Mobile Phone Shopping to Create Efficient Markets across Borders

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

An anticipated game-changing revolution in African trading set for 2013 is getting one innovative business very excited.

Southern African mobile phone “m-commerce” pioneer moWoza (mowoza.com) is developing new ways of selling services and products through mobile phones and developing the networks and infrastructure to capitalize on coming changes in Africa as cross-border trade is liberalized.

It is already selling food packages containing well-known South African brands that can be ordered by migrants on their mobile phones and then delivered to recipients – family or friends – even in remote and hard-to-reach communities. The service is currently operating between Mozambique and South Africa – the two countries share a border.

The start-up hopes to help the millions of migrant workers and small traders who contribute to the constant flow of trade and wealth between states in Africa. These people face many obstacles, including bureaucratic red tape, corruption and harassment.

Cross-border trade by economic migrants is largely informal. moWoza hopes to make it formal and efficient while reducing exploitation of migrants and corrupt practices by officials. By providing an easy-to-use mobile phone service, it hopes to build trust with these transactions.

Africa is a market of a billion people worth US $2 trillion in trade and business, but the World Bank estimates the continent is losing billions of dollars in potential earnings because of high trade barriers. It found that it is easier for African countries to trade with the rest of the world than with other African countries.

The continent’s leaders are calling for a continent-wide free trade area by 2017.

Studies by the World Bank and others have repeatedly shown that inefficient transport and trade barriers translate into higher prices of goods for consumers as importers pass along high transport costs to consumers. Food prices remain extremely high in Africa – almost 25 per cent higher than they were in 2006, according to the World Bank. In developing countries, people normally spend up to 80 per cent of their incomes on food.

With the world in the grip of an ongoing food crisis brought about by multiple factors – including growing populations, environmental challenges such as drought and soil depletion, declining rural economies, inefficient farming methods and commodity speculation – measures that increase efficiencies and trade can be a powerful counterweight and help drive prices back down again.

moWoza – mo stands for mobile and Woza is a Zulu word meaning running -sells a range of products including basic foodstuffs to a target market of cross-border migrants in Southern Africa. moWoza estimates there are 7 million migrant and cross-border shoppers in South Africa alone, and it’s building a network reaching into remote communities to deliver packages ordered through its m-commerce service on mobile phones.

moWoza aims to open up access to products in these underserved markets.

moWoza is trying to position itself for the new opportunities that will arise when, in 2013, 23 African borders open for regional trade, creating a vast trading area stretching from Cairo in Egypt to Cape Town in South Africa.

moWoza wants to be the m-commerce brand that people will turn to. It is chasing customer markets that include African economic migrants, small and medium-sized enterprises doing cross border trade, and the 30 million African economic migrants who are supporting family back in their home countries.

Founder Suzana Moreira says the company carried out extensive research in South Africa, Mozambique, Lesotho, Zimbabwe and Kenya before launching its first trial runs between South Africa and Mozambique. “We ran several pilots to determine the most efficient way to provide access to packages for the beneficiaries and developed the necessary technology to enable our customers (migrants) to place orders simply. We are now operating between Johannesburg and Maputo,” she said.

Officially incorporated in 2009, moWoza did not get up and running until 2010.

Once a customer has experienced a delivery from moWoza, they are introduced to other services like banking or how to download information from the Internet. Many customers are only just learning about the resources available online.

“We look forward to the opening up of cross border trade as our findings suggest that the liberalization and facilitation of the cross-border trade initiative will increase demand for all products and services from South Africa to neighbouring countries,” Moreira said. “South Africa offers an extensive range of products compared to the choice of products that are offered in many of the neighbouring countries.

“The structures and networks that compel migrants to come to South Africa are well established,” she explained.

“The social networks encourage the movement of labour. Hundreds of thousands of male migrants from the Southern African Develoment Community, SADC (http://www.sadc.int/), countries have spent the greater parts of their working lives in South Africa. They in turn had parents or grandparents who had worked in South Africa, while providing a lifeline to the family in the home country.

“This practice will continue: mobile money to a degree will facilitate this lifeline but as long as products can be sourced cheaper in South Africa, the demand for South African products will continue.”

The people behind moWoza sound like business radicals, proclaiming that traditional ‘bricks and mortar’ businesses will be replaced in a shopping revolution by WAP (wireless application protocol) and SMS (short message service) business platforms operating on mobile phones.

Apart from developing the m-commerce business, moWoza aspires to become a well-known brand for the migrant community.

“Becoming a lifestyle brand is a bold statement on our part,” Moreira said. “However, this goal reflects a measure of success and would demonstrate that we are delivering value to our customers (migrants and micro-merchants) and their beneficiaries.”

The moWoza brand hopes to reflect the lives of their customers and be all about embracing fluidity and mobility.

“As our primary customers are transnational and highly mobile (immigrants with a dual existence), we would like moWoza to represent mobility and fluidity (attune to anytime, anywhere, always).” she said. “Their greatest aspiration is an improved livelihood and a simplification of the rigours of grass-roots existence.”

moWoza foresees big changes coming for the economies of the African countries affected by the opening up of regional trade. According to its website: “New markets and trading routes will mushroom, traditional value chains will be replaced with ICT [information and communications technology] innovations; a savvier and younger consumer will emerge who will value convenience and simplicity.”

For users, moWoza’s service works like this: A customer uses a mobile phone to make a purchase. An agent helps with selecting the right package and delivery options. When the payment is made, an SMS mobile receipt – a so-called m-receipt – is sent to the customer. The person who will be receiving the parcel will also receive a text message. During the delivery process, ‘m-updates’ are sent on progress to both parties and when the parcel is finally delivered, a final notification is sent of delivery.

Special drop-off points have been set up in countries where the service is available and there is follow-up contact with the customer to determine their continuing needs.

MoWoza hires people from the communities they operate in as agents. An agent works with the customer to show how the Internet works on mobile phones and to improve their literacy skills.

Product parcels are selected to meet the World Health Organization (WHO) nutritional guidelines. The packages are selected based on focus groups and customer feedback.

With offices in South Africa and the United Kingdom, moWoza is looking forward to expanding what it can offer.

“We will continue to innovate, and deliver services that improve the livelihoods of our target market and their beneficiaries,” Moreira said. “We will extend our packages to include seeds and other agricultural products, school and educational materials, and health products. As we grow, our services will extend to digital (virtual) goods, e.g. insurance products specifically targeting the underserved communities.”

Resources

1) A downloadable map showing border delays, bribes and barriers impeding cross-border trade. Website: http://www.borderlesswa.com/resources/18th-usaid-uemoa-road-governance-map

2) Borderless Alliance: Removing Trade Barriers in West Africa: Borderless is a vision for competitive trade in West Africa – of eliminating barriers to trade. Streamlining procedures, attacking corruption and facilitating the movement of people and goods will lower costs. Consequently, businesses will expand, create jobs and generate more revenue for government and more income for people. Website: http://www.borderlesswa.com/

3) Borderless Conference 2013 and 2014: Call for proposals: The Borderless Alliance Secretariat announces a call for proposals to host the 2013 annual Borderless Conference. Borderless Conference 2013 will be the second transport and trade annual conference in West Africa, and will bring together more than 300 stakeholders from around the world to discuss efficiency in logistics, using data for decision making and advocacy. Website: http://www.borderlesswa.com/news/borderless-conference-2013-2014-call-proposals

4) West Africa Trade Hub: Website: http://www.watradehub.com

5) Trade Mark East Africa: Supporting East African Integration: Through TradeMark East Africa, a cost-effective regional aid delivery mechanism has been established that can focus on building long-term East African capacity. TradeMark East Africa provides a durable platform for scaling-up of Aid For Trade to East Africa. Website: http://www.trademarkea.com/home/

6) Geneva Trade and Development Forum. Website: http://www.gtdforum.org/

7) Spaza News: The newspaper aimed at spaza shop owners seeking to connect them. Website: http://www.spazanews.co.za/

8) Africa Trade Gateway: Website: https://www.africatradegateway.com/

9) Cross Border Trade Desk: This website is a ‘resource’ to help cross border traders in Eastern and Southern Africa to find an association near to them, to voice their opinions and explain what COMESA is doing in improving conditions for small-scale cross border traders. Website: http://www.cbtcomesa.com/

10) Defragmenting Africa website including the report De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services by the World Bank. Website: http://tinyurl.com/cta3ykf


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