Mobile

There’s an good post over at the CGAP blog about mobile money’s innovation crisis. The author claims that nothing new has happened in mobile money since Mpesa was launched in Kenya, except for maybe the launch of Mkesho this year in Kenya as well. Besides that, everyone around the world pretty much tries to duplicate what Safaricom is doing in this space.

Why?

“There may also be one partnership in particular that could be hampering innovation—that with the banks. Historically, these two players have taken very different strategies for new product development, especially in resource poor countries.”

Thinking big picture

You can send up to $500 for as little as 37 cents using Mpesa. On Zain it will cost you 74 cents. That’s an insanely low transaction cost compared to what banks charge, and that’s not even going into the fact that they can’t do transactions as low as 50 to 100 Ksh ($.60 to $1.24). The kicker, you can store your money in it for no fee at all (unlike the usurious rates that the banks charge).

Simply put, banks cannot compete with mobile operators when it comes to transacting payments for the majority of Africans.

Regulators make and enforce the rules around everything. How do they make their decisions, who lobbies them and why? Is the reason that we haven’t seen a true replication of Mpesa anywhere besides Kenya due to the banking sector protecting its interest?

Opportunity lost

Right now anyone in Kenya can do every type of transaction within our own borders, and if creative into neighboring countries as well. A few other countries have the ability to do this type of thing as well, if less efficient and/or elegantly conceived.

Currently opportunity is lost by local merchants in not integrating mobile payment structures better into goods and services offered to both businesses and the public. This is changing, businessmen are quick to move to figure out new ways to increase margins and customers. It’s only held back by the operators not willingly opening up their platforms for easier integration into business.

11% of Kenya’s GDP was shifted through Mpesa in 2009, and the company expects that to be around 20% this year.

We can all agree those are big numbers and that a massive ability to make money has been shown in Kenya. This begs two questions:

• Why has no one allowed it to truly replicate in another country?
• Why is no one throwing big money after this, trying to figure a way to scale a mobile operator and bank agnostic payment solution across a region, if not the whole continent?

There are big players trying to break into the greater African market (I’m looking at you Naspers). There are banks who have the money to spend on figuring this out, but aren’t thinking beyond their own brand, so continue to fail. Maybe the answer is we just should sit here and let all this lost opportunity continue to drift by us, waiting on the big credit card players of the world like Visa or Mastercard to make a move.

That’s a fatalistic stance, and I certainly hope it’s not true. Unfortunately, I don’t think we’ll see this service come from 2 guys coding in a garage. Instead, I hope that there are mobile operators and banks banding together to make something bigger than themselves that make more profits for everyone. If not them, a big investor willing to wager millions of dollars on making billions.

It’s been hectic lately… In the course of one week I’m going from the madness that is running any situation room for a major Ushahidi deployment (Uchaguzi), to what is looking to be one of Africa’s best tech conferences (Tech4Africa).

(video by Jon Shuler)

Uchaguzi: Monitoring Kenya’s Referendum Vote

Uchaguzi is a deployment of the Ushahidi platform that marries up traditional election monitoring groups and practices with voices from the crowd. It was an experiment in a more holistic approach to monitoring an election.

Our goal is to make this an election monitoring platform that can be used by anyone (at least in E. Africa), as a mixture of the core Ushahidi platform, with a package of customized plugins that do things such as:

• Map known election monitor phone numbers to specific locations
• Content-map the election monitoring number codes into an automated full report
• Use shape files to get make reports not just point-based, but heatmapped
• Ticketing system for escalated items
• Ability to mark items as “actionable” and/or “action taken”

We started Ushahidi 2.5 years ago here in Kenya to crowdsource and visualize some of the stories coming from ordinary people in the midst of Kenya’s post election violence. Last Wednesday the whole country went to the polls again, this time to vote “yes” or “no” on a referendum for a new constitution for the country – arguably something even more important than a politician who will only be in office for 5 years.

Being Ushahidi, and this being Kenya, we were ready to do our part. This came in the form of Uchaguzi, a deployment where we partnered with local groups like SODNET, Twaweza, CRECO and HIVOS. Ordinary Kenyans and election monitors alike could send in text messages to a local shortcode, which was widely advertised before the date. (read more here)

Over 50% of all incoming reports were verified in real-time, and an overwhelming 60+% were reports that things were going well. A win for both the deployment and the country!

A Thank You

Through a combination of great partners and a huge volunteer outpouring of time at the iHub, we were able to manage the inflow of information, mapping and verification.

The Uchaguzi project brought more than 70 volunteers to the iHub August 3rd and 4th (with at least 12 others joining remotely). Volunteers helped map and process over 1400 messages as well as assisted our team of Ushahidi developers fix bugs that popped up during the Uchaguzi deployment. The volunteers met the challenge with incredible enthusiasm, focus, patience, and a spirit of fun! We couldn’t be prouder to have such a wonderful Ushahidi community!

“We” isn’t just the Ushahidi team. Yes, deployments like this do take some time to customize and we did build some new functionality in (than everyone now has access to use), but it’s largely not the technology, it’s the people. The 80+ volunteers, tech and non-tech alike, were amazing and came through in a big way. Not enough can be said about Jessica Heinzelman, Ushahidi intern for this summer, who wrangled all of the volunteers and operations for the situation room.

Media Hits

Fast Company
Christian Science Monitor
Business Daily Africa
UN Dispatch
CNN iReport
All Africa
Reuters
Internews

Safaricom is Kenya’s largest mobile operator with approximately 80% of the market. Most people don’t know this, but they get hundreds of business and technology proposals each week from people all over the country – techies and non-techies alike. It was with this problem in hand that they decided to open up an “Innovation Forum” for Kenyans to share their ideas.

In short, it was a disaster. Draconian legal terms and conditions mixed with ham-handed community engagement meant that they met with a lot of resistance and outright mockery on public channels such as Twitter and Facebook. Just a sample from one blogger:

Engaging the Community

Safaricom is now back to the drawing board. Their problem hasn’t gone away, they’re still overwhelmed with emails, letters and proposals for business ideas that might/might not make sense for them to engage on. Wadzanai Chiota-Madziva heads up their VAS (value added services) department, and is in charge of this. After the noise caused by the less-than-stellar launch of the Innovation Forum, she and CEO Michael Joseph met with one of the techies who was very concerned about the way they were handling this: Al Kags.

Al Kags has sat down in a couple of meetings with them thus far, finally he suggested a board that could serve as a buffer between Safaricom and the people sending in proposals. The Innovation Forum Board’s job would be to speak for the community to Safaricom, as well as push for better access to APIs, a developer sandbox and possibly and app store. They would also be responsible for helping to translate Safaricom’s position to the community.

I was invited, along with some other’s from the tech community, to sit down and discuss this with them last week. It was a fruitful discussion about the possibilities and the roles and responsibilities that the board would have.

Some of the discussion was about the need for a buffer to be created between Safaricom and submissions to foster fairness and openness, to provide confidence to developers to innovate without fears of intellectual property (IP) misappropriation.

“The intention is for the board to create a fair environment for innovatioin by playing the middle ground between Safaricom Ltd and the developer and innovator community”

The position is largely one of an enabler. The board would oversee the Innovation Forum by:

• Create and agree rules of engagement with all parties
• Advocate developers perspectives at Safaricom
• Facilitate understanding of Safaricom position with the developer/innovator community.

Figuring out the Board

The people invited for the meeting, as the potential board, were Moses Kemibaro, Jessica Colaco, Al Kags, Karanja Macharia, Rehema Parmena and myself.

While it is up to Safaricom to decide who is on their Innovation Forum Board, those of us at the meeting pushed back a little on how they had done this. If they want to interact with the community, it might behoove them to reach out to that community for some of the nominations.

They listened, and starting today going through the end of the week, you can make your own nominations for the Innovation Forum Board for Safaricom to review on the website. This is your chance to put a name in of someone that you think would represent the community well on the board.

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.

Mobile Subscriber Growth in Africa

A new report shows that Africa has 12% of the new mobile subscribers in the world, adding 20.1 million in Q1 2010. That’s a sizable amount. What’s actually more interesting to me is that they’re saying that the continent now has 47% penetration, which means that there’s a lot of growth yet to be had as compared to the rest of the world.

[One of these days I'll have the £400 to purchase and really dig into these reports...]

Street hackers and the Neighbourhood App Store

Jan Chipchase gives us some background on how the mobile phone street-hacker culture originates:

“I like to think of it as a neighbourhood app store – and in many ways it’s the edges of the internet, where entrepreneurs are taking content online and offering it to local, offline and/or technologically illiterate customers. Also these corner shop app stores can be content editors for their community: they filter content they think their customers like, but they also guide what their customers might like as well.”

Nokia battles the Chinese

As David put it, “Nokia lost the high end to iPhone/Android/Blackberry, now battling China’s cheap phones on the low end. Things not looking good.” (link)

“For instance, it sold 432 million devices in 2009, or more than its top three competitors combined, however, its average selling price for all models has plummeted 44 percent in the past five years to 62 euros.”

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.

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!

On Friday I’ll be addressing some of the top business decision makers for Nokia in Africa. My goal is to shake them up a little, make them think deeply and differently about the African market.

Nokia hasn’t truly innovated in Africa since they put a flashlight in a Nokia 1100 in 2003.

I’ve been asked to discuss my views on how the handset and mobile services business situation is developing, what the opportunities are in those areas and suggestions on how Nokia could lead in this market.

Therein lies the problem: I’m only one person with one opinion, they need to hear from others with different experiences.

What would you say?

Add yours in the comments below. The best will be brought to the Nokia executives attention:

Here are a couple from Twitter.

• Top-end or low-end handsets, what does Nokia stand for here? (via Niti Bhan)
• Innovate on the user experience for low-end handsets. (via Rombo)
• Is Nokia serious about social impact, or is that just face paint?
• Africa is ripe for experimental phones and financing models, what is new coming out of Africa first?

Don’t just think cheap handsets. What else would you do within business models and solutions?

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.

_______

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.

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…

This is brilliant. Legends of Echo is a new free Java mobile phone, massively multiplayer role playing, location based game put out by the people behind the Grid in South Africa (Vodacom).

“In the game, the Echo is a parallel virtual universe based on the South African map. Instead of cities and skyscrapers, however, players will find rolling green fields, rocky outcrops and valleys to explore and establish their base.”

The best overviews are found on the News24 Games blog, in an interview with co-creator Nic Haralambous, and on Nic’s own blog (you’ll also want to read what Vincent Maher had to say about it). From what I can tell, without having played it yet, is that it’s a turn-based card-type game. You find loot, do battle and win more loot. Leveling is there, but it’s not as large of a component as expected.

“There are lots of different kinds of weapons, powers and items that you can pick up by moving around the country from city to city, province to province. Each one gives you a slightly different edge in battle.”

On top of the normal game elements, and an indicator that makes me believe that LoE might be better thought-out than most other games, is the fact that they built an economic system into the game from the beginning. Nic states, “There is a currency model built in to the game that allows players to spend airtime in the Echo Marketplace.” That’s a big deal, and it’s not easy to pull off if done right.

Legend of Echo’s graphics and visual appeal can’t be understated. They spent a good deal of time to make this game look and feel like a World of Warcraft competitor, and it shows. Visually it reminds me of Arcanum meets World of Warcraft.

Specs

You’ll need to have a high-end Nokia or Sony Ericsson to play Legends of Echo. I’ve got an old Nokia N95 sitting around somewhere, so my plan is to dust that off and give the game a run when I’m in Cape Town next month.

It also appears that you actually have to be in South Africa to play it, but I’m checking with Nic to see if anyone living in a country that The Grid operates in can play it as well. This is doubtful, as it’s based also on the Afrigis system, which is fairly Southern-Africa specific.

The game is available for free as a Java download to cellphones. To play Legends of Echo, SMS ‘ECHO’ to 33313 (50c/SMS) or visit http://www.legendsofecho.mobi

A teaser video:

Legends of Echo from Cow Africa on Vimeo.

Thoughts from a gamer…

• It seems that a web-based Java version of this game would be successful, if only because it would allow you to play on whichever device you have handy. Are there any plans for that?
• How much will LoE go the direction of Foursquare where they really use the location based systems to drive competition and increased game play?
• I’m impressed that they took the time to create a strong virtual economy.
• Will a real-world economy of people using real money to buy and sell goods develop online, as we’ve seen in other successful MMO games?
• You’re supposedly able to “Build special items with unique abilities”. I’d like to know more about the crafting system, as that can be one of the best ways to deepen interaction and make a game more unique.

South African, Matthew Buckland, has launched Memeburn a site that tracks emerging technology trends and has opinion pieces by key influencers.

Amheric/Ethiopic translations have been launched within Google’s applications.

Freedom Fone, a free and open source IVR (interactive voice response) system, which started out of Zimbabwe, has now launched. You can download v1.5 now.

Afrinnovator has launched a news aggregator for African tech news.

I was interviewed by CNBC about the iHub and Ushahidi.

Panacea, a South African mobile phone company has the first (legit) bridge between Africa and Paypal live on the continent. Finally, at least one country is able to send/receive payments via PayPal.

Kahenya, from Virn, is launching a new ad platform, called Metro, that distributes ads to all of their sites and affiliate sites. They anticipate to start Web Marketing Campaigns from as little as 500 Kenya shillings (