A Rising Tide: Africa’s Tech Entrepreneurs

[This post is my talk from NetProphet 2010 in Cape Town, South Africa. Keep in mind it was aimed at a crowd that was close to 100% South African, and my purpose was to show what was going on north of the South African border.]

The idea for this talk came from a conversation that I had with a programmer that I met in Jo’burg when I first visited 3 years ago. After a talk that I gave, he told me, “Someday I’d like to visit Africa.” As you can imagine, I wasn’t quite sure how to respond.

Now, I think he meant this Africa

I would rather speak to you about this Africa

This map color codes countries by their level of internet penetration. As you can see, all of Africa has a fairly poor internet penetration rate compared to the rest of the world.

South Africans sometimes forget that they are a part of a much larger continent, choosing to align themselves closer with far-away Europe than their bordering countries, and they miss all types of opportunities due to this.

So, when Tim asked me what I wanted to talk about at NetProphet this year, I thought it a great opportunity to highlight some of the entrepreneurs and opportunities that lie just north of this great country.

Most of us look at this map and say, “that’s pathetic”. A few say, “blue ocean”, a completely untapped market ripe for the picking.

I’d like to start off then by telling you about two people, Karanja and Fritz, who are of the latter type, and they’re making good money working in this market. First mover advantage in the tech space has always been a key, and their early inroads into the space position them perfectly for taking advantage of a growing mass of consumers.

A story of 2 entrepreneurs

Karanja Macharia is the founder and CEO of Mobile Planet, a mobile company in Kenya that provides third party services to both the main mobile providers and other corporate clients. They’ve been around for a number of years, Google invested in them 2 years ago, and most importantly, they’re profitable.

I carry around a Nexus One and an iPhone. Karanja carries around a Nokia 1600, the cheapest data-enabled phone you can buy ($25). Why? He does this so that he understands what his customers need and use. His clients aren’t your upper-class Blackberry toting professionals, they’re the “wananchi” (the ordinary person).

It takes a paradigm shift in the understanding of people, culture and spending habits to tackle this market. It’s not a population that understands the PC-web in the same way that you, me or anyone from the West does. It takes a different perspective, and a different type of entrepreneur.

In Kenya, approximately 40% of mobile users don’t keep a balance on their mobile phone. This means, they might top up with 10-20 Ksh from time to time to keep their phone active, but most of the time they have the phone for people to call them. At the same time, there’s a burgeoning opportunity and demand for mobile web content. So, the question is, how do you get that 40% active on the web with the current pre-paid model in Africa, where everything has a cost?

Talking to someone like Karanja is an eye opener, you quickly realize how deftly he wields his knowledge of mobile consumers in Kenya against the realities of the mobile operator’s business culture and the “freemium” pricing of the web as it too grows in penetration here.

Karanja represents this new technology entrepreneur in Africa. He’s a seasoned businessman, not some wet behind the ears University student. Karanja understands cash flow and business management, as well as the differences between a PC-web based culture and the mobile-base culture that is sub-Saharan Africa.

_______

Fritz Ekwoge is the founder of iYam.mobi, he too comes from a professional background, though as a programmer and developer, not pure business. He represents a different type of entrepreneur, a younger generation that knows and cares about the web world beyond his Cameroonian borders, and tries to figure out how the two can work together.

Last year I wrote about his first application, iYam.mobi, which is a mobile phone based mobile directory. It works off of the assumption that no one using it ever touches a PC and therefore won’t need it when they look for contact information of service providers via an SMS command to the server. It’s simple, and it works. Fritz has taken the original iYam.mobi ‘mobile mobile’ directory concept and run with it.  It’s evolved into a generalized SMS-based content publishing platform with virtual currency that anyone can use to create and consume local content services.

That application has been rewritten and is now onto another application that might be even more interesting. Fritz has created a new SMS Apps Store at iYam.mobi, and his company has been named FeePerfect. Fritz is in the process of obtaining his VAS (value added services) license.  The platform is undergoing testing and will be released as private beta next month.

Fritz represents this new technology entrepreneur in Africa as well. He’s done his time at firms like PriceWaterhouseCooper, sees the digital landscape both internationally and in Cameroon, and realizes the opportunities available in his home market that are difficult for outsiders to bridge.

Many people claim that, “the future isn’t SMS” with too many limitations and a horrible cost structure. That might be true. However, it’s also the present reality. What Fritz understands is that you build for what people need, not for what tech pundits in the West and upper class Africans idealize about.

Why do these stories matter?

Both Fritz and Karanja come from completely different backgrounds. Business, culture and technological penetration vary greatly between Cameroon and Kenya. In one, you’re not surprised to hear of entrepreneurial success and innovative thinking while in the other you do wonder about the consumer-side viability of mobile or web-based products.

I believe these stories are important because they take us outside of our comfort zones. We are forced to come to the realization that our understanding of the business potential of technology entrepreneurs in Africa is far greater than we had thought. We consistently underestimate the viability of consumer markets in Africa because we do not truly understand the customer there.

One other point I’d like to make on entrepreneurs. Justin Spratt wrote an excellent piece on the new Memeburn site, called “10 Lessons for Founders“. In one of his last paragraphs he talks about the Ideal Founder. All of these same traits are clearly visible in the new tech entrepreneur in Africa, so they’re not that different than their Western counterparts on a personality level. Where they do differ is in their understanding of how to bridge their culture and technology.

Where is it happening?

There are a couple major cities that act as hubs for technology innovation in Africa.

  • Johannesburg and Cape Town in South Africa
  • Nairobi, Kenya
  • Accra, Ghana
  • Lagos, Nigeria
  • Cairo, Egypt

Looking at maps like this and talking to individuals in this space, I tend to disagree that the digital divide is primarily between rich and poor in Africa. My theory is that it’s more urban versus rural than anything else. I do travel quite a bit, and I’ve found that you’re much more likely to see a data-enabled phone in use in the slums of Kampala than in the rural backwoods of Liberia.

These cities are the ones to continue focusing on and encouraging a critical mass of programmers, businesses, universities who focus on tech and funds and investor groups to formulate.

One of the projects that I’ve been heavily involved with since the beginning of the year is a new tech innovation hub in Nairobi, called the iHub. Our goal is to create a nexus point for the tech community in Nairobi.

It’s an open space for the technologists, investors, tech companies and hackers in the area. This space is a tech community facility with a focus on young entrepreneurs, web and mobile phone programmers and designers. It is part open community workspace (co-working), part vector for investors and VCs and part incubator.

I’m firmly of the belief that spaces like the iHub in Nairobi, Limbe Labs in Cameroon, Appfrica Labs in Uganda, Banta Labs in Senegal , and a new Geekspace here in South Africa (where there are more) are just the types of place that we need to get behind. These are the places that draw in the interesting people and projects, and they also serve as a filter and trusted intermediary for outside investors and businesses.

Thus far we’ve only seen the first generation of mobile and web entrepreneurs. There are a few good successes stories, but not enough. What these cities represent, and the hubs within them, is a space for that next generation of entrepreneurs to rise up. Locations to look for the newest and best ideas, invest in them, and then help them grow beyond the urban boundaries that pen them in right now.

Finally

Still don’t believe that the Africa north of you is worth taking a look at?

“Kenya is proving more lucrative per subscriber than South Africa for mobile advertising.”

Hearing someone tell me that, from one of the leading mobile advertising networks, was surprising. But, I’m guessing not nearly as surprising for me (who lives in Kenya) as it probably is for you, who live in South Africa.

We have a rising tide of technology beating against our continent’s shores, and it comes as no surprise to me that we have entrepreneurs rising up to meet it.

40 thoughts on “A Rising Tide: Africa’s Tech Entrepreneurs

  1. pandaBoy

    Great post, very true in regards to the fact that mobile phones are the main access point for the web here in Kenya, every time you log on to facebook or twitter half the posts are via mobile. Whenever somebody approaches me with an idea for a ‘big’ project and they don’t have a solid mobile plan – atleast a mobile site accessible from handhelds like the nokia in the article I can’t take it seriously.

    Anyway, Great post! Did your talk come with slides that can be downloaded somewhere?

  2. joe

    Yeah, really interesting. I wonder how these models work economically and whether the prospect of ‘free’ wifi would be a threat or an opportunity for them.

  3. Afrowave

    Thanks for the talk. Its too bad you have let SA’ans know ;). Kenya should be sneeking past SA in MobileWeb use soon.
    Very good stuff.

  4. ghabuntu

    This is an awesome post dude. You hit the nail right on the head when you said “We consistently underestimate the viability of consumer markets in Africa because we do not truly understand the customer there.”

    I am in the open source community and I really laugh out sometimes when I see all sorts of “NGOs” from the west that claim they are working to bridge the tech divide here without any in depth understanding of the dynamics of we Africans.

    Great post man, will be referencing this piece later in the day when I do my FOSS round up. Keep up the great work!

  5. Loy Okezie

    Hi Erik, I’m pleased with this great feature of African tech entrepreneurs. Soon, the world will give Africa more attention in the technology space.

    However, I noticed from your graph that internet penetration in Nigeria is between 6%-10%. Permit me to say that this is flawed.

    According to statistics from the ITU, Nigeria’s internet penetration currently stands at 16.1%.

    See link: http://www.internetworldstats.com/af/ng.htm

    By the way, the post was an interesting read!

  6. Paschal

    Great piece Erik. It seems to me that the Internet penetration map has a flaw though. Both 0-1% and 30+% are represented by the same colour. Is that deliberate?

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  8. Rafiki

    Nice, nice, nice!

    But where are our female African tech entrepreneurs? Do they exist? Women tend to invest more wisely than men…

  9. souti

    I also believe that East Africa will overtake Southern Africa technologically if it has not already mainly because East Africans are more open to their neighbours and want to do things for Africa as opposed to Southern Africans who want to align themselves to Europeans miles away, well done if i can say that “white african” for telling it like it is!

  10. mtoto wa jirani

    I’m placing a huge bet on East Africa seeing as the emerging trend is creating tech solutions customized to African problems rather than customizing ‘foreign’ technology for a market that may use it only out of excitement and later throw it away.

  11. John Karanja

    Being a mobile APP developer i must concur with Karanja that looking at the end users environment is crucial to understanding his needs.

    This is something that we fail to remember many times over and i think places like the iHub are there to remind us to innovate not just churn out stuff and hope it sails through. Lesson learnt!

    As usual great stuff from Hash we want more…

  12. Farley

    Interesting stuff…just discovered you from out here in Chicago. Very inspiring to read about this tech start up trend and get a sense of what opportunities are still out there. Waiting for your next post….

  13. Judith Tamasang

    Very informative and eye-opening. Having been ‘spoilt’ by the instant access to technology in the UK, I didn’t realise how pristine Africa still is this field. Good to know that we still have people that want to give back their knowledge to their communities; people that focus on meeting the needs of the common man at an affordable cost.
    Ekwoge and Karanja are inspirational and make Africa proud. I hope more Africans can join this wagon of intrepid entrepreuneurs in future.

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