June 2009

If you provide services to poor people, should you make a profit?

That’s essentially the question raised by Katrin Verclas on MobileActive, and it’s an excellent one. Specifically, Katrin calls out the new Google Trader service offered by Google in Uganda, in conjunction with the release yesterday of their SMS products with Grameen and MTN Uganda, one of the local mobile phone operators. Basically, they charge 220 Ugandan Shillings per use, instead of the median 110 UGS charge across most networks. This is called a premium SMS rate.

Premium SMS rates are charged so that third-party service providers can make money off of services that they provide over the mobile phone network. The operator makes their (ridiculously high) profit as normal, and the overage is for the third-party. You’ll find a lot of dating, event and sports services offered in this way all over the world, not least across Africa.

Back to the question

The question posed is if people who are claiming to help the poor should charge, and if so, should they make a profit?

I think we’ve seen from the Grameen model in Bangladesh (ex: Grameen Bank and Grameen Phone’s Village Phone program) that you can (and possibly should). By doing so you help both parties; first, by providing a service that consumers value and are willing to pay for, and second by making the business of running an operation self-sustaining. Many good business, or project, ideas die due to lack of sustainable cash flow.

For instance, if a 220 shilling SMS can save you the 1500 shilling visit to the doctor or veterinarian, or give you a 10% higher return for your crops, is it worth it?

Is there a problem in the question?

There ends up being a paternalist nuance to that original question. After all, is it up to us to decide what services to offer the poor and at what price? Aren’t poor people able to make the value-based decision on whether a trip to the doctor is more useful to them than a call or an SMS to one? If services are being offered, the person making the decision to call, SMS or go physically to solve their problem, or not, is ultimately the arbiter of whether or not a service has merit and should be offered. It’s a classic market-led approach – if the price is too high for the service, equilibrium will not be reached and one will give, usually price.

This is particularly true when talking about for-profit companies offering services – like Google is with Google Trader. They don’t operate under the same development/grant funded subsidization that a lot of others do in Africa. Even if their goal was not to make a profit on this service, they still need to cover internal costs, as does every organization that isn’t provided with free money.

Final thoughts

This space in Africa, of offering services to the poor (in lieu of the governments actually doing their jobs), has been primarily “owned” by large development and aid organizations. This has created a false floor for the economy, as projects and initiatives are propped up by outside money and services rarely have to survive on their own. This is changing, as low cost and high value options come into the market, be they mobile phone operators providing new communication opportunities, or cheap chinese batteries and LED lights for local energy/lighting needs.

I’m sensing a flux in the space, like two bull buffaloes before they fight, the heavyweights in the aid industry and in business are circling each other before they knock heads. The marketing is over who is helping the poor and marginalized in Africa best. In the end the market will decide, and regardless of the messages spouted by both sides, the “poor African” will choose the winner.

If there’s a problem with collusion and price fixing in an industry (like there sometimes seems to be with SMS services in a country), that’s something beyond the scope of individuals and needs to be tackled separately by regulation. However, that’s not the case here, we have expensive SMS services in East Africa, but the new entrants into the space always offer low rates, and the costs of switching providers is relatively low.

No, this is market-based competitive services and both non-profits and for-profits have the right to offer them at whatever price they like. Equally, individuals have the right to use it or not, be they premium SMS rates or not.

I’d like to hear some other African’s thoughts on this.

Do you want big multinationals like Google and MTN coming in and providing their services to you? Should we be asking questions for the poor, or is that condescending in itself? What is the sticking point here, and is there a side that I’m missing?

**UPDATE**
Thanks to Katrin’s email to Rachel Payne, Google’s lead in Uganda, we have the following response from her on this topic, and it does clarify quite a few unknowns:

Hi Katrin.

Yes, I saw your blog post where you speak in detail about the pricing. However, what is written is not quite accurate. You see, Google, Grameen and MTN launched three types of mobile services yesterday: Google SMS Tips (targeting low-income, rural users primarily), Google SMS Search (urban, mainstream) and Google Trader (all users).

The second service is somewhat similar to other “premium SMS” content services currently available (except that it is built on Google search technology) and therefore, is the same price as other content services. To accommodate the first group, we have priced Google SMS Tips at half the price of a content service; this is available for the cost of a person-to-person SMS, which many rural individuals are willing and able to afford currently.

The third service drives income and livelihood benefits, so we decided to begin charging at the normal content service rate and monitor whether this excludes rural communities or not (we did extensive testing during the pilot, which included pricing discussions and most of the users found that Google Trader provided far greater, direct value than the 110 shilling price difference). For all services, we are offering them for free for the first few months, just to ensure that all users have an equal opportunity to try them out, risk-free and allow them to access critical content during this period so that they can assess whether or not they would like to continue to use the service.

I hope this helps provide a bit more information that clarifies the questions raised.

Grameen Foundation’s AppLab has released a new suite of mobile phone applications developed in Uganda, using Google SMS Search and in partnership with MTN Uganda as the mobile operator. The services include:

• Farmer’s Friend: a searchable database with both agricultural advice and targeted weather forecasts
• Health Tips: provides sexual and reproductive health information
• Clinic Finder: helps locate nearby health clinics and their services
• Google Trader: matches buyers and sellers of agricultural produce and commodities as well as other products. Local buyers and sellers, such as small-holder farmers, are able to broaden their trading networks and reduce their transaction costs. (known locally as “Akatale SMS”)

Back in 2004 Grameen started to replicate in Uganda what they had done in Bangladesh with their Village Phone Operators. That is, they would go 20km beyond the best phone signal and provide a loan to a lady in the village that would let her buy a phone and an antenna that would extend the range of the network. The lady would then resell services to local individuals who didn’t have access, or the ability to buy their own phone.

I’m actually quite impressed with this initiative, as it fits in perfectly with Grameen’s mission: providing opportunity through the most basic of mobile phones. All of these services work on SMS-only phones, so anyone with a single bar of coverage and a phone has access to a lot of knowledge in their hands.

Here is a promo video from Uganda, explaining why these services are needed:

High-powered Partnerships

Beyond the applications themselves, what I find most compelling is how the Grameen Foundation collected such a high-powered group of partners. The list reads like a who’s-who of innovative mobile services and development in Africa with Google, MTN Uganda, Technoserve, Kiwanja.net, and BRODSI to name a few. It’s a mixture of for-profit businesses, local NGOs and non-profit tech organizations.

I remember a conversation a couple months back with Sian Townsend (Google) and Ken Banks (FrontlineSMS) about how they did the field studies for this project. Sian shared with us some of her research on mobile user experience while in Uganda – it was extensive. Through a month of rapid prototyping and studying how users were actually using the new services, the team quickly learned what was important and how to better serve information up to the end-user.

Though I haven’t been able to personally test the services yet, with this group, I would expect the results to be better than average. For instance, Google doesn’t tend to get involved with ideas that don’t scale. I imagine that they see replicability with both SMS Search and Google Trader in many other countries as well. Rachel Payne, the country manager for Google in Uganda, has a blog post here, but not much more information on the long-term plans for Google Trader. I’d be interested in seeing how this compares to Esoko out of Ghana.

The Global Messaging Congress is underway in London. I’m here to speak about extending the power of messaging – providing critical information in disaster zones. My goal is to showcase some of the interesting solutions we’ve seen in this space, from Ushahidi to Cartagen to SMS GeoChat – among others. I’ll also be calling upon the experts here to think of what they would do with their knowledge and expertise with the tools that they know and understand so well if called upon to do so during an emergency.

Notes from the Opening Remarks

It’s time to reinvent the industry. The personalization market is dying – the days of big money in ring tones and wallpaper is over. The economic crisis is tough and the regulatory market is not benign. So, why be optimistic?

1. Applications. Apple’s iPhone has changed the customers view of what an application is. The fact that a farting application can make $800,000 sends a certain signal. The question is how does this model change things once it moves beyond the early adopters?

2. Mobile social networking has become the epicenter of innovation. New business models and money making opportunities are being thrown off by this new market.

Operators, especially in places like the US, are trying to control what content shows up on the network. The government regulators and the operators policies are out of control, in fact there are some cases where the industry is suiting on the behalf of the customer. This will cause a downsizing in the US market for the next couple years from the content providers.

Keys to succeeding in the mobile social networking space:

• Alternate billing solutions. You have to have your virtual currencies tradeable on the social networking platforms. All payment methods must be accepted, from SMS payments to credit cards.
• Content. You have to have something there for people to use, read, play with. Quiz applications are the big thing right now (brings up example of a quiz app being #3 on iPhone apps right now).
• Discoverability. The main problem from users perspective has been trying to find the applications and content that they want. This is an issue for both the content providers and the operators to solve.

Role of the operator is changing, it specifically has a large impact in billing. They need to take a significant cut in the amount they charge for this service – 50% is just ridiculous, it must change as it’s not sustainable or excusable.

“Apple’s app store is the big shadow hanging over all of us, except of course that they’re never here…”

Adii Pienaar (aka Adii Rockstar) is the 7th in the African Digerati series of interviews. At only 24 he’s the youngest one on the list – he’s here because he represents the success that can be achieved as a young digital entrepreneur in Africa. Just under a year ago Woothemes splashed onto the stage as a new seller of WordPress (blogging tool) themes.

Rumor has it that this might be the most monetarily successful startup in the new media scene coming out of South Africa… That’s in less than one year. Regardless of whether that is true or not, the fact is that Woothemes is one of the top WordPress theme sites in the world, and it’s grown out of Africa with a lot of work, an eye for design and passion.

Woothemes just launched version 2 of itself, called WOO2. This interview is in response to that, and a chance to take a look at one of the visionaries behind it. After reading the interview, take a look at Adii’s blog. You’ll realize he’s light-hearted and doesn’t take himself to seriously, personality traits that I appreciate.

When was the seed of Woothemes planted in your mind, and what was it’s genesis? What caused you to go from idea to actually building something, and how did you do that?
I don’t really know… Magnus, Mark & I had been collaborating a bit more loosely and the business was growing quite steadily. So I think it was just a natural progression to formalize the collaborations into a business and brand it as WooThemes. Luckily for us, we had a good following at that stage and the foundations were good all round to launch WooThemes.

What inspires you?
Would I be egotistical to say that I inspire myself? Honestly though, I’m inspired by a bunch of different things on a daily basis; and those things are random at best. The “being inspired” bit, along with willingness to act on said inspiration is a result of me absolutely loving a challenge and thus being completely driven to pursue those challenges.

Who are your biggest influences?
Online, I’ve got a lot of respect for entrepreneurs like Ryan Carson & Collis Ta’eed, who are at the top end of this new wave of entrepreneurs. Offline I’ve always appreciated Richard Branson’s way of going about business and marketing his ideas. And then closer to home… I’ve learned a helluva lot from both my business partners – Magnus & Mark – whilst I’d be lying if I said that my dad didn’t influence my business mind a lot – especially when I was younger.

Woo2 is a redesign of the Woothemes site and the community platform behind it. What are the big changes, and why do they matter?
Facing outwards, I think WOO2 signals our intent with regards to further growth and also improving the current experiences on WooThemes.

On a business level, I think WOO2 is more professional and we put a lot more strategic thinking into it. So again, it’s some kind of natural progression of how we’ve grown. WOO2 is the next step and the next part of the journey ahead.

Woothemes is expanding to other platforms beyond WordPress (Drupal, Expression Engine, etc.). What is your strategy here, and when will we start seeing these themes for different platforms?
The strategy is basically one that aims to diversify our offerings (and also our risk of having all our eggs in one basket), along with the growth aspects (new products = new markets = new users). And whilst I’m reluctant to commit to any schedule in this regard, we will start rolling out the Drupal themes in the next 2 / 3 weeks, and we’ve already started work on the EE & Magento stuff.

There’s always been the debate amongst the WordPress intelligensia about some theme providers not honoring the WordPress GPL licensing. iThemes, Brian Gardner and others have changed stances. I noticed you have as well. Is this where you wanted to go, or was it something that the greater community forced upon you? How will this help your business?

I can categorically say that this wasn’t something we did because we felt forced to do so. Way back in August 2008, I told Matt Mullenweg (at WordCamp SA) that going GPL was on the horizon for us and we’d do so when we felt comfortable doing so.

And as for how it will affect / help our business… I don’t know yet. We’ve only been GPL for a day, so I guess we’ll have to wait & see.

How big is Woothemes and how active is your community? Can you give any numbers?
This is tempting, but I’d rather not share these numbers… Maybe in the next couple of months, we’ll adopt a more open approach and share some of these numbers, but we’re not into boasting about supposed success.

I can however say that our support forum has racked up almost 45K posts, which means that the community is active. And our free themes (6 of them) have been downloaded about 35 000 times in the last month…

You’ve successfully created a web business out of South Africa that has impacted people around the world. You’re tapped into the web in a way that few others are. What’s next? What does the big picture look like from a the Rockstar perspective?
I’m taking over the world, one WordPress installation at a time.

LOL no… I’m very content with what I’m doing at the moment and very happy with the space & freedom that WooThemes has afforded me. I’m still young (24), so at this stage I’d like to think that I’m trying to revolutionize my own life, in terms of how I work and how I act outside of business hours. Beyond further growing WooThemes, that’s probably my main focus, because I want to do this now and not when I turn 30 / 40 and realize that I’ve work my life away.

And a shameless punt… I’m writing a book called Rockstar Business that basically airs my thoughts & experiences within this journey!

Finally, what are your thoughts on the impact of blogging in your own continent: Africa?
I’m ashamed to admit this, but Africa is generally a deep dark place for me (which I’m planning on rectifying with a proper journey into Africa – for holiday – later this year). So I’ve honestly not met many Africans who are bloggers.

BUT… In theory I think blogging gives everyone a voice; a voice they didn’t have before. And that’s true freedom & power for me, which we’ll ultimately see itself manifest when Africa becomes one of the strongest nations / economies in the world.

[Disclosure: I'm a customer of Woothemes, having purchased (full-price) one of their themes for the Maker Faire Africa website. I'm very happy with this too, everything is rock solid.]

This week is turning into quite a week for tech news (that matters). Here are the ones catching my eye:

Opera Unite
“Opera Unite now decentralizes and democratizes the cloud.” A groundbreaking new initiative from the Opera team. This has the potential to be really big. I didn’t do my homework on this one, and after reading Chris Messina’s analysis, I agree this is lame.

BOKU launches
Mobile payments are going mainstream. BOKU’s system doesn’t require users to have a credit card or bank account.

WordPress 2.8
A big new release for the world’s top blogging platform. I, like Adii, am interested in how much people trust WP to get it right, and just update without doing any backups.

Digital Security
My friend Patrick Meier has put together what might be the best overview I’ve read on digital security in repressive environments. All the more important due to this week’s Iran events.

In completely unrelated news, I’m not working off of my normal MacBook Pro machine and it’s proving just how reliant I am on one device. Instead I’m working off of an Acer AspireOne netbook. While this is a great substitute and travel computer, it is definitely not anywhere near what I need as my daily workhorse. I find I am much less efficient.

Apparently, when you’re a foreigner traveling in the developing world, your biggest problems are that you’ll be set upon by bandits or get in a horrible car wreck. Nicholas Kristof is a well-traveled journalist for the NY Times, going to some of the most far-flung reaches of the world, so he does have good advice for travelers. It’s just a pity, as Chris Blattman points out, Kristof ends up undermining his own stated reason for writing the piece (to get more college students traveling in the developing world) by fostering this idea that international travel is inherently dangerous.

Here’s one of my favorites (can’t you just see everyone lining up to visit the Philippines after reading this?):

“10. Don’t wear a nice watch, for that suggests a fat wallet and also makes a target. I learned that lesson on my first trip to the Philippines: a robber with a machete had just encountered a Japanese businessman with a Rolex — who now, alas, has only one hand.”

In response to Kristof’s op-ed, here are my take. Not all about your kit, but also some thoughts on traveling in general.

15 Africa travel tips (not related to bandits, thugs and murder):

1. Take only one bag. “Suitcases are for suits, check-in for suckers” as my well-heeled friend Jan Chipchase points out. My choice is the Northface Heckler backpack (in black). It’s got a convenient sleeve for my computer, and plenty of room for the camera and other items – your mileage will vary.

2. Pack less. This is what makes #1 work. You’re going to be tempted to pack for every eventuality. Don’t. only to find out when you get there that you only need 1/3 of what you brought.

3. Carry a power bar. Usually you can find food wherever you are, however for the small cost in space having something handy that gives you some energy and that you can trust to not get a stomach bug over, this is my first choice.

4. For the techies… USB devices are great for transferring information, applications and pictures use one. However, remember that there are no condoms for USB devices and that every PC and internet cafe device should be treated as a pox-ridden carrier of digital STDs for your virgin device. Keep it faithful to only your computer (and vice versa).

5. Paperbacks trump hardbacks. There’s a lot of waiting around when traveling, which makes it nice to have a book handy.

6. On mobile phones. You have two choices on your phone. a) buy a cheap one when you get there ($20-40) and get a local SIM card. b) get an unlocked phone before you leave and just buy a SIM card when you hit the ground. For multi-country travel I suggest going with “b”, which is what I do. If you lose a lot of phones, or are terrified of being robbed, go with “a”.

7. Bargain for everything. Have a great conversation with the first seller of whatever service or product you’re interested in. Never buy from that person. Instead, figure out exactly where the line is and then haggle harder with the next vendor, tout or merchant. (How can I state this delicately…? If you’re paying 25% of the asking price, you’re still being ripped off.)

8. On Cameras. A lot could be written about this, but suffice it to say that smaller is better unless you really like to take good pictures. I would suggest something that is waterproof. My personal favorite is the Sanyo Xacti – I love this thing. However, I could equally suggest getting something that runs off just a couple AA batteries. (Pros and Prosumers who, like me, carry a larger body DSLR ignore this one. You have your own rules to live by).

9. Spread your money out. Never carry all your money in one place. This isn’t just for security reasons, its for bargaining as well. I suggest carrying varying amounts of cash in 3 different spots and knowing what the amounts are so that you never pull out too much.

10. Eat local. This is especially true if you’re going on the cheap, don’t be afraid to eat the cooked foods at the road-side kiosks. You’ll see me regularly eating beans and chapatis on the streets of Nairobi for lunch. At $.50 I’m getting a good full meal and I can do it in a hurry if need be. If that’s too adventurous for you, you can choose other local spots, just don’t fall into the trap of thinking that you have to eat at the “westernized” establishments.

11. Mosquitos are made in hell and must be killed. I could write a whole post on the epic battles I’ve had with these satanic insects. Buy a can of Doom (insect spray), get insect repellent, sit on the smoky side of the fire, use a mosquito net – whatever it takes. My favorite way to kill them is a wadded up t-shirt as it has a wide area of impact – if you’re good you can smash them up against the wall/ceiling from a good distance away.

12. Remember your power adapter. Know what the outlets are going to be like where you’re going so you can recharge your computer and/or camera. Not knowing where you’re going, I would suggest this one – though a little big, it does fit almost everywhere you’re likely to travel.

13. Watches are overrated. It’s just one more thing to carry, use your cell phone for the time. Time doesn’t matter as much anyway to be honest… I haven’t worn one for years, but it could be I’m missing something here.

14. Drink a lot. I’m not going to get into it on whether you drink bottled water, sodas, beer or tap water – just make sure you’re drinking. You’ll end up sweating more, walking more and not realizing just how dehydrated you are until you notice that you haven’t gone to the restroom all day.

15. Toss out your expectations, embrace the differences. It’s not all going to fit the “standard” (as I reminded myself when I nearly bashed my skull in) that you think it should be. Just roll with it and keep a light-approach to life. When something goes wrong, which it will, remember that a smile, a shake of your head and a laugh will take you a lot further than the angry, frustrated and shouting “white person in Africa act” will.

The bonus tip is this: make friends locally and listen to them. They know the area and can point you towards people and places that you’ll get a lot out of. They also know most of the dangerous and dark corners of the region that you should stay away from, which Kristof talks of. People, at the end of the day, are your greatest assets when traveling, not your gear, knowledge or prior experience in the region.

Have tips of your own to add?

The best ones in the comments will be added here (so leave a link so I can attribute it to you).

From Ethan Zuckerman:

• Bring a hat. One you don’t mind wearing all the time, one you can wash in the sink or a bucket every night, one that keeps the sun from frying your brain. Or buy one. But this is a “don’t leave home without it” item for me.
• Undershirts keep you cooler. I rarely wear one in the States, but they’re essential equipment in tropical climes, and one of the few ways to remain presentable if you’ve got to do a business meeting.
• And an urban Africa tip – a cheap flashlight/torch is your friend when the power goes out and you’re staggering home from the bar at 2am. We refer to them in Ghana as “sewer avoidance systems” – trust me, fall into one open sewer and you’ll carry a torch with you for the rest of your life.

From Kari:

• Live as much like an average-incomed local as possible (very poor by US standards). it leads to richness.

From Patrick Meier:

• listen and make friends locally. Stress on all those words. Take the time to greet and exchange greetings with people whose paths you cross, everyone is important, chat with the guard outside your hostel, make every effort to learn the local language, it’s a sign of respect and is appreciated, say a warm hello to the mama selling the peanuts on the street, make friends with taxi drivers, and know how to ask questions, and then how to listen.

From Alan Davidson:

• Carry a copy of your passport and an international driving license. Don’t know how many times a copy of my passport and not the original has saved me a world of trouble.

From JKE:

• I used to carry a USB-2-mobile cable instead that plugs into any USB port and also comes with an adapter for the 12v socket in any car. Helps you get some energy where there’s no socket and is much lighter than most power adapters.

From Tony Durham:

• If you can’t patch holes in the mosquito net, apply some repellent around the hole.

From Christopher Fabian:

• Nokia phone with built in flashlight becomes a clock, alarm, torch and phone…magically!
• Two each of small packets of tylenol cold (2 daytime / 2 nightime) are great if you get slammed with some bug and just need to get through a day and a night somewhere.

From SW:

• Always have tissues with you as the lavs are seldom well stocked.

From Catherine:

• Especially in very busy areas like indoor markets, hugely populated street corners, etc, I carry my day backpack on my front.

Steve Song has put together a great interactive map that helps you visualize what undersea internet cables go where in Africa. There’s also a helpful table of statistics and data on each of the cables. Head on over to his site and check it out.

More on the history of this project.

Reading about the newest feature in Gmail, called “Inbox Preview” from Google has made me quite happy today. You see, it’s got a lot to do with the “If it works in Africa, it will work anywhere” theory that I expounded upon first here and here.

“Inbox Preview is now launched in Gmail Labs – while Gmail is loading, a simple, static preview of your inbox with your ten most recent messages is displayed. This will allow users like myself to be productive even before Gmail has completed loading.”

A perfect example

Basically, Google realized what slow connections were doing to people’s interaction with their email accounts. So, they sent in a team of engineers to work in cyber cafes in Ethiopia to test out where the bottlenecks were and to come up with a solution.

So, besides building in Africa to serve just African audiences with web specific solutions, we can see solutions coming from Africa that also serve the rest of the world. On top of that you can also use our continent as a testing and R&D grounds for new or improved services.

Morris Mbetsa is a 19 year old Kenyan with a lot of good ideas. If that was all, he wouldn’t be that special, however, he actually builds prototypes of his ideas and they end up being quite extraordinary. The first time we covered his “Block and Track” SMS-based vehicle security system on AfriGadget. This time he’s come up with a web application – the “Wakenya” system for tracking Kenyan citizens virtually via mobile and web.

The frustrations of tech entrepreneurship in Africa

Morris and I got together shortly after his first system was created. He shared a couple other ideas beyond that first invention with me.

He had received a lot of attention due to the Kenyan TV coverage, but it hadn’t turned into any real money for him. No one within Kenya was interested, either as a business partner or funder. There were a couple international groups that were trying to angle in on him, but when I spoke to him he didn’t know or trust them. What he had was all the makings of a sad story of inventiveness leading to… nothing.

This is our story in Africa isn’t it? How so?

• We’re continually fighting to get our own money people interested in what we’re doing. We lack seed capital and no one locally cares.
• We need business mentors that we can trust, ones that we’re not always worried about being fleeced by overnight. Ones that aren’t just looking out for how they can either steal the idea, the IP or the equity.
• Lacking any local funding or business partners, we hope that an international funder will notice us.
• If we’re able to get international attention, the next trick is trying to figure out if any of these people are real, honest or legitimate.

It’s frustrating. Why won’t anyone locally come in and fund an idea? Not just an idea, as in the case of Morris Mbetsa and others like Steve Mutinda, but real prototypes. These are working models. (I could go off on a tangent talking about all of the great software developers in Africa who talk a lot about good ideas but never build them – but that’s another post). No, these kinds of guys actually build the prototype first, then try to find someone to fund it. Basically, they’re doing it the right way.

Does the government have a role?

It should, but only in so much as they create a system which limits the hurdles that entrepreneurs need to overcome to create a business, get funding and bring their ideas to market (not just for tech, but for everything). Private investment should be the lion’s share of this type of growth for the country, but in Morris’ case, he’s created a system for Government, so there should be some government funding for just this type of activity.

In fact, Kenya went so far as to create the ICT Board a couple years ago for this express reason:

“To rapidly and innovatively transform Kenya through promotion of ICT for socio-economic enrichment of our society.”

Here we have a young Kenyan with (many) good ideas and prototypes. He needs some structural support though, and we hope he gets it before the vultures descend. I know Paul Kukubo, Al Kags and a couple others within this group – they’re good people and have big ideas themselves. I know that they’re trying to come up with big structural ways for Kenyans to access ICT services and for Kenya to become an global ICT hub.

My question is this: How will that ever be the case if guys like Morris Mbetsa don’t have the requisite government structures in place to allow them to succeed?

3 groups and food for thought

We have a foundational investment-in-innovation problem in many parts of sub-Saharan Africa. If Kenya is one of the top 5 African hubs for technology, then we know that the rest of the countries are in similar or worse conditions than this. What is it going to take for us to truly setup an ecosystem of entrepreneurship and the structures that support innovation, especially in the tech sphere?

1. Outside investment as catalyst
I’m starting to wonder if it will take a concerted effort by investors in the international space who can inject large amounts of capital into business ideas that have potential. Why international, isn’t local good enough? Normally it would be, but international investment comes with some benefits that local investment doesn’t. As anyone who lives in places like Nairobi knows, almost any money you take locally comes with two problems. First, it’s usually a small amount given for an excessive demand on equity. Second, it comes with political ramifications that tend to compromise the receiver of the funds.

Is what we really need a shakeup? A wake-up call for the local investor to realize that they will miss out on the big ideas and products if they don’t create a local system that allows real innovation to flourish, grow and enrich the inventors.

2. Government mechanisms for entrepreneurs
Outside investment as a catalyst for change in this space is one possible idea, but it’s not enough. As mentioned earlier we also need someone within our highly-bureaucratic government system to create a channel for entrepreneurs and investors to act. This could be accelerated business entity creation, and it would likely include lowering certain licensing terms and restrictions. My guess is it would also mean a structure for low-interest business loans as well.

3. A united technology community
Lastly, we need the technology community itself to band together. This is coming into being in a few countries, places where we have techies networking and creating relationships with business people and government. We’re starting to see when an investor comes into town, people okay with sharing the names of other entrepreneurs that have good ideas, and not trying to just tie that investor down with their own stuff.

While there will always be competition, lets put aside the tendency to pull someone else down when they’ve achieved some modicum of success. Instead, trumpet the small wins and help each other get ahead. Goodwill pays off so much better in the long run.

Finally

You can see this is something that I’ve been thinking about a great deal, and it bothers me to no end. For, if we don’t fix this we’ll continue to have the best and brightest head to other parts of the world – there is no industry where this is easier to do than the digital one. With them goes all the intellectual capital, inspiration and revenue that would further enrich our own continent.

I’m determined to play my part in seeing change happen. I want to see real technology powerhouses grow within Africa – ultimately with African investors and with solutions that will take the world by storm.

[Interesting update on Morris]

Last week I had the opportunity to sit down with two people that I have a lot of respect for in the interactive marketing space in Africa. First was Rob Stokes, CEO of the well known Quirk marketing firm in South Africa. Later in the week I got to catch up with Joshua Wanyama of Pamoja Media.

Before I get into that though, you should take a look at these numbers.

Africa’s exploding internet growth

Currently, Africa is the second fastest growing internet market after it was passed with the Middle East in terms of connectivity. The growth rate is 1,100% with only 5.6% of Africa’s 975 million people online.

The 10 largest internet markets in Africa are seen below. These 10 countries account for a staggering 86% of the 54.2 million Africans online:

1. Egypt – 10.5 million
2. Nigeria – 10 million
3. Morocco – 6.6 million
4. South Africa – 4.6 million
5. Algeria – 3.5 million
6. Sudan – 3.5 million
7. Kenya – 3 million
8. Tunisia – 2.8 million
9. Zimbabwe – 1.4 million
10. Ghana – 0.9 million

(Research number are from the Internet World Stats)

Education and Charlatans

Quirk is successful, and they’re looking to expand into other parts of Africa. However, one of the hurdles that they face is that there just aren’t that many people who understand why web marketing is needed, and that there is a need for a real strategy behind everything from your website to links to emails. It’s a problem of education in the business sector, and it comes with two problems.

First, low-bandwidth has caused most internet usage to be lower than normal in Africa. So, a lot of businesses don’t recognize the value of good web marketing, since most of the executives never get online to see their work anyway. For instance, think about the tourism industry in Africa, it is plagued with slow, ugly and hard to find websites. Most of them don’t even realize the business they’re missing out on.

Second, there are any number of people who will tell you that they can do your internet marketing or help with your online strategy and execute upon it. However, that’s simply not true for many claimants. There are likely only a handful of real experts in online marketing in any sub-Saharan African country. In Kenya alone, I can only think of a couple firms or individuals who really know what they’re talking about, and even fewer who can execute upon what they speak.

So, Rob has a challenge in addressing this market in Africa. It’s a big market if it can be cracked, but it takes more than just sales skills, it takes someone with the patience to educate and grow an industry.

Redefining yourself for the market

Joshua Wanyama found himself in a bind. He had just moved back to Kenya after growing a successful web firm in the US. Now he wanted to put Pamoja Media on the map in Africa, and he realized quite quickly that there was a major knowledge-gap in the interactive marketing space. How could he sell the connections that his ad network gave him if the very people he was selling to didn’t have an online strategy at all?

This realization caused him to change his strategic direction of the Kenyan operations to gain a customers. He changed it from being just about his ad network, and added on 5 more areas of expertise that would really give his clients positive returns:

• Interactive strategy – how to scale a company’s operations and marketing online
• Creative Development – Interactive ads, landing pages, enewsletters & micro sites
• Placement – We run ads on the Pamoja Media Network, Yahoo, Google and Facebook network of sites
• Social Media Marketing – This works for clients seeking long term social engagement with customers. We handle blogging, Facebook, Twitter, YouTube, Flickr and other accounts for such clients
• Online PR – We also handle online PR for companies seeking to grow their reputations outside of advertising African Market online

It’s a lot of work to sell yourself into new accounts and then keep up with the demands of high profile clients. I know, I’ve been there. I know Joshua, and I know he’ll be successful with this.

What I also know is this, it’s terribly hard to scale a service organization. It takes more people. My hope is that Pamoja Media will be able to gather enough clients in the ad network space so that that remains the core business. This can scale, and it can be done efficiently.