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Where Africa and Technology Collide!

The China Lesson for Africa

eBay China - Tom.comeBay decides to leave China – arguably one of the biggest eCommerce markets of the future. Why? Why, would you do that after having spent over $100 million?

Corporations are generally pragmatic entities that will cut off non-profitable departments, locations and/or people after giving them time to prove themselves – or not. eBay is no different, they were soundly drubbed by a local company named TaoBao.

The lesson learned here surrounds the keyword “local“, and it’s one that Africa, region and continent-wide would do well to remember. The tech giants can do incredible things with all the money and experience that they have. They are, on top of the web world because they are good at what they do. However, that position brings with it a level of arrogance that makes them believe that they can recreate their Western successes in non-Western settings.

Unrealized by many is that an understanding of the local marketplace, the nuances of the culture and business practices, always trumps money and technical experience. That’s what the African Digerati need to remember and start working towards. Why not build the next eBay in Africa, then be “partnered” with for $40 million? Why not build the next PayPal, Google, YouTube or MySpace, when the success of such a venture is sure to realize millions of dollars?

5 Comments

  1. “Think globally, act locally.” I’ve recently been trying to sort out the implications of this. Rene Dubos made a really good point about the importance of the local when it comes to the environment and people making a living. But he also imagined rich communications among people in different locations. The Internet really is a disruptive technology and we’re all trying to figure how what the implications are.

    I agree with your premise that African Web platforms are what’s needed. But I also see great potential for communication and collaboration with Africans in a global context.

    The way that Internet businesses scale in many African contexts I strongly suspect will be quite different than the ways that Paypal, Google, YouTube and MySpace scaled. The access to capital is just not as available. The model of Grameen proves that it pays not to be too fatalistic about that. But I think that communications which bridge localities are essential.

    In the PBS Frontline about Kiva, Matthew Flannery said something to the effect that the real Kiva revolution will be when Africans are using something like Kiva to make loans to each other.

    I’m babbling on here, my point is I believe African Digerati have an enormous challenge in trying to figure ways to consolidate very small sources of money from a large pool of people rather than tap venture capitalists. The African Diaspora and various Afrophiles are important connections to make. The African Internet needs to be local of course, but people outside Africa can play a role in making the bridges needed.

    I’ve got to pay more attention to Muti. I’m not sure that’s the Website that will do it, but there’s such a need for a central gathering place for aggregated content about Africa to build the kinds of connections needed.

  2. Well, in the case of e-bay, this is a busness based entirely on trust. And it directly involves giving people information that gives them access and ability to spend your money in the exact same way you just did, online with no physical identification required, no signatures to compare, nada. This is the reason I believe that very few economies are ready for e-bay. Trust takes a long time to build, true, tested and secure (ish) methods of payment and ability to dispute a transaction and get it resolved must go hand in hand. In the US and parts of Europe, this is all easy and all toll free numbers are US based and the same access is available in Europe mostly. This would need to be made a reality in most markets befor e-bay could work. Factor in the fact that after it has been made availbale, it needs to stand the test of time…

    It’s not just about numbers of possible shoppers when it comes to online business hugely reliant on trust. Politics and location economic health play a major role. And other infrastructure needs to be robust as well. Phones for toll free numbers, easy internet access, both to shop and to dispute claims if need be… Africa is not quite there yet. That’s my opinion.

  3. Mimmz, thanks for your response. Trust is a huge massive THE most important part of any online transaction. You’re absolutely right that most African nations don’t have the infrastructure in place to deal with disputes.

    However, this is a perfect example of localization at work. When building a platform for eCommerce in Africa, you have to take into account that lack of infrastructure and make a system that has the necessary functionality in place within the application itself.

    There are a number of ways to do that. The easiest is by creating a barrier to entry that is tied to a person’s real life profile. If they misbehave, then they are banned from the marketplace. That won’t stop it, but it does create a way for fraud to be combated.

    This topic goes back to some of my earlier posts on an why an electronic banking system is so necessary for eCommerce to take place in Africa. If there is a centralized platform that is accepted as the major means of payment, then admission to that system is a great means of controlling bad behavior.

    Also, it must be realized that no system is fraud-proof, so even the best of applications has to deal with it at some level. Where I see you saying the major gap is found is between the company who owns the platform and the policing forces of the state within which it is doing business. If that government will not recognize or do anything about fraud or theft, then you are right, things get more difficult.

  4. I agree with the sentiments expressed above. I think building a payment system where money is deducted from pre-paid phones might be the best way forward.

  5. Wilfred, that’s a very good idea. Piggybacking on the back of a prebuilt infrastructure ensures much faster time to market. It might still make sense to build alternate ways to manage the money within an account too – that way you don’t end up being solely reliant on the phone companies.

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