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21 Jun 2012BANKING: How Banks Are Driving African Business Offshore
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âThere is huge demand from African businesses to be able to do business online and accept payments over the Internet,â says Harvey. âBut very, very few banks on the continent outside South Africa are prepared to make the necessary facilities available. By and large they donât understand e-commerce and are still very suspicious of it.â
Even if a bank does agree to provide a business with an online merchant account, adds Harvey, itâs often on terms that the business isnât prepared to accept. âOne 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 offshore instead,â says Harvey. âAnd theyâre not the only ones.â
âThe trend is definitely for the more affluent businesses to set up shop in Europe,â says Harvey. âThere are some initial hurdles to overcome in registering the business, but once youâve done that life is much easier all around. You can get the payment facilities you need, at much more favourable rates.â
Smaller businesses often turn to âsupermerchantsâ who make their own merchant facilities available to others â but the costs are high. âPeople are being charged exorbitant fees and the payment cycles are notoriously bad,â says Harvey. âIt can take as long as 30 days to get your money out, which kills cash flow.â
With African businesses facing these hurdles, gaps in the market are often filled by others instead. âAfrican entrepreneurs are being denied the opportunity to market their own goods to the world on a fair basis,â says Harvey. âAs a result they can easily be held hostage by middlemen who have much easier access to all the facilities they need to sell globally.â
The losses to the continent are numerous, concludes Harvey. âWeâre losing out on tax revenue and on re-investment in local business growth,â he says. âJust as important, weâre 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.â
Business News Sector Tags: Finance|
