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Where Africa and Technology Collide!

Tag: sms (page 3 of 3)

Local Software for Local Needs

I happened to be in Nairobi for the first Skunkworks organized conference on local-grown mobile, web and desktop software – setup by Alex Gakuru. It’s a mixture of demos, with a scattering of talks by high-level sponsors and the Permanent Secretary of Information Dr. Ndemo.

Skunkworks@Innovate conference in Kenya

Tulipe – An African Payment System

Kenneth Mwangi just gave a presentation on his new web and mobile payment application called Tulipe, which means “let’s pay” in Swahili. It’s most similar to PayPal in how it is setup, where you signup to use it on the web, and then can start using mobile phones for payment after the account is set up.

Kenneth is in is final year at Strathmore University, well known for their tech programs, and this is his final project. The prototype is still being built, but it has a lot of potential. This is one of those ideas that a savvy business investor should jump on.

Tulipe - Kenyan payment application

TimeTabler – School Scheduling Application

Bonn Ndegwa is part of a company called Unwired Technologies, based out of Western Kenya, that works on what we call “tropically tolerant software”. In other words, they create desktop applications that work in rural, unconnected Africa on old computers. It’s a perfect example of Africans developing software for their own needs, instead of just importing solutions created for a different world.

TimeTabler

TimeTabler has a specific niche, they focus on serving the needs of schools putting together their schedules for both classes and teachers. It doesn’t sound that exciting, but it is if you’re a headmaster that used to spend a week trying to do what now takes only an hour with TimeTabler. It’s simple, working off of an Access database, but it works – and that’s all that matters.

Reasonably priced, they have 3 pricing levels, with a one-time cost of:

  • Primary schools – 9,000 ($125)
  • Secondary schools – 19,000/= ($250)
  • Universities – 90,000/= ($1250)

Kikwe – Send Airtime Across Africa

Sam Kitanye and Victor Murage are talking about the Kikwe application that allows you to send airtime anywhere in the world (not just Africa). They use electronic inventory, so they bypass the need of keeping physical voucher inventory, which is very useful when you think about times when the shops run out.

Scalable to any network, because you’re sending a pin number – if you tried to do this by keeping an account, SIM card or modem, that wouldn’t work. The airtime is sent instantly.

Fraud is always a problem with these kinds of international transactions – especially when you’re dealing with airtime in Africa as it has become its own pseudo-currency. Victor talks about the ways they are tracking fraudulent activity, but past experience in this space reminds me of how difficult it is, made even harder as their product is instant.

This is a good business idea for making money from the diaspora, assuming you can manage the fraud. However, the achilles heel for use within Africa is (again) the lack of local payment systems to actually create the transaction. Hopefully they’ll get together with Kenneth of Tulipe (above) and figure something out.

Jahazi – Local Kenyan Internet Content

Mugambi is giving a review of the newer version of Jahazi (which I reviewed in it’s earlier stages). One place where you can get all your local information for Kenya. Mixing things, including email, news reader, SMS and local internet content.

It’s another good example of home-grown software made for local markets, challenges and content.

What Twitter’s Global Failure Means for Africa

Biz Stone let the world know that Twitter’s SMS service is no longer active in Africa – or anywhere outside of the US, Canada and India. To most people in Africa this means absolutely nothing, as the penetration rate for the service never moved beyond the few fringe users amongst the technology elite.

Why this is Important

I’m guessing that at least half of this blog’s readers are wondering why they should even care about this news. After all, it sounds like some new trendy mobile/web app has failed to expand outside of North America – how is that news for Africa?

Twitter represents a change in communication. By acting as a global gateway for updates via SMS (or the web), that then updates all of your followers, Twitter succeeded in breaking ground in one-to-many messaging. There have been a couple times over the past year where Twitter was used in Africa to get news out that wasn’t possible in any other format.

Two examples come to mind, specifically addressing humanitarian uses; first, there’s the case of it being used in Egypt to help a jailed user, and second was when Juliana used it during the Kenyan post-election violence to update about events in Western Kenya in lieu of a blog post.

Soyapi wrote a post a couple months back talking about the potential for Twitter in Africa. In areas like Africa where mobile phone penetration far outstrips internet penetration, Twitter ends up being an incredibly good way to update friends, family – or in the case of businesses and government, the general public – about things that are happening.

“Realizing that a lot of people in the developing world have migrated from their home villages to cities both within and outside their countries and continents, they still need to some updates about the goings-on in their home towns.”

What’s Next?

In our globally connected world, if your service can’t cover the globe, then you need to open it up for communication between similar services. What we really need is a platform that allows Twitter-like applications to “talk” to each other globally. If I set up a similar platform in West Africa then there should be a way for Twitter users in the US to also accept my updates. Closed gardens in this case create single points of failure. (I’m interested in the less restrictive Identi.ca platform.)

This global contraction by Twitter creates opportunities for others. Jaiku, recently purchased by Google, now has the ability to grow deeper into other regional markets. And, if nothing else, Twitter has done us all a favor by launching a global pilot project that proves out the usefulness of this type of service. Launching country- or region-specific clones of this same type of service is now a real option.

2007 African Mobile Phone Statistics

Africa Telcom News has released a free report, called the African Mobile Factbook, that gives all of the major numbers on subscribers, penetration rates, profitability and growth potential for every African carrier and country. As anyone who is tries to do research in this space knows, it can be difficult to get some of these mobile phone statistics for Africa, so this is a welcome source for information.

Interesting Facts

  • Nigeria, South Africa and Egypt are the fastest growing markets
  • Africa has become the fastest growing mobile market in the world with mobile penetration in the region ranging from 100% to 30%
  • Pre-paid subscriptions account for nearly 95 percent of total mobile subscriptions in the region
  • Most of the mobile operators are home-grown. In 2005, the continent’s seven largest investors controlled 53% of the African mobile market
  • Across most of Africa, SMS is likely to be the only non-voice value-added service to gain mass market popularity in the immediate future
  • East Africans pay taxes of between 25% and 30% on mobile phone services, compared with an average of 17% across Africa
  • African states with less than 600,000 subscribers and includes Burundi, Cape Verde, Central African Republic, Comoros (Union of the), Djibouti, Equitorial Guinea, Eritrea, Gambia (The), Lesotho, Liberia, Mayotte, Sao Tome and Principe, Seychelles, Somalia, Swaziland and Rwanda.

Subscriber Numbers and Penetration Rates

At the end of 2007 there were 280.7 million mobile phone subscribers in Africa, representing a penetration rate of 30.4%. The chart below shows the historical numbers up until 2007, with projected growth and penetration rates through 2012.

Even more interesting, when you look at the major African markets, is to see the huge growth potential for areas that are already very profitable. As can be seen Nigeria, Kenya and Egypt have the greatest growth potential.

Africa’s Mobile Phone Operators (carriers)

There are (or will be) a staggering 11 mobile phone operators in Nigeria, with 4 in Kenya and South Africa, and 3 in egypt and Morocco.

“MTN dominates the African market with over 73.9 million subscribers in the region as of 4Q 2007 followed by Vodacom (33.4 million), Orascom (32.4 million), Zain (30.6 million) and Orange (27.7 million), respectively.”

Size doesn’t mean everything though, Millicom has the highest growth in revenues, and Orascom has the highest EBITDA margin, primarily due to its strategy of investing in the emerging mobile markets.

The chart below shows five of the leading mobile network operators in Africa in terms of their subscriber base (size of the bubble), revenue growth rate and EBITDA margin for the latest completed financial year.

In Summary

The growth rate in Africa over the last couple of years has been phenomenal, and will likely continue for the next 3-5 years. Major drivers of increased growth include:

  • Subsidization of handsets
  • Pre-paid offerings
  • Continued liberalization of the telcom sector
  • Low penetration rates
  • Expected uptake of 3G services

Growth inhibitors include:

  • Taxation – especially in East Africa
  • Low income across the continent hampers growth
  • Widespread illiteracy decreases the growth of value added services, even SMS
  • Unreliable electricity supplies
  • Corruption

I’m curious to see the uptake of both data services (3G and EDGE) as well as the increased number of low-cost handsets. Just yesterday I read a report of a Malaysian company setting up a mobile phone manufacturing plant in Mozambique, so there very well might be some super low-end phones available soon.

Thoughts on Ecommerce Problems in Africa

Recently, I’ve noticed a sudden buzz about ecommerce in Kenya. Brian Longwe talks about the beginnings of this with Mpesa, emails are bouncing around between companies I know, and last week I spent a morning listening in to what the Kenya ICT Board and Federation had to say about it.

Mobile Phone with Money in Kenya

Let me start with the Kenya ICT Board. The meeting was basically about legislation and the fact that ecommerce would be good for Kenya. Of course it is, anything that lowers transaction costs for both buyers and sellers greases the wheels of commerce and increases the amount of trade across all industries and sectors. That’s a given.

But how? See, that’s the big sticking point that I’ve been banging my head against the wall over for 2 years now. It’s not enough that you can buy and sell with a Visa or Mastercard in Kenya. As long as you continue to ignore the wananchi (average person), then you’ll only help the wealthy and not see the real gains and advantages of a level playing field.

Which brings me to Brian talking about Mpesa, the mobile phone payment system in Kenya. For, in Mpesa, we have the beginnings of a payment system that can be used by everyone. He’s right about that. What’s wrong is that it’s mobile phone carrier dependent (Safaricom).

What we need is a carrier and bank agnostic ecommerce platform for Africa. Why?

Let’s go back to our “average person” again and talk about banks. They are generally unbanked (thus the use of Mpesa), or if they are, they have only a couple thousand shillings (less than $100) in the bank. The transaction costs for them having to keep their money in these aging institutions is often impractical. They have no, or very limited, opportunities to borrow money and they have no realistic way of getting any type of credit.

So, as can be seen, tying money, credit and debt to banks is not practical.

Now, let’s talk about why it needs to be carrier agnostic. This is even easier to understand. In Kenya there are two carriers; Safaricom (Mpesa) and Celtel (me2u). By the end of the year, there will be four. The barriers to use of a system that relies on one carrier is as ridiculous as requiring any payment system on the web to only go through one ISP. Sure, it makes sense if you’re that company to control that monopoly, but it’s bad for everyone else.

What does this mean then? Where do we go from here?

The upsides of a carrier and bank agnostic payment system is high. Not only would a system like this be used for the obvious domestic transactions (Kenya-to-Kenya) and external transactions (Kenya-to-world), but all of the sudden we have the ability to create real micro-loans and a new system to create credit scores for unbanked people over time. That’s wealth building, and it would transform Kenya.

Well, first off, let those who have the funds to do so, start building the right type of payment gateway. Start in Kenya and grow regionally, then continent-wide. It’s a semi-heavy investment (relative to who you are of course), but the return is absolutely insane. In fact, it’s ridiculous that after this long no one has done anything beyond build monopolies in this space.

[Note: My first post on this from 2 years ago]

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