👨🏿‍🚀TechCabal Daily – The Blame Game

Logistics and payment challenges are the two prominent challenges facing e-commerce in Botswana, According to startup founders, logistics and payment are the two prominent challenges facing e-commerce in Botswana. In the past year, at least five e-commerce startups have closed shop after COVID-19 briefly offered hope that e-commerce would catch on.

In 2020, e-commerce reached fever with the government launching a National E-Commerce Strategy and a national marketplace called BW Reka. 

The national strategy feels like a relic from the past and BW Reka is now offline. 

Ephraim analyses some of the reasons e-commerce is struggling: 

“The best way to handle logistics [in Botswana] is to have an in-house fleet because courier companies would be too expensive,” said Phumulani Makgetho, co-founder of e-commerce startup Vaisa. “But having your fleet that can deliver nationwide is another challenge on its own.”

Payments are another challenge. Botswana does not have a local gateway and startups have to rely on mostly South African solutions.

Yet, all is not lost and the people in the arena are thinking through these challenges.

Read about it here. 

There are two ways to view Nigeria’s inflation: through the eyes of a structuralist or a monetarist. The structuralists believe that since food prices constitute about 55% of the Consumer Price Index, the measure of inflation, and Nigeria’s notoriously low credit penetration (14%) render the effects of interest rate increases inefficient, inflation is driven by issues like poor crop yields, crumbling infrastructure, and rampant insecurity.

Monetarists, however, believe that Nigeria’s history of recklessly printing money is the driver of inflation. In eight years, the money supply tripled as the CBN financed government spending. When the liquidity of an economy increases that rapidly, too much money chases too few goods. This leads to an increase in the price of goods as the law of demand and supply kicks in. 

Evidence tells us that the right way to look at the cause of Nigeria’s inflation is through the lens of a monetarist. Structural issues are not unique to Nigeria; most African countries also face insecurity, low crop yields, and infrastructure bottlenecks, but the growth of the money supply is unique to Nigeria. 

Under Emefiele, a structuralist approach was used to bring down inflation but it led to some of the highest inflation rates ever recorded. And it seems that we are still on the same path. In just one year of Yemi Cardoso’s tenure as the current central bank governor, the money supply has doubled. 

The current strategy of raising interest rates to curb inflation has proven ineffective, as the devaluation of the naira has deterred foreign investors, demand for the dollar remains high, and the money supply continues to grow. 

The central bank must coordinate with fiscal authorities to rein in deficit financing and implement fiscal rules that limit excessive liquidity injections into the economy. Until monetary policy gets its house in order, we can expect Nigeria’s inflation to remain stubborn.

In June, Kenya tried to plug a $3.7 billion hole in its budget by imposing a raft of taxes, including a tax on bread and other everyday items. The taxes, which would have brought in $2.7 billion, were dropped after week-long deadly protests. 

On September 10, the country’s Treasury Secretary announced that the government’s budget deficit had increased to KES767 billion ($5.95 billion) up from $3.7 billion. The widening budget deficit has put pressure on Kenya’s public finances, which are already strained by debt repayments, pending bills, and expenditure carryovers from the previous fiscal year. 

Although the government has promised to reduce budget spending by nearly 2% to KES3.87 trillion ($29.9 billion) in the new fiscal year, it still needs to fill its budget deficit. To do this, the East African country is now in talks with Abu Dhabi for a $1.5 billion loan to help bridge its budget deficit. Talks of the loan deal are still in the preliminary stages and details remain unclear. People familiar with the conversation say the loan will carry an interest rate of about 8.2%.

Talks of the $1.5 billion loan package come as Kenya aims to break away from costly commercial debt. The country awaits a delayed $600 million disbursement from the International Monetary Fund. The IMF delayed funding after Kenya failed to meet up with its conditions.

The loan discussions are part of Abu Dhabi’s broader effort to strengthen ties with African countries. Earlier this year, Abu Dhabi extended a $35 billion aid package to Egypt.