WhiteAfrican – Page 32 – Where Africa and Technology Collide!

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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]

Nigeria – W.Afri.Tel 2009

June 4, 2009 / HASH / Comments Off

Interactive Marketing in Africa

June 4, 2009 / HASH / 13 Comments

Last week I had the opportunity to sit down with two people that I have a lot of respect for in the interactive marketing space in Africa. First was Rob Stokes, CEO of the well known Quirk marketing firm in South Africa. Later in the week I got to catch up with Joshua Wanyama of Pamoja Media.

Before I get into that though, you should take a look at these numbers.

Africa’s exploding internet growth

Currently, Africa is the second fastest growing internet market after it was passed with the Middle East in terms of connectivity. The growth rate is 1,100% with only 5.6% of Africaâ€™s 975 million people online.

The 10 largest internet markets in Africa are seen below. These 10 countries account for a staggering 86% of the 54.2 million Africans online:

1. Egypt â€“ 10.5 million
2. Nigeria â€“ 10 million
3. Morocco â€“ 6.6 million
4. South Africa â€“ 4.6 million
5. Algeria â€“ 3.5 million
6. Sudan â€“ 3.5 million
7. Kenya â€“ 3 million
8. Tunisia – 2.8 million
9. Zimbabwe â€“ 1.4 million
10. Ghana â€“ 0.9 million

(Research number are from the Internet World Stats)

Education and Charlatans

Quirk is successful, and they’re looking to expand into other parts of Africa. However, one of the hurdles that they face is that there just aren’t that many people who understand why web marketing is needed, and that there is a need for a real strategy behind everything from your website to links to emails. It’s a problem of education in the business sector, and it comes with two problems.

First, low-bandwidth has caused most internet usage to be lower than normal in Africa. So, a lot of businesses don’t recognize the value of good web marketing, since most of the executives never get online to see their work anyway. For instance, think about the tourism industry in Africa, it is plagued with slow, ugly and hard to find websites. Most of them don’t even realize the business they’re missing out on.

Second, there are any number of people who will tell you that they can do your internet marketing or help with your online strategy and execute upon it. However, that’s simply not true for many claimants. There are likely only a handful of real experts in online marketing in any sub-Saharan African country. In Kenya alone, I can only think of a couple firms or individuals who really know what they’re talking about, and even fewer who can execute upon what they speak.

So, Rob has a challenge in addressing this market in Africa. It’s a big market if it can be cracked, but it takes more than just sales skills, it takes someone with the patience to educate and grow an industry.

Redefining yourself for the market

Joshua Wanyama found himself in a bind. He had just moved back to Kenya after growing a successful web firm in the US. Now he wanted to put Pamoja Media on the map in Africa, and he realized quite quickly that there was a major knowledge-gap in the interactive marketing space. How could he sell the connections that his ad network gave him if the very people he was selling to didn’t have an online strategy at all?

This realization caused him to change his strategic direction of the Kenyan operations to gain a customers. He changed it from being just about his ad network, and added on 5 more areas of expertise that would really give his clients positive returns:

Interactive strategy â€“ how to scale a companyâ€™s operations and marketing online
Creative Development â€“ Interactive ads, landing pages, enewsletters & micro sites
Placement â€“ We run ads on the Pamoja Media Network, Yahoo, Google and Facebook network of sites
Social Media Marketing â€“ This works for clients seeking long term social engagement with customers. We handle blogging, Facebook, Twitter, YouTube, Flickr and other accounts for such clients
Online PR â€“ We also handle online PR for companies seeking to grow their reputations outside of advertising African Market online

It’s a lot of work to sell yourself into new accounts and then keep up with the demands of high profile clients. I know, I’ve been there. I know Joshua, and I know he’ll be successful with this.

What I also know is this, it’s terribly hard to scale a service organization. It takes more people. My hope is that Pamoja Media will be able to gather enough clients in the ad network space so that that remains the core business. This can scale, and it can be done efficiently.

Ken Njoroge of Cellulant

May 31, 2009 / HASH / 13 Comments

“The greatest number of merchants and retail customers will be reached over mobile operators, not banks.”
– Ken Njoroge

Ken Njoroge is a homegrown Kenyan technology entrepreneur. One of the original founders of one of Kenya’s top digital agencies, 3Mice, he moved on to co-found Cellulant, which has been doing some great work all over East Africa and is now active in 9 countries in Africa (Kenya, Tanzania, South-Africa, Ghana, Rwanda, Botswana, Zambia & Ethiopia).

Cellulant started in this space 5 years ago, they began by selling music via mobile devices, but really got active in banking about 3 years ago as a customer trying to make things work for their buyers. It came down to this question: How could their customers pay directly via their mobile phone? Their problems were around usability and no one yet had a successful business case for this issue. This is still true within the banking space.

Bridging the banking and mobile operator divide

Cellulant are privileged to meet in the board rooms of banks and mobile operators. They hear first-hand the issues that are being discussed, and the build solutions for thOn the mobile operator’s side they are most closely aligned with Zain, creating a lot of third-party applications for them.

The 4 Pillars

Ken spoke about the 4 pillars of the mobile payments space, briefly covering banks and operators, but then delving deeper into what he considers the really big prize at the end of the day: merchants and retail consumers. (I agree, it’s the long-tail and it once tapped it will have an extraordinary impact on the economy)

Banks
They provide technology solutions that extend banks into mobile banking, and use mobiles as a channel to provide their services. The banks and the mobile operators are coming from different business models. The regulatory area needs to be looked at quite keenly because both are large and have a big impact.

Mobile operators
They have been the most innovative and a true success story in Africa.

Consumers
They have become increasingly sophisticated. They thought the low-hanging fruit was going to be urban young adults. However, they found out it was rural users, usually older in aged(!). “The consumer tends to be ahead of the technology – even us as an agile young company, we are trying to keep up with our customers.”

Merchants
These are the people and business entities looking to provide services and get paid in this ecosystem. This ranges from the big power and water organizations who use mobile phone payments for millions, but it’s also the video store across the street who has 2000 customers that needs payment solutions too (the long tail). We have to find solutions for these types of smaller merchant-customers.

Kenya – M-Banking 2009: Balancing Innovation and Regulation

May 25, 2009 / HASH / 3 Comments

Volume vs Value in Mobile Payment Systems

May 25, 2009 / HASH / 11 Comments

Bankers are not well known for giving riveting talks. However, Stephen Mwaura Nduati gave a surprisingly interesting one here at the Mobile Banking conference just outside Nairobi. He’s in charge of “Payment Systems” at the Central Bank of Kenya – a regulator.

He made the case for why regulation is needed, and what risks are naturally inherent within payment systems. Not just mobile payments, but all systems.

What I was most interested in was his slides giving out some data on the payment system space within Kenya. It’s really quite revealing on what the motives are, and why they’re there, for the Central Bank and policy makers.

Kenya’s payment system timeline

You can see where Mpesa and Zap came into the timeline for payment systems in Kenya, but you can also see that it’s quite clear that the Central Bank of Kenya (CBK) thinks of many things beyond mobile payments.

Kenya National Payment System Modernization Framework

Low vs high volumes

Mobile payments are all the rage, clearly shown in the graph below. However, the amount of money flowing through the system from this is negligible compared to the other types of payments. There is a large difference between high volume systems versus where a lot of money flows, but with fewer transactions.

Monthly transactions in Kenya payment systems by type

Current payment system flows

Low volume, high value. These are what the CBK care about. Taking a look at the following two slides, you can see that though mobile payments and ATMs are what everyone talks about, what the bank really cares about making sure that the real time gross settlement (RTGS) system stays on the tracks.

Kenyas current payment systems flows

Average daily values for Kenyan Payment Systems

Talking Mobile Banking in Kenya

May 25, 2009 / HASH / 9 Comments

I’m attending the Fletcher mBanking conference in Nairobi today and tomorrow. Right now I’m sitting in the panel on “Perspectives on Mobile and Branchless Financial Services”. It’s quite a panel with, among others, Michael Joseph of Safaricom (of Mpesa fame), Adan Mohamed of Barclays Bank, David Proteous of Bankable Frontier Associates.

mbanking-kenya1

Points from the Panelists

David Porteous
He challenges Kenya to create a Kenyan model, not just of one-off success stories, but a Kenyan one that is open and usable by multiple actors in the country, not just one or two. Something that can be duplicated and used around the world. Lastly, he warns of “Regulator Flu”, much like Swine Flu it sweeps around the world and stifles innovation.

Adan Mohamed of Barclays
Adan starts with this provocative statement, “We will never have an environment where we have no branches.” He says it is ingrained in our psyche to use branches, and we will always need branches, so this idea of a branchless banking system is nice, but will run concurrently with the old status quo system. The use of technology continues to be small, it’s patchy, it’s mixed. There’s a long way to go, as people are nervous of what goes on behind this internet system.

Specific challenges revolve around regulation. For instance, if you want to run it 24/7, you have to get permission, you have to deal with money laundering rules, etc… He thinks that the central bank needs to be given a greater mandate. However, we need to see this space not revert back to the old ways, even as more control is given.

Customer contact tends to be low in a branchless system. He thinks this is a place where people want to be in touch and face-to-face with people. A lot of focus has so far been on the payment side of the occasion – we need to focus on the savings side of the equation as well.

Mark Pickens of CGAP
What we have today, is not necessarily what things will look like in the future, “what could disrupt the current landscape?” Mobile network operators are leading the charge. We think there will be 120+ initiatives like Mpesa in the next year around the world.

What is driving this for the mobile operators?

2.93B shillings from Mpesa of revenue
Increases in loyalty
Increases in users
Globally think there is 1b ppl with a mobile phone but no bank account

Where else could innovation come from?
What if the kinds of technology that poor people had in their hand changed dramatically? If the phones that people had in their hands could browse the internet. Not smart phones, but sub $100 phones for this.

Why would this matter?
GPRS and EDGE are dramatically cheaper than SMS (75x cheaper)
Mobile operators and banks would not own the customer due to owning the infrastructure. Anyone could reach out and find customers directly. The incumbents wouldn’t be as privelaged.
Localized creation of tools

3 main points:
Regulation. Particularly openness for non-banks to operate. Would there be a regulatory framework where this could be open for others to access and bes safe operating within? If we think that banking infrastructure needs to be openly accessible, then what is needed in the openness of mobile infrastructure?

Agents. The preponderance of Mpesa agents make a profit of $5/day. If there is limited capital in these dukas and agents, then how will he get liquidity to do it for anyone else? Maybe it can be done by extending lines of credit to the agents.

Consumers. The next round of innovation is beyond payments, but to use the wallet to store value. Who are the players that can provide this service on a safe basis? Paying for products directly would cut the cost for agents directly, and it would cut the cost of money within the system to the gov’t (2-3% of GDP). Poor people do have money, and they do save, but they put it at home in a jar, under the matress. What comes next innovation, is that the mobile needs to beat the matress

Peter Rinfretof Iris Wireless
Friction will continue to increase between operators, banks and other institutions like Western Union, etc.

The regulations and regulatory environment will change a lot for everyone. You’ll see regulations in one country that affect other countries. His example is the US is the largest remittance market in the world, and that has huge repercussions to what happens in the other countries around the world. Anti-money laundering rules will become stricter and more difficult for receiving countries to comply.

We’re not talking about a change of habit that is relatively new. This is money, something we’ve been dealing with for millenia. We’re talking about old habits dealing with money, so it will take time and it will evolve slowly. And it has to make sense within the market that you’re in. No two markets will look the same.

Michael Joseph of Safaricom
Mpesa launched in March 2007. It’s surprising to see how fast it’s grown. 19% of the population is banked, but 71% who have access to mobile phones in Kenya. The key success of Mpesa is not just good working technology, but to be successful with it you need to understand distribution. It’s not cheap. It’s not easy to put together an agent network that operates with integrity. “It is not build it and they will come.”

Customer growth is at 6.2 million customers in March of 2009 with over 11,000 new registrations each day. Trends: $1.7B moved in P2P transfers since launch. Average P2P transaction is just under 2500/= shillings ($30).

“This is what worries the banks, that we’re moving all this money around and they’re not getting any fees.” We’re not a competitor to banks, because they couldn’t operate on these small 30/= fee.

Safaricom has 300 staff dedicated to Mpesa. There are now over 10,000 agents. It’s the McDonalds effect” – whenever you are hungry there is a MacDonald’s. For us, whenever you turn around there is an agent.

“It is so important to have a regulator that is willing to take a risk with you.” It took nearly 9 months to convince the regulators in Kenya to allow them to launch Mpesa. We are treading new ground in Kenya, so having a courageous and risk-taking regulator made it possible. For money transfer we need some sort of regulation – a level playing field for others to do this a well. Regulation should facilitate and not frustrate.

“When we look back, money transfer will be the biggest thing that we ever did in the telecommunications world.”

Massive Africa Update on Google Maps

May 21, 2009 / HASH / 20 Comments

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.

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.

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:

The 2009 TED Fellows Video

May 21, 2009 / HASH / 1 Comment

I’ve been fortunate to be part of the TED Fellows program, starting in Tanzania and then this year in California. It is definitely worth applying for, and I know there are going to be quite a few openings for TED India later this year.

(Watch the high-res version here)

Microsoft vs the Open Source Community in Africa

May 17, 2009 / HASH / 19 Comments

Microsoft vs the open source community in Africa

Last week the BBC interviewed Dr. Diarra, the chairman of Microsoft in Africa. One of his quotes was memorable:

â€œAfrica is really the last frontier in not only developing technology that is specific to people’s needs, but eventually even developing new business models that will enable the emergence of local software industries, such as young people who have the skills to be able to write their own applications for their own community,â€

I agree with the first part of that statement, it’s the second part that I find alarming. Coming from Microsoft, how can young people build the skills to write code when they can’t even pay for the closed software needed to run it? It’s not free, and if access (which he states earlier) is the biggest issue facing African technologists – then how does closed software fit into the equation?

Let’s say that the developer communities do emerge even with that hurdle, we’re still left with what one person wrote: “…they will be formed from programmers who are completely dependent on American software for the livelihood: it’s neo-colonialism, pure and simple.” At it’s worst then, African governments are paying for Western products, and are dependent on these large organizations to maintain and support critical systems.

Netzpolitik writes an interesting piece, pointing to a recent WSJ article and talking about how Microsoft positions itself within education and government circles in Africa, thereby cutting off major revenue sources for open source developers and organizations that originate from within the continent.

“Of course, Microsoft does not come for free â€“ the hidden price tag is not just attached to the licensing costs but also to the ownership of innovation and data. Microsoft should be supporting local developments instead of stifling them and dealing with them as competition.”

Monetary and Knowledge Costs

There really are two costs when dealing with software: the expense of buying and maintaining it, and the knowledge cost within the local programming community. The monetary side is a short-term cost relative to the knowledge costs (core competency) that a nation does, or does not, develop over time.

In Africa organizations have a lot of hurdles to overcome, not least of which is the straight cost of doing business. Where it might be simple for some organizations in the US and Europe to wave off a couple thousand dollars worth of licensing fees, the same is not true in Africa. The margins are lower, so every cent counts.

In a region where cost is so important, it’s amazing then that the most lucrative deals go to the Western organizations that have high costs for ownership and maintenance. These outside organizations use backdoor methods to gain contracts where in-country options are available, usually with less expense and with greater local support.

The bigger problem is the knowledge costs, or lack thereof, when closed source organizations muscle into the most lucrative fields. What the country ends up doing is stifling its own programming community. Without money trickling back into that community, its growth is stunted. Instead of young developers learning the fundamentals of coding in open code, they end up going to work in an office that runs proprietary systems.

Ushahidi and Vine

The last year has taught me a great deal about working in the open source space. Not just in developing a tool using these principles, but in helping create a non-profit technology organization focused on open these same fundamentals. That is, we believe that the best use and furtherance of our technology, and our organizations goals, is done with and by the greater community that grows around it. We serve as a focal point from which this community gains energy and to act as a group which is dedicated to the core framework of the tool itself.

Do all situations need and/or require open software? No. In some cases closed-source options are just plain better, which is why I have no problem buying great apps for my PC, Mac or iPhone that make my life easier. I don’t believe that all technology has to be open, though I do think that by keeping it completely closed most companies will be bypassed by their open counterparts in the long run. Good examples of this are the Firefox browser and WordPress blogging platform – possibly Android.

A couple of weeks ago Microsoft announced their new Vine product. It has a lot in common with Ushahidi, including sending and receiving of alerts via SMS and email. To be honest, we have no ownership of this idea, but what we do have is a question as to why Microsoft believes and works to create crisis and emergency systems in a closed way.

Some thoughts from other bloggers on this same issue:

“Crisis reporting is something that wants to be free. It needs to be free, community owned, a service that just exists.”

– Jon Gosier

“There is nothing in Vine that you cannot already do with a combination of Ushahidiâ€™s proximity alerts and the path-breaking SMS based forms updates from FrontlineSMS. Having met with the best and brightest of Microsoft Research, key members of the team behind Vine and the team behind the new version of Sharepoint and Groove, Microsoft have nothing that comes close to the capabilities of FrontlineSMS today with regards to forms based data transfers over SMS in austere conditions, which is precisely what is needed for decision support mechanisms and alerting post-crises.”

– Sanjana Hattotuwa

“The ownership of a crisis reporting system by one company seems unattractive from a consumer as well as a security perspective. It is not unlikely that this will become yet another failed attempt to override instead of collaborate with existing local solutions.”

– Netzpolitik

Unless Microsoft is creating something truly revolutionary, which I don’t see that it is in Vine, then I would rather see them put their development muscle behind something that actually is. It doesn’t even have to be Ushahidi. Finally, if they really are about creating emergency and disaster software for use by normal people, then I would encourage them to not charge for it and to make it as open as possible for others to work with it, including Ushahidi.

[Sidenote: Interestingly enough, the first pre-beta smartphone app that was finished for Ushahidi was the Windows Mobile version. We all chuckled, and then gave a quick dig to the ribs of the devs doing the Android and J2ME apps, to get them going. To us, it didn’t matter that it was the service created for our friendly closed-source giant finished first. In the realm that we find ourselves in, crowdsourcing crisis information, it doesn’t matter what device you use – it just needs to work.]

(Blue Monster image by Hugh MacLeod)