Insyte Weekly: Investment in Africa's Tourism Industry, Rumoured iOS 18 Upgrades and More

This week we highlight how generative AI helped a Klarna save money, the pending closures in retail, upcoming iOS 18 features and so much more. Here’s a breakdown of some of the week’s top stories.

Media & Entertainment

The gaming industry has ascended to unprecedented heights over the past decade, becoming the largest entertainment medium globally, valued at over $200 billion USD. Despite this success, the industry faces significant challenges, including nearly 20,000 layoffs in the past two years, driven by financial instability and the escalating costs of game development according to Jared McCarty. For sustainable growth, the gaming industry must balance creativity, financial management, and support for smaller studios.

iOS 18 is rumoured to be a significant upgrade, with new AI-powered features according to David Nield. Expected enhancements include voice memo transcribing, photo retouching, improved search capabilities, automatic replies in Mail and Messages, and Safari upgrades with better web searches and quick summaries. Siri is set to become more natural-sounding, and AI-generated emojis will match message contexts. Smart summaries for emails, messages, and notifications, along with customizable home screens, are also anticipated. Additionally, Apple might announce a partnership with OpenAI for deeper ChatGPT integration, potentially alongside Google Gemini as an AI chatbot option, focusing on privacy and secure AI tools. These updates will likely be unveiled at WWDC 2024.

Fintech

Klarna, a leading BNPL provider, has leveraged Generative AI (Gen AI) to achieve significant cost savings and efficiency gains in its marketing operations as reported by Louis Thompsett. By using tools like Midjourney, DALL-E, and Firefly, Klarna has saved $10 million annually, reducing its Q1 2024 marketing budget by 11%, with AI responsible for 37% of the savings. AI-generated images have cut production costs by $6 million and shortened the development cycle from six weeks to seven days, increasing engagement. Additionally, AI has reduced external marketing supplier costs by $4 million. Beyond marketing, Klarna's AI assistant, developed in partnership with OpenAI, performs tasks equivalent to 700 full-time agents, with 87% of the workforce using AI tools regularly. This reflects a broader trend of Gen AI adoption in the industry, enhancing both employee performance and customer experience.

Tourism

South African Tourism Minister Patricia De Lille announced the upcoming release of a new e-visa list to facilitate international travel, highlighting a 15.4% increase in tourist arrivals from January to March 2024 as reported by Fatem Omar. Speaking at the Africa Indaba travel trade show, she emphasized the importance of collaboration and networking, with over 1,200 exhibitors and 1,100 buyers participating. De Lille also relaunched the R1.2 billion Tourism Equity Fund to support emerging enterprises. Deputy Minister Fish Mahlalela revealed plans for a Middle Eastern roadshow to boost tourism from the region and stressed the sector's role in youth development. Efforts to enhance tourist safety through police and private security collaborations were also mentioned. Media representatives explored Durban's diverse offerings, including wildlife safaris, adventure activities, luxury accommodations, shopping, and significant cultural sites, showcasing the city's appeal to a broad range of travellers.

The General Authority for Investment and Free Zones (GAFI) recently held promotional meetings with key Turkish companies at the African Tourism Forum in Sharm El-Sheikh, focusing on tourism investment and hotel sectors according to Daily News Egypt. GAFI officials discussed with Tripholi their plans for luxury hotels in Sharm El-Sheikh and New Alamein, as well as business hotels in Cairo, to enhance Egypt's hotel infrastructure and business sector. Meetings with the Kilit Group, known for hotel supplies, explored potential partnerships to modernize hotel equipment in Egypt. Discussions with Toura focused on supplying contemporary hotel furniture to Egyptian hotels. These meetings highlighted Turkish companies' strong interest in Egypt’s market, noting the supportive investment environment and diverse tourism destinations, making Egypt an attractive investment destination in the tourism and hotel sectors, crucial for the national economy.

Tanzania’s tourism sector is experiencing significant growth, prompting the government to earmark 179 investment sites for the construction of accommodation facilities according to Giza Mdoe. At the African Tourism Forum in Sharm El-Sheikh, GAFI officials met with Turkish companies like Tripholi, Kilit Group, and Toura to discuss potential investments in luxury and business hotels, modern hotel equipment, and contemporary hotel furniture in Egypt. Deputy Conservation Commissioner Iman Nkuwi emphasized the government's commitment to attracting local and foreign investors, highlighting strategic investment opportunities in wildlife facilities, luxury lodges, and MICE event facilities. Following the pandemic, Tanzania's tourism receipts reached a record USD 3.4 billion in 2023, with the government targeting 5 million tourists annually by 2025, potentially generating USD 6 billion.

Retail

Pick n Pay, South Africa's third-largest grocery retailer, is undergoing a strategic review under its new CEO, with plans to close or convert over 100 loss-making core supermarket stores as reported by Ndobile Dludla. This move follows years of market share loss to competitors like Shoprite, attributed to challenges in balancing margins and discounts. The company aims to save about 850 million rand through store closures or conversions to franchise or discount stores. Qualisave stores will revert to Pick n Pay branding, with an expected cost of 50 million rand. Additionally, Pick n Pay plans to streamline operations, reduce costs by 1.3 billion rand over three years, raise capital through a rights issue and Boxer's listing, and modernize remaining stores. These efforts are projected to break even by the financial year 2027.

In South Africa, a decline in consumer buying power has led to reduced food purchases, exacerbating food insecurity, with one in four households experiencing hunger according to Ina Opperman. Factors contributing to this include inflation, interest rate hikes, and potential maize shortages due to El Niño. Despite a slight income growth, rising food prices and drought-related crop losses are expected to continue impacting food security, highlighting the need for sustainable solutions in food production and affordability.

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