October 2010

I get asked a lot about mobile data costs in East Africa, so thought I would put it in writing for everyone to find easier.

Mobile data access charges have fallen drastically in the last several years in East Africa, in large part to the SEACOM undersea cable arriving and increased competition between operators. Data connectivity is the new battleground, fighting not just amongst mobile competitors, but also with traditional ISPs.

In the mobile data connectivity space, each country sells either data capped bundles (or time capped bundles in the case of Uganda) that can be loaded onto a SIM card. There are out of bundle charges, priced per Megabyte or Kilobyte, but these rates are exorbitant, so anyone who connects regularly uses a bundle of some sort.

More creative offerings come out each month by the mobile operators, making it more confusing and harder to compare against competing services, but also offering some incredibly low pricing for entry-level users, or consumers who don’t need high speeds.

No doubt, a downward trend of mobile data charges will spur the growth of mobile web usage and publisher forwards.

Kenya
In Kenya, from charging internet usage at 10 shillings a minute just a few years ago, now cyber cafes charge 1 shilling a minute for browsing. The use of mobile data has been made easier by increasingly cheaper rates. For example in Kenya, Safaricom are offering a limited 10MB worth of mobile internet usage at 8 shillings per day. Zain Kenya offers unlimited internet usage for 3,000 shillings per month. Orange Kenya on the other hand are having a 7-day unlimited offer for their 3G network at 1000 shillings.

Uganda
In Uganda costs for mobile data connectivity have been driven down by the SEACOM cable landing in 2009, and led by costs cutting by Orange. Orange was first to the market with cheap, affordable 3G service and has played a major role in driving market prices down. They were the first to institute 5,000Ush/day & 25,000Ush/week packages for Internet – finally making it accessible to the common man. MTN, the larger network in Uganda,

Tanzania
Tanzania boasts some of the most unreliable data networks with the least penetration within East Africa. Zain and Vodacom both offer 3g, while Tigo offers GPRS. Zantel and Sasatel are CDMA networks, with EVDO connectivity. All networks, no matter what the speed of the connection, charge a flat rate of 40,000Tsh for 1gb of data. Data prices have gone down, but not noticeably.

While not possible to do an apples-to-apples comparison of the rates between the three countries, here is a pricing comparison chart for 3g data on 1Gb bundles and 1Mb pay as you go costs for the leading operator in each country:

As is true in this hyper competitive market, these numbers will change (hell, I’m probably already off on something). The overriding trend is that the costs are going down for consumers, even if slower than we’d all like to see.

[Picture courtesy of Stefan Magdalinski]

This is the third year that I’ve gone to Pop!Tech. I’m part of their Fellows program this year, along with Ken Banks of FrontlineSMS, as a faculty/Senior fellow member helping with the event for the incoming 2010 class. As usual it’s a surprising number of interesting and intelligent people that are in the midst of changing the world.

The Fellows

One of my favorite things about the program is how we’re shuttled off to a beautiful setting in the Maine woods to spend time with experts from a number of different fields. It’s a time for contemplation on the reasons that you do what you do, as well a chance to gain access to experts who will help you build and evolve your organization to fit your vision.

This year, I know a number of the Fellows, making it feel like this is also a meeting of old friends.

• Matt Berg, a technologist with a focus on Africa, is here from Rural Technology Lab and ChildCount.
• Nina Dudnik, with Seeding Labs project getting scientific equipment and labs setup all over the world.
• Ben Lyons, mobile payment and and credit guru of FrontlineSMS:Credit
• Leila Janah, creating outsourcing work to rural Africa through Samasource.

Funnily enough, I had to come all the way to Camden, Maine in the US to hear about an innovation in Kenya. One of the Fellows is Rose Goslinga, the founder of Kilimo Salama (meaning “safe agriculture” in Swahili). She has created an innovative micro-insurance program designed for Kenyan farmers. The project is a partnership between Syngenta Foundation for Sustainable Agriculture, UAP Insurance, and telecoms operator Safaricom.

The service has been so wildly successful that Rose is missing the Fellows program due, she’s still in Kenya in the midst of scaling the service nationally.

India is watching Africa closely, especially after the big $10.7bn move by Bharti Airtel to take over Zain’s Africa operations. Yesterday Ankit Rawal, head of advertising for inMobi in Africa, spoke at the iHub. He spent a good amount of time explaining why Africa was so important to their growth strategy, and used a good bit of data from an InMobi research project to show why.

Ad Impressions

From their July 2010 statistics, Africa has over 2.8 billion mobile ad impressions available, an 18.5% growth from just one month before (June 2010). That’s an amazing figure, and amazing growth, by anyone’s standards. Only 16% of that inventory is on smartphones.

InMobi’s largest African markets, in order, are: South Africa, Egypt, Kenya, Sudan, Libya, Nigeria. There is a big difference between these countries and some of the others that we saw stats for. For instance, Mozambique, Tanzania, Angola and Namibia have only about 20-40 million impressions/month. There is a wide gap between Africa’s tech leaders and the rest of the continent.

Manufacturers

Continent-wide, the most popular manufacturer is Nokia at 61.3%, followed by Samsung at 21.8%, with SonyEricsson a distant third at 6.3%. Those aren’t especially surprising figures, but if you dig down into the country details provided for South Africa, Kenya and Nigeria, they differ.

• In South Africa, it’s 38% each for Nokia and Samsung
• In Kenya, it’s 66% Nokia and 18% Samsung
• In Nigeria, it’s 78% Nokia and 9% SonyEricsson

Operating Systems

Important information for mobile app developers and businesses is which operating system to focus on. Nokia OS and Symbian lead, followed by RIM. No Android, iPhone or Windows Mobile mentioned, though there is a suspiciously large (37%) chunk of the pie for “other”.

Handsets

The actual devices that people are using that show mobile advertising is interesting as well. It’s largely Nokia, holding 7 of the top 10 spots, with Samsung carrying the other 3. The top device, is the moderately priced Nokia N70 is a popular, though unpretty, “do it all” phone.

Other Information

Not available in the qualitative research document provided by InMobi, but part of Ankit’s talk yesterday, were some other demographic statistics.

Male acceptance of mobile advertising in Africa is the highest in the world, when asked, “How comfortable are you with mobile advertising?”. African women came in second behind Asia on that same question. Women in South Africa were the clear outlier compared to Nigeria and Kenya, with only 45% comfortable with mobile ads.

Africa’s under 25 population has the highest comfort level with mobile ads in the world. 75% from this age range are okay with mobile ads, as opposed to 67% in Europe, 73% in the US and Asia.

South Africans are more interested in ads when top global brands appear as ads. The primary benefit of mobile ads that all consumers are looking for is “new information”.

Final Thoughts

Africa, as a whole is well positioned to see a huge growth in mobile advertising. This comes from a combination of consumer acceptance of mobile ads being the highest in the world, healthy support via increased data plan competition among telcos, growth in 3g and smartphone adoption, and mobile screen mindshare amongst users.

There’s a new service coming out from Google, tentatively called “Baraza”, which is the term used for meeting place in Swahili. It’s a service focused on creating ways for Africans to interact and share knowledge by asking and answering questions, many of them hyper local, or of regional interest only.

Google Baraza is accepting alpha testers right now, you can sign up to try out the new service at this link.

Q&A websites like Baraza aren’t new, perhaps the best known one is Yahoo! Answers which has been phenomenally successful. Even the other, smaller sites have a lot of traction. There isn’t a Q&A site focused on Africa, and that is the niche that Google is working to fill.

Why?

Simple really, Google has a vested interest in seeing more African content coming online. More African content means more Africans engaging with the open internet, more information to organize and more search queries.

There are already millions of Africans with Google accounts, and that’s a good thing, they’re going to need it. Q&A sites need critical mass on both the questions and answers sides of the equation. Yahoo! Answers being the top Q&A site has shown that a large member base gives you the edge. It takes a lot of people answering and asking to make it work. Of course, this isn’t new to Google, three years ago they launched something similar for Russia.

I talked to the Google Baraza product manager yesterday to find out a few more things before I wrote this. They’re accepting a limited number (100) of signups right now, and alpha testing will begin shortly.

Right now Baraza is firmly rooted in the PC space – that is, you need a computer to access it. However, we already know that mobile phone access to the internet trumps PC access to the internet in Africa, so that leaves me wondering when they will create at least a mobile web (WAP) access as well?

Regardless of the mobile side, this is a good idea that could make a large impact if they can get African users involved.

Somalia is intriguing. Since they 7th century they’ve been refining and working within their Xeer system of community law and have a violent aversion to the authority of any centralized government. It’s also one of the most entrepreneurial, hard-edged business cultures around. For instance, there are currently 7 mobile operators, offering better and more varied services (at lower prices) than almost any other country in the region.

Why I’m interested in Somalia is two-fold. First, I’m interested in watching how the international community tries to force central government on a society that clearly abhors it and functions without it. Second, Somalia is a fascinating study for anyone watching the African tech and business scene. Out of one of Africa’s harshest environments, entrepreneur’s thrive.

Hawala (money lending) and remittances

Somali’s have been using the Hawala form of money transfer for centuries, to the tune of approximately $1.6 billion annually. Somalia, per capita, has one of the largest diaspora populations in the world. One in eight Somali’s live abroad. Therefore, it’s not surprising that the remittances they send make up approximately 40% of urban household income, averaging out at $132/per.

(sidenote: my ongoing thoughts are that it is no longer a digital divide solely between rich/poor in Africa, but between urban/rural)

While the political ramifications of Hawala are hugely important and interesting in the post-9/11 world, what I find more pertinent are the mechanics and how technology is changing the way it works.

The East African newspaper put out a good visualization today on the way that Hawala currently operates in the form of remittances from Western nations to the Middle East and finally to Somalia. The United Arab Emirates (UAE) serves as a central clearing house for both simple cash transfers and more complicated import/export relationships.

As can be seen, the person in the US or Europe gives money to a branch agent in their country. This is sent to a central country clearing house, then onto a UAE clearing house, then to a Somali agent and finally to the individual who collects the funds in Somalia.

It used to be that Somali local private operators could only communicate by HF radio (yes, they did it before this via trust networks, family ties and paper), but when the mobile phone revolution hit Africa in the 90′s the communications were made more efficient. At first this was through satellite phones, and now by the robust local mobile phone network.

Banks and Hawala

“Modern banks will always ask lots of questions and ask you to fill in lots of forms, our people are used to Hawala, we know it very well.” (via BBC)

There are no commercial banks in Somalia. The country’s relationship with international creditors has been frozen for over 20 years and has a national debt of $3.3 billion, of which 81% of that is in arrears. It’s safe to say that no one is going to lend money to Somalia anytime soon.

The most attractive economic growth would seem to stem from Hawala organizations opening up arms that do commercial, formal banking. Wealth generation without the ability to access debt and credit is more difficult than if you have those tools available – for businesses and for individuals.

I just got back from Mombasa, and there are large amounts of money being imported into Kenya and invested, both at the coast and in Nairobi. Somali’s have clearly shown their enterprise ability and entrepreneurial spirit, there are great swaths of the city that are almost 100% Somali owned now. However, until the communities there figure out a way for life and business growth to be more tenable, the investments will continue to flow to Somalia’s more secure neighboring countries rather than building their own.