The forex industry in Africa has been growing significantly. It has been estimated that the number of forex traders across the continent ranges from 1.3 to 1.8 million. This growing user base is comparable to those in other parts of the world.

Undoubtedly, the Forex market has always been an attractive place for traders and investors to start and it is due to not one but multiple factors like high liquidity, ease of entry, global nature, high volatility, access to demo accounts and high-profit potential.

But the question is what led to the popularity of the forex market in Africa and whether the forex market in Africa will continue to expand. Let’s find out the answer!

Reasons Behind the Rise of Forex Trading in Africa

1. Impact of Coronavirus: In 2020, Covid-19 took hold in the world, including Africa. As there were restrictions on movement, people were confined to their homes. Economies were shut, and there was job insecurity. That’s when people started to look for alternative ways to generate income, preferably from home. Amidst all this chaos, people started to gain interest in forex trading. The primary driving force was the heightened volatility in the markets due to the ongoing pandemic. Additionally, the war in Ukraine has only exacerbated the already volatile market which created a fertile breeding ground for those seeking to profit from the movements in the market, regardless of whether they are positive or negative.
2. Access to the Internet and Mobile Phones: The technological landscape of the African continent is rapidly evolving. Smartphones and tablets have become the go-to devices for communication, entertainment, and almost everything, including trading. The increasing accessibility of the internet has only further compounded this trend, with wireless technology enabling countries to rapidly expand their online infrastructure and increase the reach of the digital world. Brokers operating in this space have been quick to capitalise on these developments and have designed their trading platforms to be as mobile-friendly as possible. MT4 and MT5 are prime examples of how easy trading platforms are to use. You can easily place, monitor and exit trades on the move using the mobile version of these trading platforms.
3. Africa Can Benefit From Lesser-known Markets: The savvy traders know that being aware of the fundamentals like political climate in the country, economic health and infrastructure development can pay off big time as this can help them make the most out of the price movements. The best part of trading in the lesser-known pairs and currencies is that movements can be much more stark and pronounced, which makes it easier to time the market in many cases.
4. Better Financial Education: As the African continent hurtles towards an economically empowered future, there has been a remarkable increase in the financial literacy of its people. Various literacy initiatives and better schooling have played a pivotal role in this regard. There has also been an influx of talent from abroad, contributing a lot towards it. Forex platforms themselves have also played quite a critical role in educating traders by offering a wealth of resources that help them to learn the ropes of the market.

Future of Forex Trading in Africa

Africans, in general, are becoming more active in the forex markets due to the increasing rate of internet penetration and other factors, which indicates that we can expect the trend of forex trading to accelerate in the near future. However, there are people who think that the forex market in Africa has reached its saturation point.

In reality, the market still has massive potential for growth. Currently, the forex market is enjoying stability, which is seen as an excellent foundation for continued growth, but the changing regulatory controls may have an impact on future growth. But certainly, there’s a lot of room for growth in forex activities in Africa.

How New African Traders Can Start Forex Trading?

As we know, forex trading is a financial activity that involves the buying and selling of currencies with the intention of making a profit from fluctuations in currency rates. Therefore, you have to be strategic and know when to make your move and when to hold back. The basic idea is simple: you buy a currency when you expect its value to increase relative to another currency, and you sell it when you anticipate it will decline. The difference between the entry and exit prices determines the profit or loss of your trade.

So, let’s understand how you can start trading forex and what you will need before starting:

Learn About the Markets: Mastering the fundamentals of forex trading is essential to survive and consistently make profits in the market. There are two main approaches to trading, or we can say to speculate the direction of the market: technical analysis and fundamental analysis. Technical analysis involves using chart patterns, candlesticks, moving averages, and other technical tools to identify trading opportunities based on price movements. In contrast, fundamental analysis takes a longer-term approach and relies on macroeconomic indicators such as employment data, retail sales, and interest rates to identify potential trades. To get started with online Forex trading, it’s important that you understand these concepts thoroughly, as well as learn and practice risk management in trading.

Create a Trading Account: In order to place trades in the market, you have to create a trading account with a reliable broker, as only then will you be able to get access to the market. It is one of the most important decisions, and you must take it carefully, as choosing the right or wrong broker will make all the difference in your trading account. Make sure to check the broker’s regulations, terms and conditions, and other important features as you may not want to end up with a fraud company as this may risk your trading capital.

Find a Trading Strategy: The market has so many trading strategies. Scalping, Day Trading, Swing Trading and Position trading are just a few of them. Each strategy has different rules, and you must make sure that it completely suits your trading style because that’s the only way to get the maximum benefits from your trading strategy. In order to have a solid strategy, you must have accurate information of the trades you intend to enter into. For that, trading tools will be of great help, as they help find the right data you need to smartly enter a trade to make profits with a minimum amount of risk. For instance, if you have a day job, you should try scalping, as it demands a lot of time and concentration. Scalping is a short-term strategy where traders have to enter and exit trades within a time frame of a few minutes, which is hardly possible for a person who is busy with their full-time job. So, in this case, you may choose swing or position trading. Therefore, make sure that your strategy suits your trading style.

Choose a Trading Platform: Here comes another important decision. Trading platforms are equipped with charts, indicators and other trading tools that help you monitor and analyse the market. Therefore, you must find a trading platform that is user-friendly, intuitive and responsive. You should also check different order types and other necessary features to ensure that the platform offers everything that you will need during trading. But you should know that your broker should support the trading platform of your choice otherwise, you can’t connect your trading platform with your brokerage platform. Typically, MT4 and MT5 are the most preferred platforms that most traders and brokers love. So you can choose any based on your preference. Most beginners prefer to trade on MT4 due to its simple design and limited features, but you are free to choose any, given that you are comfortable trading on it.

Understand the Risks Involved: Forex trading is prone to numerous risks: market risk, operational risk, risk of ruin, leverage risk, liquidity risk, emotional risk and risk of financial loss. If you want to protect your account from these risks, you must fully understand what they mean and what measures you can take to prevent your account from these losses.

There has been a tremulous shift in Africa’s economic and financial landscape. Access to the internet, increased literacy rates, and political and social turmoil impact are crucial factors in driving this change. As more and more Africans started developing an interest in the forex market, they started investing their time in gaining a deeper understanding of this complex financial world. This has made Africans better equipped to make sound financial decisions and confidently navigate the markets. This development can be seen as a course towards Africans’ brighter and more prosperous future.

1. Be A Good Employer

As a good employer, you should set clear expectations for your employees. You should inform them what needs to be done, the deadlines, and where their work is shown once they are done with their responsibilities. Tracktime24 can help you to outline deadlines, tasks, and responsibilities. With these expectations, you should be able to set clear boundaries, demonstrate healthy leadership, and provide the best direction. You need to spell out rules, policies, regulations, and procedures. It’s easy enough to accomplish this by having a proper employee manual in place.

Also, you should try using personal touch and talk to your employees one on one or in a group. Set expectations that are consistent with all your employees. You should include everything including break times, clocking in early, and much more. For instance, is it okay to clock in early and leave early? Are there mandatory breaks? Will your employees’ wages be docked if they take too long with lunch? If you outline more issues and expectations, you will have fewer problems and have productive workers.

2. Help Your Employees Feel Valued

You need to be more encouraging to your employees and give them praise whenever appropriate. You should always thank them by doing a good job and show them that you value them. If something goes wrong or if one of your employees makes a mistake, you shouldn’t punish the person. Instead, you should talk to the person, teach them correct procedures and offer encouragement or further teaching whenever necessary. By punishing your employee, you will be making things worse because your employer is likely going to get angry and bitter. Actually, they might end up sabotaging their work to get back at the company.

If there are further errors after correction, you can evaluate the person to make sure they are a good fit for the job. Remember, as an employer, you have an excellent opportunity to make a difference in the lives of your employees. Take the time to smile at them, ask them about their family, ask about their problems or interests too. If you feel that someone is depressed, you can help them get the necessary therapy. Note that, employees with depression will have higher absenteeism rates, decreased performance and increased health problems.

3. Create A Productive Atmosphere

The physical layout of your office is important if you want to maximize productivity. You need to give your employees enough room to work, provide the right supplies/materials, and a pleasant and comfortable environment. You should have ergonomic equipment that motivates your workers positively to help them with the needs they require for their job. Don’t forget about ecotherapy since it is an important element in a productive environment.
Some of the most important factors to note about ecotherapy include:

• The environment should have live green plants. People will feel better about themselves, their jobs, and their duties when there is a connection to nature around them. Actually, workers who are near plants or windows will have higher job satisfaction, boss appreciation and coworker cooperation compared to those without. They are also happier. If you can’t have live plants, you can include murals or pictures of outdoor scenes.
• Make sure your employees are breathing in healthy air. A lot of buildings have indoor air pollution. You should have air purifiers and change your air filters regularly. Also, you should allow your employees to keep their windows open.
• Utilize real sunlight whenever possible. If there are no windows in the offices or workspaces, you should install full spectrum or light bulbs in all fixtures including the overhead fluorescent lights.
• Make sure there are healthy food choices in the break room or cafeteria. Healthy food allows people to think better. It also improves their mood and boosts their energy levels. You should have healthy food challenges at work to encourage people to eat better. Make sure your restaurant brings in healthy food occasionally for catered lunches.
• Allow your employees to personalize their workspace but within reason. Everyone should have a place they can call their own.

Finally, the workplace should be family-friendly. Allow your employees to take time off for their children’s school events. You should also allow them to stay home if their children are sick. They should also take their vacation days. If possible, you should offer child care on the premises or near it. Give your employees at least 13 weeks of maternity leave and paternity leave.

4. Get Everyone Involved

Make sure there is a clear and comprehensive employee manual. It should include procedures on how to handle various scenarios including family emergencies. Ask your employees for their ideas regarding the manual so they can feel like they belong to the company. Allow them to contribute their opinions and voice their concerns. Your company should be able to gain valuable information about products and concerns that will hurt the bottom line.

You should plan for special employee events where the family will be involved such as fairs, picnics, and workshops. If you create more sense of family in the workplace, your employees will become productive. Create a designated charity where people can donate money and time. That way, everyone can see the larger picture. Research shows that people feel better and their lives will improve when they volunteer. It will boost their overall performance too.

Some companies usually do business using foreign trademarks licensed under franchise arrangements. This allows a locally registered entity to locally use a trademark owned by a foreign company, usually for a fee and subject to certain standards as specified.

Considering the nature of the arrangement, which on the face of it, offers a business advantage to the local entity; there has always been an issue as to whether the local/ Ugandan company is considered imported a service into Uganda?

This issue was the subject of a ruling by the Tax Appeals Tribunal in the case of Apollo Hotel Corporation Ltd v Uganda Revenue Authority TAT Application No. 68 of 2018.

The facts were that in 2008, Apollo Hotel Corporation Ltd (the Applicant) entered into an international license agreement with Sheraton International Inc. a company incorporated in the United States of America. The agreement granted the Applicant the right to operate its hotel in Kampala under the trademarked brand name “Sheraton” and also to use Sheraton International’s centralized reservation system by paying franchise fees to Sheraton International. URA raised a tax assessment of VAT amounting to Ugx. 398,418,285 on the franchise fees. Apollo objected to the assessment and the matter was left for determination by the Tribunal.

The main issue was whether the use of the brand name “Sheraton” and the provision of the centralized reservation system amounted to a supply of an “imported service” for purposes of VAT?

Tax Appeal’s Tribunal in their ruling dated 27th August 2021, dismissed the Application holding that;

i. The use of the trademarked brand name “Sheraton” and the provision of the centralized reservation system amounted to a supply of an imported service.

ii. That VAT was only due on the principal service namely, the right to operate the hotel under the trademark name “Sheraton” using the centralized reservation system.

In reaching its holding, the Tribunal relied on the case of Sagar Ratna Restaurants Pvt Ltd & Ors v The Value Added Tax Officer Where the Delhi High Court in India found that the use of the trademark McDonald’s amounted to a service and not goods for purposes of VAT. The Tribunal thus concluded that the use of the brand name Sheraton under the agreement amounted to service and not goods.

The Tribunal also invoked the destination principle which provides that services supplied from a foreign jurisdiction and consumed in one’s own jurisdiction are considered as imported services. The Tribunal thus reasoned that the Sheraton brand and reservation system was supplied for use in Uganda by Sheraton International Inc. and was used by the Applicant in Uganda. It follows that these services were imported services for the reason that they were supplied from a foreign jurisdiction and consumed in Uganda.

Effect of the decision.

The above decision by the Tribunal sets a precedent that all companies in Uganda which are running businesses using foreign trademarks by paying franchise fees must charge VAT on payments to those foreign persons. The principle in the decision is of wide application and will most likely affect all businesses operating under the franchise arrangements in Uganda.

This decision is a great win for URA in its attempt to tax the digital economy and intangible intellectual property rights. The use of the centralized reservation system which is located in the United States of America is similar to the running of most digital platform-based businesses. This poses a challenge for taxation under the permanent establishment principle which provides for taxation only when an entity has a physical presence in a foreign jurisdiction. The decision provides a window for the taxation of the digital economy.