Thoughts on Africa’s Mobile Operators and Disruption

Generally speaking, mobile network operators (MNOs) were highly disruptive in the 90’s, but have continued to decrease in this over the last decade. Operators are no longer the offensive, attacking force of yesteryear, instead they’re putting up barriers and defensive walls trying to protect what they have and hide.

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.

Twitter is Slowly Coming Back to Africa

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.

Massive Africa Update on Google Maps

The Map-the-World and Map-Maker teams at Google have been making some major, and much needed, additions for Africa. With a large data push yesterday, Google Maps has one of the most impressive sets of maps on Africa that you can find.

There are now 27 more African countries that now have detailed maps, including:

Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, Gabon, Guinea, Gambia, Ghana, Ivory Coast, Madagascar, Malawi, Mauritania, Mozambique, Niger, Nigeria, Reunion, Sierra Leone, Somalia, and Togo.

Comparing countries

What I wanted to do was compare old map tiles with new ones, but I didn’t have any screenshots to do that with. Instead I did a quick comparison of a few countries – those that were just announced vs ones that weren’t on the list.

A good example of this is found when comparing Mali to Burkina Faso in West Africa. There are significantly more town names in Burkina Faso, and all the roads either have names or numbers. In Mali, which hasn’t been done yet, there are some major roads outlined, few towns are named, and no minor roads to speak of.

Mali vs Burkina Faso

Also of interest, you’ll notice how the roads that should intersect at the borders, do not.

Here’s another interesting view of West Africa. You can clearly see that there has been a lot of data added for all of these countries, except for Liberia and Mali.

Google Maps in West Africa - May 2009

One other interesting map that I came across was of Mogadishu, Somalia. It appears that there either are no street names, or that the Google team working on this didn’t know what they were:

Mogadishu, Somalia - no road names – the Mobile Mobile Phone Directory

Fritz Ekwoge is the kind of African developer and entrepreneur who keeps me optimistic about Africa’s future. A couple years ago he built Kerawa, a classifieds service that is doing quite well in some West African countries. Last week he got in touch with me about a new service he created called, which is in alpha. (Bill Zimmerman is also covering this, as he was part of the testing for the service)

A uniquely African solution to an African problem

iYam - mobile mobile phone directory from CamerooniYam is a simple mobile phone-based mobile phone directory (Fritz calls it a “mobile mobile phone directory”). It is a way to lookup businesses, service providers and contacts from your mobile phone.

That doesn’t sound very exciting, and it shouldn’t if you live anywhere outside of Africa. However, those of you in Africa will recognize immediately why this is such a valuable service. You see, most countries in Africa don’t have a mobile phone directory for finding goods, services or individuals. There is no easy way to contact most businesses in Africa. It provides a simple, accessible solution to the problem using the ubiquitous SMS protocol.

Example uses:

  • Looking for computer dealers to buy your next laptop? iYam will give you their contact numbers.
  • Looking for software developers to help you work on your project? iYam will give you some contact numbers.
  • Has your phone just been stolen and you want to get back some of your old contacts ? Find their numbers using iYam.
  • Someone just called you but you seem to not remember who has that phone number ? iYam can tell you a lot more about the owner of that number.

iYam is ground breaking because it is a new form of search. Instead of searching for web pages, you search for people. You are only allowed to use 155 characters to describe yourself as you add yourself to the direcgtory, forcing a certain amount of constraint.

“The way we develop here in Africa will be different from the way the big nations developed. They grew up with computers. We are growing up with mobile phones.
– Fritz Ekwoge”

Business cases and investment opportunities

Most of the discussion between Fritz and I revolved around the business case for his product, and the investment money needed to make it a real business. As always, the Achilles heel for any smart, entrepreneurial programmer in Africa is how to get enough money to work on something beyond the idea and prototype phase.

    Business Models
    Plan A: Strike deals with local Telecom operators to charge a small extra fee for each SMS passing through our service.
    Plan B: iYam only displays the first five results per SMS request. As the service gets more popular, many businesses will be eyeing for the top position. They will have to pay for that.

    Hardware requirements are modest. Currently, in it’s alpha stage, iYam is powered by a laptop plus two mobile phones. These will be replaced with a bigger server and some GSM modems as traffic increases. To reduce international communication costs, the iYam setup can easily be replicated in other target countries.

    SMS will definitely cost a lot as the service becomes more popular. But revenue should cover those costs, or deals could be made with telecommunication companies to reduce our SMS costs.

    The market in Cameroon alone is sizable, but there is no reason that once this moves from prototype to service, that it can’t be replicated in other African markets.

    Technical Details
    Currently, it does not work with the local CDMA provider CAMTEL, because they don’t exchange SMS with the GSM providers. However, it does work with other countries, as Ghana and Gabon have already been tested.

Final thoughts

As I mentioned in the beginning, I’m enthused by both Fritz and by iYam. Of the two, I’m more excited by Fritz, because it’s easy to come up with ideas, and hard to execute on them. This is his second time to have done just that. This is the perfect opportunity for an early-stage investor to get involved and help scale an idea and prototype to a real product making real money.

Mobile-XL: SMS Browser for Mobiles in Africa

In the summer of 2008, US-based Mobile-XL launched their new SMS browser in Kenya. I had been in touch with their CEO Guy Kamgaing-Kouam, via email, but we had never had always just missed each other in Kenya or in the US. Since then, I’ve been watching them closely, and seeing how their business unfolds as they target African nations with their new service. They are starting with Kenya, Uganda and Tanzania, but are aiming to roll out in South Africa, Cameroon and Nigeria soon.


Big, Strong Moves

It seems that Mobile-XL is doing well. In July, they partnered with Fonexpress, a Kenyan retail chain of ICT products and services to provide content and services. In November, they announced that mobile pioneer Alieu Conteh, Chairman of Vodacom Congo, has agreed to join the Board of Advisors.

Today, they have announced their biggest news, a collaboration with Nokia to start embedding its SMS based browser in mobile phones for selected African markets. This, of course, is the big prize for any mobile application developer: the chance to have your application bundled with the base-level software available out-of-the-box.

“As early as March 2009, a select series of Nokia handsets shipping into Kenya, Uganda and Tanzania will be equipped with the firms XLBrowser software service.”

The XLBrowser, and why it matters

Guy, and his team at Mobile-XL, have built the XLBrowser. This is a J2ME (Java) application that utilizes SMS to provide instant access to global and local information using almost any mobile phone. The XLBrowser’s interface allows users to select and instantly receive information, news, sports, finance, entertainment, games, music, and more. Costs appear to be slightly more expensive than a basic SMS message (10/= shillings in Kenya).

Though the XLBrowser is a walled garden (content-wise), it is still particularly innovative as they use SMS to send data. This type of technology is perfect for places in rural Africa where WAP, GPRS and internet connections are limited at best. This is the beginnings of something very interesting.

Many make claims to “bridging the digital divide”, as do the people at Mobile-XL. But, in this case I think they’re right. It’s not just another application that relies on strong mobile data connections, but one that can work off the very lowest common denominator – which is what is needed in much of Africa today.

Their next big trick will be to bring on as many new subscribers as possible, and that only happens when there is real value added through the use of the application. With strong content offerings, ones that people in Africa truly care about, they could very well pull this off.

Personally, I’d love to see more businesses take on this challenge. Using SMS to connect Africans to the rest of the web, and the world.

Aiming at an African Classifieds Marketplace

There have been a number of plays on the free classifieds space in Africa over the years. Most seem to fizzle out, either due to not having enough revenue to continue, or their owners losing interest before the site grows. It seems like a play in the same space as Craigslist and Kijiji (Gumtree in SA) should work well. After all, you don’t need to digitally handle the transaction, that takes place offline.

I’ve been keeping my eye on one that might have some potential though: Kerawa. They explain it as, “an online tool promoting offline transactions.”

Kerawa homepage

Kerawa started just this year, from a small team of guys in Cameroun. They report having listings in 42 countries, but some are limited to just a couple. What’s more impressive is seeing how lively it is in Cameroun, Morocco, Ghana and South Africa, their top 4 countries. What a spread! That means they’re doing decently well in all but East Africa.

Some thoughts on Kerawa

Mobile Phones
I remain convinced that services like Kerawa will not become mainstream in Africa until they build the application in such a way as to allow mobile users to really take part. This seems obvious to me, so I’m not sure why they haven’t created a downloadable J2ME application for this at the least. Maybe they could create a way for people to access it via SMS, or at least pay for alerts on certain items (like jobs).

Kerawa posted their analytics for the year thus far. It is trending up, which is a good sign. What’s more important is numbers on classified listings, as once you get a decent amount of both buyers and sellers, then you’ve achieved critical mass and become “the” place to go. No one wants to go to the 2nd best market in town (just ask eBay’s and Craigslist’s competitors).

Kerawa Statistics

iPhone Conquest Turns to Africa

iPhone Conquest of the World (June 9)

Above is the map of the, “iPhone conquest of the world” shown at Apple’s WWDC keynote today. 15 African nations are getting in on the game now that is is 3G and more affordable. Honestly, I wonder how many of the local networks can handle the data load, but that’s another conversation. Orange will be the carrier for Africa (as well as the Middle East and Europe).

The iPhone will be released in many countries on July 11th. However, the full index of countries, including all of the African nations (save South Africa), won’t see the iPhone until later in the year.

iPhones in Africa - Country List

The 15 countries are:

Botswana, Cameroon, Central African Republic, Egypt, Equatorial Guinea, Guinea, Guinea-Bissau, Ivory Coast, Kenya, Madagascar, Mali, Mauritius, Niger, Senegal, South Africa.

The iPhone in Africa. Really?
Many people will say that the iPhone will never be of any consequence in Africa. Possibly true. Outside of Egypt and South Africa, the number of people who can afford post-paid data plans are fairly limited. The second problem is the data networks themselves, many of them aren’t ready for the stress that iPhone users will apply (as AT&T wasn’t in the US).

I reserve judgment. Blackberry’s, N95s and other smart phones can be made to work in Africa quite well. However, I don’t think what we’re seeing is “just another smart phone”. It’s a new operating system that changes the paradigm of the mobile phone/web. (I think Android is similar in many ways too – just more open).

What will happen is those who can afford the iPhone and the requisite post-paid plan will rush out and buy it. The data networks will become stronger to support it, and local developers will start building for apps (not to mention the secondary and tertiary applications and APIs that are needed).

Years from now, when the idea of the mobile web isn’t so flashy and unknown in Africa, we’ll look back and say our thanks to the iPhone as one of the catalysts that pushed development forward.

Gruber gets it right:

“The physical phone is not the story. A year from now, the iPhone 3G will be replaced by another new model. The platform is the story. Platforms have staying power, and, once entrenched, are very hard to displace.”

[image courtesy of Engadget, and full notes from keynote. Full video on]

Online Shopping Services for the African Diaspora

There are more and more services popping up created for Africans living abroad to shop and deliver commodities to their relatives in their home country. As covered in a previous story, the sub-Saharan African remittance market is about $20 billion annually, so it only makes sense for more tech-smart businessmen to tap into this.

The lack of any cost-effective traditional money transfer service has also played a part in the creation of this financial back-channel. Africans in the diaspora can buy (or send) a wide variety of goods and services including; airtime minutes, flowers, cakes, school fees, shopping vouchers, etc… the list goes on.

Below are a couple of these websites and their respective country:

iCare – Uganda
iCare - Uganda online shopping

Happysend – Cameroon
Happysend - Cameroon online shopping

Akyedie – Ghana
Akyedie - Ghanaian online shopping

MamaMikes – Kenya
MamaMikes - Kenyan online shopping

Zimbuyer – Zimbabwe

I’m sure there will be more innovation and interesting sites building out in this place throughout the continent. In fact, I’m sure I’ve missed a great deal of the sites that are already out there. If there is a site that you think I have missed, add it to the comment area below.