Hurdles of High-Tech Entrepreneurs in Africa

Morris Mbetsa is a 19 year old Kenyan with a lot of good ideas. If that was all, he wouldn’t be that special, however, he actually builds prototypes of his ideas and they end up being quite extraordinary. The first time we covered his “Block and Track” SMS-based vehicle security system on AfriGadget. This time he’s come up with a web application – the “Wakenya” system for tracking Kenyan citizens virtually via mobile and web.

The frustrations of tech entrepreneurship in Africa

Morris and I got together shortly after his first system was created. He shared a couple other ideas beyond that first invention with me.

He had received a lot of attention due to the Kenyan TV coverage, but it hadn’t turned into any real money for him. No one within Kenya was interested, either as a business partner or funder. There were a couple international groups that were trying to angle in on him, but when I spoke to him he didn’t know or trust them. What he had was all the makings of a sad story of inventiveness leading to… nothing.

This is our story in Africa isn’t it? How so?

  • We’re continually fighting to get our own money people interested in what we’re doing. We lack seed capital and no one locally cares.
  • We need business mentors that we can trust, ones that we’re not always worried about being fleeced by overnight. Ones that aren’t just looking out for how they can either steal the idea, the IP or the equity.
  • Lacking any local funding or business partners, we hope that an international funder will notice us.
  • If we’re able to get international attention, the next trick is trying to figure out if any of these people are real, honest or legitimate.

It’s frustrating. Why won’t anyone locally come in and fund an idea? Not just an idea, as in the case of Morris Mbetsa and others like Steve Mutinda, but real prototypes. These are working models. (I could go off on a tangent talking about all of the great software developers in Africa who talk a lot about good ideas but never build them – but that’s another post). No, these kinds of guys actually build the prototype first, then try to find someone to fund it. Basically, they’re doing it the right way.

Does the government have a role?

It should, but only in so much as they create a system which limits the hurdles that entrepreneurs need to overcome to create a business, get funding and bring their ideas to market (not just for tech, but for everything). Private investment should be the lion’s share of this type of growth for the country, but in Morris’ case, he’s created a system for Government, so there should be some government funding for just this type of activity.

In fact, Kenya went so far as to create the ICT Board a couple years ago for this express reason:

“To rapidly and innovatively transform Kenya through promotion of ICT for socio-economic enrichment of our society.”

Here we have a young Kenyan with (many) good ideas and prototypes. He needs some structural support though, and we hope he gets it before the vultures descend. I know Paul Kukubo, Al Kags and a couple others within this group – they’re good people and have big ideas themselves. I know that they’re trying to come up with big structural ways for Kenyans to access ICT services and for Kenya to become an global ICT hub.

My question is this: How will that ever be the case if guys like Morris Mbetsa don’t have the requisite government structures in place to allow them to succeed?

3 groups and food for thought

We have a foundational investment-in-innovation problem in many parts of sub-Saharan Africa. If Kenya is one of the top 5 African hubs for technology, then we know that the rest of the countries are in similar or worse conditions than this. What is it going to take for us to truly setup an ecosystem of entrepreneurship and the structures that support innovation, especially in the tech sphere?

1. Outside investment as catalyst
I’m starting to wonder if it will take a concerted effort by investors in the international space who can inject large amounts of capital into business ideas that have potential. Why international, isn’t local good enough? Normally it would be, but international investment comes with some benefits that local investment doesn’t. As anyone who lives in places like Nairobi knows, almost any money you take locally comes with two problems. First, it’s usually a small amount given for an excessive demand on equity. Second, it comes with political ramifications that tend to compromise the receiver of the funds.

Is what we really need a shakeup? A wake-up call for the local investor to realize that they will miss out on the big ideas and products if they don’t create a local system that allows real innovation to flourish, grow and enrich the inventors.

2. Government mechanisms for entrepreneurs
Outside investment as a catalyst for change in this space is one possible idea, but it’s not enough. As mentioned earlier we also need someone within our highly-bureaucratic government system to create a channel for entrepreneurs and investors to act. This could be accelerated business entity creation, and it would likely include lowering certain licensing terms and restrictions. My guess is it would also mean a structure for low-interest business loans as well.

3. A united technology community
Lastly, we need the technology community itself to band together. This is coming into being in a few countries, places where we have techies networking and creating relationships with business people and government. We’re starting to see when an investor comes into town, people okay with sharing the names of other entrepreneurs that have good ideas, and not trying to just tie that investor down with their own stuff.

While there will always be competition, lets put aside the tendency to pull someone else down when they’ve achieved some modicum of success. Instead, trumpet the small wins and help each other get ahead. Goodwill pays off so much better in the long run.

Finally

You can see this is something that I’ve been thinking about a great deal, and it bothers me to no end. For, if we don’t fix this we’ll continue to have the best and brightest head to other parts of the world – there is no industry where this is easier to do than the digital one. With them goes all the intellectual capital, inspiration and revenue that would further enrich our own continent.

I’m determined to play my part in seeing change happen. I want to see real technology powerhouses grow within Africa – ultimately with African investors and with solutions that will take the world by storm.

[Interesting update on Morris]

Uganda’s Appfrica Labs

Jon Gosier runs Appfrica Labs. He’s been hard at work over the last year promoting technology all over Africa on his blog, and at the same time building a base for the technology incubator Appfrica Labs that he launched late last year with some external funding from European VC firm Kuv Capital. Jon is one of the most capable, energetic and social programmers that I know. He is entrepreneurial, understands the business side of things as well as the nuts and bolts of developing. In short, he’s about the perfect person to put your money behind if you’re going to invest in the African startup tech space.

Appfrica Labs Staff

Innovation in Uganda, by Ugandans, for Uganda

There’s something very powerful about the focus that Jon is applying to Appfrica Labs. I’m sure that there are opportunities and applications that he will incubate that stretch beyond Uganda, but he’s taking a measured approach. There’s enough low-hanging fruit in Uganda for him work on, so he’s starting there.

“The mission is to offer opportunities and work experience for East African software entrepreneurs so that they can then use their talents to bolster the growing local markets by creating their own products and companies. We pick up where local colleges like Makerere University leave off by offering hand-on experience in Java, C++, C#, Ruby on Rails, Django and Python, PHP, Perl, Kannel and various other programming languages that often can’t be taught in-depth in classes due to budget restraints.”

Jon notes that there are over 60,000 Facebook users in Kampala, and instead of creating yet another social network, he has decided to focus a fair bit of early development into this platform. He doesn’t focus on Twitter or other “hot Web 2.0 apps” which aren’t being used there by enough people yet.

Proof is in the development

A good example of this local Uganda focus is the apps and tools that are being developed right now. Here are just a couple examples, and I know first-hand that there are more on the way shortly:

Status.ug – an inexpensive, and efficient, mobile gateway for Ugandans to update Facebook via their mobile phone.

Answer Bird - UgandaAnswer Bird – Uses Facebook Connect to allow questions to be asked and answered in a Twitter-like interface more here).

OhmSMS – Get an SMS when your power is off at home or at the office, simply by keeping a cheap mobile phone plugged into an outlet.

Why this works

Appfrica Labs is not only a great idea, but it’s a blueprint for a new way for technologists to band together and create something in the face of a lot of difficulties in Africa. We all know of the problems faced when trying to get seed capital, or of the lack of traction when trying to sell ideas to the government or big businesses within a country.

What Jon has been able to do is create a brand which others can rally around and push their efforts forward as a collective. It’s about marketing, messaging and communication. He’s made a lot of headway for not just himself, but the other entrepreneurs in Uganda due in no small part to the hard work and late nights put into his blog, creating his own code, and promoting his message at conferences.

We have yet to see the final outcome of all this labor, but it’s an extremely strong start that leaves me optimistic about the future of Appfrica Labs and any other innovation hubs that pop up around Africa. Rebecca Wanjiku is right, Africans should stop whining and work smart, collectively to get new technology built, released and adopted throughout the continent.

iYam.mobi – 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 iYam.mobi, 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.

    Advantages
    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.

    Disadvantages
    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.

    Growth
    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.

Representing African Technology to the World

Vinny Lingham 2007Vinny Lingham has had two big hits in the last couple weeks. Just a week ago, in the midst of this down economy where web apps are dying every day, he managed to pull out a second round of funding for Synthasite worth $20 million. That’s a lot of money in a good economy, in a down one it’s huge.

Today, he was announced as one of the World Economic Forum – Young Global Leaders for this year. The others joining him from the Bay Area include the likes of Zuckerberg (Facebook). There have been others from Africa (full list), and it’s quite a group to be associated with.

Vinny is proving to be a great example of the type of tech entrepreneur that Africa creates. My hope is that he continues to be a resounding success in the global market, thereby bringing more investors and businesses hunting for real investment opportunities, not just looking to give handouts.

Barcamp Nairobi ’08 – Final Recap

Barcamp Nairobi ended up being quite an event, with 228 attendees and an overwhelming amount of good conversations. The list included bloggers, web and mobile developers, government officials and students. We had people from all over Kenya, as well as a couple who came in from Tanzania. It was truly eclectic and exactly what we were hoping it would be. Josiah Mugambi has the full run-down of topics covered in each room.

Pictures
Can be found on Picasa, Flickr and Facebook (you’ll have to friend John Wesonga for the Facebook ones).

Videos
I’m working on uploading a couple videos from Barcamp Nairobi. There were some really good conversations started, not all of which I was able to get on video, or even be in the room for. Hopefully, we’ll get some blog posts and videos from others who were there as well.

I’ll continue uploading additional videos throughout the week on YouTube.

Barcamp Nairobi Bloggers (let me know if I missed you):

O’Reilly Radar
(Programming Languages Survey)
Al Kags (gov’t perspective)
Rob Rooker
The Deeper Meaning of Life (Liz)
John Wesonga
Wilfred Mworia
Josiah Mugambi
Clement “Omesa” Ongera
Peperuka
Frontline Interactive
69mb (poster) (post #2)
Louder than Swahili (post #2)
Startup Africa
Notes from the Road (on Ndemo)
SportsKenya
Tech Talk (NY Times columnist)
Girl in the Meadow
The Gitts Zone
Brian Longwe
Kenyan Poet
Open Source Africa
Do Good Well
Business in Focus
Odyssean
Network World

Steve Mutinda: Brains, Initiative and J2ME Skills

Every once in a while, in this line of work, you get a genuinely welcome and unexpected surprise. That’s what happened the other night when I met up with some local tech guys and a certain Steve Mutinda showed up just happening to mention that he did some J2ME programming. He has created two mobile phone apps (and working on a third), which I’ll review over a couple of posts.

In brief, LiveQuotes let’s you track the Nairobi Stock Exchange (NSE) from your GPRS enabled phone.

The NSE updates their data every time a trade happens, and that information can be downloaded as a CSV. Steve has it setup so that he checks it every minute, allowing you to have near real-time access to the exchange, and a scrolling ticker for your selected portfolio. Want to see how your stock has done over time? No problem, there is a basic line chart showing how your shares have done historically.

Steve started this about 3 months ago, soft-launching it to a few friends as he worked on new features and fixed things up. So far there are 200 users. I would expect that to change soon. 800,000 Kenyans have just bought into the Safaricom IPO was his inspiration, and a good one because it means there are hundreds of thousands of new stock owners in Kenya.

While it’s fee right now, plans are to charge 30/= Kenya Shillings per week ($0.50 cents) per user. Anyone can receive the application through a simple SMS with a link to the URL, and then registering on the spot. Safaricom or Celtel (depending on which carrier the end user has) will act as middleman for transactions, paying Steve on a monthly basis.

A little math will tell you that by getting just 10,000 users he will make about 300,000/= per week ($4,665). $18,000/month is a nice salary by almost anyone’s standards. I’ll be asking for a loan from him soon, I hope.

What else is in the future? Uganda and Tanzania for one, possibly the rest of Africa if things go well. On the technology side, look for some type of API that will allow others to access the same pre-parsed information.

See it in action in the video below:

South African Tech: A Tale of Two Success Stories

There are a number of technology companies from South Africa that have had no small amount of success. I want to take a minute to highlight two of them though, because I think they show something important.

The decision you have to make when deciding to create a technology business, a web or mobile application in Africa, is whether it’s something for the local market or international. Very few companies are solving for both. In my examples you’ll see Mxit, a company solving for a local problem, and Synthasite, a company solving for an international problem.

For those who don’t know, Mxit created a java-enabled chat application for mobile phones that decreases the cost per message compared by ~90% of a normal SMS message. They have over 7.5 million users after just a few years in action, and are the staple communication system for young mobile users in South Africa. It’s a phenomenon, and they’re looking to expand internationally.

Mxit Users in South Africa

Synthasite is the free web site creator and publishing platform, designed and created in the mold of any Web 2.0 app coming out of the Silicon Valley. Vinny, the founder, tells me that they have over 70k users and are increasing that by 1000 each day – which puts them as one of the top 3 services like this in the world. They have just moved 1/3 of their operations to San Francisco, with 2/3 of the company still in Cape Town.

Synthasite

Both of these companies had completely different strategies: local and global. These companies serve to prove that any developer in Africa with a good idea that solves a problem, and has the drive to see it through, can be incredibly successful. It’s inspiring, and I hope that more of Africa’s web developers will see the opportunities all around them.

[Image courtesy of Rafiq via Flickr]