Notes: Tekedia Institute is hosting a webinar for those interested in being Tekedia partners: Monday, Sept 7, 7-8pm Lagos time. Zoom link here. Tekedia LIVE Wed | 11am-12 noon | Sustainability & Innovation – Temitayo Ade-Peters, WeForGood | Zoom Link Friday | 11am-12 noon | General – Ndubuisi Ekekwe | Zoom Link Saturday | 11am-12 […]
The Uneasy Entanglement Between Alipay, WeChat Pay and the New Chinese E-yuan
The Chinese government is stepping up on its push for a national digital payment system. The digital yuan project is designed to provide a global payment system that will help China to curtail the impact of US’ sanctions among other things.
However, it poses a threat to existing payments platforms, Alipay and WeChat Pay which control over 90% of digital payments in China.
The e-yuan, called Digital Currency Electronic Payment (DC/EP), will facilitate e-wallet payments in place of fiat, allowing citizens to carry out financial transactions digitally. The Chinese central bank is speeding the project up as it aims to develop a cashless economy.
Former IBM executive, Richard Turrin who is writing a book on China’s digital currency said “the time table has been sped up by the coronavirus and the realpolitik of US-China relations.”
But the development is posing existential challenges to both Alipay, WeChat Pay and by extension commercial banks. SCMP reported that Analysts and investors are assessing how the two payment companies will coexist with the central bank’s digital yuan. Ant Group’s Alipay said it is not clear how the digital yuan will impact existing structure.
“We do not have sufficient visibility as to the impact of the DC/EP on consumers’ payment behavior and the payment industry. It is not clear how the DC/EP will fit into or change the current digital payment industry landscape,” Ant said in IPO Prospectus.
Tencent and Alipay have 800 million and 700 million monthly users respectively, the biggest in number of users in any payment platform globally. SCMP said Tencent’s WeChat has a $49 trillion pay service market, which is almost 500 times bigger than in the United States.
China is pushing to become the first major country in the world capable of monitoring economic activity in real-time through digital currency, and the central bank governor, Yi Gang wants to learn real-time data management from the private sector to guide the growth.
Analysts believe the Chinese government has no plan to supplant financial institutions; its main aim is to create a total digital financial system that will help to eliminate tax evasion. Moreover, as SCMP noted; the digital yuan and the existing systems are not mutually exclusive. Alipay and WeChat Pay offer more than payment services; their services involve loans, asset management and money-market investments. The central bank is not considering adding any of these services which are of interest to users on existing platforms.
“We expect an immaterial impact of the digital currency on the core business of the internet companies in the near-term, as the design is still at an early stage with many uncertainties in technologies,” said Bank of America equity analyst, Sachin Salgaonkar.
Analysts said the millions of users onboard WeChat and Alipay’s platforms will give Tencent and Ant valuable insight into consumer behavior, which will give them advantage over rivals.
But the central bank has engaged the companies in its projects, which downplays any notion of rivalry and upholds the analysis that the Apex bank’s objective is to fine-tune monetary policy. Alipay has filed at least three patents in preparation for how it would theoretically facilitate a central bank digital currency, CBDC, according to South China Morning Post.
“We expect the leading payment companies like Tencent and Ant to be part of the research and design process led by the authorities, contributing technical and operating experience and know-how,” added Salgaonkar.
The Bank of International Settlements said CBDCs can coexist within a two-tiered payment system, allowing the central bank to focus on regulation, focusing on ensuring trust, stability and integrity in payments while the private sector is best placed to undertake the consumer-facing activity of CBDCs.
Alipay and WeChat Pay have combined 1.5 billion daily users, accounting for 96% of e-payment transactions in China. Analysts believe it’s time the central bank exercised some regulatory oversight and developed a contingency system for a possible failure in the e-payment system of Alipay and WeChat Pay.
The central bank’s move also suggests China is pushing to lead the global digital currency space. The death of Facebook’s Libra presented the South Asian giant with the opportunity to topple the United States in digital currency.
“China is positioning itself as a trailblazer when it comes to the future of money,” said Henri Arslanian, a cryptocurrency mogul and adviser to the central bank. “Libra was the catalyst, and COVID-19 has accelerated central bank activities.”
Meanwhile, the central has kept the details of the digital currency confidential since it started studying it in 2014, and appears not to be in a hurry to launch it. Developing a national digital currency involves complex technicalities that take time, and if done wrongly, would make users lose their money.
Moreover, the central bank is looking for a way to protect banks from the impact of the currency. The sustainability of commercial banks depends on having deposit money where they can give loans and derive interest from. Making all financial transactions digital will mean that many Chinese banks will be liquidated.
The PBOC told the IMF that the e-yuan will be likely limited to small retail transactions by setting maximum daily and yearly limits on payments and that it will only process large amounts by appointment. It added that it may apply charges for large sum or high-frequency transactions, and will not offer interest on accounts.
Week 2 Session
Notes: Tekedia Live (our webinar) begins this week. All sessions are recorded. Schedules below. For Tekedia Live, you will see a table in each weekly board with Zoom link and time. You can ask questions via Zoom, YouTube, etc. Only the first 100 members can be on Zoom; others will connect via YouTube Live. The […]
The Andela Metamorphosis – Marketplace of Software Developers
This is a complete redesign, Andela has radically changed its playbook. The software developer placement company began with an aspirational vision of making developers out of young people, and placing them into amazing global entities. Then, it pivoted into a decentralized software developer boutique, unbounded by geography, unlocking more potential experienced developers. But the new move is surprising. Simply, Andela is now a marketplace for software developers. I will not write a “gig company” because there is nothing “giggy” when you make fat money as a developer.
This is worth discussing and in Tekedia Live coming up this week, we will examine Andela and what founders could learn from this firm. Since I wrote that piece, The Andela Problem, I have been tracking how this company is evolving to overcome challenges it meets on the way: “Andela has resolved to turn all the employed developers on its books to contractors – who will only be paid for work done and not a monthly salary as the company has been doing before now”.
Yes, the original playbook keeps changing and that is what it could take to do business in a nascent sector. WeeTracker explains what is happening.
The latest entry in the ‘Andela evolution’ journal spells out fresh information on the metamorphosis of the startup from talent school to talent marketplace.
After going fully remote and welcoming external engineers into the Andela fold as contractors, Andela has confirmed to WeeTracker that it would “no longer be supporting a paid bench.”
A well-placed source had earlier told WeeTracker that Andela has resolved to turn all the employed developers on its books to contractors – who will only be paid for work done and not a monthly salary as the company has been doing before now.
That has been partly confirmed as Andela has now revealed that existing developers brought on as full-time employees at Andela are now allowed to become contractors.
It is understood that the startup will now operate a ‘gig economy-esque’ model where engineers will only be paid when they are engaged in work, but not when they are not.
Like I wrote in our class note: money cannot directly fix a tough market but money can help with a better business model to fix ways to unlock opportunities therein. Money can acquire knowledge, a very critical factor of production. Andela is doing all it can to create value and also capture value in a business which is still a demand-market, making it challenging that winners cannot be those that provide supply. Andela needs to invest to control demand so that it can allow optimal equilibrium to be reached in its orchestration more organically. Today, it is working at supply when winners today are those that influence demand.
SPECIAL REPORT: The Green and Dark Sides of Times Higher Education’s Ranking of Nigerian Six Universities
It is no longer news that some of the Nigerian universities have been on global rankings in the last few years. It is not new that these Universities have never made it to top 10 in but to above 400th in the world. Like other educational institution ranking organisations in the world, the Times Higher Education Global University Rankings for 2021 establishes once again while Nigerians always like to see their higher institutions among the best in the world. The moment THE released the 2021 rankings both the current and past students including Vice Chancellors and faculty members celebrated the feat on social media and other platforms.
As these stakeholders continue celebrating the achievement, this piece examines the green and dark sides of the individual indicators used by the THE for overall rankings of the University of Ibadan, the Lagos State University, the University of Lagos, the Covenant University, the University of Nigeria and the Obafemi Awolowo University. This examination was not done in isolation, it considers counter and alternative narratives about the efficacy of global rankings in general and the place of Nigeria’s norms and values in particular.
The Dark Side of Global Rankings
The Academic Ranking of World Universities (ARWU), The Times Higher Education (THE) World University Rankings and QS World University Rankings are the prominent rankings in the last few years, based on their consistent evaluation of Universities across the world using informative and performative approaches. The methodologies of ranking being used by these organisations have been questioned severally by stakeholders in the education sector and public affairs analysts. Based on this, some indicators or measures being used have been reformulated, addressing inadequacies such as using same indicators to determine competitiveness of technical universities and universities with mixed courses pointed out by the stakeholders and experts.
Beyond the methodological issues, the narrative has been that rankings [of the identified organisations earlier presented] are producing imagined competition instead of intensified competition between universities. Imagined competition, according to the stakeholders who aligned with it, is being created with the evaluation of universities without considering differences in markets [countries]. For instance, this school of thought believes it is out of context to compare a university in a developing country that lacks the needed strategic resources to compete with a university in a developed country, where the resources are readily available. Therefore, when all the universities cannot have same strategic resources for playing the right strategic games needed for intensified competition, the idea of letting the public see one university as the best should not arise.
In our understanding of the recent rankings of the six Nigerian Universities, some of these issues emanate. From the comparative presentation of the Universities, it emerges the universities competed within citations indicator more than other indicators adopted by the Times Higher Education. It is also occurred that these Universities played strategic choice games within international outlook indicator at the expense of teaching and research indicators.
Our Data and Measures
The Times Higher Education University Rankings and scores associated with country’s norms and values constituted our data. According to the THE, the University of Ibadan, the Lagos State University, the University of Lagos, the Covenant University, the University of Nigeria and the Obafemi Awolowo University are the Nigerian best global universities within 401-500 Band, 501-600 Band, 601-800 Band, 801-1000 Band and 1001+ Band respectively. Since these Universities are between 401 and 1001+ Band, we reclassified the Band using average analysis.
Our analysis establishes that these Universities could be placed within 001-101+ Band [the new classification]. This indicates that these Universities have demonstrated that they have collective ability and capability to place Nigeria within top 100 Universities in the World. We further explored the new classification by situating the Universities within THE’s 155 Band, which has the University of Cape Town [the most ranked University in South Africa]. This was done with the intent of knowing the place of scores of individual indicators of the Nigerian Universities in the context of those attained by the University of Cape Town, South Africa. How norms and values [see earlier notes] conformed with The Times Higher Education University Rankings were also measured by our analyst
Emerging Insights
As pointed out earlier, the six Nigerian Universities’ performance in the THE’s rankings differ. While the University of Ibadan is the best in Nigeria [overall ranking], The Lagos State University is better in terms of Citations than the University of Ibadan. While the University of Ibadan is the best in the country, the Covenant University, the Obafemi Awolowo University, the University of Lagos, the University of Nigeria are better than the University of Ibadan in the area of transferring knowledge to industry [see Industry Income indicator on Exhibit 1]. Looking at the scores on Exhibit 1, it is also obvious that the Covenant University is better than the University of Ibadan in terms of research. Surprisingly, the University of Nigeria with its 5th position in Nigeria is the best Nigerian University in teaching than the University of Ibadan. Overall, the individual indicators show that all the six Universities are better in Citations followed by industry income, international outlook than in teaching and research.
With this, our analyst notes that there is a strategic issue that must be addressed by the stakeholders. The individual performance on the indicators, according to our analyst, indicates that faculty members [lecturers] are paying more attention to what would enhance their promotion. It also suggests that administrators of the Universities are amassing and concentrating their resources on the indicators they see as strategic to the methodologies of THE at the expense of those that have tendency of increasing their rankings within teaching and research.
Exhibit 1: Nigerian Top Universities for 2021
Exhibit 2: Average Ranking Per Indicator
Exhibit 3: University of Ibadan and South African Universities within 401-500 Band
Exhibit 4: University of Lagos and South African Universities within 601-800 Band
Exhibit 5: UNN, OAU and South African Universities within 1001+ Band
Exhibit 6: Lagos State University and South African University within 501-600 Band
The Place of Nigerian Universities in 001-101+ BAND
When we placed the University of Cape Town, which was ranked within 155 Band along with the Nigerian Universities [using our reclassified Band], analysis reveals that the Lagos State University is the only Nigerian University that has a citation score beyond what the University of Cape Town attained. The University of Cape Town is also better in other indicators than the Nigerian Universities [see Exhibit 7]. If Nigerian Universities want to be in top 101+ Band by 2022, our analyst notes that they need to work out modalities that would help playing the right strategic games before the year.
Exhibit 7: Nigerian Universities within Reclassified Band and the Best South African University within 155 Band
The Green and Dark Sides of Country’s National Norms and Values on the Rankings
Since stakeholders in the six Universities are expected to interact among themselves and with those outside their Universities environment before making significant inputs that produced the outputs, which resulted in the rankings, our analyst examines the place of national norms and values on the rankings of the Universities. This was done with the intent of knowing the impact of the stakeholders’ behaviour in terms of expected relationship patterns and taking decisions on critical issues and needs.
Analysis suggests high percent of the collective norms and values on the University of Nigeria and the Obafemi Awolowo University’s rankings than other 4 Universities [see Exhibit 8]. Strategically, this signifies that the University of Ibadan, the Lagos State University, the University of Lagos and the Covenant University have appropriate mitigation strategies for overcoming the negativities associated with the norms and values.
Disaggregated analysis, however, shows that the negativities impacted the rankings of the University of Ibadan, the Lagos State University, the University of Lagos and the Covenant University. Analysis reveals positive impact of the staff and administrators’ abilities of the University of Ibadan, the Lagos State University and Covenant University in creating processes that helped in dealing with issues and needs that were likely to prevent them from being ranked better [see Uncertainty Avoidance]. Despite this, it emerged that the University of Ibadan and the Covenant University along with the Obafemi Awolowo University, the University of Nigeria and the University of Lagos had organisational structures and processes including people with high status. These prevented staff at the lower level from working fearlessly towards the realisation of better overall rankings [see Power Distance], analysis suggests.
The sixth position occupied by the Obafemi Awolowo University, according to our analysis, is better understood within the national value that stresses Nigerians’ degree of controlling their desires and impulses based on the way they were raised [see Indulgence]. This implies that the staff and other stakeholders at the vanguard of ensuring better ranking for the University played less significant roles towards it.
The leading position occupied by the University of Ibadan resonates with the country’s norm that Nigerians always maintain some links with their past while dealing with the challenges of the present and future [see Long Term Orientation]. This indicates that the University wants to prove its past glory and successes. This is also observed in the rankings of the Lagos State University, the University of Lagos and the Covenant University. These Universities have one time or the other being ranked best in Nigeria and globally [especially the Covenant University].
Like the LTO that encourages the staff and administrators at the University of Ibadan towards better ranking realisation, the strategic goal and objective that the University must be the best equally helped [see Masculinity]. In this regard, the Lagos State University, the University of Lagos and the Covenant University followed the country’s oldest University [University of Ibadan]. In spite of these positives, these Universities [UI, LASU, UNILAG and CU] appeared to have staff and administrators who showed less degree of interdependence while working towards the attainment of the rankings [see Individualism].
Exhibit 8: Low and High National Culture Manifestation in the Universities’ Rankings
Exhibit 9: National Culture Influence on the Universities’ Rankings
