kenya

Kenya is quickly gaining a competitive advantage in the mobile payments space. Led by mobile operator giant Safaricom with their Mpesa product, the market locally sees huge value in mobile money transactions. Add to that a regulatory system that is relaxed enough for innovation to be encouraged, and you have a great space for interesting things to happen.

Pay.Zunguka

The team at Symbiotic always have more than one iron in the fire. I was surprised by their most recent release of a new product called Pay.Zunguka last week. Simply put, it’s a payment gateway and aggregator, allowing merchants, developers and content providers a way to monetize their work with the public.

There are two sources of inspiration in Pay.Zunguka (guys, we need to talk about names at some point…), that is the ability for people to utilize international online payment methods like PayPal and Google Checkout, but more importantly that users here in Kenya can do it all without a credit card, only using their phones. That’s a big deal, and it’s a nod towards recognizing that credit cards aren’t necessary, we can bypass that mess.

Mbugua Njihia, CEO of Symbiotic, tells me that their plan is to first integrate with content providers and create an easy-to-use micropayment space, charging 3% per transaction. This will be followed by a partnership campaign to work with larger organizations who don’t have an efficient payment platform for consumers.

PesaPal

PesaPal I’ve written about before. It’s a mobile payment gateway as well, but one with a specific focus online. Liko and team have made great headway recently, but not just in the technology, which is critical. They’ve made headway in some other important areas, funding and marketing.

We’ve talked about the need for local investors to buy into local technology startups. When that doesn’t happen, the international ones swoop in and take advantage of local investor myopia. In this case, PesaPal is receiving a healthy seed capital investment for scaling and marketing. With cash flow happening right now, it’s a good time to invest, and I’m glad to see someone doing so with this team.

I talked to Liko yesterday about this. Their strategy has shifted somewhat since last year, instead of just focusing on web merchants, the PesaPal team is working on relationships with educational institutions and educational book suppliers to make parents lives easier when their child starts the school year. The parent can now pay their child’s school fees using Mpesa or Zap, and then are directly linked to the list of that year’s books with the option to buy them too, and have them delivered to the school for their child’s first day. Brilliant!

This is the kind of fresh thinking that is great to see coming from tech startups: they’re not thinking or selling the tech, they’re selling a solution to a problem.

Zynde

Zynde is a new player in the space, but you’ll start to see a pattern here when you jump over to their website. Because none of the large companies are addressing the very real need for agnostic payment gateways the market is filling in that gap for them.

A quick email chat with David Kagiri of Zynde gave me more insight into their focus behind the service:

“My main driver was that new technologies existed that could enable me deliver cost effective solutions. After interaction with owners of small businesses I realized that most don’t keep track of their business finances and the cost of the available off shelf software that would help them with that was beyond their reach. I came up with a simple solution that uses the SaaS (software as a service) model so that I could deliver cost-effective solutions to them and an API that will enable creative developers to extend it to multiple mobile platforms and reach the masses.”

Zynde will have to prove themselves in what is quickly turning out to be a highly competitive space with competent players.

We’re just a month away from one of my favorite events of the year: Maker Faire Africa! It’s where we bring inventors, innovators and ingenious designers and artists into one place. Last year we did it in Ghana, this year it’s in Kenya on August the 27th to 28th. Submit your project here!

“The aim of a Maker Faire-like event is to create a space on the continent where Afrigadget-type innovations, inventions and initiatives can be sought, identified, brought to life, supported, amplified and propagated.”

The aim is to identify, spur and support local innovation. At the same time, Maker Faire Africa would seek to imbue creative types in science and technology with an appreciation of fabrication and by default manufacturing. The long-term interest here is to cultivate an endogenous manufacturing base that supplies innovative products in response to market needs.

Projects, Sponsors and Links

‘Match a Maker’ was started last year, and it was such a big success that we’re doing it again this year. It’s done in order to link people up who could help each other with technical advice, contacts and business advice.

There will be a business corner for entrepreneurs to get help from local experts, a time devoted to kids experimenting with technology, and talks by local and international experts on everything from manufacturing to scaling your business.

Workshops

• ‘Think Solar’ : Solar technology for young people
• ‘Crafting peace’ : Hand crafts for children
• ‘Hack your mobile’ all ages

A BIG thanks to Freedom to Create, Butterflyworks and ASME for sponsoring this year’s event!

Keep up to date on the Maker Faire Africa:
Blog
Twitter: @makerfairafrica
Flickr Group

"The African Scifi factory is a highend production facility located in Thika-Kenya, dedicated to re-establishing popular African science and fiction narrative using animation ..."

The African Scifi Factory in Thika, Kenya sounds like a great place. It looks like one too, their site looks pretty good. However, no one will ever hear of them or find them online through a search engine. That text above, it’s their meta name=”Description” tag, and it’s about the only thing that Google or any other search engine can see about them. They’re virtually invisible to the web.

It’s 2010 and we still have people designing websites in pure images (as above) or Flash. It doesn’t make sense. Why the need to hamstring yourself, your business and your clients by not designing an XHTML site?

The African Scifi Factory isn’t the only one, I’m just using their site as an example. We actually have designers being trained today who only learn how to use Flash. We have others who still don’t know how to handcode HTML and CSS. I still see CVs and resumes from “serious” designers who use Dreamweaver to create websites.

There are no borders on the web

We all need to realize that we live in a global ecosystem, especially online. There are no borders in this space.

If you’re a web designer who does crappy XHTML and CSS, then know that you’re becoming less relevant with every day that you don’t learn your trade better and update your skills. Kids in the Ukraine, Indonesia and elsewhere are eating your lunch. I can Google a PSD to HTML business in 5 seconds, take the top result, and have my designs put into excellent XHTML/CSS for as little as $45. Why should I use your services? What do you offer that’s so much better?

You’re not a quality web designer if you can only put together a fancy looking Photoshop file, that makes you a designer. A web designer needs to know how the HTML and CSS work, understand user-interaction and usability of the functions in the design and be able to create bulletproof markup.

Design and Coding

Interestingly enough, the programming community in Africa seems to be better off than the web design community. There seems to be a lot more quality programmers per capita than there are quality web designers per capita.

Why?

What will it take for us to take our web design skills as seriously as our programming skills?

[Update: African Scifi Site fixed by local Kenyan web designer]

A young designer by the name of Martin Kariuki decided to take the specific example of African SciFi Factory into his own hands after this blog post, and re-created the whole site in HTML. See his blog post and work on this here.

Great job by Martin for doing this! Impressive initiative and a nod to the goodwill in this community.

It’s not often that you hear of a tech startup from South Africa who chooses to build and deploy their product to Kenya first. In fact, I’ve never heard of such a thing. However, that is just what is happening with Mocality, a mobile and web-based business listings and directory application built for Africa.

Mocality’s job: create a digital platform that makes it easy for business owners to promote and expand their businesses in Africa.

“As a business owner, you get free SMS, a contact list, a free mobile website and a free mobile business card.”

Mocality represents this change in the paradigm that we’ve seen coming on for years in Africa. An application built agnostic to the client platform (mobile phone or PC), where data is fed into whatever you use in a meaningful way. Where the mobile usage is just as rich as the PC use.

In fact, they’ve studied usage of mobile phones on their system and have seen the usage of smartphones to be so negligible as to not matter. As CEO Stefan Magdalinski says, “This is the Mocality reality: RIM, Android, Apple are 2% of usage.”

About the Team

Successful startups generally have great leaders, Mocality has that. Stefan Magdalinski (@smagdali) is a seasoned web veteran and entrepreneur, co-founder of Moo.com and an early entrant into the programming space in England in the mid-90′s, and just recently relocating to South Africa for Mocality. They have plenty of funding, from MIH, a subsidiary of Naspers Group (who has been eying Kenya with recent forays such as Kalahari and Haiya).

I’ve met with Stefan in Kenya and South Africa, and I’ve also had the chance to meet some of the members of his team here in Nairobi. The impression that I’m left with is that this is a serious startup, with plenty of funding and a great vision and a strategy put in place to pull it off.

How it Works

Mocality is built for Kenyan businesses that don’t have enough money (or value to gain) to advertise in a print directory.

Again, a paradigm shift. They’re saying that they don’t care about the big end of the power law of distribution (the big companies), only the longtail (small, marginalized businesses). This is apparent in the images below of their typical user:

• SMS, WAP & Web tools (now J2Me, iPhone)
• Businesses can self list
• Geo-coding All business locations
• Map view of business
• Business toolkit:
1. Add customers & suppliers
2. Send bulk messages (400 free SMS monthly) (but with anti-spam controls)
3. Send mobile business card
4. Add details (e.g. Menus, Special Offers)
• Website, google optimised (white hat only)

Important to business owners in this segment is that the platform is free. Services will be added to the platform over time that business owners can pay for, but currently the only cost to them is data or SMS usage on their own mobile phone to access Mocality.

Scaling using the Crowd

Initially, the Mocality team walked all over Nairobi getting businesses to put their listings on the platform. They were successful, and in about 6 months of hard work were able to get approximately 11,000 businesses listed. That’s good, but barely puts a dent in the number of companies operating in this city.

The team then launched a crowdsourcing option, where they experimented with allowing anyone in Nairobi to add their own (and other’s) businesses to Mocality, and they got paid a bounty to do so. Within the last 6 weeks they have as many listings entered as the previous 6 months. If you live in Nairobi and want to become an agent, you need a WAP-enabled cameraphone and only need to visit http://www.mocality.com/money.

That’s impressive, but the impact is even more apparent when you look at the visualization:

If you have a business in Nairobi, you can get your listing onto it by visiting www.mocality.com email to info@mocality.co.ke or SMS callme to 2202 from within Kenya.

Today is only a half day at Barcamp Nairobi 2010. We’re getting underway, and there are 5 talks so far:

• 9 colloquial Kenyan languages in Whive.com by John Karanja
• Live mapping using OpenStreetMap and GPS units by @mikel
• “Build a Drupal site in 20-minutes” by @batje
• “Geek girls in Nairobi” by the Akirachix
• Explaining the Kenya ICT Board $3m grant by @Kaburo
• Google Geo API

The $4 Million Kenya ICT Board Grant

“US$ 4 Million of the proceeds for Grant Applications for the development of digital content and software applications.”

It was announced 10 days ago, and there are already 500+ applications. Final applications are due by July 19, 2010.

$10k for individuals and $50k for organizations. That is a Kenyan citizen and above 18 years old, for companies, you have to be registered in Kenya. You have to show your resume/CV for the leadership team.

The application can be done online.

Two main areas of the grant:

1. Government services and applications (5 ministries)
2. Any innovative ideas around digital content and software

The first 46 grants will be handed out to both private and public sector ideas and applications. More grants will be given out to companies (30) than private individuals (16), but there will be an equal split between the two groupings.

Grants announced on August 15th, 2010, at which point they will be working on contracts. The grant will be given out in 3-4 tranches, starting in October 2010. The funds have to be spent within 12 months. There will only be 46 grants given out this year (2010).

A single company can apply in multiple rounds for a grant, but will only be given one grant per round.

What protection will your idea be given? The team looking at and reviewing/judging the applications will be signing NDAs. There are 9 judges who will decide the winning proposals, and they do plan on sharing the names of those individuals.

Some people are worried that if they have a new idea, and they’re working for a company, that that company will own it and not them. Kaburo Kobia is suggesting that if they believe that is really the case, then the individuals should break away before then.

If you have any questions, make use of their website, send them an email at grants@ict.co.ke, call them at +254-020-2211960 or visit them on the 12th floor of Teleposta towers.

Google Maps API

Mano is one of the top engineers from the Google Maps team and he was flown out to Kenya specifically for Barcamp Nairobi. He’s giving an overview of what can be done using their API, well beyond the normal pointal use that we see all the time.

I asked him what they’re doing about offline mapping, especially for those of us in Africa who don’t have the same access to connectivity. Mano says that they’re concerned about offline maps as well, which they don’t offer, but not for the reason I suggested. Instead, they see most of the people in the world accessing maps via mobiles, so they need to be able to let that happen when data capability is not within range.

It’s our first chai break and there’s easily 250+ people at Barcamp Nairobi 2010 already. The hashtag is #BarcampNairobi, there is a @BarcampNairobi Twitter account. We’re streaming it LIVE here.

The Barcamp Nairobi 2010 Flickr group is here.

There is blogging going on at the following links (ping me if I miss you):

KosmoReporter (Pictures)
iHub blog
Wannabe Geek (Live Blogging)
Multiplicity

Some amazing things have happened to get us to this point. Phares Kariuki led the organizing team, where people volunteered of their time to organize and create the logo. Sponsors really stepped up, including:

Ushahidi
Mocality
Seven Seas
Zuku
K24
Google Kenya
Kenya ICT Board
iHub (facility)
NaiLab (facility)

It’s that time of year again, so I hope all of you Nairobian techies, bloggers and programmers are ready for Barcamp Nairobi. [Twitter: @BarcampNairobi]

Barcamp Nairobi will take place at the iHub and NaiLab, starting at 9am on Saturday June 12th and going late into the night. It keeps going on Sunday with WhereCamp Africa, so all you geo/mapping geeks get ready.

As usual, those who get in early will get a Barcamp t-shirt, until they’re all gone.

Register here. There are already about 300 planning to attend.

A Barcamp Primer

“Barcamp is an ad-hoc gathering born from the desire for people to share and learn in an open environment. It is an intense event with discussions, demos and interaction from participants who are the main actors of the event.”

Those who haven’t been to a Barcamp need to understand something: You make the event. It’s a very democratic event, it doesn’t matter if you’re the Permanent Secretary of a university student, if you have something people want to hear, you’ll have a chance to sign up for a time and room to talk in, and people will vote with their feet on whether or not they like your topic.

We start the morning off with a session where everyone gets a chance to put forward their topic and then sign up for a time and room. The day then begins, and it’s a madhouse of great talks and even better people and connections. Food and snacks are provided, and the new iHub coffee shop is open for you to buy your caffeinated drinks all day long.

Potential Topcis

• Using my (GPS Enabled) cell phone to avoid traffic
• Cloud Computing Applications in Kenya
• Business Skills for Techies
• Rural ICT
• ICT initiatives for youth
• Mobile Application Development
• Using Google Fusion Tables
• Web design, and why it’s not as good as it should be in Kenya
• Hardware hacking
• Tips and tricks for internet connectivity around Nairobi
• Merging mobile and electronic commerce concepts
• Walking-papers.org: openstreetmapping without a GPS
• Drupal, WordPress, Joomla and other CMS hacks

Get your talk ready!

Map & Directions

The iHub is on the 4th floor of the Bishop Magua Centre, directly opposite Uchumi Hyper on Ngong Road.

View iHub – Nairobi’s Innovation Hub in a larger map

It’s hard to believe it’s been 2 years since we last did this, letting 2009 slip by us… I’m really glad we’re doing this in 2010 and happy that Ushahidi is sponsoring it, as well as the iHub providing the space!

I’m sitting at the iHub this morning, after just having given my welcome to the 40+ Nairobian hackers who have descended upon the place. They’re here to take part in the global Random Hacks of Kindness (RHoK) hackathon to develop tech solutions to pressing needs in crisis and disaster response.

It should come as no surprise that Nairobi’s technorati are well-versed in mobile solutions, that’s quickly becoming a competitive advantage in this city. So far we have groups coming up with solutions for amputee registration via SMS and USSD, An SMS solution to create distress texts, improvements to people finder apps and tracking of mobile payments.

Keep up to speed

• My Pictures
• Live stream
• Twitter, follow #RHoK or @iHubNairobi
• The iHub Blog

This event goes through Sunday afternoon, it’s a full 36 hour hackathon. Watch as the devs in Kenya work with their counterparts in Australia, Indonesia, Brazil, the US and UK. Keep an eye out on the above resources to see what comes out of Africa!

A lack of regulation, or at least a more relaxed regulatory environment, have been directly responsible for Kenya becoming a hub of innovation, specifically in the mobile payments and banking space.

The gorilla in Kenya’s room is Safaricom. The posted a Ksh 21billion pre-tax profit yesterday, citing growth and profits in almost all areas, including 137% growth in data services, which they see as the next big cash cow.

Safaricom has directly benefited from this environment and their savvy marketing and business moves have left others in the dust. Businesses should be allowed to make profits and smart strategic decisions rewarded by profit and market position should be expected and encouraged – else why do they do it?

A couple of weeks ago new regulations, put together last year by the CCK, were floated by the Monopolies and Prices Commission. These rules were intended to curtail the massive growth of firms like Safaricom and the ScanGroup, to the detriment of competitors and the market as a whole. Naturally, the only firms upset with these rules were the incumbents.

Just yesterday, Dr. Ndemo, the permanent secretary for information and communications decided that Kenyan professionals who drafted these new rules weren’t professional enough and called in consultants from the United States to review them. While it is true that the Monopolies and Prices Commission is weak in ability to fulfill its mandate, this move comes off as an appeasement by Dr. Ndemo to Safaricom as it came out on the same day that Safaricom was having it’s annual shareholder’s meeting. It makes you wonder who dances to whose tune.

Both sides have good points. Smaller firms do have an uphill battle, not only due to their size, but also due to the unfair practices that larger firms tend to busy themselves with in Kenya to keep the competition at bay. However, large firms also have point. If they are playing fair, should they be punished for being better than everyone else?

Too much regulation in a sector can cripple a country’s innovative business growth, especially technology (see South Africa’s banking rules…). Dominant players have the same effect.

Maybe, instead of adding unnecessary regulations, governments should look to truly and strongly punishing unfair and dirty practices that are already on the books. A 200,000 Ksh ($2,500) fine is the most that Kenya’s monopoly commission can do, and it’s laughable at best.

Mxit is a massive mobile social network that was started in South Africa a couple years ago. Today, Safaricom announced a partnership with them, using their marketing muscle (7 pages of ads in today’s newspaper) to import Mxit into Kenya.

[For the time being, we'll ignore the complete ripoff of Twitter in their marketing...]

Mxit is a free instant messaging platform that uses the data network, thereby making it cheaper per message than sending an SMS. They claim 19 million users, most a younger demographic, who spend time chatting with friends or in chat rooms. MXit also supports gateways to other instant messaging platforms such as MSN Messenger, ICQ and Google Talk.

Local apps and entrepreneurs react

This should be a slap in the face to Kenyan programmers and tech business entrepreneurs. The model to build the same type of mobile social network has been openly working and available to do for at least three years.

To be fair, Mbugua and the Symbiotic team tried to create something like this a year ago, called Sembuse. Both he and Idd Salim aren’t very happy about this latest move, claiming that Kenyan entrepreneurs can’t get the same access or opportunities as their South African counterparts.

From Mbugua:

“The issue is not that they have a partnership with Mxit but that from personal experience, local developers and companies suffer greatly in their quest to have such partnerships.”

From Idd:

“Most likely, the marketing retards at Safcom were convinced to believe that Mxit will increase data ARPU for Safcom. Mxit is meant to be a replacement to SMS. … So Instead of sending an SMS, you will use Mxit. Safaricom will lose KSHS 3.5 per SMS, but gain KSHS 0.003 per data exchange over Mxit. Talk of Safaricon Conned! Pwagu amepata pwaguzi.”

The issue with Safaricom

On one side, the Sembuse team have a point. Safaricom has been promising to open up their API and platform for real extension. This has never been fulfilled. They have promised to (honestly) engage with the local programming community, and this hasn’t happened either. They were publicly called out on all of these facts and more at the Mobile Web East Africa conference this year.

In many ways Safaricom walks arrogantly through the Kenyan market, lying, stealing and cheating their way to even larger profits. However, they also push the edges. While others are happy to sit back and make their current margins, Safaricom takes risks and eats their lunch. Innovation, whether it’s home built, bought or stolen still has the same effect.

Business reality

For whatever reason (marketing, value add, etc), Sembuse didn’t catch on – it hasn’t reached critical mass. Numbers of users, rather than technology ability even when it’s better, are the things that larger companies are looking for in this type of play. If you don’t have half a million users, you aren’t even in the game.

Though I’m no Safaricom apologist, I can’t fault them for making a decision to go with a tested product from an established business. Yes, SMS is currently a cash cow, especially here in Kenya. However, everyone can see the writing on the wall: data is the future, and controlling the channel is more important than anything else.

As David Kiania from the Skunkworks list noted, “Rule No. 4 in business: Cannibalize your revenue and business model before your competition does it for you.”

I’m more disappointed that no Kenyan company has been able to make a go at this by themselves, just like Mxit did years ago. You don’t need Safaricom or any other mobile app provider to be successful in this space, Mxit if anything, has proven that.

Like I said 2 years ago, this is a sure win if you can pull it off correctly. The technology to do this is not new, as Idd Salim points out as well, neither is the model – so you know that the strategy here is on marketing and communications to show the value add to potential customers.

More than anything else, Kenyan entrepreneurs should be upset with themselves for missing a sure opportunity, not upset with Safaricom for making a good business decision.

Just a week ago I was in Cape Town talking about how entrepreneurs in Africa are looking at the prepaid mobile phone market and are trying to solve for the cost structures for data provided by the mobile carriers. Who knew that internet giant Facebook would beat them to it?

This week Facebook launched 0.facebook.com, where they worked out deals with 50 mobile operators in 45 countries to either zero-rate data costs coming to that URL, or paying that data cost themselves. This means that anyone, even those with no airtime on their mobile phone, can still take part in Facebook.

“Thanks to the help of mobile operators we collaborated with, people can access 0.facebook.com without any data charges. Using 0.facebook.com is completely free. People will only pay for data charges when they view photos or when they leave 0.facebook.com to browse other mobile sites. When they click to view a photo or browse another mobile site a notification page will appear to confirm that they will be charged if they want to leave 0.facebook.com”

Interestingly enough, 5 of the 6 largest Facebook using countries in Africa do not have access to this service yet: Morocco, Nigeria, South Africa, Ghana and Kenya.

Why this matters

What has happened is that Facebook, even with all of their problems and questionable ethical moves on privacy issues, still have a great strategist with a global perspective in their midst. What they have realized is that the only way to increase penetration in the developing world is to cover the data costs for their users (or, if lucky, snooker a mobile operator into not charging them for it).

I pay for someone to visit this blog. I pay my web hosting fees and that means that you can visit it for free. Almost. Unless you’re on a free WiFi service you still have to pay your ISP to connect to the internet. This is akin to me paying off your ISP for when you visit my website.

It’s a big deal, and I think we’ll see a lot more of this happening. It raises the bar for everyone else. If you want to play in this league, you now need to pay off the mobile operator for the traffic that goes your way. Meanwhile the mobile operators laugh all the way to the bank – it’s a huge win for them, and a big score for mobile web consumers in the developing world.

People are excited about M-Kesho (money for the future) which launched yesterday, where Safaricom has linked their mobile payments service Mpesa as a joint venture with Equity Bank in Kenya. This basically extends Mpesa into a bank and insurance company, with the future offer of microcredit as well.

• Equity bank has 80 branches in Kenya.
• Mpesa has 17,500 outlets in Kenya.
• There are approximatey 8.4 million bank accounts total
• Equity has about 4.5 million bank accounts
• Mpesa has 9.5 million users
• Kenya has 107,000 credit cards in circulation

See the pattern? These are are big companies with huge local connections and inroads into the popular culture. This is a strong indicator that every Kenyan will have access to banking and insurance via mobile phone very soon.

“This is a bank account introduced by both Equity and Safaricom where customers can earn interest from as little as 1 Ksh. Customers can withdraw cash from their Equity Bank Account to their M‐PESA accounts and customers can also deposit through their M‐PESA accounts to their M‐KESHO Bank account. Other features of the account include Micro credit facilities (emergency credit availed through M‐PESA), Micro insurance facilities as well as a personal accident cover that translates into a full cover after 1 year. For one to open this account, the person must be an M‐PESA subscriber.”

Reality Check

As others have pointed out, there have already been links between mobile payment systems like Zain’s Zap and banks like Stanchart. So, this isn’t exactly groundbreaking and new. Why is it big then? It’s big because of who is doing it: the giants of the banking and mobile sector.

Rombo has written a particularly good post about M-Kesho. She asks some hard questions, like who really benefits out of this deal: Equity or Safaricom?

It’s hard to say, but I wonder if the pressure put on by regular banks onto the regulator about how close to a bank Safaricom’s Mpesa really has forced their hand. Did they have to choose a banking partner in order to stave off the regulator, or did they do it to increase market share and positioning?

Finally, I think this move, like the moves made by Safaricom in the past on this mobile banking space are shortsighted. Yes, it gets them more subscribers and it does solidify their grip on the mobile market in Kenya, that is working. However, mobile money and payments are much bigger than just one operator or one bank. Becoming the “Visa of the mobile payments space” all over Africa (the world?), is a much bigger deal than being the biggest fish in Kenya’s small payments pond.

[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.

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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.

[Note: this is a long story about the last couple days in Northern Kenya, where I still am]

Reaching Lake Turkana was one of the big steps we needed to do along the way for our excursion into the Northern part of Kenya. It was adventurous, but little did we know that it was just setting the tone for the rest of the trip.

Larachi is a small town East of Loyangalani as you head towards Mt Kulal. It’s nestled in a ravine with a about 170 families consisting of the odd mixture if the warring Samburu, Turkana and Arial people groups. They have a school, but no teacher, since all teachers refuse to come due to lack of water. We spent a warm day in the hot sun discussing this with their elders and the possible building out of a gravity water system by Food for the Hungry.

We started to see clouds coming together around noon, deciding it was prudent to make a move away from the mountain into the stony soil around the lake. This also gave us another chance for a quick dip to cool off, Erik some time to fish, and to drink a pot of chai.

This is when the rain started.

Contrary to popular belief, it does rain in the NFD, but not much. Currently it’s green and vibrant, contrasting with the normal dry, brown, dusty and arid state that you usually find it. That too isn’t abnormal. What is, is the fact that it’s been raining across the north for the last 3 days, flooding an already wet desert. People who have lived here for over 20 years have never seen it this way.

Mt Kulal

We made it to the top of Mt Kulal, to the town of Gatab that sits at 5800 feet, that evening. Kulal is God’s viewing point for all of the north. It’s a lush, green, forested environment that serves as an oasis in the desert and haven for weary travelers, such as ourselves. We could see it raining all across the horizon, from Marsabit to South Horr and even over Lake Turkana.

Besides having the chance to sleep in a non-convection oven type environment, it also provided us access to the only other hospital in the area to re-bandage my hand (Frankenstein stitches and all). We pitched the tents in a friend’s plot of land, after a great evening of chai and fish (Talapia) that we had brought up from Lake Turkana.

At 2:00am it started to rain. Not just any rain though, this was big rain, the type that feels like someone is pelting your tent with golf balls. After 10 minutes it let up. A hasty debate on the merits of pride and honor verses the fact that we had sited the tent on a strategically poor “river valley-like” side of the hill ensued. Shortly after, we made a strategic retreat for our friend’s house and piled onto the floor. That whole night I slept with a grin on my face as I heard the rain battering the mabati (sheet metal) roofing, while I remained dry and comfortable.

The next morning we found our tent 10 feet further down the hill, upside down and swamped with water. Barak and Pam’s tent was of better quality and better sited, so they emerged dry and calm the next morning. Lessons were learned.

The Run to Korr

Arapal, a town directly on the other side of Mt Kulal from Larachi was our aim for yesterday. They have had a water project going for a while, and their community has benefited greatly from it. Our goal was to hit their community, and then try to make it to Korr by the end of the day. A long day of driving, but very doable (most of the time).

By midday we again saw clouds forming, big thunderheads forming to bring the hammer of rain down on the desert. Our planned route from Arapal to Korr via Karagi we were told would be a great risk. Plan B was hatched to make a run back south of Mt Kulal and to the gap between the mountains where South Horr resides. This would be two times as long of a trip, 6 hours instead of 3.

We made a mad dash for South Horr, knowing that the rains we had seen over the area the day prior and the clouds we saw forming that day, were likely to leave us with some tough choices. By now those who know the North will realize just how much crisscrossing of the area we were doing. Our diesel was starting to run low, and there are no petrol stations anywhere. We begged some from the nun at the catholic mission in South Horr and set off for the gap.

Just after the mountains, the road splits. One branch heads directly towards Korr, the other takes you through a beautiful valley within enclosing arms of high cliffs, where you will find the town of Ngurunyet. The branch towards Korr was closed. We gamely turned towards Ngurunyet and ran until after dark to get there, only to find out that the rains had closed down the road from there to Korr completely.

It was time to camp again. We found a place by the river and held out until morning, hoping and praying that it didn’t rain. It didn’t.

Hitting Korr

At this time, you can imagine what this feels like. You’re trying like mad to get to a location, thinking through every path and camel track that you know of to get there. Obstacles keep forming, being overcome, and reforming along the way.

Everything looks better in the morning, as it did for us today.

Marsabit was closed to us, which would get us to the main road. Maralal could get us towards Nairobi, but we’re very hesitant to go that way due to the number of shootings by the ngoroko (the Turkana bandits) along that route. Korr, is where Erik used to live, where he has a house and where we can camp out for a few days, hoping that the land dries out so that we can make a run for the main road and Nairobi.

Distances are deceiving in Africa. You might be only 30-40 kilometers from another town, but that town could as well be another continent if you try to reach there during the wrong season.

Under hastily muttered prayers and hopes of a nyama choma feast in Korr, we set off. Things were going well, we had been joined 2 days previously by another vehicle full of Kenyan Food for the Hungry staff. They knew the paths, and knew how to drive. Unfortunately, like us, they were driving a large, long wheel base Landcruiser.

A Short Aside on the Merits of Landcruisers vs Land Rovers

There is a long-standing battle on which is better: Landcruisers or Land Rovers. Erik and I represent the two opposing factions, with him in the Land Rover side of the debate and myself on the Landcruiser side. Regardless of what your emotions might tell you, the Land Rover’s weak aluminum body does make it lighter so it does perform better in boggy and muddy conditions.

As we were the first to trek out upon this road since the rains, we had to do a lot of testing before we entered into questionable areas. Fine driving by Erik and Peter got us through most of it, until we found an area that looked like dry sand, but which had about four feet of soupy mud beneath. An hour of digging, finding rocks and lifting the vehicle later, and we were free.

I now sit in Korr, drinking some homemade lemon juice and basking in the glory that is a cool breeze after a much needed shower. We’re completely boxed into Korr now, but there is a small airfield here, even if there is no internet of mobile phone connection. For now, I’m just happy to have a dry place to sleep, a healing hand, and the knowledge of an adventure now behind me.

A couple of people have wondered how I’m able to stay connected, to put up blog posts, update Facebook and tweet pictures to Twitter while in what would seem the true bush. Well, this is the true bush, but every once in a while you come upon an island. This island is where one of the mobile phone networks has dropped in a tower and a power supply for it.

The short answer

I carry all of the data modems available from Safaricom, Orange and Zain. I also carry my data connected mobile phone (this trip it’s the Nexus One), and an unlocked multi-purpose modem. To this I add my Acer Netbook, which I’d feel a lot better about losing than I would my Mac, and that completes the setup.

The long answer

In Gatab, on Mount Kulal, you can get two signals. One is Safaricom, that reaches all the way up the mountain (if you’re standing in the right spot) from Loyangalani on the shore of Lake Turkana. The other is from Orange Telkom, with a tower on the mountain itself. Both are powered by windmills.

Where else will you find a connection?

• South Horr
• Logologo
• Laisamis
• Loyangalani
• Gatab
• Baragoi
• Marsabit

These are the towns that I know of with cell phone towers. Whenever you have a voice connection up here, you also have a GPRS connection (always Edge, never 3g). The Orange connection’s are CDMA, not the normal EVDO “3g+” speeds that you get in Nairobi and Mombasa.

Sometimes all you get is the one tree within 20km that gets a signal…