E-commerce challenge for Africa

Barclays targets its 1m Africa customers for e-banking

By Gray Phombea in Nairobi

Barclays bank and Africa Online are teaming up in a major deal that could usher in an internet revolution on the continent.

The two firms plan to create "a powerful link between financial services and the internet across Sub-Saharan Africa" in a venture intended to pave the way to e-banking and kick-start e-commerce in Africa.

But doubts are being cast over the feasibility of such an ambitious plan for a continent still stuck on the knife-edge of antiquated technology.

20,000 participants will test the system in Nairobi with an estimated 300 transactions a day

Africa's computer literacy, let alone logging onto the internet, lags far behind levels in other parts of the world-even among the relatively small group of city dwellers with sufficient incomes.

Nevertheless, the two firms are poised to go ahead with the launching of a $400,000 pilot scheme in Kenya next month, opening three internet centres in the capital Nairobi.

Smartcards

Ayisi Makatiani, the CEO of Africa Online, the largest Internet service provider on the continent, says that "this is what the market in Africa has been waiting for".

Mr Makatiani believes the deal is what Africa has been waiting for

According to Mr Makatiani, the aim is to provide "a product that will eliminate geographical boundaries and offer an exciting service to surfers on the go, whether accessing the internet remotely or just away from their desktops".

The programme will test a smartcard system that will allow users to load value from their Barclays accounts and then use the card to pay for routine services and e-purchases at Africa Online internet centres across the country under its "e-touch" brand.

Smartcards are already widely used in Europe and Asia and are employed in a range of everyday transactions from pre-paid phone calls, ATM banking to public transport.

The roll-out of the new, yet to be named card in 12 other African countries will begin next year and will be available to Barclays account holders in those countries.

They include Zimbabwe, Cote d'Ivoire, Tanzania, Uganda, Ghana, Botswana, Zambia, Swaziland, Namibia, Mauritius and the Seychelles.

Mr Makatiani says development of the internet and the transition towards e-commerce has been hampered largely by lack of financial transaction tools.

He feels that "a stored value card will fit in nicely in a society that still uses cash".

Network

Barclays Africa, a subsidiary of Barclays Plc, has 250 branches serving up to 1m customers across 12 African countries.

Nearly 20,000 people will be involved in the pilot scheme

Africa Online, which is backed by a technology firm investing in Africa, known as African Lakes, has 60,000 subscribers in its 12 host countries on the continent.

"While internet banking is not part of the pilot, it will be one of the options going forward," says Sam Nganga, Africa Online Corporate communications manager.

Nganga's confidence is motivated by the fact that "Barclays Bank is the biggest internet bank in the UK and therefore has lots of experience in this area".

The e-touch pilot will involve 20,000 participants in Nairobi with an estimated 300 transactions a day.