Africa

Pivot 25 was a blast! Over 100 teams from Kenya, Uganda, Tanzania and Rwanda applied to pitch their startup over a 2-day period. We named it “pivot” because we wanted to play off of the word, often used in the startup scene to denote a need for a startup to nimbly move in a different direction (plus it had a good sound). We did the event for 2 reasons:

1. To bring attention to “what’s next” coming from the vibrant mobile startup scene in East Africa.
2. To support the new m:lab, a mobile incubator that launched yesterday, where all profits from the event went to sustain.

This wasn’t your ordinary conference, it was a pitching competition mixed with lively fireside chats with the regions top business and government leaders in the tech space. Larry Madowo, a TV news personality in Nairobi, did one of the most amazing jobs I’ve seen with the fireside chats, keeping them lively and (best of all) disagreeing with each other. The event with 300+ attendees was smoothly MC’d by AlKags, keeping the pace fresh and upbeat.

Each category of finalists consisted of 5 companies, with an independent panel of judges (in other words, the organizers had no say in this). The finalist pitched for 7 minutes, followed by some very pointed and tough questions by the judges. Each judge scored the presenters on their pitch, business viability and model, an average of all these scores was tallied to find that session’s winner.

The Winners

Prizes of $5,000 were awarded to the winners of each of the 5 categories, and the overall winner was picked from these and will go to pitch at the DEMO conference in California:

• Mobile Payments/Commerce: mShop by MTL Systems (Kenya)
• Mobile Gaming, Entertainment and Utilities: Whive by Space Kenya
• Business and Enterprise: Uhasibu by PlusPeople
• Government, Agriculture and Education: SchoolSMS by Tusqee Systems
• Health: MedKenya by Shimba Technologies [Overall Winner]

A massive congratulations to all the winners, and we expect to hear great things from the MedKenya team of Mbugua Njihia and Steve Mutinda when they head to Silicon Valley in September to pitch on an even bigger stage.

Big Thanks!

The real reason this event worked was due to the team behind it. Countless hours spent getting sponsors, working with the finalists and designing the space. I want to thank the guys who really put the work in behind it, making it such a huge hit: Jay Bhalla (producer), Tosh, Joshua, Ryan and Jessica, the Sprint Interactive team, the Ark for the video, plus a good dozen volunteers from the iHub community.

I’d also be remiss if I didn’t thank the guys at Afrinnovator for live blogging the event, and for CapitalFM for live streaming it to the 3000+ people who tuned in from all over the world. Zuku provided us with 100Mbs for this to happen, though we will make sure we have more, and more robust, access points next time.

Finally, thanks to Nokia, Equity Bank, Samsung, Google, Tigo and Elma for sponsoring the event and helping us pay for what was a very costly exercise.

For those who want to know, the full revenue from the event was $145k, with a cost of $110k. Leaving $35,000 to put into the m:lab.

Stay tuned for where Pivot will be next year. Thanks everyone!

While in London at the RGS event I spoke about a different way that I’ve been trying to explain the startup and successful ecosystem needed in places like Africa. Specifically, in the major technology hubs for the continent, these are cities; Nairobi, Jo’burg, Accra, Lagos and Cairo. There seems to be enough funding available for SMEs. How do we get more of them?

It goes something like this.

We have a few good success stories in any one of these cities. There are a handful of great tech companies and organizations that have “made it”. This can be seen as a success in innovation or in business (or in both). Everyone wants to be at the tip of this, and these are the examples we hear of at international conferences and read about in the media.

In the middle we have everyone else, the guys who are still slugging away. They have some clients and revenue streams, but they’re not at the top (yet).

At the bottom, that’s what we deal with in places like the iHub and m:lab. These are those scrappy startups that might or might not have any right being in the place. They’re risky, probably don’t have a solid business model yet, and only a few of them will graduate into the SME space above them.

What to do?

To make the tip of the pyramid bigger, to have more success stories in the tech space, there is only one option: you have to make the base of the pyramid broader.

If your job is to see more innovative new tech companies come out of Africa, the recipe is quite simple:

• Invest seed funds into local tech entrepreneurs.

(that’s my only bullet point, it’s that simple)

I gave a keynote yesterday at the opening of the infoDev Global Forum in Helsinki, which has a specific focus on innovation. The m:lab funding comes from them, and they are exploring new ways to help entrepreneurs in the high-tech space, specifically mobiles, to make their businesses a reality.

Innovation: Knowledge and Resources

I’ve already stated that I think innovation is spread equally across the world. No one region has a monopoly on it. The kind of innovation that you see is dependent upon a number of things, but the foremost in my mind are knowledge and resources.

It’s what you’re educated about and in, it’s your skills, training and ability. When you mix that with the resources available around a creative and inventive person, then innovation happens. Let’s take a look at it.

Low-tech example
In Gikomba, a market place of jua kali workers in Nairobi, you find that their resources are made up of re-usable metal and they have deep training in non-traditional metal working methods and tools.

It comes as no surprise then, that the products they create look like this. Parafin lamps and other low-tech consumer products that sell cheaply and yet took a good deal of local ingenious thinking to craft (originally).

High-tech example
There is a group of women coders in the Nairobi area that call themselves the Akirachix. They often work out of the iHub, and their knowledge is about PHP, MySQL, USSD and SMS application building. The resources around them are mobile phones, and computers to work with.

It comes as no surprise that a couple of these gals (Jamila and Susan) develop mobile and web applications, targeted towards a demographic that they understand: farmers. M-Farm is a USSD and SMS app for farmer information, and organized buying by coops and suppliers.

What you see

What’s interesting here is that it’s often difficult for someone coming from one society and cultural background to appreciate the level of innovation coming from a completely different one. I used a couple examples of this in my discussion yesterday. How the low-tech innovation that we see at Maker Faire Africa is still innovation, and they have business value and provide efficiencies to the community that created them.

What’s difficult for people to do is see. It’s hard to look through another set of lenses and appreciate the inventiveness that got something so far. It’s a challenge to understand the needs of a culture that you don’t share and then create a product for it. This is why so many of the platforms and products designed in the West fail in Africa. It’s not that they’re not well designed, they’re just not designed by people who truly understand the needs of the customers in Africa.

It’s why rugged and efficient seed planting devices will be created in rural Ghana. It’s why Ushahidi and Mpesa had to come from a place like Kenya. It’s why South Africa’s Mxit has 35m users.

Finally, it’s why we should continue to invest in local inventors and entrepreneurs – instead of importing foreign solutions, let’s grow our own.

Vodafone recently concluded a policy paper on “Broadband in Emerging Markets”, also titled “Making Broadband Accessible for All“.

The position and reason for this paper is best summarized below.

“The success story of mobiles in the developing world is well known. Yet in the case of extending data services in emerging markets, there is a real danger of some serious policy mistakes. As in developed markets, broadband strategies in developing countries have tended to focus on investment in fibre. This is too simplistic. This focus on fibre may miss an opportunity for a transformational change built on the capabilities and in particular accessibility of mobile broadband. The early evidence suggests that mobile internet is spreading as quickly, in some developing countries, as mobile telephony did originally.”

Traditional definitions of broadband have a narrow focus on bandwidth and speed. This paper uses a wider definition, as broadband policy needs to consider the entire ‘eco-system’ of internet and data services from both a demand and supply-side perspective.

Content Sections

• Mobile Internet usage and demand in Kenya: The experience of early adopters (David Souter)
• The potential of mobile web content in East Africa (Erik Hersman)
• Spectrum policy and competition in mobile services (Thomas W. Hazlett)
• Rethinking mobile regulation for the data age (Martin Cave & Windfred Mfuh)
• Building next generation bradband networks in emerging markets (Luk van Hooft)

The Diffusion of the Mobile Web Across East Africa

Mobile web content is growing at an astounding rate. It rose 2.6-fold in 2010, nearly tripling for the third year in a row. Official Kenyan industry statistics show that mobile internet subscribers will grow by approximately 843% for the 12 months to September 2011.

What I like about papers like this is that I get to use words that normal people don’t use. I make a case for international content and platforms as “drivers of diffusion” of data across East Africa. That simply means that these platforms and content are helping to spread the use of data more deeply into the region, and allowing local players to get in at lower costs.

International web content is by far the most widely available and used in East Africa. This is in large part due to the ease of finding and disseminating this content, as well as its normalized licensing schemes and reliability. International platforms also carry a majority of the content that is currently being viewed on mobile phones. The following are the types of content that are most important to consumers in East Africa, according to our interviewees:

1. International entertainment news (sports, gossip, lifestyle)
2. Local news
3. Breaking news
4. Facebook (and to a lesser extent other social network tools such as Mig33, Mxit and Twitter)
5. Jobs
6. Dating (chat and relationships)
7. Religion
8. Local video/media

The reasons are that international platforms, such as Facebook, Yahoo!, BBC, CNN, Google and Wikipedia, have already been tailored to work on the most widely used data- enabled handsets. This contrasts with local content providers, many of whom have yet to tailor their websites for mobile access. In addition, local content less available at present, not as easy to license, and often cannot be reliably guaranteed as a long-term source.

Local Content

I interviewed a number of executives from Kenya, Uganda and Tanzania. There was a clear belief that while international content, increasingly localized for the market, is currently king, local content has the greatest growth potential because it is more highly valued by consumers.

While local content developers lack scale they have advantages that the global platforms do not. For one, they understand the local tastes and culture so customers value their content more. The consumer benefits of truly local content and platforms could be large.

The Government Role

There is still a lack of concrete government policies for government services or content to be made available or accessible via the mobile in any country in East Africa, even though this is the primary channel by which citizens could access services online. There is a solid case to be made for mGovernment, instead of just eGovernment.

To underline this, the most popular Kenyan Government website (Kenyan Revenue Authority) is shown as seen on a PC screen, a smartphone (HTC Desire) and a typical 2G internet enabled handset (Vodafone 350). The website is most clear and easily accessible via a PC interface (and consumer interaction primarily is through downloadable pdf files). There are no browsing problems when accessing through a PC-based browser. The KRA website is also accessible via the native Android browser in the HTC Desire Smartphone. The HTC Desire also allows downloading and viewing of pdf files. However, the native browser on the Vodafone 350 (a basic 2G EDGE handset) does not present the KRA website in a usable format. As can be seen, the website is badly rendered and quite impossible to navigate.

Possible government services to be made available via mobile web:

• Paying bills
• Service delivery questions and concerns
• Taxes – access, information and filing
• Health – access or appointments, information
• Public job search

An argument can be made that m-government services would have a greater impact if the focus were on supplying tools for small businesses to interact with government, rather than only making services available for citizens in general. By removing the barriers to entry for small businesses, the government would be providing a service that increased usage, decreased business costs and had a potential tax revenue increasing effect due to filing and paying on time.

Summary

East Africans are accessing the web primarily through their mobile phones. The new medium is enticing them online with the new services and content provided through a new medium. Broadband penetration rates are low enough in this region that we are not yet seeing the displacement of newspapers, radio and TV seen in other, more connected regions of the world. However, as with all network technologies, there is the potential for reaching a tipping point. This will depend on the provision of enough mobile web content that is valued by East African consumers.

The content driving East African users online is currently largely provided by international news and content sources, such as Yahoo! and the BBC, and also by global internet platforms, such as Facebook and Google’s Gmail. Even taking into account the decreasing data costs, falling data-enabled handset costs, and the increased availability of broadband, there would not be enough traction locally to get to the critical point if the content were not available.

These international content sources and global web platforms generate demand, and therefore allow the mobile network operators to decrease costs as more users come online. International content is thus providing a pathway for local content creators. While local content is in high demand and there is a rapidly increasing user base, the mobile web content space in East Africa is in its early stages, and there are no
clear leading content providers. At present the key trend is the provision of increasingly localized content by the leading global companies.

This paper has identified two important barriers to the further diffusion of mobile internet usage across East Africa: lack of m-government policies; and, more important, an absence of charging mechanisms which share the cost of mobile internet access between end-users and content providers. If governments embraced mobile-based provision of services and provided access free of usage charges to end-users (sharing the efficiency gains through payments to network operators), the potential impact on internet access could be dramatic. The challenge for governments and local developers of mobile web content is to utilize their local cultural understanding and ability to maneuver quickly to make their content more relevant and affordable to end-users.

(Note: This is summary of my section. Download the full 2Mb PDF report to read the section in its entirety, and to read the other 4 sections of the paper.)

Next week I’ll be in London to speak at the 21st Century Challenges event put on by the Royal Geographic Society with a focus on “Digital Technology in Africa“.

Besides that main event, it will be a busy 3 days as I’ll also be speaking at the World Bank, meeting at #10 Downing Street, talking at the BBC College of Journalism and at the launch of a Vodafone SIM paper on the mobile web in East Africa at the London School of Economics.

I’m particularly excited about the RGS event because of who I’ll be sharing the stage with. The other speakers are Herman Chinery-Hesse and Nicholas Negroponte.

The above video is Herman Chinery-Hesse, a successful and well-established software entrepreneur in Ghana. He’ll be keynoting the Tech4Africa conference this October in South Africa (along with my colleague Jon Gosier). Herman brings a wealth of knowledge on successful technology businesses, within a West African context. The understanding that the regions of Africa have differing business models and technology success stories is important to recognize.

Nicholas Negroponte is known internationally due to his long and storied history at MIT’s Media Lab. He’s leaving soon, and Joi Ito will soon take over the leadership of that institution. Negroponte spent his last few years heavily pushing the One Laptop Per Child (OLPC) project, and I’m sure that will be a large discussion item in London.

Here’s Negroponte a couple years ago talking about the OLPC:

If you’re in London and can join, do check to see if any tickets are still available.

A few months back Rudy de Waele got in touch with Ken Banks and myself about helping to curate a collaborative outlook on the mobile industry in Africa, called “Mobile Trends Africa 2020“.

Our task was to gather the mobile minds from across the continent and the world and ask them to vision out what they saw happening in the mobile space in Africa in the year 2020. Not an easy thing to do, tech in general, and mobile specifically, are such fast moving items that it’s hard to say where things will be even 3 years from now, much less 10.

The final 28 contributors include some of the people I most respect in this field. To name just a few:

• Stephane Boyera (World Wide Web Foundation)
• Will Mworia (Afrinnovator)
• Gerald Begumisa (Yo! Uganda)
• Steve Vosloo (Shuttleworth Foundation and mLab South Africa)
• Nigel Waller (Movirtu)
• Nicholas Heller (Google)
• Moses Kemibaro (Blogger and Dealfish East Africa)
• Gustav Praekelt (Praekelt)
• Bright Simons (mPedigree, Ghana)
• Nathan Eagle (TxtEagle)
• Wolfgang Fengler (World Bank)
• Anthony K. Ng’eno (WinAfrique)

In January I wrote about the way the Google Global Cache is affecting Uganda – how local web caching is completely changing the internet user experience for that country. We’ve known for a couple weeks that this was underway in Kenya too. Well, here are some numbers on that.

Here’s the aggregate month:

We’re seeing the overall traffic increase 300% from around 100Mbs to around 400Mbs. Those are some pretty impressive numbers, no matter how you look at them. Why is KIXP/TESPOK not making some noise about this significant achievement?

How does it look across the ISPs that are using it?

KDN hosts the cache:

Wananchi:

Internet Solutions:

Africa Online:

I love Afrographique, a site I just heard about today that does data visualizations on African data. It’s done by Ivan Colic, a South African designer, as a “small contribution to assist the changing perception of Africa…”

What Ivan does is brilliantly delve into the data that’s freely open on the internet to show patterns and information in ways that we might not have noticed if looking at the data in its raw format. The problem that Ivan has, is there’s not always that much information about Africa to use – in fact, some of his maps show big blank spots for countries on the continent with no known data for them.

Getting African Data

In Kenya, Ushahidi is working on a project about public service delivery and the companies and government entities responsible for them. I’ve become painfully aware of just how inaccessible Kenya’s government data is.

The entities that hold the most public and infrastructure data are always government institutions. Getting information from them, no matter where you are in the world can be difficult. In Africa it can be very hard indeed. For good reason too, the fact is that there are decisions made for and by politicians for themselves or their constituencies that they don’t want you to see. Having that data open, and visualized, can be damning.

Tonight we had the Permanent Secretary for Information and Communications, Dr. Bitange Ndemo, at the iHub for a session that he wanted to hold on using Kenya’s government data for local applications. Dr. Ndemo might be the hardest working and best intentioned person in government that I know. He truly wants to see tech move the country further, faster and with everyone taking part. Open data is an idea he’s been championing for quite some time.

However, we have a problem… A couple of them actually.

• There is a lot of Kenya data, most of which resides in the Ministry of Planning, but that data isn’t accessible. We don’t know who to go to to get the data we need, and there is no mandate to support one group to centralize it.
• Major data sets, like Kenya’s 2009 census data, are open (technically), since you can purchase the 4 books at $50/each and get it. That’s not really usable or accessible by many people though.
• Kenya’s own OpenData.go.ke website has only ever seen a small handful of data sets, none of which are now available anymore
• We don’t have a format for the data, it comes in anything from PDFs to Excel to CSV and books.
• Groups like the Ministry of Education might publish some information on schools, but they won’t give anyone the location data. In fact, location data is the most hoarded information, rarely getting published in even a hardcopy format.

Google has partnered with the Kenya government to show some of the data. The question is, why is one multinational given access to all this information, while Kenyan citizens or organizations can’t get it directly? Is it just the same data as the World Bank has in their excellent open data API, or is there more data visualized here than that?

I hope that the Kenyan government will look closely at what the W3C has provided, and at what Sir Tim Berners-Lee advocated recently in regards to open data. I know that Dr. Ndemo is talking to many stakeholders on this, and my hope is that people step up and step forward to ensure that the data is open, accessible and usable – and soon.

Kenya is just one example, across Africa much of the corruption and misinformation can be attributed to governments who purposely withhold data in order to further their own aims, not those of their constituents. Instead of being scared about what people will “find out” about them, these governments would do well to look at all the benefits of government open data initiatives.

Umbono: Google’s South African Incubator

In Cape Town, Google has initiated a tech incubator that gives 6 months of free space, $25-50k startup funding and access to an extensive mentoring network. The secret sauce here is in the angel & mentor network, who will be providing 50% of all investment money, while Google provides the rest. Johanna Kollar leads this initiative, and tells me they’re looking for at least 5 companies to get behind in this first go at it, though if there are enough exceptional applicants, they might do more. If you’re a registered business in South Africa, then you can participate. (more on the Google Africa blog)

The BoBs

Deutsche Welle runs the “Best of Blogs” awards each year, showcasing excellent blogs from all over the world. If you haven’t yet, take a few minutes and vote for your favorites. There are quite a few from North Africa.

21st Century Challenges: Digital Technology in Africa

I’ll be a guest to the Royal Geographic Society in London on May 18th for a discussion on technology in Africa with Nicholas Negroponte, Herman Chinery-Hesse and moderated by Bog Geldof. Our main topic:

“Can digital technology such as laptops and mobile phones offer the countries of Africa realistic economic and educational opportunities?”

If you’re in London, you can get a ticket to the event and join us.

Ushahidi moves

There are over 10,000 deployments of the Ushahidi platform around the world, and as you might imagine, a lot has been happening at Ushahidi, including:

• The launch of Crowdmap Checkins at SXSW, a way to “roll your own Foursquare-type service”. It’s in it’s beta stage, but you can play with it now, as others have already using the Ushahidi Android or iOS apps.
• Some amazing people created a Japan deployment after the earthquake and tsunami there, we helped by getting our SwiftRiver Sweeper app to do real-time translation using Google’s APIs.


Japan earthquake Ushahidi data, heatmapped

• We’ve released some reports on past deployments and are part way through an evaluation by the Harvard Humanitarian Initiative.

One of our volunteer deployers, Anahi Ayala Iacucci, spent a great deal of time and created a 90+ page Ushahidi manual for anyone looking to deploy Ushahidi. Having worked on over 20 deployments of her own, she’s one of the best placed people in the world to do this.

Samsung Seeks to Grow in Africa

Samsung is opening a new Electronics Engineering Academy for youth in Boksburg, South Africa. As Afrinnovator states, they have about 20% of the market, which will only increase as they’ve been smart enough to get behind Android in their devices (currently with 22 models). We’ve felt this presence at the iHub in Nairobi as well, where Samsung has a great interest in reaching out to Android programmers.

[A HUGE thank you to the team who put this video together: Ahmed Deen, Michael Kimani, Norah Kithaka, Bob Muchiri, Barbara Muriungi and David Muthami.]

It’s this week that we’re celebrating the iHub’s one year anniversary, and oh-so-much has happened in this last year… What started out as a little idea and an experiment has blossomed into a full-fledged community hub and a model for labs and hubs around the continent.

By the Numbers

• There are a total of 3,036 members in the iHub community.
• There are 1,236 Developers
• We have 876 Creatives amongst us
• We have 235 Green members
• We’ve held 70+ events in the last 12 months, ranging from hackathons to investor pitches to product launches.
• At least 12 companies formed off of relationships made in the space.
• We have 4 outstanding corporate partners (Wananchi, Google, Nokia, Microsoft)
• 3 companies found funding through investors that came through the iHub.
• 2 funding partners who took a gamble (Omidyar Network and Hivos).
• 1 iHub Foosball championship team.

What’s next?

2010 was big, but 2011 is going to be huge! I don’t have time to cover everything in detail, but here are the top items.

• The new m:lab incubator with space for 7 companies, a training room and a mobile testing lab for all devices and operating systems. Will be open in April.
• The Pivot 25 event on June 14-15th. Pivot 25 is an event bringing together 25 of East Africa’s top mobile entrepreneurs and startups to pitch their ideas to an audience of 400 people, with a chance of winning monetary prizes and increasing awareness of their work to local and global investors, media and businesses. In East Africa’s hot mobile market, this is a way to find out “what’s next?“. All proceeds go to support the m:lab.
• A new research arm, dedicated to facilitating local technology research capacity building and to conduct local qualitative and quantitative research in Africa.
• Advanced programming and business training and mentoring. Starting in April, a mentoring program with some of Kenya’s leading tech programmers and business minds.
• The Afrilabs Association has been founded, and the iHub is a leading member of that, where we’re sharing what we’ve learned to help others across the continent build their own hub or lab. We’re also looking to grow an Afrilabs Seed Fund, which we’ll share more with everyone about as it gets solidified.

An iHub Party!

To celebrate this, we’re putting on a big party today, March 11th. Due to size of the space, it’s invite only and for Green members who have RSVP’d in time. We’ve got Just A Band coming in, a cool party atmosphere, food and the best cake in Nairobi. Plus, those who get to the iHub on time (and are on the list) get an iHub zawadi.

Big thanks to Nokia for sponsoring the gift, Google for sponsoring the after-party drinks at Capri7, and to Microsoft, InMobi and Ushahidi for covering some of the additional costs on food, drinks, etc.

Over 2.5 years ago Twitter shut down all operations in Africa. Back then, in August of 2008, it really didn’t matter too much as the penetration rates for the service in Africa, and most of the world, were negligible. A lot has changed since then as Twitter has become a defacto communications too, and in many ways a new communications protocol, all over the globe.

Now, they really hadn’t “shut down” as the service is accessible always via the internet. What they had shut down was text messaging – SMS, due to non-sustainable business relationships with the mobile operators in each country. Since then, the Twitter team has grown, and their ambitions beyond North America, the UK and India have increased as well.

In Africa, three countries have it working; Nigeria, Kenya and Madagascar (Note: there used to be a fourth, but Cameroon has banned mobile Twitter as they go towards elections). Just send a text message with the word “start” to the following shortcodes in each country go get started:

Nigeria: 40404 (Airtel); 20644 (Glo Mobile)
Kenya: 8988 (Safaricom); 40404 (Airtel)
Madagascar: 40404 (VIP)

The Twitter team is working on relationships for expanding SMS service throughout a lot of countries in Africa. How those deals are structured with the network operators and why they’re slow in coming online with the service isn’t yet known.

You can find out which countries do have Twitter’s mobile SMS service on this page. You can also keep up with Jessica Verilli (@Jess), in charge of Corporate Development & Strategic Initiatives at Twitter, and the one who has been the most visibly active on the continent.

Michael Joseph was the CEO of Safaricom, taking the mobile operator from 5 employees to dominating the Kenyan mobile operator market with over 80% market share in his 10 years at the helm.  Regardless of your personal feelings on the man, you have to admire the tenacious approach he took growing the business, and his willingness to invest in his company’s future, thereby decimating his (often inept) competition. 

Possibly MJ’s (how he’s known in local Kenyan parlance) greatest business move was also a measured risk, that is being the company to take a software created by parent Vodafone Group and push it into the market.  That software: Mpesa, the most successful mobile payments system in the world.  Safaricom has more transactions each day than Western Union does globally in a year.  Yes, it’s that impressive.

When Michael Joseph stepped down in October of last year, he had a blank slate.  Only he knows just how many opportunities were out there, but I’m guessing there were many.  He just announced his next move, and that is to join the World Bank and “spearhead expansion of mobile money transfers” in their member states.  

“The first fellow under the programme, Michael Joseph, will advise the Bank and governments on spreading the use of mobile phone banking, drawing on his knowledge and experience at the helm of Kenya’s largest telecommunications service provider,”

All of the business acumen and cache that MJ has built up is going to go towards being the World Bank’s ambassador for mobile money.  Meanwhile, he is maintaining a role at Vodafone as a director, where he serves as an advisor on the expansion of Mpesa to other African countries.  That’s to be expected, as he’s one of their greatest success stories to date.  Both of these, though good, seem like a waste of potential, and I’ll explain why.  

A missed opportunity

No one in the world holds as much knowledge on how to deploy a mobile money system, nor how to grow it and operate it as Michael Joseph.  However, all of his success was penned in by the fact that Safaricom only serves Kenya, he could never grow it outside of the country in a meaningful way.  Forays into Tanzania and South Africa have happened, but aren’t seeing nearly the success as in Kenya.

Vodafone knows they’re sitting on a goose that lays golden eggs, yet it’s only laid a single egg – their problem is that they’ve not figured out how to duplicate its success.  

Instead of trying to hold on to Mpesa, they should spin it out as its own entity, put Michael Joseph at its head and let it take on the world (not just Africa).  

There’s a few good reasons for this move:  

First, Vodafone is too big and slow to do this internally, it’s like all of the services and startups eaten up by other large companies that die due to not being within an ecosystem that has an entrepreneurial bent, but instead are sucked down by bureaucracy.  

Second, no one else could take this brand global and have the ability to stand toe-to-toe with other operator peers around the world like MJ could.  It needs that type of personality if it’s to do what’s next.

Third, there aren’t many opportunities that crop up that allows you to take on massively profitable and embedded incumbents and win.  In this case, that’s all of the other payment methods, including credit cards and internet payment platforms.  Mpesa could become the defacto mobile payment system for the world – displacing other methods.

To be honest, I thought this was the obvious play when Michael’s time at Safaricom came to an end – for all of the players: Vodafone and MJ himself.  I kept thinking that surely there was a reason for them not moving on it, that it might have something to do with timing.  Instead, it looks like the big IP owner, Vodafone, is unwilling to take Mpesa big – and it looks like the reason why is that they’re unwilling to let go of control (now ownership). 

That’s how it looks from where I sit, if you know more, add it below.

In the words of Steve Song, Village Telco is “an easy-to-use, scalable, standards-based, wireless, local, do-it-yourself, telephone company toolkit”. He’s just put out a new video making it very clear just how useful this system is.

The team over at Blinktower has done an exceptional job of creating a short, concise and eminently understandable video of what Village Telco is.

The Village

Often, we get caught up in our high tech wizardry and get overly excited about the newest Android app or the best new web app built in African Megalopolis #5. And by “we”, I mean “I”, since I too am a tech guy who is endlessly intrigued by the latest, newest and shiniest.

What we forget is the village. “Up country”. What happens when we get comments like this last week from the new CEO of Safaricom, Bob Collymore, threatening to do away with their rural network:

We’re OK with losing market share (faced with unrealistically low rates) and focusing on Nairobi and high-income communities. The people in remote districts are receiving calls (more than making them). If rates decline, why should I continue to do that?”

Some rural communities have never had connectivity of any kind, voice or data. Others have it now, but could lose it if their revenues don’t prove to be high enough for big operators. Who is going to fill that niche?

I think the answer lies in technology like Village Telco. It’s a business, not an aid program. Where an entrepreneur can get a link to the network started (or not), and then mesh out from there to the whole community. People pay for access, and profits can be made.

For the last few years, a dedicated team of enthusiasts have been building the initial hardware and software. Both of which are open source. It’s a low-cost way to get into the telco business. Here’s to hoping that more entrepreneurs take a serious look at rural connectivity.

If you’ve been wondering what the numbers look like for Kenya’s mobile and ISP space, look no further than the latest CCK Report (Communications Commission of Kenya). It’s one of the best documents that I’ve seen, compiling information that you just can’t seem to find anywhere else.

Highlights of Q4 2010:

• There are 22 million mobile subscribers in Kenya
• 9.5% mobile subscriptions growth, which is increasing over the previous quarters
• 6.63 billion minutes of local calls were made on the mobile networks
• 740 million text messages were sent
• Prepaid accounts for 99% of the total mobile subscriptions
• The number of internet users was estimated at 8.69 million
• The number of internet/data subscriptions is 3.2 million
• Broadband subscriptions increased from 18,626 subscribers in the previous quarter to 84,726

Price Wars

Everyone recognizes the impact on SMS and voice, due to the price wars brought on by Airtel last year. The average, people are paying 2.65 Ksh per minute for voice representing 33.4%
reduction on pre-paid tariffs. It comes as no surprise that there was a 68.4% increase in traffic during this period, nearly triple the norm.

There’s nothing like a chart to bring this point home:

Interestingly, a decline in total number of text messages sent (4% less) was recorded. It’s an indicator that given the choice of lower cost voice, people would rather use that, and they do.

Safaricom lost 4.8% market share, from 80.1% to 75.9% (still massive). Surprisingly, it wasn’t Airtel who benefitied, as Orange made up for most of that with a 4.4% increase of their own. Airtel did lead the market by recording 1,143,353 new subscriptions, about 3x their closest competitor.

Internet

A whopping 99% of the internet traffic in Kenya is done via mobile operators, meaning 3G, Edge or GPRS. It’s to Safaricom’s credit that they moved on this early, not dithering around on data as their competition did, effectively taking the whole market.

My theory is that there are only two major players in the ISP space in Kenya. The first is Safaricom, supported by this report, who will own most of the country due to having an island strategy (mobile towers). This allows them to own all the rural areas and anyone who needs decent speeds and has to be mobile.

The other is the fiber bandwidth provider (ISP) who figures out and cracks the consumer market. The closest to doing this is Zuku (Wananchi) who started rolling out 8Mb/s high-speed fiber-to-the-home internet connections in Q4 2010 at only 3,499 Ksh ($45). These numbers aren’t reflected yet. My guess is that we’ll see Zuku tying up all the home internet connections in the major urban areas.

Estimates for those with internet access in Kenya is closing in on 9 million users, and at over 22% of the population, we can say we’re getting a lot closer to the critical mass needed for real web businesses and services to thrive.

Final Thoughts

Overall, the numbers on both mobile and internet are trending up, and at a very favorable rate. The indicators here prove that you should be paying a lot of attention to mobiles and data connectivity in Kenya.

If you’re a business, what’s your mobile plan? How are you providing and extending your services over the internet (and no, a website is not enough)?

If you’re an entrepreneur, how are you going to use this information to decide what to build? Are you paying attention to the wananchi, building apps for the upper class?

PDF of Report: CCK Report download – Kenya Q4 2010

I’m excited to announce Pivot 25, which will happen on June 14-15 in Nairobi.

What is it?

Pivot 25 is an event bringing together East Africa’s top mobile entrepreneurs and startups to pitch their ideas to an audience of 400-500 people, with a chance of winning monetary prizes and increasing awareness of their work to local and global investors and businesses. In East Africa’s hot mobile market, this is a way to find out “what’s next?“.

The competition is for 25 entrepreneurs/startups to pitch their best mobile apps or services, in 5 different verticals, to the audience and a panel of judges. Anyone who has a new app or service can apply, if they’re from Uganda, Tanzania, Somalia, Sudan, Rwanda or Kenya.

Pivot 25 is mostly about the entrepreneurs and their pitches, but we’re also sprinkling it with fireside chats with the top mobile industry leaders in the region.

Get Involved

There are a couple of ways to get involved with Pivot 25.

• Sponsor the event – we’re already getting some great sponsors on board, but there are still a couple areas available.
• Enter your startup – this is the BIG one, if you make it to the event, the awareness will be huge and the prizes bigger!
• Register to attend – we expect tickets to sell quickly, so get yours now before they’re all gone.

Help us get the word out by tweeting (our handle is @pivot25), blog it, and definitely tell your friends around East Africa to get their startup application in right away.

Some Background on Pivot 25

The mLab (mobile lab) is a new incubation, training and testing space for mobile apps in Kenya. It’s situated directly underneath the iHub, and was created from an infoDev grant to a consortium of the iHub, Emobilis, the Web Foundation and the University of Nairobi.

As the team behind the mLab got together and talked we realized that we needed to solve two problems. First, a good way to create awareness of and access between the mobile entrepreneur community and investors and businesses. Second, that an event could help raise funds for the mLab, making it sustainable.

The Event will not only showcase developer talent in the region but also bring much needed focus to the mLab and the role that it play’s in the mobile application development ecosystem in East Africa. Our goal is to make this truly inclusive, bringing together startups, manufacturers, businesses and operators from every country in East Africa. The mLab is accessible to anyone in any of these countries, and Pivot 25 is as well.