often dubbed the “Amazon of Africa”, has built a vast network of partnerships with local sellers across the continent. This has expanded Jumia’s product offering and allowed local businesses to reach broader markets. Jumia’s model recognises the importance of local players, leveraging their knowledge, networks, and capabilities. By partnering with local sellers, Jumia navigates the logistical challenges of Africa’s vast geographical diversity. They utilise local knowledge to understand consumer behaviour and preferences better, allowing them to provide more personalised services. However, the key to establishing these partnerships is humility. Doing business in Africa is not about imposing pre-existing models or ways of thinking. Instead, it requires understanding the intricacies of each market and acknowledging that local businesses, regardless of their size, bring invaluable insights and knowledge to the table. Therefore, humility becomes a critical business component, fostering partnerships that lead to mutual growth and success. The Jumia story underscores

Ghana, the Heart of Africa, has long been celebrated for its stable political environment and progressive democratic governance. The nation’s commitment to conducting regular, peaceful presidential elections stands as a beacon for other developing countries seeking to strengthen their democratic institutions. In 2016, Ghana witnessed a notable presidential election that led to a power transfer. The New Patriotic Party (NPP), led by Nana Akufo-Addo, succeeded the National Democratic Congress (NDC), marking a pivotal shift in the nation’s political landscape. As the country gears up for the next presidential election in 2024, the track record of the ruling government and the competing policies and political agenda of the competing parties are capturing attention. But that which is also fascinating is the transformation of the electorate. An entirely new demographic will cast their votes in the forthcoming elections. The group comprised individuals aged between 10-17 during the 2016 elections who were ineligible to vote then but are now of voting age. This could dramatically change the face of the electorate. This change ushers in what I call the ‘TikTok Electorate’, signifying the influential role that social media platforms like TikTok play in shaping political perspectives among this young demographic. Alongside, Ghana’s Free Senior High School (Free SHS) policy, initiated in 2017, has significantly improved literacy rates among the youth (World Bank, 2021). As a result, this newly minted electorate is more educated and politically informed, making them a potent force that could shape the future of Ghana’s politics and national economy. The Rise of the New TikTok Electorate: A Generational Shift in Power In 2024, Ghana will witness a significant change in its electoral landscape. Young Ghanaians aged between 10 and 17 during the 2016 elections will exercise their right to vote for the first time. This group, aged between 18 and 25, represents a vital voting demographic that could reshape the country’s political discourse and outcomes. According to data from the Ghana Statistical Service, the under-15 population represented approximately 38% of Ghana’s total population in 2010 (Ghana Statistical Service, 2012). This indicates that a sizable number of young people, previously ineligible to vote, will have come of age by the 2024 elections. Their incorporation into the electorate represents a substantial demographic shift likely to have profound implications for the nation’s politics. Generation Z, as this cohort is often referred to, is characterised by unique attributes, attitudes, and experiences that distinguish them from their predecessors. They have been shaped by significant social, economic, and technological transformations. Most notably, they are digital natives, growing up with technology and social media, which shape their perceptions, communication, and interaction with the world. This emerging electorate is also expected to be more informed and engaged, thanks partly to increased accessibility to information through the internet and social media platforms. They have a wealth of information, knowledge, and perspectives on national and global issues, making them more aware and potentially more critical of political narratives and promises. However, it’s important to note that while this demographic shift presents an opportunity for political parties, it also poses unique challenges. To effectively engage with these first-time voters, parties must understand their values, aspirations, and concerns and demonstrate a commitment to addressing them in their political agenda. Failing to do so could risk alienation, indifference, or disillusionment among this crucial electorate. The ‘TikTok Electorate’: Harnessing the Power of Social Media As we dive deeper into the characteristics of Ghana’s new electorate, I would like to highlight the term I’d be using to capture this generational shift – the ‘TikTok Electorate’. This term refers to the group of first-time voters who are digital natives and are heavily influenced by social media platforms, including but not limited to TikTok. TikTok, a social media platform that allows users to create and share short videos, has gained immense popularity worldwide, especially among the younger generation. As of 2022, it had over 1 billion active users globally. TikTok’s influence extends beyond entertainment, with the platform becoming a formidable space for political discourse, information dissemination, and mobilisation. In countries like the United States of America, we’ve seen the power of TikTok as a political tool during the 2020 Presidential Elections. TikTok was used for sharing political opinions and organising mass political actions, such as sign-ups for campaign rallies. Social media use has changed how political campaigns are conducted, adding a new layer to the political process. In Ghana, the impact of TikTok and social media, in general, is still unfolding. However, with high smartphone penetration and increasing internet usage, these platforms will likely significantly influence the political landscape now or shortly. The emerging ‘TikTok Electorate’ will likely expect more from their political leaders and parties – greater transparency, engagement, and a genuine understanding of their issues and aspirations. The key for political parties is not just to adapt to this new medium but also to understand and respond to the changing dynamics of political engagement it brings. However, it’s important to note that while TikTok can be a potent tool for political mobilisation and engagement, it also has its pitfalls. Misinformation and political polarisation are notable concerns that must be addressed to ensure a healthy political discourse on these platforms. The Impact of Literacy Rates and Education: Fostering Political Engagement Another crucial factor to consider in Ghana’s changing political landscape is the implementation of the Free SHS (Senior High School) policy in 2017. This policy, aimed at eliminating financial barriers to education at the secondary level, has had significant implications on literacy rates in the country. According to the Ghana Statistical Service, literacy among 15-24 year-olds rose to almost 90% in 2020. The increase in literacy, spurred partly by the Free SHS policy, has opened avenues for young Ghanaians to be more informed and engaged with political processes. This change might well translate into an electorate that is larger and more discerning. Literature on political science emphasises that education and literacy rates can significantly influence political engagement and voting decisions. In the Ghanaian context, a

The interconnectedness of economic elements can often create a domino effect, where a ripple in one sector can trigger a tidal wave in another. This is notably observed in the relationship between inflation and poverty. Recent events in Ghana provide a stark illustration of this phenomenon. The country, celebrated for reducing its poverty rate by over half from 52.6% in 1991 to 21.4% in 2012, has faced economic challenges. The World Bank’s 7th Ghana Economic Update revealed that an unexpected price surge in 2022 plunged close to 850,000 Ghanaians back into poverty, effectively undoing years of economic progress. Understanding Inflation Inflation refers to the rate at which the general level of prices for goods and services is rising. It decreases purchasing power – each currency unit buys fewer goods and services. Inflation is quantified as an annual percentage increase, and as the inflation rate rises, the currency’s purchasing power falls. The most common measures of inflation are the Consumer Price Index (CPI) and the Wholesale Price Index (WPI). Inflation has a direct impact on the economy. Moderate inflation is expected in a growing economy. However, high inflation can be harmful, causing uncertainty and discouraging investment and savings. Inflation can severely disrupt economic and social order at very high levels, as witnessed in hyperinflation scenarios like Zimbabwe in the late 2000s. The Situation in Ghana Ghana’s recent economic woes can be attributed to a variety of factors. The World Bank report pinpoints an increase in prices throughout 2022, resulting in a loss of average purchasing power by 15.7%. This situation was felt across all income levels, with the poorest 20% of the population losing 16.1% of their purchasing power and the wealthiest 20% losing 15.5%. Everyone felt it across the board. Notably, these losses intensified towards the end of the year as inflation surged. A substantial contribution to this inflationary situation stemmed from Ghana’s energy sector. Challenges such as electricity underpricing, the poor performance of distribution companies, and excess power generation and gas supply contracts have led to a buildup of sectoral arrears totalling about $2.3 billion by the end of 2022. Without corrective action, these arrears could exceed $8 billion by 2025. Even with the government’s attempt to increase electricity tariffs, exchange rate depreciation eroded the gains as most generation costs are incurred in US dollars. We need to understand that combating Ghana’s inflation is an uphill battle. Link Between Inflation and Poverty The effect of inflation on poverty is multifaceted. First, inflation can cause wage stagnation. In Ghana, the minimum wage increased by only 10% in 2022, even as the general price levels rose by over 53%, meaning workers’ real incomes dropped by over 43%. This disparity implies that income can’t keep up with the rising cost of living, pushing people towards or further into poverty. Secondly, inflation leads to higher costs of goods and services. Any price increase can be significant for low-income households already stretching every cedi. The rise in costs can force families to forgo necessary expenses, like healthcare or education, perpetuating a cycle of poverty. Lastly, inflation can wipe out savings. Many people, especially those living in poverty, don’t have the luxury of investing in inflation-protected assets. If they have them, their savings are often in cash or cash-equivalent assets whose value is eroded by inflation. This problem was highlighted in Ghana, where rising inflation caused households to deplete their savings or sell assets to meet their needs. In the case of Ghana, inflation also led to a regressive effect on power tariffs. The necessity of fiscal sustainability led to a significant increase in electricity tariffs, with the most considerable impact felt by those consuming between 30 and 200 kWh per month. This burden was particularly heavy for the poorest households, who consume nearly 70 kWh per month. This situation was exacerbated by the depreciation of the cedi, which drove up prices of imported goods and services and increased pressure on domestic substitutes’ prices. Impact of Inflation on Ghana’s Economy The repercussions of inflation are not restricted to individual households but extend to the macroeconomic level, disrupting the economic equilibrium. For Ghana, the surge in inflation in 2022 delivered a blow to the country’s economic growth and amplified existing fiscal vulnerabilities. The Ghanaian cedi faced significant depreciation, which amplified the rate of inflation. Let me explain – when a country’s currency depreciates against others, the prices of imported goods increase. The World Bank report acknowledges this, stating that the depreciation of the cedi has contributed to inflation by driving up the prices of imported goods and services and putting pressure on domestic substitutes’ prices. It’s crucial to remember that Ghana, like many developing economies, heavily relies on imports for consumer and capital goods. As a result, currency depreciation led to a dramatic increase in the prices of these imports. But that’s not all. The depreciation also impacted the domestic production sector, making imported inputs more expensive. In a knock-on effect, the prices of locally produced goods rose, adding to the inflationary pressure.  Moreover, the report noted that many energy sector costs are incurred in US dollars. This means that as the cedi depreciated, the cost of maintaining the energy sector, crucial for any functioning economy, escalated, causing an additional fiscal burden. The government, striving to compensate for this, was forced to increase electricity tariffs, which led to higher living costs for households and, consequently, increased poverty levels. Strategies to Mitigate Inflation Mitigating inflation, particularly in a complex scenario like Ghana’s, requires careful economic planning. Central to any plan should be strategies that address the root causes of inflation while ensuring that these measures do not disproportionately impact the most vulnerable groups in society. Here, both government and financial institutions have significant roles to play. The government could start by strengthening the energy sector. By eliminating inefficiencies and focusing on sustainability, they can reduce the budgetary support required for this sector. The World Bank report mentions that the Energy Sector Recovery Program (ESRP), initiated by