Mark your calendars, buy your tickets, submit your applications!

We’re ramping up to the Pivot East pitching competition, where the best startups in East Africa come to show what they have, pitch their startup to investors, media and the judges for a chance to win the prize money.

Pivot East will be held at Ole Sereni Hotel in Nairobi, June 5th and 6th. Last year we had over 100 applications for the 25 slots, and we’re expecting even more after seeing how well Pivot25 did last year (writeups by TIME Magazine and CNN). Last year we saw startups from Kenya, Uganda, Rwanda and Tanzania, and this year we’re hoping to see some from South Sudan and Somalia as well.

Categories

As last year there are five categories, each of which will have five startups that will pitching in them. If you think you have a prototype, a deck and a business plan to wow everyone with, let’s see it. Applications are open.

1. Financial Services
2. Business and Resource Management
3. Entertainment
4. Mobile Society
5. Utilities

Getting more information

Pivot East is put on by the m:lab East Africa, an incubator for startups in the mobile apps and services space. All profits go to support the facility. This year support comes from Samsung, and we’ll be announcing a few more big names in the coming weeks. If you’d like to be one of them, contact us.

If you have any questions, we’re having a meeting a Baraza at the iHub on Monday the 6th of February from 2.30pm to 3.30pm. If you’re a startup wanting to know more, or are media or an investor, come by and talk to the organizing team.

[Note: for more on last year's here is my blog post retrospective.]

UPDATE:
The Pivot East Team will be coming to Uganda on the 20th February 2011 at Makerere. You can book your tickets for the event on the link below:

http://pivotuganda.eventbrite.com/

The iHub Research team has worked up an infographic on Tanzania to match their past ones on Kenya and Uganda. We’re looking at 50% mobile phone penetration in Tanzania, with about 22 million connected, where Vodacom has the largest market share at 42%.

The crazy stat is online: In Tanzania, only 2.5% of the population has access to the internet, 80% of those on mobile phones.

Hats off to Patrick Munyi (@ptrckmunyi) for the great design!

THE MOBILE WEB from Duniamedia on Vimeo.

Dunia Media, out of Switzerland, has put together a good video showcasing this change.

Interestingly enough, this video showcases iCow and M-Farm, both providing agricultural data to farmers, not in a browser, but as text or voice messages. One could think the title to be a tad misleading, as the “mobile web” term is largely applied to web interaction on a browser on a phone.

What I like about this take though is this; the internet allows for a paradigm that doesn’t care what device you have, whether PC or phone, as long as you have a database and a channel you’re in the game. As long as the device has some type of text or voice communication it is suddenly a read/write platform.

What we’re seeing in applications coming from Africa is a way to stretch the use-case of “old” messaging technology like SMS, USSD or voice into new ways of data transfer that challenge Western conceptions of what the internet is.

The long and short: Mocality claims Google Kenya is using its database to sell a competing product.

For some context, the Google team in Kenya has always been above board. They are genuinely good people, so seeing this happen is incredibly surprising. I’ve been trying to get in touch with them since yesterday when I first was made aware of this situation, but have had no response to any of my queries.

The problem here is that the sting put on by Mocality is so complete. They have all the forensics and even voice recordings to show what Google is doing. I want to believe that Google has an answer for this that makes sense.

UPDATE: Google has owned up to this, saying:

“We were mortified to learn that a team of people working on a Google project improperly used Mocality’s data and misrepresented our relationship with Mocality to encourage customers to create new websites. We’ve already unreservedly apologised to Mocality. We’re still investigating exactly how this happened, and as soon as we have all the facts, we’ll be taking the appropriate action with the people involved.”

I like the analogy of Kikuyu Grass to discuss an issue that I see as a major issue in certain industries in regards to how technology solutions get critical mass and go mainstream, or don’t.

The Macro and Micro Problem

I call this a “macro and micro problem”, where you have to solve a big overarching issue of scale at the same time as solving needs for individuals at a very hyper-local level. This is a particularly difficult problem for bootstrapped startups to manage, because they don’t have the money or access to infrastructure to scale wide, even though they might have an excellent micro-level solution that individuals want to use.

There are two industries in Africa that I see this problem at it’s greatest, though I’m sure there are more; agriculture and healthcare. In both agriculture and healthcare you need to serve the finite needs of a farmer or someone who is sick or injured, yet it’s difficult to provide that any one solution to millions of people. Academically, you can do it, it’s easy to come up with a solution sitting in a room somewhere with a whiteboard. It’s also feasible to roll out a pilot project and make it work well in one area.

What’s difficult is replicating that same working idea at scale. This only gets more difficult as you take in the hyper-local technology demands and cultural context across a country. In fact, there are few organizations who have figured out how to roll out new technology at a national level, the best being large corporations such as bottling and soap companies, and of course the mobile network operators.

Let’s look again at healthcare. There are some great solutions coming out of the tech community for problems surrounding patient information, clinic and doctor information, medicine supply chain management, drug reminders and more. Some are at pilot stages, but none have critical mass at a national level. They simply can’t build the infrastructure fast enough, can’t market widely enough and aren’t trusted by everyone, everywhere yet. Can they do any of these? Yes, but it takes funding and great execution.

Examples from the payments space

The payments industry is on that has been able to solve this from both a macro-to-micro level, and also from the micro-to-macro level.

Macro-to-micro
The too often talked about mobile money solution in Kenya, Mpesa, is actually a really good example here. The product innovation came from outside the company, but the execution on it came from inside, as did the strategy to focus on getting thousands of Mpesa agents going all over the country. This focus on hyper-local agents solved the micro problem, and the national infrastructure and brand of Safaricom allowed it to proliferate and gain trust.

Micro-to-macro
PayPal began as a solution for small businesses or individuals (and grew largely through use on eBay) to accept payment via credit card, which was expensive or hard to do back in the early 2000′s. They were small, serving individual needs, but were able to grow their brand and scale their infrastructure to what they are today due to large VC investments.

Outstanding Questions

The question is, are there ways to solve this problem in healthcare and agriculture?

In agriculture, how will the Esoko‘s and M-farms of the world do it? Can they do this on their own, will it have to be take in by a larger company to hit critical mass?

In healthcare, will MedAfrica be able to get enough data and downloads for mainstream use? Will mPedigree and Sproxil be able to scale their counterfeit drug solutions?

I think these types of startups can, though some will have to broker partnerships with larger organizations, like the government or the mobile operators to do so. Each of them will also have to work very hard in order to meet the demands of putting a new technology solution in play at a large scale.

Like Kikuyu Grass, which has many touch points to the ground as it’s runners spread across and takeover a whole field, startups trying to solve problems in a big industry vertical need to have many local touch points as well.

• iHub reaches one year, clocks over 6,000 members and more than 100 events. Companies were founded, business got funded and many companies found CTOs and employees through the network. (What makes the iHub work?)
• The m:lab (East Africa’s mobile lab) was founded, with a testing center, 7 companies incubating and 2 classes of mobile app development trained.
• AfriLabs was founded and now has grown to see over 15 labs in Senegal, Uganda, Kenya, Nigeria, Ethiopia, Zambia, Cameroon, Ghana and South Africa.
• The first Pivot pitching competition and conference was a massive hit. Look for regional versions in South and West Africa in the coming years.
• Ushahidi has over 20,000 deployments in 132 countries, the community grows.
• Kenya leads an open data revolution in Africa, and we also held the IGF which brought many big names into town.
• African tech startups start to get some real attention globally.
• Massive growth in bandwidth mixed with lower costs on smartphones, internet itself and mobile services as well as increases in internet and mobile users across the continent.

2012 looks to be even better

The past few years have been about building an infrastructure that improves the chances of the technology startups in Africa to succeed. Seeing this buildout in action in 2011 was exciting, but it should be recognized for what it really was: a setup for 2012 and beyond.

You see, all those labs and hubs around the continent, the startups and the media coverage? They’re all about getting attention and increasing the awareness of the pent up startup potential in Africa’s technology space. Media and funders both have a bigger target to hit when looking for entrepreneurs. We were setting the stage to broaden the base of our startup pyramid: finding the local innovators and entrepreneurs and getting more of them funded.

Where we stand now is an order of magnitude beyond what we had just a few short years ago. In 2006 if you stated that you want to be a web or mobile entrepreneur you weren’t taken seriously. Five years later and it’s a legitimate position to take. We now have some successes to point out (think mPedigree, Mxit, PesaPal, Sproxil and Ushahidi etc), which make it a lot easier for the new breed of startups to get started.

This is what we’re aiming for: a playing field that allows more entrepreneurs to startup, get some seed funding and fail fast if necessary. The ones who make it, the ones who get beyond the startup phase and become real companies with cashflow and employees, are why this is being done. This will make some people a lot of money, and it will make millions of others lives a lot better because they have better and more relevant products locally.

2012 is set. It’s the year where we grow the seed funding and early stage venture capital investments so that five years from now we have the ecosystem needed to support a much larger investment and startup community.

My prediction is this: In 2012, if you have a startup in one of the main tech cities in Africa and are unable to get funding, it is due to one of two things: Your idea isn’t viable or you don’t know how to pitch.

The funding is coming, and it’s up to you to create a business and make it succeed.

(To do this, I suggest you read 2 posts on the Afrinnovator blog: “15 Skills African Tech Talent Must Acquire in 2012” and Mbwana Alliy’s “12 Predictions for African Tech in 2012“.)

Instead, the disruption comes from the open web. Whenever the operators put up a blocker to what users want, usually in the form of price or access to their infrastructure, the web finds a way of displacing them. Examples abound in location based services, text messaging, video and photos.

There’s a reason operator revenue is shifting away from voice and SMS towards data. The products that got the operators here are receding in relative value. The user wants what’s available in the open web, and that’s just not found, or being provided, by the operators.

So, what is an MNO to do?

Change. Disrupt someone else. Innovate.

One of the biggest disruptors, even in this decade of MNO mediocrity, has been Safaricom – the 800lbs gorilla in my own back yard. They’ve invested in new technology, products and business models like few others, and are reaping the rewards of those strategic moves.

Do I like having a monopoly player in my market? No.
Do I feel bad for the other MNOs (Orange, Airtel and Yu) who are crying now? No, they did this to themselves.

Let’s dig into their golden-child, Mpesa, the mobile peer-to-peer payment system that’s did $3.15 billion in transaction in just the last 6 months(!). How do you know they succeeded in innovating? Well, the easy answer is looking at their profitability and user tie-in that they get from Mpesa. Look more closely and you’ll notice the other signal, all of the bank lobbies in other countries have put up huge walls, blockading an aberration like Mpesa from having sway in their country.

[Sidebar: A warning to everyone who wants to see innovation in their country. Over regulation of telecommunications and banking strangles it. South Africa and Nigeria are cases in point.]

So, Mpesa sounds to everyone like a huge success story. It is, and it’s not. What we think of as an amazing disruptive product is really only halfway up the mountain. There are too many corks being popped while money lies sitting on the table. This stems from 2 main things, which seem to be an issue of Vodafone primarily, since they own the IP for Mpesa and own a 40% stake in Safaricom:

1. The lack of leadership by Vodafone to NOT open up an API that other businesses could build on and increase usage. They’ve stifled innovation on their own product.
2. Their lack of vision in the global payments space. Their shortsideness in not spinning out Mpesa as its own company to take on Visa and Mastercard directly. This was one of the few products and business models that could do that.

More MNO Innovation

So, Safaricom might be stifling its own product, but they’re still not short on disruptive features and products. They do fall prey to bureaucracy and political infighting, but they’re also one of the most aggressive MNOs globally, always trying new things. Three more examples:

• Creativity in 3g data pricing and accessibility down market.
• First-movers in 3g and exceptional data coverage countrywide.
• Okoa Jihazi, their product that gives a loan of credit from the operator to users who are tight on cash.

Other examples of MNOs who are innovating in Africa are:

Airtel Madagascar working with Movirtu with their new Cloud Phone, a way for people to share a phone, but keep the SIM card in the cloud.

MTN, testing Mobile Phonebook by FeePerfect out of Cameroon, a product that puts a phone book into everyone’s phone.

Small + Big

Clearly, innovative products can come to market through MNOs. What’s the common denominator on these products though? Most of them came from small companies and were then incorporated into the MNO.

Ideas come from outside, they come from the edge. Scale comes from inside, from the massive infrastructure provided by the MNO. They have to work together to succeed.

I work with, and talk to, hundreds of entrepreneurs. They have ideas, prototypes and products that just might be what the users want. They lack the access to the infrastructure to roll it out.

As an MNO, you boost your chances of success in this increasingly chaotic space by not walling everything off, but by opening it up.

So far they’ve done Kenya and Uganda, next up is Tanzania (I believe), so keep an eye on the iHub blog for more.

As I understand it, it’s what NGO’s do in places like Africa and Asia, but if the same things are done in poor communities in the US or Europe, it’s not called ICT4D, it’s called civil society innovation or a disruptive product.

I’ll be the first to say that I think more communications and technology tools in the hands of ordinary people is good, it’s what we need. For this reason I didn’t come down on the OLPC project, not because I agreed with it’s strategy or reason for existing, but because I simply think that getting more computers in kids hands is good idea.

So, let me be clear: I’m not against the practice of getting more ICT into Africa, I’m just don’t appreciate the condescension and hypocrisy that the term ICT4D comes with, and I’ll bring up the reasons that it actually constrains the technology innovation culture in Africa.

What do we really mean by “ICT4D”?

Ken Banks is doing a fun “ICT4D Postcards Project” where he’s asking people who work in that field to send him a picture with a note of why it matters to them. Though a fun project, I hesitated when asked to participate, because I’m particularly put off by the terminology. But, I did one, and here it is:

“ICT4D” represents a mental roadblock. A term that brings as much baggage with it as a sea of white SUVs, representing the humanitarian industrial complex’s foray into the digital world. It means we’re trying to airlift in an infrastructure instead of investing in local technology solutions. Like the SUVs, it’s currently an import culture that will not last beyond the project’s funding and the personnel who parachuted in to do it.

If an ICT4D-type project is done in a poor part of America, is it still considered ICT4D?

That’s the question that sums up the hypocrisy of this term to me more than anything else. Here’s a an example of what I mean, on a project that I really like and am behind: PeaceTXT. It’s using mobile phones and SMS to help with violence interruption in Chicago.

Is that ICT4D? If it was deployed in Johannesburg or Mogadishu it sure would be labeled as such.

Is ICT4D basically branding for emerging market tech? It seems like it’s a way to name interesting and innovative products from Africa and Asia as something different than their counterparts doing the same thing in the West. In the West they’re called a disruptive initiative or civil society product.

If an African company creates a product that gets millions of Africans using technology to communicate better, which seems to be the very definition of ICT4D, are they automatically that? Mxit does that… What are they?

Let’s say you’re Kilimo Salama, run by my friend Rose Goslinga, which is a micro-insurance program designed for Kenyan farmers, and a partnership between Syngenta Foundation, UAP Insurance, and Safaricom. You charge, make money and yet are helping both small and large farmers alike. Is this ICT4D?

A roadblock to African tech

I was recently discussing this term with one of my Kenyan tech friends, where he stated, “I always picture a team from the UN putting up toilets in Uganda when I hear of ICT4D.”

That’s one of the key problems that the ICT4D space, because to an African it comes with all the baggage of 60+ years of failed aid and development work on the continent. It triggers that begging bowl mentality, instantly stripping the dignity away from the initiative.

It also feels like this is how international NGOs are trying to stay relevant, by creating a new department and new initiatives that the big funders will buy into and support (themselves to stay relevant). Ask yourself, how many ICT4D projects in Africa are more than pilot projects? How many are just Westerner organizations parachuting in, which have no hope of staying alive beyond the time and funds put in by their organization? Sounds like the same old “aid story” to me.

That might be annoying, but the actual problem with this is twofold.

First, the African technology startup scene is young, but it’s ready to be treated as a real industry with real investors looking to make real returns. When the people who are doing business and making money in African tech get a sniff of an “ICT4D” project, they immediately dismiss it – labeling it as a special needs project where the regular rules don’t apply.

A startup company who is trying to create value and make money, but doing so with what outsiders view as poor or disadvantaged communities, is often pigeonholed internationally as ICT4D. For instance, is Esoko the money-making agricultural product from Ghana, which is now in a dozen countries, an ICT4D company? How about if a company started off by being used in Africa, but then their product went global – such as with Ushahidi?

Second, the funds and work put into this space by the NGOs are creating a false floor in the economy. They’re undermining the community of tech entrepreneurs who could be building the same products and services and charging for it, just like we’d expect any company in the West to do if there was a valuable service worth paying for. If it’s a service that should be supplied by the government, then they’re short-circuiting those responsibilities and subsidizing actions that subvert the public offices away from their duty.

Let’s say, for arguments sake, that the only way to get a much needed project going is to get a Western team in-country to start it. Is there a reason why ICT4D projects are slow to get local ownership, management and team members? Is this technology tourism and fabricated externally run projects, created because doing work in Africa is an adventure?

In Closing

What I’m hoping to get across is that we’re doing ourselves a disservice with this terminology and that it has a negative perception in the tech startup culture in Africa. Technology is about overcoming inefficiencies in the system, and products succeed because they solve real needs within communities. In Africa, as in the West, some of these solutions are for-profit and some not-for-profit. It’s important to invest in the local startups involved in trying to solve these problems and come at it from a more objective view, instead of labeling innovative technology solutions from Africa automatically as ICT4D.

We have to thinking less of ICT as something that’s about development, and more of it as a commercial venture. We need more focus on ICT4$ than ICT4D.

I just finished with a talk at PopTech on Saturday where I talked about “The Idea of Africa” and how Western abstractions of the continent are often mired in the past. It’s not just safaris and athletes, poverty and corruption – it’s more nuanced than that.

Today I’m in London for Nokia World 2011 and am speaking on a panel about “The next billion” and how it might/might not turn the world upside down. In my comments tomorrow, I’ll probably be echoing many of the same thoughts that came out over the weekend at PopTech.

Here are a few of the points that we might get into tomorrow:

Horizontal vs Vertical scaling

I talk a lot about this with my friend Ken Banks, where we look to scale our own products (Ushahidi and FrontlineSMS) in a less traditional format. As entrepreneurs you’re driven to scale, but our definition of scale in the West tends to be monolithic. Creating verticals that are incredibly efficient, but which decreases resilience.

In places like Africa, we have this idea of horizontal scaling, where the product or service is grown in smaller units, but spread over multiple populations and communities. Where a smaller size has its own benefits.

In this time of corporate and government cuts, where seemingly oversized companies are propped up in order to not fail, there are some lessons here for the West. We shouldn’t be surprised that the solutions to the West’s problems will increasingly come from places like Africa.

Instead of thinking of Africa as a place that needs to be more like the West, we’re now looking at Africa and realizing the West need to be more like Africa.

Reverse distribution

Will we increasingly see a new set of innovative ideas, products and services coming from places like Africa and spreading to the rest of the world? Why is Africa such a fertile ground for a different type of innovation, a more practical one – or is it?

Disruptive ideas happen at the edge.

Africa is on the edge. While the world talks at great length about the shifting of power from the West (US/Europe) to the East (India/China), Africa is overlooked. That works in our favor (sometimes).

A couple of the ideas and products that have started in Africa and been exported beyond the continent include; Mpesa, Ushahidi and Mxit.

Mpesa – the idea came from Vodafone, but product met it’s success in Kenya. Over $8 billion has been transferred through it’s peer-to-peer payment system. Vodafone has failed to make the brand go global, but the model itself is being dissected and mimicked the world over.

Ushahidi – we started small, from Kenya again, and driven by our Crowdmap platform now have over 20,000 deployments of our software around the world. It’s in 132 countries, and the biggest uses of it are in places like Japan, Russia, Mexico and the US.

Mxit – the famous mobile chat software from South Africa has 3x the number of Facebook users in that country, and has over 25 million users globally.

Like we see at Maker Faire Africa, these innovative solutions are based on needs locally, many of them due to budgetary constraints. Some of them due to cultural idiosyncrasies. Often times, people from the West can’t imagine, nor create, the solutions needed in emerging markets, they don’t have the context and the “mobile first” paradigm isn’t understood.

A good example of this is Okoa Jihazi, a way to get a small loan of credit for your mobile phone minutes when you’re out of cash to buy them, from the operator. They’ve built some safeguards in to protect against abuse, such as you have to have had the SIM for 6 months in order to get the service. It works though, because the company selling it (and many of the mobile operators do across Africa) understands the nuanced life of Africa.

We hold on to technology longer, experiment on it, abuse it even. SMS and USSD are great examples of this, while much of the Western world is jumping on the next big technology bandwagon, there are really crazy things coming out in emerging markets, like USSD internet, payment systems, ticketing and more.

Throughout the world, the basic foundation of any technology success is based on finding a problem, a need, and solving it. This is what we’re doing in Africa. We have different use cases and cultures, which means that there will be many solutions. Some will only be valuable for local needs and won’t scale beyond the country or region. Others will go global. Both solutions are “right”, it’s not a failure to have a product that profitably serves 100,000 people instead of 100 million.

Turning the world upside down has as much to do with accepting this idea of localized success as an acceptable answer as it does with explosive global growth and massive vertical scale.

The Two Big Trends

Trend #1: Adoption by Africans as consumers is increasing.
Trend #2: Technology costs are decreasing

Let’s get back to my talk for tomorrow at Nokia… 87% of sub-$100 phones sold by Nokia are sold in emerging markets. 34% of Africa’s population (313 million) are now considered middle class. The fastest growing economy in the world is Ghana, 5 of the top 10 are African countries (including Liberia, Ethiopia, Angola and Mozambique). Across the continent, the average GDP growth is expected to be at 5+% going forward.

At the same time, we’re seeing bandwidth increase, and bandwidth costs decrease. Mobile operators are the continents major ISPs, and they’re getting creative on their data plans. Handset costs are going down. Smart(er) phones are available for less than ever before. We even have one of the lease expensive Android phones in the world at $80 in Kenya, the IDEOS by Huawei.

Is it all bright and rosy? Not at all. You’re on the edge, you have to create new markets, not just new businesses. But in that challenge lies opportunity, for it’s from these hard, rough and disruptive spaces that great wealth is grown. If you’re an African entrepreneur, why would you want to be anywhere else?