On the 5th of March 2019, a Facebook post by the Nigerian Tribune, one of the leading tabloids in the country alleged that the Central Bank of Nigeria (CBN) has banned the importation of textiles into the country.

However, this is not an accurate representation of what happened. What the Central Bank of Nigeria did was add textile to items no longer eligible for foreign exchange. The governor of CBN Governor, Mr. Godwin Emefiele said

“Effective immediately, the CBN hereby places the access to FX for all forms of textile materials on the FX restriction list.”

Making the announcement, the CBN Governor said the decision was to help revive the moribund industry. The CBN will continue to support cotton lint importation for use by textile factories. However, textile factories will have to make plans to source their cotton locally by 2020.

Businesspeople who import goods into the country buy foreign exchange from authorized dealers majorly banks. They use this foreign currency to pay their suppliers. The announcement means textile importers can no longer access the foreign exchange. This applies to other importers of items on the list. This brings the total amount of items on the restricted list to 41. However, in December 2018, CBN added fertilizer to the list to bring the total to 42.

How the policy will affect importers

The Central Bank of Nigeria trades 1 USD for 305 Naira. However, importers cannot buy the USD at the CBN rate for items on the restricted list. They will have to seek for foreign exchange from other sources including the black market. However, at the black market, the USD sells as high as 360N per USD and above.

Nigeria’s economy is largely dependent on the sale of crude oil. Following the plunge of oil price in 2015 which sank the country into recession, the CBN decided to ration foreign exchange to ensure it doesn’t run out of reserves. The CBN stated that,

“For the avoidance of doubt, please note that the importation of these items are not banned, thus importers desirous of importing these items shall do so using their funds without any recourse to the Nigerian exchange markets.”

What this means to the textile industry

According to the CBN, the policy is to boost the local production of the items on the list. The textile industries in the country are struggling to survive due to flooding of the market with foreign textile. Reacting to the ban, David Ibidapo, an economic and financial analyst said,

“This is a good initiative by the CBN, because if you look at what we spend on importation it is about 50 percent of our budget deficit. And imagine if that amount is being generated internally, it will automatically impact on our Gross Domestic Product (GDP).”

The CBN also has an importer/exporter window which facilitates currency exchange between buyers and sellers. In addition to lowering the pressure on FOREX, Mr. Ibidapo is of the opinion that,

“This will also inspire local production of textile with the single digit rate the CBN is promising local textile industries that are interested in getting loans.”

List of items shut out from CBN foreign exchange

• Rice
• Cement
• Margarine
• Palm kernel/palm oil products/vegetable oils
• Vegetable and processed vegetable products
• Poultry-chicken, eggs, turkey
• Private airplanes/jets
• Indian incense
• Tinned fish in sauce
• Cold rolled steel sheets
• Galvanized steel sheets
• Roofing sheets
• Wheelbarrows
• Head pans
• Metal boxes and containers
• Enamelware
• Steel drums
• Steel pipes
• Wire rods (deformed and not deformed)
• Iron rods and reinforcing bars
• Wire mesh
• Steel nails
• Security and razor wire
• Wood particle boards and panels
• Wood fiber boards and panels
• Plywood boards and panels
• Wooden doors
• Furniture
• Toothpicks
• Glass and glassware
• Kitchen utensils
• Tableware
• Tiles
• Textiles
• Woven fabrics
• Clothes
• Plastic and rubber products, cellophane wrappers
• Soap and cosmetics
• Tomatoes/tomato pastes
• Euro bond/foreign currency bond/ share purchases

There are viable industries in the country producing items on the list. For example, Nigerian rice production has grown to 9.86 million tonnes in 2017 from 353,000 tonnes in 1968. Dangote Cement is among the largest producers of cement in the continent. However, the flooding of the market with foreign goods and the consumer preference for these goods is adversely affecting the growth of local industries.

Safaricom has secured a deal that will enable users to pay for online shopping at AliExpress using M-pesa. AliExpress is an online shopping platform run by Alibaba Group—A Chinese e-Commerce giant. This deal means that, in a few weeks time, Kenyan shoppers can use M-pesa to pay for goods on the platform.

Ant Financial, an affiliate of Alibaba, will be offering M-pesa as one of the payment options. Ant Financial is the Group’s affiliate that runs payment services. The deal targets microtraders across Kenya who source or import their supplies and goods from manufacturers in China. Shopping for goods from China will now be easier and more convenient.

M-pesa

Launched in 2007, M-pesa is a mobile money service that has not only facilitated transactions of businesses in Kenya, but has also transformed lives. Kenyans can literally pay for anything using the mobile money platform. They can use M-pesa to pay for medical services, school fees, and utility bills. The platform also offers loans and savings to the 21 million users in Kenya.

Under the new deal with Alibaba, Kenyans will be able to select M-pesa as the preferred payment method. Total cost will then be displayed in Kenyan shillings. The standard Lipa Na M-pesa Paybill charges will still apply. The new service with Alibaba comes under the M-pesa Global banner, which allows users to send and receive money globally.

AliExpress in Kenya

AliExpress is available to all Kenyans who have access to the Internet. With a wide internet coverage and easy access to Smartphones in the country, this means that anyone planning to shop online can use AliExpress.

Compared to Alibaba, shoppers can buy products in smaller quantities on AliExpress. Alibaba mostly sells goods on wholesale. The integration with M-pesa means that shoppers can complete all the transactions on their mobile phone and have their goods delivered at their locations. Previously, AliExpress only allowed payments through bank transfer, Western Union, Master Card, and Visa.

Online Shopping

The deal between Alibaba and Safaricom puts AliExpress at a strategic advantage in the online shopping market in Kenya. The addition of M-pesa payment method minimizes apathy associated with online shopping. The new service means shoppers can order and pay for goods at the comfort of their homes, office, colleges, or whichever location.

AliExpress continues to compete with other online shopping platforms in the country that include Jumia, Kilimall, OLX, Shopit, Mimi, Avechi, Pigiame, Electrohub, and Amanbo. In 2017, Safaricom introduced its e-Commerce platform, Masoko.

South Africa is the home for Microsoft’s first data centers in Africa. The two data centers are located in Cape Town and Johannesburg. The new data centers are serving Azure, with Dynamics 365 and Office 365 scheduled to be added by end of 2019.

The company had, in 2017, announced that it plans to have data centers in South Africa. Overall, the multinational technology company has 54 cloud regions announced around the world.

Data Centers and Digital Transformation

The new data centers in South Africa make Microsoft the first global provider to offer cloud services from data centers in Africa. The company aims to help in promoting digital transformation in Africa.

The location of the data centers in Africa means regional users are guaranteed of resilient cloud services, enhanced security, compliance needs, and data residency. Furthermore, the new data centers will help promote global investment, improve access to the Internet and cloud services in Africa, and increase business opportunities in the region.

Projections from IDC–International Data Corporation–indicate that adoption of the cloud services will generate around 112,000 jobs in South Africa—by end of 2022. The data centers will facilitate improved environment for building digital businesses. Nedbank for instance, plans to utilize Microsoft Azure to increase its agility, customer focus, and competitiveness.

Furthermore, Azure provides companies with data privacy and security. This makes it a suitable service for banks like Nedbank. The Peace Parks Foundation and eThekwini Water have also signed up with Microsoft for computing services.

Microsoft Azure

Microsoft Azure is a cloud computing service. It can be used for building, testing, managing, and deploying services and applications through Microsoft data centers. The service supports different tools, frameworks, and programming languages.

Users of Azure can enjoy instant computing resources on demand. In addition, businesses or individuals using the service do not have to build on-site data centers or have server cooling environments. Also Azure users do not endure maintenance costs, electricity costs, and use of floor space. As such, Azure brings down the costs of computing.

Microsoft’s Investment in Africa

Microsoft has a 30-year history of operations in Africa. With over 10,000 local partners on the continent, the new data centers in South Africa add to the company’s long list of investments in Africa. The expansive investments in Africa took a new direction with Microsoft’s launch of 4Africa Initiative in 2013.

The initiative seeks to facilitate the company’s engagement with startups, partners, and governments. The aim of these engagements is to help the youth develop locally relevant technology, 21st-century skills, and affordable access to the Internet.

Other global tech giants with plans to open data centers in Africa include Huawei and Amazon. Facebook announced it will set up a content review center in Nairobi, Kenya.