Emerging economies

Africa- How Bitcoin Is Reducing The Need For Trade financing

Bitcoin -The title of this blog post was  inspired by an article I came across on Global Trade Review (GTR). Elizabeth Rossiello, founder and CEO of BitPesa, tells how the idea of forming the company was born.  BitPesa is solving a number of business problems using digital currency, especially those involving foreign currency issues.  So how does Bitcoin really work?

FinTech– Though ‘Africa and Asia have become hotbeds of payment innovation’, European FinTech entrepreneurs too have a chance to succeed despite the challenges of limited opportunities. How can companies thrive?

Money laundering and the financing of terrorism– An interesting article on the International Monetary Fund (IMF), highlights the importance of fighting corrupt officials, tax fraud, and  most importantly those who engage in financing terrorism. How? Although this includes working with various governments across the globe and working with correspondent banking services, governments too, need to “increasingly harness the power of financial technology. While fintech can be misused—including through the anonymity of virtual currencies—it can also be a powerful tool to strengthen our defenses against terrorist financing.” (Read on)

Mobile Money an innovative solution for “cross-border money remittance service”- Quartz Africa highlights examples about how mobile money is playing a huge role in business transactions, and why the Telekom Industries have no choice but to “capitalize on innovation and the scalable nature of mobile money” (Read on)

The Secret behind Germany’s SMEs Growth, The Germany “Mittlestand”, SMEs Access to Finance

-Like elsewhere in many parts of the world, in Germany the small and medium-sized enterprises (SMEs) form the backbone of the German economy. According to KfW (Kreditanstalt für Wiederaufbau), there are approximately 3.6 million SMEs and they offer employment to more than 60% percent to the working population. (See a summary of further information on  “THE SME SECTOR IN GERMANY” by KfW) .

-Who are the Germany “Mittlestand” and what makes them stand out?  I came across an article titled ‘Introducing the German Mittlestand’ -The article describes 8 facts about the Germany’s ‘Mittlestand’ and what makes them productive. (Read on at Make it in Germany)

-What is the secret of SME growth in Germany and what can the world learn from them? An article by the Telegraph.co.uk describes a broader picture behind the success and growth of the Germany’s SME’s and how they compare with SMEs in the UK and elsewhere in the world. One of the important issues addressed in the article, is the Germany SME access to business financing which is hugely provided by institutions such as the KfW Development Bank among others.

Limited access to SME Financing is a global  problem. I’ve listened to small business owners talk about their frustrations in their businesses. Most of them talk about the difficulties they face while trying to raise business funds through bank financing. According to research, a large number of SMEs are forced to seek alternative methods of business financing. Some raise finances through external sources such family and friends due to the fact that they have limited access to bank loans. A separate article by (OECD) The Organisation for Economic Co-operation and Development, highlights other forms of alternative financing and the importance of having broad range of financing instruments available to SMEs besides just bank financing. Easy access to alternative finances as is important to in order to continuously improve on the  performance of SMEs,  innovation, employment and fuel growth, ( Read the full OECD report here)

Still on alternative SME Financing, are slowly taking a bold step to help improve access to financial Services around the world. Examples of such companies include  Village Capital and PayPal . According to Paypal, the main is to “…support social impact innovators who are making financial services more accessible to low-income individuals, families and small businesses…” (Read on here)

How ‘evolving’ technology leads to fewer choices and creates mountains of waste

Sharad Sinha, Nanyang Technological University

Let me ask you a question. Are you periodically forced to buy a new laptop because the technology – hardware or software – in your current laptop is no longer supported even though it’s fully functional? The Conversation

The Microsoft Windows operating system is estimated to power about 90% of world’s personal computers today. Newer versions of Windows appear every couple of years or so. Once that happens, many applications, such as your favourite web browser, rush to support the new version. Over a few years, these applications move away from supporting older versions to the same extent as the new one.

Google Chrome is a case in point. When it’s running on Windows Vista (a much older Windows operating system) on my laptop, it no longer receives updates from Google — that support has been removed. Microsoft has itself stopped support for Windows Vista.

Another example: I have found it very difficult to find an external hard drive – the device you use to back up your data, photographs of family and friends and songs – that works with my fully functional eight-year-old Windows Vista-based laptop.

Almost all easily available external hard disks now support some of the more recent versions of Windows. So, how can consumers like me get the required hard disk? The answer is that they probably can’t.

Product lifespan

Companies design products with an expected lifespan, and they plan technical support and product warranty accordingly. A good rule of thumb to estimate a product’s lifetime is to look at its warranty period, as it can help you guess how often its manufacturer would be launching new products.

Apple provides a one-year limited warranty and launches a new iPhone almost every year. After the initial warranty period, you need to purchase an additional warranty for extended coverage.

The warranty period is clearly not the actual expected lifetime of a product. But it does mean that if you don’t care for your device, you will be paying extra money for additional coverage in the best case scenario, or buying a new and more expensive device in the worst.

After a few years, even your caring attitude will inevitably reach a point of diminishing returns because no matter how functional the hardware is, the software technology driving it evolves much faster.

Reduced choice

New products are seen as new choices but, unless you have the financial means, you actually have fewer choices.

Using your older device constrains you because of the limited support for its hardware and software. And what happens when your old device runs into issues, even if they are minor ones? Since there’s no more support available for the hardware or the software, your options are to upgrade, or look for people with the skills to repair it.

An upgrade can be expensive and the people with the necessary skills may simply not exist. Technical repair skills have sadly been on the decline.

This is not just the case in the consumer electronics industry, where the US Bureau of Labour Statistics predicts a decline of 2% from 2014 to 2024 for electrical and electronics engineering technician jobs, but also in the automobile and other industries. This is a trend seen across in advanced economies.

Developing countries tend to have secondhand markets and thriving repair bazaars, such as Nehru Place and Gaffar Market in New Delhi, Harco Glodok in Jakarta and 25 de Marco in Sao Paolo. You may have access to these markets, but the quality of their services is seldom guaranteed – and not all services are legal.

Effect on purchasing power

It’s one thing to have purchasing power limited by financial means and another entirely to have it curtailed because of reduced choices.

While companies may claim that user expectations change market dynamics, it’s also true that many companies make tireless efforts through advertisements and promotions to influence user expectations. Some actually try to set user expectations.

The latter is typified in the idea that “customers don’t know what they want”, which is eschewed by many because of Steve Jobs. The goal of this idea is essentially to manoeuvre customers to satisfy a company’s goals.

When a large customer base moves towards a particular set of products, a company need not continue offering support for pre-existing products. Many people may not need the new product, but they sell in the name of technological ‘evolution’ even when this evolution is nothing more than feature enhancement.

Contribution to e-waste

In countries where a service provider also sells consumer devices on contract, reduced choices may not be apparent. Take for example, smart phones such as Apple’s iPhone, which are sold by mobile carriers. With the launch of every a new iPhone, customers may have the option to upgrade to the latest device at a cost. Many see this as an opportunity to get a new device every few years.

Some of the devices discarded as a result may find their way through vendor buyback programs, others may be recycled or refurbished versions in certain markets – but mostly without any warranty. Many others still, though, find their way to a landfill and thus contribute to electronic waste.

Even if we give consumers the choice to not contribute to e-waste or delay it as much as possible, will they be likely to exercise it? Probably not, given the rate of technological evolution. Devices discarded because of a lack of technical support (like my laptop) are likely to find their way to landfills.

A lot of the technological evolution in consumer electronics market today is not trying to solve a pressing need. Rather, it’s trying to fulfil desires, not all of which are innately human. And, in the process, it is reducing the choices we have.

Sharad Sinha, Research Scientist in Computer Science and Engineering, Nanyang Technological University

This article was originally published on The Conversation. Read the original article.