Switching on: Africa's vast new tech opportunity
By Pete Guest12 July 11Comments 5This article was taken from the August 2011 issue of Wired magazine. Be the first to read Wired's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online.
In 2011, visitors to Africa looking for war, famine and pestilence have to dig a lot deeper than in the past. At Nairobi's Jomo Kenyatta International Airport, hardened missionaries have been replaced by gap-year students clustered around iPads, and on the streets the bad old days have given way to another holy trinity: Premier League football, Toyota Hiace minibuses and cellphones.
Africa's national economies have grown consistently over the last decade. Even in the depths of the financial crisis, GDP growth exceeded three percent: more than in any other region of the world. Improvements in security, Chinese investments and soaring commodity prices have all played a part in transforming the continent's prospects.
Beyond macroeconomic factors, though, technology is driving profound changes to economies and societies across the continent. The hundreds of millions of mobile handsets and billions of airtime minutes only go some way to describe the scope of entrepreneurship that underpins Africa's technological revolution. From mobile payments to telemedicine and advertising, there is a common pulse of innovation, driven by an irrepressible combination of aspiration and necessity. This is the new Africa.
How popular are mobile phones in Kenya?
Just ask the hordes of airtime vendors working Nairobi's gridlocked traffic, selling scratchcards from garlands around their necks. The country has a population of 40 million. At the turn of the century, the number of mobile-phone users was around 200,000. There are now 22 million.
The devices have supplanted not just the country's fixed-line telephony industry, but also the manner in which money is spent. Companies led by Vodafone's mobile-payments giant M-PESA have filled the vacuum left by the moribund local banks in a country in which, according to the World Bank, around half the population live under the $1.25 (77p)-per-day poverty line. One such company is PesaPal, a web-and mobile-payment platform set up by Agosta Liko, 35, that integrates with Kenya's main mobile-payment services.
M-PESA (M for mobile; "pesa" is Swahili for money) emerged from a joint project between the UK's Department for International Development and local operator Safaricom. Its model was to use the existing network of mobile-credit sellers that had sprung up in petrol stations, general stores and bars across the country. People were already exchanging airtime as a way of transferring money. M-PESA formalised the value exchange, turning thousands of sales agents into micro bank branches and millions of mobile phones into wire-transfer services. Users can store up to 50,000 shillings (£350) in their account, with Safaricom taking a transaction fee of between 30 and 150 shillings whenever a user sends money. In 2010 there were 9.5 million M-PESA accounts, compared to 8 million traditional bank accounts in Kenya.
A 2010 Massachusetts Institute of Technology report said that 75 percent of all households with an M-PESA account used the service to store money. Its success has opened the door to an economy that is no longer entirely cash-based, sparking a wave of innovation from local technology entrepreneurs such as Agosta Liko.
When M-PESA was emerging, Liko was in the US, working on payments, wire transfers, fraud management and loans processing as a systems engineer at First Citizens' Bank in Raleigh, North Carolina. In 2007 he took this experience home to Kenya to found Verviant, a software-services business. Here he saw that the emergent mobile-payments industry chain was missing a link. "Mobile payments are for transferring money to your grandmother or your children," he says. "There was no world class payment system targeted at consumers. There are two million Visa-card accounts versus more than 16 million mobile-money accounts, so we built a solution that would allow any Kenyan to pay using mobile money and also allow Kenyan businesses to accept Visa payments from abroad."
PesaPal aims to bridge the gap between mobile accounts and company bank accounts, in the process breaking down a major barrier in the development of ecommerce. It is already partnering with Zuku, the fastest-growing ISP in Kenya, as well as the Nairobi Stock Exchange, where the public can buy stock information using mobile credit, and, he hopes, trade stocks directly.
"Right now, Kenyans pay to pay, or pay to make payments. We want to do away with this."
If anyone qualifies as a grandee of Kenya's online ecosystem it is Joe Mucheru. Like many of his generation of entrepreneurs, Mucheru, 42, returned to his homeland after a stint working abroad -- in his case, the UK -- attracted by the untapped potential of the internet in east Africa.
"When I got my first installation of Netscape [in 1997] it came on a floppy disk with Netscape 1.0. It cost $1,000 [£620] for the installation, and the installer then went off with the floppy disk," says Mucheru, now regional lead for sub-Saharan Africa at Google and office lead for East Africa at Google Kenya. There was government resistance, too. Much of the industry was still nationalised and there was unease over the proliferation of communication technology. "The president had banned fax machines; there was this whole idea that information being spread by faxes was dangerous," Mucheru says. "[President Daniel arap] Moi had put out a decree that there was no email in government."
In 1998 a new telecommunications act broke up the state monopoly over the sector and an infrastructure started to develop. The state-owned internet service provider Jambonet began to expand its coverage and lowered prices. "But sometimes there were seven-day timeouts when Jambonet was down," Mucheru says. "The whole country had to wait for the internet."
Mucheru, together with Njeri Rionge, launched Wananchi, which means "citizen" in Swahili. An internet service provider, the company pioneered "triple play" -- TV, internet and telephone services -- in Kenya. Business grew as the telecoms sector began signing distribution deals with international broadcasters to feed the local appetite for European football. (Last August the group signed a merger deal with Mitsumi Cable Vision and rebranded as Zuku.)
In June 2007 Mucheru joined Google as head of its new Africa operation. At the time, the company was unsure of its strategy; it just knew that there was potential in the huge concentration of local 15- to 25-year-olds with an appetite for information. With Google's muscle behind him, Mucheru is working to remove the remaining constraints to the sector's development -- access and content. Bandwidth prices may have fallen in Africa, but the cost to the consumer has not fallen in step as operators have been slow to update pricing structures or roll out wireless networks and 3G services.
Mucheru hopes African businesses and individuals can become content creators. To "seed the market" for content growth, Google launched classified platform Google Trader on to the web in 2009. "You have to have sufficient content that people can actually monetise it and be able to do the advertising and so on," he says. "Right now the world average is one domain for 90 people. In Africa it's one domain for 10,000 people."
Having led the development of mobile strategies in Africa for brands such as MTV and Google, 33-year-old Isis Nyong'o is aware of the huge change technology is bringing. Her current employer InMobi is a mobile advertising company that, with more than 100 billion mobile-ad views to date, rivals Google's AdMob for leadership in the space. Her mission: to scour Africa for media partners who can provide content InMobi can sell through.
In 2005 Nyongo joined MTV Africa for its launch, where she led its marketing expansion. It was here that she was exposed to the rapid uptake of mobile services on the continent. At the time, however, data services were embryonic -- SMS was very much the main medium. "I had to build the Africa business in terms of sales," she says. "A lot of what we offered included mobile -- SMS-related interactive campaigns linked to shows and original programming. It was pretty evident, looking at the youth market at the time, how relevant mobile was."
In 2008 Nyong'o joined Joe Mucheru's team at Google's Nairobi office to help develop its content strategy. "The markets change really rapidly. It was just two years ago that we were focused on SMS [with Google Trader]. We did a lot of prototyping work with local operator MTN Uganda, and through that we started to see the demand for a desktop service as well as a mobile app service," she says.
Nyong'o was effectively Google's head dealmaker in Africa, reaching out to mobile companies and other potential partners as the company tried to expand and better define what it was going to do in the market. A priority was to find ways of seeding the content that the company would eventually index. That experience convinced her that mobile media could generate cash and led her to join InMobi in February as the company's managing director and vice president of Africa. "The role an ad network plays in the ecosystem is an important one," she says. "It will give you at least one way to monetise - that's the role we play in the ecosystem."
Saheed Adepoju and Anibe Agamah met at secondary school. It was there that they were taught to code in the general-purpose C and assembly languages for computers, and where they first talked about going into business together. Within a year they had a name for their company: Decipher. They have remained together since, working for the same software company after graduating in maths (Adepoju) and computer science (Agamah). When Adepoju went to the UK to study advanced computing at Bournemouth University, Agamah went to London to learn technology management. And it was in Britain that they founded their company. Decipher had already been registered, so they settled on Encipher.
Adepoju returned to Nigeria in 2009, looking to develop management software for local businesses. This proved fruitless, but once the iPad launched in April 2010, the pair saw their future in tablet computing and began working on apps using Google's Android software.
But they hit an obstacle. "There wasn't a platform where you could test those applications here in Nigeria," Adepoju says. So they built their own: the seven-inch Inye tablet. The early version, which will retail at $300 (£185) -- less than half the local price of a Galaxy Tab or iPad -- can connect to the internet using a dongle as well as through Wi-Fi connection -- a more attractive option for Nigerians, Adepoju says. The iPad and its competitors are configured for markets with blanket Wi-Fi, but in Nigeria such hotspots are rare.
Once internal testing of the Inye is finished, Encipher will give Africa's marketleading mobile-telephony company MTN a demonstration. The company would be a major distribution platform for the product and a personal milestone for Adepoju and Agamah, putting their work in shops alongside international brands.
Beyond its functionality, the founders hope that the Inye's local origins will give it an edge on rival brands. As developers, the pair feel that they can tailor the mix of apps on the device to appeal to Nigerian users. An example of one of their more successful local apps is Gold SMS, which plays to the local fondness for bulk messaging by enabling users to do so online through a simple interface. They have also been working on local-language services, including a product that helps health workers to identify and explain symptoms in local languages.
"Providing [those apps] would boost our hardware," Adepoju says. "Besides, relevant apps we build will run on [telco] Huawei's platform as well. So it is still good they are around. We just get those owners to get our apps on their tablet."
This year the company sent out an April Fools' Day press release stating that it had been acquired by Google. A month later Adepoju unveiled the Inye-2 at Google Day Nigeria and met with the company's regional leadership who were, he says, "stunned by the boldness" of Encipher's business. He hopes the time will soon come where a multinational's interest is not so far-fetched as to be a joke.
In a few short years, Bright Simons has moved from local activism to international recognition with a company that aims to ensure safe access to medicines throughout the developing world.
In 2009 the UN Office on Drugs and Crime estimated that around 45 million courses of fake anti-malarial treatments -- principally from Asia, and potentially toxic or dangerously ineffective -- were sold into West Africa in 2008. The World Health Organisation has estimated that up to 20 percent of malaria deaths worldwide result from these fakes, and that adulterated courses increase the possibility of resistant strains of disease developing.
Simons's company mPedigree works with pharmaceutical companies to ensure consumers know that drugs are safe. Each package includes a scratch-off panel concealing a unique code which consumers send to a toll-free number. If genuine, a confirmation text is sent back almost instantly. The company earns revenue through licensing these validation codes.
In 2005 Simons lived in London, helping migrants negotiate government bureaucracy, a job that left him "demoralised". The following year he was living between Ghana and London, working for a company that used mobile-phone networks to reduce the cost of organic and Fairtrade certification for local small-scale farmers. "I thought mobile was good because there was infrastructure," he says.
He eventually set his sights on the pharmaceutical trade. "The beautiful thing was that, with pharmaceuticals, we would be working with people who had some money and we wouldn't have to pre-invest in the beneficiary," he says.
To ensure his service would be available free of charge to all Ghanaians, Simons had to strike deals with every telco in Ghana to convince them to work not just with mPedigree but with each other to create a single toll-free number across all networks. "And then we did what we do best: we did advocacy, we did publicity, and, as people started to hear about it, it started to grow," Simons says.
Since then, mPedigree has continued its growth, working with government bodies and pharmaceutical manufacturers in Nigeria, Kenya and Uganda. It has closed deals to protect six million packs of antimalarials, amebicides, anti-inflammatory agents, oral care products and nutritional supplements, and has discussions and trials going on across Africa and south Asia. "We haven't convinced all the pharmaceutical companies," he says. "But we've got to a stage where there are enough who see the value of the service as a differentiator in the market."
Stefan Magdalinski has a talent for sniffing out opportunities. Six years after founding and establishing local business listing site UpMyStreet during the 1998 dotcom boom, he worked with Richard Moross to create moo.com, which allowed customers to take images from Flickr and print them on business cards. Now, the 39-year-old British entrepreneur has gone back to the listings game -- albeit in a different context.
Two years ago he left London with a high profile -- "Last time I went to Number 10, Tony was in" -- for a career in Africa. He moved to Cape Town to run a portfolio of businesses for international media group MIH. The companies include Kalahari, an ecommerce retailer in Kenya and Nigeria; Dealfish, an online classified-ad platform; and Mocality, a business directory under development in Kenya.
Apart from two days of interviews and a two-week holiday in Tunisia, it was Magdalinski's first venture in the continent. He had no preconceptions, besides a scepticism over the accuracy of what he calls the "BBC view" of Africa: famine, war and poverty. "I just didn't believe it could be true. And you go there and, lo and behold, it's not true," he says. What he did find, however, was a momentum which reminded him of the early days of ecommerce in the UK.
"In the mid-90s, I was working at a company where the first time we saw the internet mentioned in a national newspaper, we cut it out and stuck it on the wall. Africa feels a little bit like that," he says. "You look at Kenya and Nigeria, and the number of internet users is doubling every year. It's at that point in the curve where it's just incredibly exciting. People are doing really transformative things."
Magdalinski points out that a lack of local content is as much an opportunity as a challenge. "The reason we built the [Mocality] database from the ground up was because there just wasn't a database of small businesses. You couldn't just go and buy it. We've since signed up 100,000 businesses, of which about two-thirds had no other presence on the internet. I'm proud of the fact that we've put 65,000 businesses online for the first time."
Thursday 14 July 2011
Switching on: Africa's vast new tech opportunity (Wired UK)
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