Poor financial infrastructure in Africa could be costing the continent billions by driving business off-shore, says Peter Harvey, founder and MD of internet payment gateway provider PayGate.<\/p>\n
\u201cThere is huge demand from African businesses to be able to do business online and accept payments over the Internet,\u201d said Harvey. \u201cBut very, very few banks on the continent outside South Africa are prepared to make the necessary facilities available. By and large they don\u2019t understand e-commerce and are still very suspicious of it.\u201d<\/p>\n
Even if a bank does agree to provide a business with an online merchant account, adds Harvey, it\u2019s often on terms that the business isn\u2019t prepared to accept. \u201cOne of our clients, an airline, was so appalled by the terms on offer from their own bank that they chose to register a new business off-shore instead,\u201d he said. \u201cAnd they\u2019re not the only ones.\u201d<\/p>\n
According to the company chief, the trend is definitely for the more affluent businesses to set up shop in Europe. \u201cThere are some initial hurdles to overcome in registering the business, but once you\u2019ve done that life is much easier all around. You can get the payment facilities you need, at much more favourable rates.\u201d<\/p>\n
Smaller businesses often turn to \u201csupermerchants\u201d who make their own merchant facilities available to others \u2013 but the costs are high. \u201cPeople are being charged exorbitant fees and the payment cycles are notoriously bad,\u201d said Harvey. \u201cIt can take as long as 30 days to get your money out, which kills cash flow.\u201d<\/p>\n
With African businesses facing these hurdles, gaps in the market are often filled by others instead. \u201cAfrican entrepreneurs are being denied the opportunity to market their own goods to the world on a fair basis,\u201d said Harvey. \u201cAs a result they can easily be held hostage by middlemen who have much easier access to all the facilities they need to sell globally.\u201d<\/p>\n
The losses to the continent are numerous, concluded Harvey. \u201cWe\u2019re losing out on tax revenue and on re-investment in local business growth,\u201d he said. \u201cJust as important, we\u2019re losing out on opportunities to learn how to operate in a global marketplace. We need much more competition and innovation in the banking sector, and more pressure from governments to encourage their banks to modernise.\u201d<\/p>\n
By Peter Harvey, MD of PayGate<\/em><\/p>\n Related articles<\/strong><\/p>\n Social lending to hit SA banking<\/strong><\/a><\/p>\n Absa readies for full 2.0 online banking<\/strong><\/a><\/p>\n Businesses are continuing to cut costs<\/strong><\/a><\/p>\n