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17:31

Startup Funding in Africa- Let’s take a step back & talk Market Efficiency

Over the last few days… Actually it seems like forever- The web has been full of articles about how Africa needs startup funding. Almost everyday now I see some article about it. As a general rule when you hear the same thing over and over again- you should start to ask why? I have written about what I think on this topic prior. Here is are summary of my points:

And one that tries to capture a more ecosystem approach beyond just the funding piece.

Rather than keep stating the problem, we should ask why it exists and if it really does exist?

Take this tweet yesterday- “RT @africatechie: Africa: long on opportunity, short on capital bit.ly/L1nlGI on @VC4Africa“

And Today the Mara Foundation in Kenya tweeted.

“is lack of capital just an excuse for #startup failure in #Africa or truly a fatal factor?“

This is an excellent question. I think it depends on how efficient you think the African (or Global) market is in allocating capital to worthwhile (African) startups. Note the brackets in the last sentence. How efficient is good? Well let me anchor you back to situation I had in Silicon Valley about a month ago. I met a startup focused on Africa I am an advisor for a routine meeting- basically we met at a coffee shop that we both like and when I showed up and I noticed that the startup was spending a huge amount of time applying for grants. This is how the conversation went:

Mbwana: “STOP IT! Find real investors!”.
The startup: “but its free money!”... Point well taken.
Mbwana: “But it takes you so long to fill out these forms to AID organizations who don’t even get your technology and even longer for them to respond- you could be building out your prototype and making tangible progress”
The Startup: “But we still need the money! Oh and its free”- Point taken again… (Note this startup had an excellent prototype and I noticed the team was well rounded with an engineer and business development who had just quit her job to join this startup).

Sounds familiar right? I call it inefficiency. As I left the coffee shop I suddenly remembered someone I met a week earlier who loved the domain the startup was in, not only that, she had a soft spot for women led startups AND she’d been to Africa a few times and knew the environment pretty well. I immediately made the intro via my smartphone. Less than a week later the startup had secured further angel investment from this person in one meeting. This is how efficient Silicon Valley is. I have heard of stories of startups being flooded with money on AngelList the moment they post on the website. Silicon Valley is incredibly efficient- or you could argue its now a bubble and the pendulum has swung way too far that money is being thrown at everything that moves. Are there amazing startups in Africa that deserve funding and are not getting it?

Lets try the other side: Kauffman foundation told me to be cautious of a certain big startup initiative focused on Africa. I was confused. Why? Surely any efforts to help startups in Africa should be welcomed? A staff member told me “Do you think African startups are ready for that kind of exposure- one startup can ruin the entire market when the ecosystem is still not ready yet”

This story made me pause and I started to understand- it reminded me of another story of a gentleman who wanted to take some startups from Kenya to Silicon Valley on an investor roadshow, take equity cut of each startup plus the startups must pay for their entire travel expenses to come to Silicon Valley. When we quizzed this person further, he had no Linkedin profile or online presence whatsoever and he didn’t even mention any reputable investors he’d be introducing these startups to. Had he even been to Africa? Should we have made this arrangement happen? I think not and we did not. The kenyan startups may show up to Silicon Valley, deplete valuable cash they might not have and meet investors who are not even reputable but probably have never set foot in Africa! And then when inevitable disaster strikes, the word will go round that Kenya or African startups are terrible (ruining it for others in future)! Worst of all the startups would have wasted time vs building out their startup.

I have also heard of the rich African elder making a $100k investment in a friend or relative’s startup and the startup totally failing or that person is engaged in multiple startups or projects and fails. Now this elder person will never invest in tech startups again- firmly deciding it’s better to invest in real estate to support the future of his or her family. Sometimes if the money comes too easy, it makes a startup clumsy- this is true even of Silicon Valley, it just happens at a bigger scale with bigger burnouts. But from failure also comes a sharpening of the saw and the market learns to allocate capital just a little bit better and take on less risk next time…

So what’s the moral of the story? There are clearly market inefficiencies in the startup funding process outside of Silicon Valley and especially in Africa. Fund Managers/Venture Capitalists/Impact Investors may not be taking enough risk because they don’t know the technology domain, region or startup team characteristics. On the other side- startups may not be ready to absorb large amounts of capital and exposure for multiple reasons (talent/skills being one and focus being another). The African startup ecosystem is still developing… African founders need to focus on getting stuff built and building skills along the way and focus- a do or die scenario, not half attempting a startup when someone has betted their savings on you… Investors/Grantees need take some risk but learn from their mistakes but not flood the market with money. Back to those grants and impact investing… Even they are aware that their involvement might lead to a risk to the ecosystem they are trying to help. So yes, even grants can be bad for the ecosystem- look up Crowding out effect as a cautionary example to NGOs, AID givers and Governments.

Ultimately when we have more bigger tech startup successes, it will begin to wake up both the investor and founder side and the market will become more efficient and maybe Africa may enter into a boom and bust business cycle we see even in Silicon Valley and across the globe where one period founders have all the power and awash with cash and another time there is little funding available as investors got burnt and have showed poor returns.

I leave you with a concluding comment from Ernst and Young on Africa business confidence which captures the tension that exists in the stories I tell.

“Despite this growth, there remain lingering negative perceptions of the continent — but only among those who are not yet doing business in Africa.”

12:55

Startup Business Models within the African Context

» ‎ Afrinnovator

This evening, Afrinnovator will be hosting a Startup-focused event titled “What’s your Business Model?“. Last month we held an event that brought together several seed funds and VCs for a panel discussion open to questions from Startups about matters related to funding, we also got some feedback from these funds about what they have observed in the local (Kenyan) startup ecosystem.

Let’s see if we can set a foundation and context for the event later on today…

Perhaps I should start off by observing that this ecosystem is in a state of flux (not just in Kenya but in many other centers of technology innovation around the continent). As I have said before, I believe these are the formative days, the few million years post big-bang, if you would. So there are many questions and many gaps that need to be filled as we seek to learn from other innovation centers around the world, while at the same time setting the rules that will work best for our context all while actually building this thing. In a sense, it’s like setting about building a structure while figuring out what the actual structure should look like in the end and not just that but also how to build it, while building it!

One of the gaps that were observed out of that last event was the apparent lack of the ‘business dimension‘ in many of the startups that these investors talked to. Many had cool ideas, many had great ideas, many had the technical part sorted out – they had the skills to code their product – but few had a solid foundation in terms of the actual mechanics of taking those components and turning them into a viable, marketable and profitable product and overall profitable business.

One part of this problem relates to having a sound business model that works for what you’re trying to do. What’s a business model? A business model describes the rationale of how an organization creates, delivers, and captures value (economic, social, or other forms of value). This ties in aspects of defining what your product is, how you will go about making it, who your customer is, how you will reach them with your product, what it will cost you and how you will make money in the process and the specific activities and resources needed to make it all happen.

Let’s set aside the actual conversation about what a business model is, what classic business models exist and how to define the business model that works for you (we will be tweeting and perhaps even livestream) and try to put this whole discussion within our context. This is quite simple really and Mbwana already did a great job with his article about copy/to strategies by noting that you can’t lift already existing strategies into the African context and expect them to necessarily work exactly as they do in their regions of origin. This includes business models.

Mbwana gives a great example of FlipKart in India. While FlipKart could be called the Amazon of India, at the execution level, they are very unique to their context in terms of how they execute the payment and fulfillment components of their model. For FlipKart, Cash on Delivery offered the ideal mechanism for dealing with this and that’s because in India, they could not succeed at doing more or less the same thing that Amazon does (e-tailing), in the same way that Amazon does it. The ‘what‘ is similar to both, the ‘how‘ is different.

This does not just apply to just how to capture value from your customers (one aspect of a business model), but to the entire framework of all that goes into your business model.

So join us this evening at the Nairobi Innovation Hub to explore business models and put them into your own context. We’re also honored to have Mr. Liko Agosta co-founder of PesaPal and Verviant as part of the event sharing real world lessons from his experience in starting and running two tech companies. Karibu

19:06

Toffene Kama: Startup Founder, Tech Entrepreneur and Passionate about Africa

» ‎ Afrinnovator

It’s always great to meet and talk with people who have a great passion for Africa just as we do here at Afrinnovator. Toffene Kama is a highly driven and passionate individual whose not just talking about Africa’s great future with passion and enthusiasm but is also actively running an amazing tech startup called Willstream Labs.

Willstream tackles the problem of migrants remitting money back home to their families in their countries of origin in Africa for specific uses. Simply, the issue is that migrants need to send money back home frequently for all sorts of things – paying for a family members medical fees, or school fees or some construction that they are carrying on back home. Well, many times all sorts of issues can arise in the process, for example, quite frequently the money sent may end up being used for a very different purpose than it was originally intended. Willstream allows the ‘remitter’ to create a ‘stream’ and allocate funds for specific services at partner businesses that then the family member can go to and use (kind of like redeeming a voucher for a service). Toffene says that Willstream is not a money transfer service, but a payment service.

I recorded a chat with Toffene in which we discuss Willstream and what they’re doing particularly in Senegal, Africa, tech, running a tech startup, product development and delivery and many other things. Here’s a short summary of our chat with some of the lessons learnt

Check this out on Chirbit

Starting Willstream:

Toffene started Willstream to solve a problem which he faced himself as a migrant living in France but having to frequently send money back home. He quickly realized that many other people in his situation faced the same problem. Sensing an opportunity to provide a solution to the shared problem in a profitable way, he set about building what had been simply an idea in his mind. Interestingly, he did not set about starting Willstream immediately he had the idea, instead he kept talking with people and getting feedback for sometime before starting – why? One reason is that he says, having been in the telecoms industry and particularly in mobile payments, he knew the market was not yet ready for what he wanted to offer.

Lessons learnt:

Creating a product that provides a real solution to a real world problem beats creating a product to solve an imaginary one – do your groundwork/homework e.g. market research to ensure you have something real
Observation is a key quality for entrepreneurs. Toffene was keen to observe and realize that his problem was a shared problem, not only that but observing the intended market is crucial

Building Willstream

Toffene set about building Willstream largely leveraging his past experience in the mobile and mobile payments world (Toffene has experience working for companies such as Redknee and Alcatel-Lucent), even getting people he had worked with before to build his company. One key area is product development. Toffene emphasized the importance of getting great people on board and a huge focus on product development.

At the same time, keep a close ear to what customers are saying, and keep an eye on how they’re actually using your product. For example, Willstream launched a product called Willstream Clubs for which they had an idea of which market and what use cases they intended it for, but upon launch they found people from other markets finding it out and using it for interesting purposes, and they had to adjust their thinking to take advantage of the opportunity.

As for the actual product development process, Toffene says he follows the Lean Startup methodology, they did not set out to build everything at once. Instead, they identified what the most important aspect of their offering was that they could produce (minimum viable product) and present to their market and built that as fast as they could and launched it

Lessons learnt:

Leverage past experience (Read: Why it might be a good idea to be employed (first))
Get the best people in the business
Focus on product development – create a great product, then refine it till it’s best of class
Listen to your customers
Keep an eye on how the product is actually being used

On Funding

Toffene and his colleagues set about building their company on their own resources and skill base. He says that it may be a burden for a startup to get external funding too early in its history. In addition, it is worth having something to show first. Create something, build something whose value can be quantified in some way and then you can leverage that to bring on board valuable funding partners.

Lessons learnt:

Invest yourself first, before you can get others to invest in you

Africa, tech, entrepreneurship

It’s time for Africa!

Africa’s future lies in exploiting it’s human resource, not just the natural resources. It’s a unique moment in time for young Africans to leverage entrepreneurship to achieve their dreams.

14:32

What’s your Business Model?

» ‎ Afrinnovator

15:02

Are you a “Growth Masai”?… Key skill gap in Africa Technology Startups

» ‎ Afrinnovator

One of the opportunities and challenges of the tech industry is how rapidly it continues to advance and in its wake change not only how we live, disrupt current solutions but also redefine how we work. Jobs can get eliminated overnight whilst new ones can emerge from nowhere. I’ve been looking forward to writing this post- especially after my first trip back to Nairobi last week to see the progress of Nailab and iHub but also a few startups new and old. Many have noted the skills gap that exist such as “business” skills- but none have written specific examples of exactly what these skills actually are. Trust me, it’ss much deeper than just being able to code in python or ruby and be a “certified” developer or having a certificate in accounting or marketing- even though being proficient in these languages is important to actually get something solid built and understanding the basics of business. A recurring theme was apparent- many startups had either skills and role gaps they cannot fill, are actively building them or have no idea that role even should exist. The last being the most dangerous as its perilous to growth. At the same time, one of my favorite Silicon Valley Ninjas, Andrew Chen, came up with a new term for role in a startup that disrupts traditional marketing functions – the Growth Hacker, an intersection of a few key core skills that help a startup gain new customers and achieve rapid growth. The tenacity of a hacker to solve problems, to being able to work with social platforms and understand data to tap millions of customers. These new skills are not silos- they are actually an intersection of many disciplines- I also strongly believe in the “systems thinking” approach.

Product Management & Marketing evolve to African Growth Masai

In a previous post I highlighted the pitfalls of adopting a copy to/clone strategy for building a startup without revisiting the market and customer assumptions. The same applies for roles and hence skills in startups. I think every African startup needs to first figure out how to productize (be able to scale) a product or service (finding a market niche, willing customer to trial and eventually pay) but then also scale the business to multiple markets and languages. The last being the most challenging for whoever is tasked with this growth role. I am calling this a “Growth Masai”- I use the Masai term here to illustrate a point. Borrowing from the Growth Hacker and adding African elements- like the Masai (who historically is not bound by geography- they can be found in Tanzania AND Kenya), this role involves someone who is nomadic in nature “explores new pastures” and looks after his/her goats (aka customers). One term I will never forget that I learnt from Microsoft is “Sell what me make and Make what we sell“- this adequately captures the inherent tension that happens between engineering/development and Sales depending on the dominant culture. Textbooks will say that you should listen to customers first then give them what they want- that makes sense, but sometimes, customers don’t even know what they want (enter Steve Jobs visionaries). In western markets, the Product Manager (PM) takes the CEO’s vision and makes it happen day to day within the different functions. In Africa, this means a PM must figure out the link between product and sales in highly uncertain and often unproven markets when you are likely the first one to try this sort of businesses (market is not even definted!), these can include:

What value promise is the startup selling? Is the startup serving the right problem?
What are customers using right now instead of your solutions- are you in the business of making things “more efficient and better” or a total new product or service in the eye of the customer (e.g. have they ever used mobile payments in any manner, a CRM or marketing solution, a new energy alternative.
What customer educational programs work in the face of low literacy and tech adoptions?
What local partner do you need to provide “customer credibility” (i.e. don’t just show up with your urban look and rural africans to trust your solution). Or in some markets- connections to Government officials to get things done fast and accurately?
What are the best distribution channels and business models to reach and serve the target segment “mobileweb, SMS, USSD/, Android Marketplace, Billboard/Newspapers, Social Networks (Mxit, Facebook?)”?
What are the best pricing and payment mechanisms? Pay in full, pay as you go, carrier billing, credit card or COD?
How often does the customer need handholding and what are the particular needs of their business?
What are the drivers behind retaining customers and why do they leave and go to the competitors or alternatives.
Should you be adopting a lean approach, constantly listening, iterating and releasing frequently, learning and failing fast- or is your industry such that customers cannot tolerate and a more traditional “waterfall” (shut yourself in the bunker and code for months for a big release?)

When I visited Mobile Planet when I was in Kenya last week, I noted Karanja Macharia had begun to train and groom his first product managers. I was shocked and impressed- I had never seen one in Kenya before. But Mobile Planet is a successful 10-year old company- they must know a thing or two. Africa Personas and customer understanding needs to be better captured Nielsen did everyone a favor and conducted this market research study to identify the different types of African consumer. I think this is a good start but does not adequately capture the complexities of the markets and needs across regions and product/services types (in other words it does not cater to tech markets). We might all use nokia feature phones, but we don’t all use mobile payments as preferred payment mechanism and we might have different incomes dependent on what geography one resides- this is challenge for a manager analyzing an app delivered to the Nokia platform. Same there are perils in relying on World Bank and UN data that might be outdated. I have blogged before about how much I think better research and africa data is critical to investors to understand the industry but also for startups internally to navigate opportunities.

Adjacent Markets Provide Additional Areas to Discover of Growth- The Masai exploits

Many startups might be able to conquer their home market and a specific product, but to reach true scale they need to scale to multiple markets and sometimes branch into multiple products to achieve growth. Sometimes I hear folks say “I’ll just own my own market”, our neighbors don’t know my market! That may be true now, but it may not be true in the future- Growth Masais from other countries who can handle multiple turfs will start to invade your terroritory with not only superior products but better ways to sell and delight your customers. For example, in Tanzania, Customer Service is notoriously bad at some of the mobile operators- this provides an opening for new service centric competitors. Another one is mobile payments/m-commerce, It becomes very clear that one can’t live of payments alone- you need to have additional value. In the first wave of tech startups- many customers will learn first hand what is lacking in their teams- many will fail because they can’t identify or fill these positions from the available talent pools in Africa. The best way is to recognize that these skills actually exist and form industry associations and companies can contribute in creating training programs for the industry. Yes, surprise, surprise it comes back to good old education and training. I was very excited at the iHub to see that not only are the creating a Research Unit, UX lab, have a thriving mobile lab, but they also are now installing a super computer- hubs play a key role here and some of the best hubs on the continent will have leaders who will identify what skills they want to develop not just what skills are good in their community to reinforce (good incubators/hubs will act and invest accordingly).

10:33

Does the “Copy to/Clone…” Strategy work in Africa?

» ‎ Afrinnovator

Every so often I hear venture capitalists and entrepreneurs in Silicon Valley ask a recurring question regarding Tech Startups in Africa- why not just use the “copy to” strategy? Clone an e-bay, clone a Groupon… After all there are 1,000s of Groupon clones in China! And the Samwer brothers in Germany are notorious for doing this right that it angers many innovators in America.

I have decided that this strategy is not as easy to implement as it sounds, even though it does work in some cases. Why? Here are the reasons I have come to realize how, why and when it can work or not work. But often it comes down to the need for local or incremental innovation:

Tech Adoption Cycle is not necessarily the same Everywhere- Focus on fundamental Need
Job sites like Jobberman in Nigeria are in many ways direct clones of other job sites around the world. I recently met Paul Bassat, who founded the leading job site in Australia and then actively cloned or invested in other job sites across Asia. Why does this work so well? Job search is a fundamental need all over the world and the profile of job seekers looking for high value jobs (i.e. entry positions out of university etc..), for instance- many speak english as the language of business and many recruiters are somewhat global and standardized in nature. But the key thing is that both sides of a 2 sided marketplace are pretty technology savvy and can use a computer to both post a job and search for a job. Paul Bassat understands what it takes to make job sites work, no matter what context- so he is perfectly position to act both as a cloner and investor.

When does this not work? When there is a fundamental mismatch in tech adoption and assumptions on business models. I see a ton of social media and SMS marketing startups in Africa and even mobile commerce. I am currently in Tanzania after 9 months away from Africa and I find its easy to assume things, but not even resident Techies in Africa and all over the world often forget their target customers are not like them. Some companies have not even used traditional marketing before- or they believe that a billboard ad is by far the most effective way to advertise because “big gorilla company next door” does it so it must work! Attention can sometimes be the number one issue for companies trying to deliver marketing solutions to businesses- try live in the african business’s shoes for a while before you try push your whizz bang social meda, SMS marketing solution.

I spent 2 weeks in Alaska installing my friend’s POS system on the iPad and learnt first hand how hard it is for small businesses to adopt tech even in America. In Africa, although people are used to paying for utilities, airtime and some services with mobile payments, the leap to do so for things like travel tickets (i learnt first hand with yellowmasai.com) etc… comes down to trust/fraud fear factors in commerce which are still lagging behind the technology’s actual effectiveness. Its a matter of time till this changes as everyone gets used to it. On business models, as an example, transaction fee models may not always be the best way in Africa because the initial volumes needed can be very high. At yellow masai- I quickly realized that it was hard to negotiate lower transactions costs online when the payment infrastructure does not support it- but there was simply not enough volume currently to make it profitable to lower transaction fees to an acceptable rate.

Another way to look at this is through an economic lens- customer acquisition cost and time, this can be very high or lengthy since you are actually investing a ton in education of say “why SMS marketing is effective”- then once they join and finally get it 6 months later, they may stick around forever and their referral to their friend’s or relatives business becomes easier. So in many cases, its a “last man standing” play- at some point the adoption picks up and whoever is left around wins and wins big dominating the market.

Design Thinking and Focus on Product

The other big one is simply a back to basics focus on design. Just because Groupon works around the world- doesn’t mean it will work the same way everywhere for mobile first Subsaharan Africa. Even for the normal web, when you analyse commerce sites in India and China, they look very different in style from their western counterparts. Smart startups trying to clone or copy understand this, take the obvious feature phone ubiquity and importance in designing for bandwidth constrained environments. We see this first hand with the growth of mobile social networks such as Mxit. There is a reason I spent a few hours at Stanford’s Liberation Technology group a few weeks back, where I learnt that Professor Josh Cohen spends time in Kenya understanding local contexts and leading design sessions- and was even more delighted when I saw a Kenyan Computer Science Masters Student as the Teaching Assistant! A strong focus on design for unique environments can help foster better products that can get adopted faster.

Local execution is often Key

Back to commerce- when you look at India, you quickly realize that the Cash on Delivery (COD) model is an essential ingredient for ecommerce in that market- even though many indians own credit cards, there is still a huge trust factor. Whilst we have mobile payments in Africa- m-commerce on a scale to Amazon or ebay won’t be fulfilled until we sort out the fulfillment part of the equation- India solved the payment, fulfillment, fraud in one go- one company to watch is FlipKart and how they succeeded. So a clone of say ebay or Amazon even with mobile money simply won’t work in sub-saharan africa until the complete fulfillment puzzle is solved in the way India solved it. One could ask can COD clones to sub-saharan Africa be the solution to kick starting a bigger m-commerce revolution? Yesterday, I was impressed to learn that in Tanzania a form of COD + mobile payments exists- you can order Dodoma Wine from the vineyards by calling and paying with M-PESA and it would be shipped by bus and you’d get alerted to pick it up from the Bus Station. This already works and is in use, with more careful design could it be scaled up for the masses (not just Tanzania wine addicts) and for other goods? Not sure, but its easy to fall into the trap of assuming it might without questioning all the assumptions and going through a more investigative design process.

Of course these factors are in fact intwined. A compelling product designed for the right audience in africa and executed in a local manner is what works and simultaneously lowers acquisition cost and time- or face a long process of educating your customer how the “west does it”… So does the “Copy to” Strategy work? Yes, but I think technology adoption for many countries can lag due to the fact that many consumers and businesses don’t live on their computers for the length of time the west has as well as other factors such as literacy and a fundamental belief that ICT can actually improve their lives or deliver return on investment or business efficiency. Some startups don’t have the funding, expertise or patience to sustain this and often get impatient and distracted and open other business such as a consultancy (I see this time and time again). Some of the smart ones actually figure out the bottle-neck that is slowing down their business and directly solve it for themselves, sometimes discovering a whole new business there as its a problem someone else has. In the end it actually comes down to innovation, even if incremental can make an idea in one context work in the other.

8:26

Talking about Africa’s Digital Content Future

» ‎ Afrinnovator

The history of African peoples is filled with tons of folklore and a rich oral history. Our peoples in past times primarily disseminated information and preserved their culture in the form of folk tales, songs… content; and the primary platform of distribution was oral. Today, Africa stands to embrace it’s history of original content creation on the platform of the Internet and World Wide Web in form of digital content. A platform that not only creates a powerful media to create and convey original content across the entire globe but also to store it and remix it to create new and innovative content.

Not only that, but the power of mobile has created even more opportunities for creation and distribution of content, democratizing and consumerizing the tools needed to create digital content. On the distribution side, increased bandwidth and access to it, has allowed ordinary people to efficiently upload their content to web based content platforms for all kinds of digital content, be it audio, image & video or text based, on platforms such as Flickr, YouTube and Facebook that have then opened up a global audience for content creators.

A huge problem for local film makers has been the actual distribution of their work. Film makers have largely depended on showcasing their work at festivals with the hope of attracting some attention for their work at these events. In addition, it would appear that the work of many African film makers, for example, is more widely known and appreciated outside Africa than in Africa. How can these problems of distribution and awareness be fixed?

Buni Media, the originators of popular Kenyan political satire show, The XYZ Show, have created a new internet video platform – buni.tv – specifically focused on content created in Africa or about Africa, their aim: to revolutionize the distribution of African video.

We talked to co-founder, Marie about Buni Media, Buni TV and digital content in Africa:

Afrinnovator: Please introduce Buni Media to us.

Marie (Buni Media): Buni Media is a multimedia company based in Nairobi and in Los Angeles, California. I co-founded the company with Gado in 2009 to produce The XYZ Show, which is now about to start its 6th season and reaches more than 8 million people on its various platforms (television, radio, buses, web, mobile) every month.

Since 2009 Buni Media has grown tremendously and besides The XYZ Show, we now produce documentaries, we publish books, and we’re in pre-production on a new pan-African children program. “Buni” means “innovation” in Swahili, and the mission of Buni Media is to use innovative techniques such as puppets, satire, animation, social media and mobile technology to produce top-quality content that entertains and challenges audiences both within and outside the continent.

Afrinnovator: You recently launched buni.tv, tell us about that

Marie (Buni Media): Buni TV is our new pan-African web and mobile video distribution platform. It is probably our most ambitious project to date and we’re very excited about its potential.

One of the main challenges we’ve had on our journey to produce The XYZ Show has been its distribution. We’ve been pretty good at it – 8 million is a huge number. But it’s been difficult and sometimes frustrating. You have to deal with a broadcasting industry that does not have the interests of producers at heart. And the reality is, most talented filmmakers on the continent will never have the opportunity to show their work and to find their audience.

Today if you produce a fantastic film in Africa, the best you can do is to take it to festivals around the world and maybe get a European television station to buy the rights for that territory. But African audiences will never see it. From the audience’s perspective, you might know that there’s better content out there than what you’re being served on TV, but you don’t know where to find it or how to access it. Buni TV proposes to bridge that gap.

Afrinnovator: What are you trying to achieve with this new platform

Quite simply, we’ve set out to revolutionize the distribution of African video.

Buni TV will first source, select and showcase the best, most innovative video content being produced in or about Africa. We clearly have an agenda here, which is to show audiences on the continent and the rest of the world that there is some really great work being made by African filmmakers, animators and artists – a fact that festival curators have known for a while but that has not reached the general public yet.

Buni TV will then leverage the upcoming mobile video revolution to bring this content directly into the hands of the audience. Buni TV is accessible both on the web at www.buni.tv and on smartphones at m.buni.tv. Our platform is built on top of a video manager service which allows us to both host this content and stream it to a whole range of devices from computers to tablets to mobiles, while automatically adjusting to the speed of your internet connection. Basically if your phone can play YouTube videos, it can play Buni TV.

We strongly believe that tablets and mobiles are how people in Africa will primarily consume entertainment in the future. The continent will skip television, satellite and cable to jump straight into the era of personal entertainment devices. Getting relevant content directly to those who want to watch it will allow us to create new revenue streams for filmmakers and help support the creative industry.

Afrinnovator: Tell us about the opportunity for local digital content development in Kenya (and Africa)

Marie (Buni Media): First of all, a precision: what you call “digital content”, I simply call content.

We used to talk of digital content as opposed to film or analog recordings – it was a technical matter. Today 99.9% of the video (and same with sound or photography) content being produced in Africa is made using digital technology, like the Canon 5D for example. So let’s talk about the opportunity for local content development in general. It is our position at Buni Media that as producers of content we should not see Kenya as our market. The world is our market.

One of the challenges of the Kenyan media industry is that it is talking to quite a small local audience, and very often that market alone cannot sustain quality productions. Kenyan filmmakers have to look beyond their own borders and create films that can appeal to at least the whole East African region, if not Africa or even the world. That’s where the opportunity lies and that’s how you can find good numbers. A global platform like Buni TV will help create these trans-border markets.

Afrinnovator: Where do you think Kenya (and Africa) stands in terms of the quantity and quality of digital content being produced in the country (continent)?

The Kenyan film and television industry has made some tremendous progress in the past few years. Some of it has to do with the proliferation of affordable, quality equipment, which has allowed Kenyan filmmakers to practice, learn and experiment. The Kenyan animation scene is particularly interesting – and Buni TV will be featuring some fantastic Kenyan animated films like Kwame Nyong’o's The Legend of Ngong Hills, which is nominated for a 2012 Africa Movie Academy Award for Best Animation.

But in general there’s still a long way to go, and some years are better than others. Distribution and funding (both are irrevocably tied) are always major challenges, and this is where Buni TV comes in. If we can fix distribution, then all of a sudden funding will become available. If we look at Africa in general, there is definitely a good amount of quality content now out there. African films keep getting noticed at big international film festivals and ironically, Western audiences might know more about independent African cinema than audiences on the continent. Again, Buni TV proposes to be the solution to this problem.

Afrinnovator: What can be done to promote more digital content development from the country (or continent)?

Marie (Buni Media): Fix distribution, which will dramatically increase people’s exposure to quality content and help create new audiences. Then the rest will follow.

Afrinnovator: How do you read Africa’s digital future? What can we expect?

Marie (Buni Media): The future lies with mobile technology.

What many Kenyans do not realize, is that Kenya is the world leader in that domain. What Kenyans have come to see as every day things like M’Pesa or even call-back ringtones are still at the very forefront of innovation in terms of the global mobile industry. When I talk about Kenya’s mobile landscape to tech people in the US, they are extremely impressed. And Kenya is showing the way for the rest of Africa.

There are currently more than 600 million people on the continent who own a mobile phone. That’s double the total population of the US. Out of these 600 million mobile phones, about 18% are smartphones, which is quite a small share. But with the arrival of affordable devices like Huawei’s Ideos, this is rapidly changing. That is a massive opportunity, and Buni TV is in an ideal position to take advantage of it.

22:48

Buni TV launches www.buni.tv and m.buni.tv

» ‎ Afrinnovator

Buni Media is announcing the launch today of Buni TV, its new web and mobile Pan-African digital video platform.

By showcasing the best, most innovative and visually arresting content being currently produced in or about Africa and distributing it new audiences on the continent and abroad, Buni TV (www.buni.tv) aims to become the premier destination for independent African video.

At launch, the platform will offer the entire 5 seasons of the very popular Kenyan political satire The XYZ Show (produced by parent company Buni Media), award-winning Kenyan animation films like Kwame Nyong’o’s The Legend of Ngong Hills, documentaries by Egyptian filmmaker Abu Bakr Shawky, Nigerian children TV program Bino and Fino, music videos from across the continent, as well as content provided by its partnership with Scotland’s Africa in Motion film festival. Buni TV will also act as a curator, showcasing film trailers and other videos already existing online but notoriously hard to find.

“There is actually quite a lot of remarkable, high-quality African content out there, but it’s often scattered over niche sites and very difficult for African audiences to find. Buni TV editors will do the leg work for our audience and select only what is worth their time. Buni TV wants to become the number one destination to watch modern, creative African content online and on mobile,” said Marie Lora-Mungai, CEO of Buni Media.

Whereas others African video platforms seem to target only the diaspora market, Buni TV wants to bring its content in priority to the continent’s under-served audience. Anticipating Africa’s upcoming mobile video boom, Buni TV developed a light, user-friendly mobile site that works on most smartphones and can be accessed at m.buni.tv.

Buni TV’s platform was developed by Asilia and designed by Barbara Muriungi. “Buni TV comes at a timely stage in the telling of the African story. Rather than outsiders making films about Africa, Africans are also able to do so, and showcase them not just to the outside world but to other Africans”, they said.

Streaming videos on Buni TV will initially be free with advertising. Buni TV will share the revenue made from advertising around their work with the filmmakers on a 50-50 basis. In the future, the platform will develop a subscription option to allow access to premium content.

“Buni TV has been developed by filmmakers for filmmakers and film lovers. We know what it means to be independent creators. In Africa like everywhere else, distribution is a major challenge: how to find the right audience for your work, how to get your work in front of that audience, and how to generate revenue from that audience. We’ve built Buni TV to provide a solution to that problem,” said Marie Lora-Mungai, CEO of Buni Media.

About Buni Media:

Buni Media (www.bunimedia.com) is a multi-media company based in Nairobi, Kenya and Los Angeles, California. It is the production outlet behind The XYZ Show, Africa’s first political satire program featuring life-size latex puppets. The XYZ Show (www.xyzshow.com) reaches an audience of more than 8 million people every month through its various platforms.

9:55

Disrupting SMS Apps Space: Telerivet’s Distributed Mobile SMS service using Android Phones

» ‎ Afrinnovator

Most web and mobile startups in Africa need to have to some sort of messaging or notification layer that incorporates SMS. Wider businesses, large and small also too to communicate with customers . I have certainly blogged about the importance of SMS platforms for innovation in Africa. It is simply the best way to distribute information in Africa to the masses in the wake of feature phone dominance and lack of reliable internet access. Some whole startups and social ventures depend solely on it for reaching their audience in Africa. One could argue SMS is probably the most important mobile technology component on the continent at present, it has certainly had the biggest impact.

SMS Aggregators have high setup costs and often inflexible for Startups

For something that is so important it can be incredibly hard to setup. SMS aggregators are quite active in Africa and they do very well on the whole, but the bar for anyone to get going is too high so they end up serving corporate clients and NGOs with big budgets who are more focused on marketing campaigns and notifying their current customers, some are certainly better than others, but there is a high commitment one must make to play in the space which discourages its wider use. Even then when dealing with an SMS aggregator, messaging delivery is not assured- you just can’t blast a 100,000 users whenever you want- you have to plan for it based on carrier capacity etc (atleast that is what one aggregator told me in Tanzania)… One of the major advantages of going with an aggregator is the cheaper per SMS pricing as you scale- but startups and many small businesses don’t need that scale to begin with. Another advantage of using an aggregator are the premium billing features to collect payments which then turn SMS into a revenue channel- but this has a lag in payout and the SMS aggregator often takes a big cut- nevertheless, when it set up correctly its a win:win:win for the client, aggregator and carriers.

Finally there is the initial distribution- some aggregators, because of their close ties with carrier have huge SMS mailing lists they can target based on their relationship with carriers and past clients.

The need for APIs and cross border flexibility

APIs are crucial, developers live and die on APIs (we all wish there as a robust M-PESA API!), so developers can build interesting applications for themselves or clients. But even SMS aggregators don’t really serve this well until to you pay to play – how can a developer with little capital create a working prototype, or do a proof of concept for a client? Even when you do get an API, some are not modern enough to play with the latest and greatest on the web. FrontlineSMS is typically the solution that comes to mind for some of these use cases, but that architecture, whilst it works for some, is overly dependent on using a laptop connected to a phone or stick modem as a hub vs remote automation. And whilst FrontlineSMS is certainly extensible, it only supports HTTP triggers out of the box and you have to be a pretty savvy developer to extend it.

Enter infrastructure app services like Twilio and Tropo, which make it easy for developers to hack together SMS and other telephony apps quickly in a Software as a Service model- you get free credit and can rent a number starting at $1/month. The problem is that these services originating out of the US don’t translate well across borders especially in Africa. The web was built for global scale, telephony still has border bottlenecks and regulatory hurdles such as getting a local number- you have to strike deals with carriers and regulators around the world (harder to do in Africa) the same way SMS aggregators do (which have a local connection advantage), its still a way off until the global infrastructure telephony app services make a big splash in Africa, maybe they don’t see the potential right now compared to other markets where they have better connections such as India. So aside from FrontlineSMS, there is a clear market oppotunity for commercial easy to set up SMS services that taps the creativity of local developers…

Telerivet is a paid service that is easy to set up and scale for developers

So like my last post on SMS- my prayers (and many startups) have been answered: Enter Telerivet, the team from Envaya decided to solve their own problem rather than rely on SMS aggregators, FrontlineSMS or Twilio which doesn’t do everything they need. Telerivet powers EnvayaSMS and they realized it was so important they decided to spin it out as a separate service and unleash it to the world.

FULL DISCLOSURE: I am advisor to Envaya and they are doing great work where I left off helping the Tanzanian COSTECH incubator.

Telerivet takes a distributed approach like FrontlineSMS with a unique twist- by using an android phone with app as a remote relay of messages that talks to their servers- effectively circumventing the need to centralize and go through regulators and aggregators with the high setup costs and long time to setup. My friend at Twilio tells me this set up is what they use internally to test and develop their services. So instead you can get going with the price of an android phone ($100) which can handle 1000 messages an hour. Now this may sound “strange”- but actually its very smart… It challenges the FrontlineSMS model, as this approach does not require laptop, but pushes the capability into the smartphone and back to server-removing the need for a laptop- the rest can be controlled from the web. But there’s more…

Think of the android phone as a “mobile SMS server” on increasingly commodity hardware and software, with the advantages that it has a battery (important in many parts of Africa) and can connect over 2/3G and Wifi. Just lock it in a secure location with reception and simcard of your choice. The phone can go on as long as 3 days before it needs charging- heck if its that mission critical, attach a solar charging unit to it. One big advantage is being able to control the phone remotely to add airtime to it at will and even enable it to accept mobile money via USSD commands- I will leave readers to their imagination of what this enables you to do.

I coded a simple app in less than 20 mins- their API supports modern languages, the team created easy code examples in PHP, python, ruby and curl…. They support modern web services including REST and the ever popular web hooks.

Basically, Telerivet is built with developers in mind and for local and internationally minded communities and organizations- dramatically lowering the bar to get up and running. When I talked to Joshua Stern this week, a founder, he mentioned many organizations are taking a look and switching over. But really this is absolutely what startups need and is an example of a textbook disruptive service that applies to the African context as recently explained by Will.

Decentralized model for Mobile app development enables more innovation.

By using android phones as message relays, it cuts out needing to work aggregator and dealing with regulators for startups that are innovating on SMS. Not a developer? Not a problem! Their rules bases system allows anyone to create rules to direct messages with their wizard- it is really easy. As a ”SMS mobile server”. You can connect any number of these phones- why not choose different networks to take advantage of better reception, SMS rates and internet deals? You get redundancy and modest quick scaling, you can also increase the number of SMS you can send with each phone. What is Google’s infamous server farms but a collection of commodity components in a huge farm? Or Commodity Computing. Why not buy 10 Android phones for $1000 and set up a small “Distributed SMS mobile server data center” and be able to sent 10,000 messages/hr? Or 87M messages a year? Of course the downside is the cost per message with this approach- but you can scale it up as needed- a sort of “private cloud model” until you are ready for other solutions- but you may never want to go a centralized model again if it works and you have full control.

For example- Afrinnovator is built on WordPress, which is a PHP stack- we could easily just connect up the newsletter signup via SMS now by simply adding the webhooks plugin and write a script to handle the interaction- or some other variation. We could get an android phone for kenyan subscribers and a US number (via twilio) for US subscribers. I tested this with Twilio ($1/month + $30 credit), since I didn’t want to dedicate my android phone just yet as I am not currently in Africa. Telerivet is trying to make it really easy for developers and non developers alike to not recreate the wheel and create standard packs that can be easily configured on the web for common components, similar to how wordpress works with themes and plugins. Also on the Android app side you can download versions of the app that are expansion packs that can do things like access the USSD commands allowing you to do the remote access of the phone airtime or even mobile money. For example, they are working on automating USSD commands for Airtel Money and MTN, so you could deposit mobile money directly into a normal bank account. Already startups can use Telerivet’s API to accept mobile payments from customers in their app so they can easily charge for their services…The telerivet team clearly don’t just want to only deal with SMS only. There are so many use cases for anyone I could go on forever. If you can dream it, you can now build it…

How does Telerivet stack up against other options? No one solution is perfect right? The table below helped me layout and assess the different options- feedback welcome, lets make this table useful for everyone building SMS in Africa!

Word of warning to Developers: Please be careful that you don’t end up creating spam for African consumers. Have clear optin and optout policies to respect privacy. The last thing we want is to become almost like India, where SMS became a spam channel and the regulators had to step in. It hurts everyone.

	SMS Aggregators	Infrastructure App (Twilio)	FrontlineSMS	Telerivet
Set up Cost	As much as $5,000 (especially Africa ones)	Free to get going/SandBox Developer mode. As much as free $30 credit	Any phone tethered to laptop as a hub	Android Phone ($100)- anyone web access. $15 free credit.
Regulatory	Centrally approved: Licenses & local number rental/purchase	None	Active in country SIMcard	None (use Twilio) or Active SIMcard
Cost Per SMS	Cheapest at huge scale	$0.01 per message	Standard Carrier rates	Standard Carrier rates
Maintenance	Some have maintenance fees e.g. development, or number rental	None	Must develop yourself	Must purchase Android phones and maintain their balances
API	YES- (but often no Sandbox for testing)	YES- Varies	YES: HTTP Trigger	YES: Web hooks, REST, Rules based for non coders
Architecture	Centralized- Telco relationship dependent	Carrier dependent means hard to scale across borders	Decentralized- Laptop to Mobile Tethered	Decentralized/Distributed: As many android phones in as many networks in as many geographies + Twilio.Must maintain charge & credit on each phone via remote commands such as USSD
Business Model	Bulk SMS purchase & Setup cost targeting larger organizationsPremium SMS Billing % cut	Per SMS cost & Number rental from $1/month depending on country	Open Source	Software as a Service Starting at $7/month
Unique Benefits	Formal Relationship with Carrier: Premium Billing, real time delivery reciepts	Robust APIs + Range of telephony services	Extensible	Decentralized remore mobile Server with very low setup cost. Extensible with modern API and web services. Rules based wizard for non technical

13:31

Will the Local Tech Startup Investors Please Stand up?

» ‎ Afrinnovator

The first live Afrinnovator Meetup (branded ‘kongamano’ – swahili for ‘meetup’) took place this past Monday at the incredibly huge 88mph-run Startup Garage space in Nairobi. The event put together a panel of funds and VCs that are focused on tech investment: Invested Development, an impact investor; 88mph, our gracious hosts and eVentures Africa. We had about 70 people in attendance forming a great audience that actively engaged the panel. (We were unable to livestream but watch out for the video soon)

One of the questions that came up is that of local tech-focused investors, or the lack thereof. The tech investor ecosystem in Kenya is still taking shape but even in these very early days of what has been called the ‘Silicon Savannah’, it is evident that in Kenya, much of the funding for tech startups is by foreign funds and VCs. In fact it could well be that in the recent past, the majority of funding for tech startups locally has been from the government through initiatives such as the ICT Board local content grant.

Source: angelblog.net

While the country is seeing a lot of private sector investment in other areas such as real estate, we’re yet to see the same scale of investment in tech – highly focused and specialized investment. Why is this so? And how can the situation be remedied?

A different ball game

Investing in tech startups is somewhat of a different ball game from investing in other areas. Firstly, tech is a fairly risky business. And the earliest investments in a tech startup are the riskiest, yet the most critical. This stage is critical both for the investor, risk-wise and for the startup as this is the point where they’re working on the foundations of their company and their product, if they get it wrong at this point, their chances of success go down dramatically. Yet, it is in this stage of developing a tech startup where the largest gap exists for relevant investors.

Whearas for local investors, traditional investments such as real estate are more predictable and hence the investor is able to manage risks better, tech has a certain level of uncertainty at the beginning. Will the founders create a good working relationship and the team dynamics needed to push things forward? Will their product be well received by the market?

Secondly, investing in tech takes understanding tech. Especially when dealing with software based startups – web, mobile, applications – since the product is intangible. When dealing with other types of business, the product (or service) is very evident, you know who your supplier is, you know who your customer is, you can workout the logistics of acquiring the product or the raw materials, manufacturing the product and distributing it. On the other hand is a knowledge based, intangible product that is often delivered over an intangible channel (the World Wide Web) and the monetization at times is not as straight forward as a customer paying up front for a product in exchange for the product.

Building on success

Perhaps another challenge that faces potential investors is that there haven’t been some major locally-backed successes that create the precedence necessary to attract other investors into the field. In Kenya, there’s a tendency for people to just wait in the wings while watching and waiting to see if someone else will take the risk. Then, once someone risks and succeeds, they’ll flood the market.

It wouldn’t be a surprise if at some point in the future, once a few startups have gone wildly successful, the tables will be turned and local investors will be making a rush to invest in tech.

The question is, who’s going to take the plunge and risk the success or failure of making major investments in tech startups? As you may have read before, there’s an upcoming fund called the “Savannah Fund”, that may just be the one to fill this gap. (Stay tuned for more about this fund in the near future)

Tech investor community

Well, it would be hard to have a tech investor community minus a good number of tech investors to form the community in the first place. Tech hubs have done a great deal to not only create physical spaces but to create the overall environment necessary for the growth of the tech community already.

And whearas few actual startups have broken out and are on their way to success, there’s much more trial attempts than was previously the case. And this is the right approach, investment follows innovation.

The more innovation we see, the more startups keep trying and trying and ultimately making some success, the more attractive tech will become for local investors. And eventually will draw them in. At that time, it will be critical to form the right kind of community on the investor side of the table.

A word of caution

As it stands, the largest proportion of investment in tech startups is coming from outside the country. If potential local investors don’t watch out, they may come in late in the game and miss the greatest successes, and hence the greatest potential returns.

We’re trying to build something that will benefit the country first. If local investors do not come together and start investing in tech the gains made from those startups that will go wildly successful may end up benefiting others more than ourselves. A typical case of Africa’s best resources benefiting foreigners more than the continent itself.

Foreign investment is all well and good, and it is very welcome. At the end of the day, for the startup, what matters for them is getting the necessary investment to work on their company and make a success of themselves. But it would be a shame if local investors missed out.

It can be done

For the most part, the capital requirements for tech startups are pretty low compared to most if not all other kinds of investment. It would not be astronomically difficult for investors who are used to massive capital investments to put money in tech with a fraction of their typical investment and yet investing in multiple startups, hence spreading their risk. If any one of those startups succeeded, they could easily multiply their investment given that tech can provide the uniqueness of disproportionately large returns to relatively small investment.

But, given that, as we have noted, this is not your typical investment in real estate or whatever else. There’s a need for either investors to get educated on the dynamics of tech in some kind of forum perhaps, or for them to reach out to people in tech who can help them understand the area and make the right investments while bearing with the risks and patience sometimes required.

The Ron Conways of the ‘Silicon Savannah’ will be made in these days, and the opportunity is wide open.

13:00

Kenya Technology, Innovation & Startup Report 2012: A Preview

» ‎ Afrinnovator

13:21

Disruptive Innovation in the African Tech Context

» ‎ Afrinnovator

What is it really to disrupt, or what is a disruptive innovation? And to put it in the African context, what does ‘disruption’ mean for the continent and what are the opportunities to disrupt?

A dictionary definition of the term ‘disrupt‘ is:

to throw into turmoil or disorder

to interrupt the progress of (a movement, meeting, etc.)

to break or split (something) apart

Disruptive Innovation is NOT making a good product better

Clayton Christensen, the Harvard Business School professor who coined the term and came up with the theory of disruptive innovation describes this kind of innovation as that kind of innovation that transforms a product that was traditionally complex and expensive to being widely accessible & affordable. The easiest example of this is the PC revolution and how companies like Apple and Microsoft undercut the giants of the computing world by introducing these much lower cost, much simpler to use computers as opposed to the traditional mainframes that were way too expensive, even for many companies.

Disruptive Innovation is about New Markets

A truly disruptive innovation will be targeted at an entirely new market spectrum. Disruptive innovation is not about building better products for our best customers but really it’s about creating totally new products (or a new class of an existing product) for totally new customers. Using the PC revolution example, Apple and Microsoft literally created a market for the Personal Computer. An interesting concept here is that of “competing against non-consumption“, that is creating products that are not really competing against another product but competing to get non-consumers to start using that product.

Disruptive Innovation in Africa

Framing this theory in the African context, what’s a great example of disruption in action? And what opportunities are there for entrepreneurs to create disruption?

Case: Mobile Money Disrupted Traditional Banking

Five years ago, Kenya’s dominant Mobile Network Operator, Safaricom, introduced a new product offering – MPESA. Five years later and multiple awards later, MPESA is the definitive case for the transformative potential of mobile money.

MPESA was really a disruptive technology. Who was disrupted? – The banks and traditional financial institutions. MPESA (and really mobile money in general) really represents this concept of competing against non-consumption. The core tenet of mobile money has come to be stated in the goal of reaching the “unbanked”. Basically, people who have no access to or no capacity to qualify for a traditional bank account – non-consumers.

The big question now is, who’s going to disrupt Safaricom in Kenya?

Perhaps that disruptor in the mobile money space could be found in a much smaller mobile money network that boasts a modest 70,000 subscribers versus Safaricom’s 15.21 million customers, and moved Sh. 1.13 billion in December 2011 versus Safaricom’s 116.6 billion. That’s Mobi Pay’s Tangaza platform. While their figures seem modest, they’ve overtaken even the second largest MNO in Kenya, Airtel Money which has a larger subscriber base of about 3.16 million but moved only Sh 420 million in December 2011, less than half of Tangaza’s volumes. In fact, Tangaza has the lowest number of subscribers.

A key differentiator of the Tangaza offering is that they support cross-network transactions, something that the MNOs have been reluctant to embrace.

Opportunity to disrupt: Smartphones

One of the most evident opportunities for disruption in Africa is in the handset manufacturing industry. It has been predicted that Smartphones will become cheaper as more and more higher end features also appear on devices in the lower end of the spectrum.

Huawei made a killing in Kenya with it’s $100 IDEOS Smartphone, and already the prediction is that the cost will go down to close to $50. According to Vodacom CEO, Pieter Uys, in an interview with Memeburn:

We’ve now broken the US$100 barrier for a smartphone. In 18 months time that US$100 will be US$50… if not less. And then it keeps coming down — that’s what happened with ‘normal’ phones.

Opportunity to disrupt: Energy

Much of Africa’s population is rural, with much of the rural population having very limited or no access to electricity. It is estimated actually that very soon, more of Africa’s population will have access to mobile but not electricity. This presents a great opportunity to exploit the concept of competing against non-consumption.

The thing with clean energy such as solar is that the technology is still quite expensive and would be out of reach for rural Africa. It is interesting, however that there are amazing innovations that will open up this low income segment. One case of a company’s that’s poised to create disruption is Egg-energy:

EGG-energy

EGG energy a Tanzanian company that calls itself the “Netflix of batteries“. EGG aims at helping low-income consumers in Sub-Saharan Africa gain access to clean, affordable energy, using a unique strategy based around portable rechargeable batteries. Their business is based on the fact that 80% of the Tanzanian population live within five kilometers of a transmission line and less than 15% having access to electricity

According to their website, their model works as follows:

1. We take power from a grid or off-grid power station and package it into portable, rechargeable, and affordable batteries. Each battery is about the size of a brick and lasts about five nights in a typical household.

2. Each battery is rented to a customer in exchange for a subscription fee.

3. Customers can exchange their depleted battery for a fully charged one at any time, by paying a small swapping fee at a nearby EGG-energy charging depot.

Perhaps they will disrupt Tanzania’s power companies!

17:57

5 Stories Seen & Heard in African Technology Investing and Startups

» ‎ Afrinnovator

We’ve been fortunate at Afrinnovator to hold the trust and respect of the African tech investor community far beyond just technology, innovation and impact. Recently, I’ve began speaking with people within private equity, early-stage seed investing, angel investing and startups. During these sessions of coffees, lunches and very casual conversations I got to grips with some of the trends behind what’s going to be happening in East Africa. Much of what’s taken place in this space especially has been underreported or not covered extensively and that’s what I will share below.

Afrinnovator’s organising a debate on Investors vs. Startups on the evening of Monday, 2nd April 2012 (scroll to the bottom for details and registration is here.)

Disclaimer: This post does includes speculation and in some particular cases the information was shared from sources that opted to remain undisclosed. However if something is unclear you put me to task in the comments section below. That said, here are the 5 biggest stories I’ve seen and heard this week in African Tech investing.

With no further ado, the 5 stories seen and heard in African technology investing and startups.

1. The Silicon Savanna Fund: iHub, i/o Ventures, Kleiner Perkins and An Afrinnovator Accomplice Combine

It’s no secret that iHub founder Erik Hersman is passionate about seeing the tech scene grow in Kenya and in Africa. He’s been blogging on it and lamenting on some of the gaps. When the gap was a space, he founded the iHub, and now the next step is finance and capital and he’s having a hand in creating what will be known as the Silicon Savanna Fund. It’s an open secret that he’s involved and not under wraps, but it’s yet to be announced. From what I’ve gathered, here are some of the details about it:

The fund will look at very early-stage higher risk seed capital
They will close 30-45 deals per annum, but not be iHub-exclusive
The fund is said to be around $5 Million with approximately $3 Million coming from abroad (stateside and Silicon Valley in particular, with KPCB among some of the names being possibly associated with the fund)
The fund will be managed by Afrinnovator columnist and Associate at i/o Ventures Mbwana Alliy
It will most likely be launched at the upcoming Pivot East Conference in Nairobi (and the startups that emerge winners will form part of the first round of investments)
Most of it should be public knowledge by now as Paul Bragiel, co-founder and managing partner at i/o Ventures gave an introduction to the Silicon Savana Fund at an event this past week.

2. Naspers and MIH Africa in Major Restructuring and Consolidation of People and Product

There’s been some interesting changes taking place at Naspers and specifically MIH Internet Africa over the past 8 months. It came to many as a surprise that they chose to shut down their e-commerce company Kalahari in Kenya and Nigeria as well as small business classifieds company Mocality in Nigeria. Now that some of the dust has settled it looks as though they are streamlining their African e-commerce efforts they have changed both leadership and decisions as far as products for the Sub Saharan region.

As far as people, Neil Schwartzman, former General Manager for Dealfish.com replaces Stefan Magdalinski who was General Manager, E-commerce for Sub Saharan Africa. Neil takes the role of CEO for Sub Saharan Africa at MIH Internet (also indicating that the structure internally may changed). MIH is hiring to replace Gary Novitzkas, who was CEO for Kalahari.com signifying either he’s left or has taken up a new role in the organisation. Stefan was also CEO of Mocality and with them shutting operations in Nigeria and Kenya moving steadily it is yet to be seen if management changes take place there as well now that Stefan moves regionally. Perhaps GM of Mocality, Jonathan Muir, would step up into the CEO role.

As far as product, I came across the news that MIH Internet had sold its stake in Dealfish to OLX. OLX is a Naspers company within as one of their main classifieds companies active in 96 countries in over 40 languages present especially in emerging markets. It remains to be seen how co-CEOs Fabrice Grinda and Alex Oxenford will do, as Dealfish recently hired the services of Peter Ndiang’ui as Regional Manager for East Africa. It’s anybody’s guess where this goes, though word is that there will be much more streamlining now that OLX is in control.

3. Google and Mocality Strike Deal. The Beneficiary, the The African Tech Community

Speaking of Stefan, who will certainly be remembered for setting up the sting operation on Google in what is arguably the biggest story in African technology this year. The repercussions after Google apologised unreservedly included the exit of then Country Manager Olga Arara-Kimani from Google.

The biggest talking point had always been that after Google admitted guilt and was found culpable, what the settlement would be. Google VP of Engineering EMEA, Nelson Mattos and Stefan Magdalinski met in Nairobi weeks later and though the result of that meeting isn’t announced yet but it is expected that since Mocality isn’t short on finances and resources as a Naspers company, that the payout would go to the next best thing, as it were, the technology community in Kenya; many of whom played a key role in getting the story viral. (it’s a long list: Techcrunch, ZDNet, SAI, HuffPo, BoingBoing, M&G, The Verge, VentureBeat, RWW, etc)

4. Kopo Kopo emerge as one of Vinod Khosla’s initial investments as part of the Khosla Impact Fund

This is a story I’m surprised has stayed pretty low key, even as far as coverage goes in Africa (guess this is why Afrinnovator may be in a league all of its own.) Last year, as Kopo Kopo VP of Business Development Benjamin Lyon, a good friend of Afrinnovator and an current m:Lab East Africa incubatee stayed mum as I prodded him on what would be next, CEO Dylan Smith was off in the Valley in meetings and fundraising as part of their first round. Estimates say they raised close to $1 Million and that it was led by Blue Orchard, Khosla Impact, First Light Ventures and Impact Assets. More on that on their supporters page.

They’re one of my personal ones to watch. Look out for a column on big data in the weeks to come as they’re one of the leading regional players in that space on the continent.

5. 88mph bring UK angel investor Michael Jackson on board

Nairobi-based startup accelerator 88mph, the investment engine of HumanIPO made the announcement on bringing in accomplished UK angel investor Michael Jackson to their team at Startups, Sushi and Wine which took place this past week after they had an Elevator Pitch session for startups at their expansive 4th floor StartupGarage space. It will be interesting to see how Michael joins the fray with the current crop of investments. He was ranked 3rd in the Telegraph’s list of most influential tech investors in Europe and will probably use that to bring UK and European clout to 88mph while Head of Operations Nikolai Barnwell holds down the fort in Nairobi. 88mph also recently made an investment that saw MoneyAcademy.co.ke founder Joel Macharia join them and pivot to PesaTalk.com to scale up efforts to dominate the personal finance and money matters vertical of Kenyan content.

Afrinnovator presents: The Investor vs. Startup Debate

If this post and the conversations we’re having tells us anything, the debate on startups, on angel investors and VCs is going on and is going to get livelier in the weeks and months to come. In anticipation of this, Afrinnovator will host a series of events starting with a debate and panel discussion on the evening of April 2nd at the Startup Garage, 4th foor Piedmont Plaza on Ngong Road (above Brew Bistro Lounge) and we’re inviting some of the most vocal internet entrepreneurs, students, investors, angels and people in and around that ecosystem to join us to lay cards on the table and hear frank discussions on the future of this industry. Join us by signing up here. More details in our blog post here.

Did I miss anything, get some facts wrong, surprise you, berate you? Sound off below in the comments. Any tips on news or edits, drop me a line at hello@mark.co.ke

image via.

19:05

Afrinnovator’s First Live Event: Investor-Startup Meetup at Startup Garage

» ‎ Afrinnovator

As we’ve noted before, funding is one of the hot topics when it comes to tech entrepreneurship in Kenya, and many other parts of Africa. We recently looked at the ICT Funding Gap in Kenya, and the challenges of finding investment at the earliest and riskiest part of a startup – the seed funding level. And then even more recently we looked at the other side of the coin, the apparent challenges that investors are facing when it comes to funding tech startups in Kenya.

The articles sparked off a bit of a discussion online, with investors and techpreneurs alike airing their views.

This has led us at Afrinnovator to organize our first live event to be held on Monday, April 2nd from 5.00 PM to 7.00 PM at the Startup Garage (register to attend here). The event will be set up in a panel discussion format with investors and tech entrepreneurs. We will be aiming at discussing the issues of finding funding, from an entrepreneur point of view, and also what investors are looking for in startups.

What are your options as an entrepreneur to fund your tech startup?
How should you prepare to pitch to an investor?
What are investors looking for?
How do investors evaluate potential investments
What’s the investor-entrepreneur relationship like?
At what point should you go for funding?
Do you need funding in the first place???
What lessons have others who have taken funding learnt and how did it work out for them?

Join us as we explore these issues and more, as we have a lively and interactive session with both investors and entrepreneurs. Among our panelists will include representatives from:

eVentures Africa: eVentures Africa Fund (eVA Fund) is the first venture capital firm investing in African SME’s active in digital media.

Invested Development: funds and supports radically affordable and innovative solutions to poverty in alternative energy and mobile technology.

88mph: 88mph is a Denmark/Kenya based seed investment company with focus on Startups targeting the East African mobile and web market.

Register to attend!

8:00

The Road Ahead: Blueprint for Building Africa’s Tech Ecosystem

» ‎ Afrinnovator

I have lived and breathed the modern technology Ecosystem of Silicon Valley for the last 7 years- its a well oiled machine that keeps on producing innovations that impact the world. In the last few years, we have started to see the culture start to spread across the world. From my vantage point, I started seeing some tech successes come out of New York, such as Foursquare. Then through the spread of conferences and events, places like Austin, Texas suddenly came on the map thanks to South by South West (which apparently has already become “too big”). Events such as Le Web in Paris, also start bring more Silicon Valley magic to Europe. Some of my good friends at 500 startups, like Bedy Yang, are investing heavily in tech startups from Brazil, China and India. Call it the globalization of Silicon Valley- more and more people are recognizing opportunities around the world.

Now it’s Africa’s turn. It is now impossible to ignore the strong economic growth and other indicators that point to not only a larger African consumer market and middle class, but a more connected continent that make it easier to reach and serve Africans even if many are still classed as “bottom of the pyramid”. Thanks to undersea cables that brought down the cost of communications and internet starting from the middle of the last decade, now conferences and pitch contests following on the heals establishment of numerous workspaces and hubs on the continent- this is now sparking a mobile revolution that is arguably only limited by 3 challenges:

Africa’s perception and legacy: Despite the progress we are seeing in Africa, legacy and perception issues hold back the amount investment and awareness in the tech sector- Governments over focus on real estate and infrastructure vs talent development and policies to allow foreign investors and business friendly environment to allow tech startups to thrive- this is not just an African problem, but many economies around the world now realize that Silicon Valley might have some things right as technology and innovation become more critical pieces of the economy.
Ability to develop home grown talent through the right technical, managerial and entrepreneurial education: The explosion of workspaces in Africa is actually quite easy to explain- Africa once felt like a very fragmented tech ecosystem, you might be the only person in Zambia who codes in python and you feel isolated- you will get nowhere unless you try find likeminded people and the network of investors and mentors to realize your potential . Not only that- your tech skills are not well appreciated. One of the reasons, I left the UK for Silicon Valley 7 years ago was because it was “cooler to be an investment banker or lawyer than to be an engineer in London”. Career distractions and traditional paths in a non tech region will make it harder for someone to benefit from their intrinsic interest in technology. I like the Village People lyrics from the popular song, YMCA. “Young Man, Go to the YMCA!”- in Nairobi for a techie it increasingly sounds like “Young Man, Go to the iHub!!”. The lucrative commodities and even AID sectors in Africa are these distractions for talent here- hubs offer an alternative for this talent to explore tech.
Opportunity cost of investing in other sectors vs Tech: Similar to talent in tech, many investors in Africa can and continue to enjoy great returns in areas such as commodities and real estate, where growth can be as much as 30% a year! Making return on investment and payback periods very attractive when compared to tech. Tech requires patience and the risk return profile is very different to other businesses- especially when you couple with the fact that many investors are not patient nor tech savvy. But this will change as investor realize the market opportunity and instant distribution to customers tech enables- but many will remain late stage investors due to the current structure of their funds. The early stage funding problem will remain a problem as long as there is no tech savvy angel network that is willing to take risks and roll up their sleeves to get their hands dirty. What about Exits you say? It’s not like Silicon Valley where “acqhires” offer investors downside protection by tapping next door cash rich tech companies looking for talent to allow them to continue to innovate. The challenge in Africa remains finding entrepreneurs who bet big to build a solid scalable businesses or innovations across the region to generate exit potential.

Despite these challenges, few things I have observed in the last month give me great hope as to why we are only the beginning and we will see a continued acceleration of Africa’s tech ecosystem as the barriers to these challenges come down.

Reconfiguring of AID systems to Philanthro-capitalism:
I have mentioned this repeatedly in other posts. I consider Aid as the fuel that propped up Governments and NGOs that have historically not contributed to economic growth. I find is fascinating all the talk about the World Bank nominating their new leader. The World Bank’s mission is to “eradicate poverty”- Did the BRIC countries lift themselves out of poverty thanks to the World Bank or was it their own style of capitalism and development? Its foundations like Tony Elumelu foundation who are preaching “Africapitalism” that come with folks who have really proven how to build economies in Africa we should be paying attention to. Aid often crowds out private investment as well. So with less money going into these aid channels, legacy institutions influence is now waining. Many departments are seeking new models to achieve more with less and get out the way to let private sector do more work-e.g. initiatives such as Data.gov. Technology is becoming a key ingredient in social innovations and many Governments in Africa are starting to recognize their importance and increasingly building tech capacity.
It used to be that a retired tech executive or newly minted rich entrepreneur in the western world with a curiosity in Africa would start a non profit or donate to one, they still can, but there are new avenues and tools to find and achieve a wider choice of impact, now they can put the same money into angel investing (increasingly less capital needed for tech startups) or contribute start an impact fund. For example, Salesforce, which pioneered an interesting CSR model is actively engaged social ventures at home, with the rise of clitivism such as the Kony 2012, we will begin to see more efforts being put into Africa social problems (first we need to get over the classic awareness problems I mentioned- yes, I know Kony is probably a bad example ).

Salesforce is just one corporation that has pioneered an interesting model. Last week, Meltwater, pioneer of the outstanding MEST model in Ghana, held are rare session in Silicon Valley that brought together people interested in tech investing in Africa (it was well attended for a first event) including Omidyar Network, a leading philanthropic venture capital firm in Africa. The list will keep on growing. It’s not just Google.org anymore.

The role of Diaspora and expats in bringing the skills and talents to Africa:
With many economies in the west seeing a period of economic uncertainty, this provides ample opportunity for talent to address a new spectrum of problems in tech in other geographies. Several high profiles startups with great teams are flaming out in Silicon Valley because tech in the west is starting to feel like hit driven “media business”. Last week’s victim, Milk Labs – there’s only so many hours in the day a person can be on their phone using apps and only so many apps that fill the homescreen of smartphones. In Africa, many consumers are not only starting to get a taste of apps relevant to them with much less competition for their time, their usage patterns are often different- for instance, they are used to paying with their phone instead of using credit cards-or mobile is often their first and primary means of accessing reliable internet. It still amazes me how long it takes me to educate someone here in Silicon Valley about how mobile payment services like M-PESA work. Those that do understand how things work in Africa can start addressing opportunities that no one else is and impact millions of people in the process and make money doing it.

Lets take the above 2 points together and see how some organizations I have come across are rethinking how to enable more global prosperity and stability that is inclusive of Africa and talent networks.
Erik Hersmann and I were recently invited to Kauffman Foundation’s new formed Global Partner Network with participation from 18 countries- some of the key takeaway from that event were:

How crisis can help catalyse change for a country (case in point Kenya with Ushahidi which has directly led to the iHub, with the founding alumni doing other great things to build and support the ecosystem).
The importance of Immigrant and Diaspora Networks in fueling not only Silicon Valley but connecting back to home countries.
Startup Chile was a real star of all the countries as a Government template that works to attract entrepreneurs- the fact that the Startup Chile’s website generates more hits than Chile’s tourism website show that there is a fast payback period the government sees into the economy without focusing on startup success. Which African Government will be first to replicate and adapt such a program?

Erik explains the rise of iHub at Kauffman Foundation Global Partners

A week later I met with the US State Department, who held a briefing of their new “partneship program that taps diaspora networks- which has some $50M+ funding from OPIC in programs such as Diaspora Alliance/IDEA and the diaspora Africa marketplace. America’s last big export to the world is its entrepreneurship culture, and even the US Government recognizes this a the highest levels and are retooling themselves to offer this support in the future. The State Department is spending a bunch of time in Silicon Valley lately- they should really open an office here, as well as spend more time on the ground in target countries once they begin scaling up their program.

US state dept outlines "IDEA" 5 pillars for diaspora engagement

Another trend worth watching is quietly building at university powerhouses. Take the generous $200M gift made by Bob King to Stanford to research emerging market economies with the goal to eradicate poverty. What does this mean? Whilst the new SEED department is still working out their model, I know they are focusing heavily on building connections to Africa- what I look forward to is more case studies and other teaching material making it to classrooms at Stanford- this provides inspiration for students to address new problems and build up the talent pool to address these markets. I also look forward to more African students such as myself making up more of the classroom- so I am not the only person here talking about Africa’s tech revolution and opportunities.

New models of education and mentoring paired with risk capital

Accelerator models with technical and managerial networks help prepare first time entrepreneurs at much lower risk with low amounts of capital. Even if more than half of the companies fail (a lesson in failure is a powerful thing), the alumni they create after a few years provide a valuable talent pool to draw upon for those startup winners who are now trained and still on the startup career path). Even here in Silicon Valley, I have seen folks who tried a startup for a year that failed yet the next year they are directly managing businesses $1M/year when they join a successful startup that has achieved escape velocity. A culture that accepts failure is critical to innovation and Silicon Valley thrives in it every day. There’s even a conference on this called FailCon. If you read Eric Ries’s Lean Startup Book (highly recommended)- he uses an excellent analogy around GhostBusters for startups and failure. At a a startup, like Ghostbusters, it feels lonely until that phone rings the problem you are trying to solve becomes a reality with only prepared to tackle it- then everyone is chanting “who are you gonna call Ghostbusters!”- many startups in Africa are right at the point of before that “call”- the line between crazy and genius.

Even new financing models such as Crowdfunding are only made possible thanks to online distribution and global participation platforms that tech enables means ideas can make into prototype much faster than ever. Investors who don’t pay attention to how lower amounts of capital for prototyping with a built in high failure can help seed a network of ever more experience future entrepreneurs will be in for a shock when breakthroughs emerge and they can’t participate in those deals because they weren’t early enough. Hands on investing in Africa is a reality as the talent and markets around technology continue to develop. Well run Incubators challenge the very notion of educational systems to prepare future entrepreneurs.

It seems everyday we are hearing more positive news on Africa’s tech scene (the press clearly now get it- like this great segment from Aljazeera’s Stream program), we now need more success stories of breakthrough companies and products beyond the Ushahidi’s and M-PESAs. My bet is that we are right at the cusp of that- the blueprint has been laid- we must keep building, and remember, its ok to fail if you learn and move forward.

Africa Tech Blueprint Summary:

	Perception & Legacy	Developing Talent	Investment Opportunity Cost
Past	Aid Systems crowd out private investors. Political Instability and high perceived investment risk. Can’t serve the “poor” in Africa except through charity.	Weak tertiary education and training systems = lack of talent to support a thriving tech homegrown tech ecosystem.	Return on Investment and Payback period attractive in other sector e.g. commodities Boom, Real Estate etc… Traditional Private Equity/VC structures favor high minimum investment in business with proven business models
Future	“Arab Spring Moment” acts as a reset. Entrepreneurship recognized as key to stability and prosperity. New models of capitalism from homegrown “AfriCapitalism” to social venture/impact investing point to being able to serve the “bottom of the pyramid at scale”- Technology seen as a key catalyst to reduce cost and enable innovation.	Incubators, Accelerators and Hubs/Workspaces + Tech events/pitch contests act as finishing schools and readiness for Entrepreneurs. These are the new Universities that facilitate peer learning, learning from failure. “Hacking” seen as a means to test and learn to build prototypes that can become real businesses. Returning Diaspora talent or expats help build up ecosystem with relevant skills, networks and investment capital or remittance channel support. Global talent fromm leading universities such as Stanford, Harvard and MIT engage on the ground.	Tech recognized as key drivers to economy thanks to investment in infrastructure and rise of connected African consumer. Instant Distribution and payment systems develop at scale. Patient Investors and tech savvy angel investors get their hands dirty and invest in potential, not just quick payback deals. Success stories and development of Exits for investors bring in “laggard investors”. Multinationals recognize and invest in regional R&D offices not just sales or cheap outsourcing hubs.

11:11

Tech Startup Funding in Kenya – the Other Side of the Coin

» ‎ Afrinnovator

Fairly recently I wrote a piece on “The ICT Funding Gap in Kenya“. We noted the existing gaps as far as funding is concerned particularly at the earliest stage of a tech startup. But it seems there is another side to the funding coin.

In the recent past, the situation has radically changed in terms of the availability of funding particularly for software based startup funding at the seed level. Whereas, we’re not quite there yet, the situation is definitely not what it was even as little as a year ago. There’s more funding in the ecosystem and more funds willing to risk investing in early stage startups. And based on how things are currently progressing it may well be that the tables could soon turn or are already turning to a situation where the pressure is on startups.

Following a discussion with some of these funds, I found they too are having certain challenges with funding startups.

100% Commitment

One of the main concerns of some of these funds is basically that they’re finding that local startup founders are not willing to commit 100% to their ventures. The founders are going about they’re venture, not because they believe in it or are sold out to it, but more of as a side project, what here could be termed as a “side hussle”. The founders have a few more projects on the sidelines that they’re not willing to let go of to pursue this particular one that they’re seeking funding for.

Seed funding is a rather risky affair as it is, investors at this level are comfortable with that risk, but would want as much as possible to keep that risk within what is manageable. If a founder is split on what they want to do, and are not sold to one project and committed to giving it their best shot, then that presents an even greater risk for the investor. This “hussle mentality”, drastically reduces the chances of success and hence the chances of the investor making a return on their investment.

Perhaps, on the other side, I could see why some local founders may have this “hussle mentality”. You see, unlike other parts of the world where a history of the success of tech startups has been established, such is yet to become clear here. In a manner of speaking, as far as the history of tech startups and innovation goes here in Kenya, it’s still the equivalent of those first few million years post the Big Bang. Yes, there are a handful of success stories at varying degrees, but we’re yet to see a good number of them. Perhaps, this leads to some founders thinking they need to spread their risk – if this doesn’t work, I still have this and that. Basically, hedging their chances of success.

But that does work from an investor point of view, the investor is thinking, “I’m risking my money on your venture, you’d better be committed to it”

Good ideas alone don’t going to cut it

The other concern that came out is this myth that good ideas alone are good enough. Christina Tamer of Invested Development said it this way:

Technologies and businesses must be market-driven. It’s important for entrepreneurs not to confuse market need with market demand. Just because people ‘need’ something or could use it, it doesn’t mean that they’re demanding it as a market and are willing to purchase.

Many startups are founded on the idea of what the market ‘could‘ use. What they ‘might‘ need. Or what is perceived to be something people would want versus what they actually need. Or on the other hand what just sounds like a good idea to the founder, or what has worked in other markets.

This simply calls for market research, which it seems, few tech startups are doing. One might argue that it could be out of the reach of most startups to afford doing comprehensive market research, but even without rolling out such an effort there is a level of research that one could carry out with little or no money. Simple things like talking to the right people such as either people who would be the target market for the product or service, or experienced people from that sector.

There definitely are ideas that take off based on a deep intuition by the entrepreneur on what the market needs or anticipating what people could use, and even foreseeing what future needs to be. But even then some market research helps to clearly define the market and then build on that. A clear market means less risk for the investor, and higher chances of making a return on their investment.

Coupled with this issue of defining markets is the issue of defining a workable business model for the startup.

The NGO/grant money effect on valuation

This is probably one of the most interesting insights I got, because I had never thought about it. If you’re in any way involved in the tech community here in Kenya, you will probably hear of a NGO backed hackathon or contest quite often. The idea is usually to provide grant money to people who come up with good ideas to solve some (usually social or human) problem. And there’s big money to be won in most if not all cases.

What some of the funds are identifying as a potential downside to this is that it’s creating not businesses, but simply people who come and put something together just for the prize money. Not only that, it blurs the lines as far as how to value a startup in the earliest stages. It’s feeding more to this “hussle” mentality instead of producing solid tech-based businesses.

Perhaps investors need to also come up with more IPO48 type events that are not just about creating cool technologies that don’t translate into business but actually finding good ideas and people to run with those ideas and then investing in them over the long term versus just giving them prize money. This is what gave good ideas like M-Farm the muscle to move ahead instead of dying at the level of just having won some prize money.

12:08

Case Study: How Kenyan SME earns 60% of its Revenue from the Web (Part 2)

» ‎ Afrinnovator

We continue with Grace’s story of her successful use of the Internet and social media in running a successful SME

Stories such as that of Grace Murugi and her Cakes.co.ke business not only inspire, but also shed a light on the opportunities available to African businesses if we embrace Internet and Mobile technology, be it in operations or in Marketing.

“If Online Payment could be more embraced locally, my work would be so much easier”

In early 2011, Grace integrated online payment into her website to allow her clients to pay online via Credit Card. This opened up a new opportunity for her to tap the Diaspora market. A year later, nearly all Online Payment transactions come from clients in Diaspora who are purchasing Cakes for their loved ones in Kenya. Kenyans don’t trust Kenyan websites when it comes to Credit Card Payment, she says. They opt for M-PESA, the local Mobile Money service by Safaricom or Cash. For Grace, this presents an unnecessary complication in reconciling her accounts.

“Being Google’s Ambassador for Kenya Business Online has been a big blessing for my business”

Among her corporate Clients includes Google Kenya who discovered her business through (you guessed it right) their Search Engine. They have been getting their Cakes from her for a while. When Google Launched their Putting Kenyan Businesses Online initiative, they chose to use her as a classic example of what Kenyan SMEs can achieve by having an online presence. Google shot a Video testimonial on her and several other Kenyan businesses, as well as using her as the face of all their online advertising banners.

This has given her unprecedented PR mileage, even earning her mentions across popular Radio Stations in Kenya such as Kiss 100, Hope FM and recently on Classic FM’s popular morning show. The resulting business exposure is priceless, and her website traffic has sky rocketed since she started featuring on KBO Ads.

“Internet Marketing is so effective and so free it hurts”

Grace has been managing her online platforms personally since inception. He only cost so far has been the time spent managing her website, as well as the $47 that she spends on her domain and website hosting. With 60% of her business coming from the website, she cannot think of any better way to market her Cakes.

“I have never spent a dime on Above the Line Advertising. When I heard how much it costs to advertise in the Newspapers and on Radio, I was shocked”

Grace derives inspiration from the success stories of the likes of ebay.com and cakelove.com. Her website gives her unlimited opportunities when it comes to the number of customers she can attend to from the comfort of her small shop in heart of Nairobi’s CBD. With my website, I can serve Millions of People, without the need of having all of them walk through my doors, says Grace. She references the thriving American Cottage Industry. In the US, entrepreneurs are able to run businesses worth millions from the comforts of their homes, why can’t we? She asks. To run a viable business in Kenya, a recognized Physical address that isn’t in your Mum’s basement is a must. The age old rule of Location, Location, Location is stronger than ever in Kenya.

“Most people who call us first ask where we are located. Not that they want to come over, no, they just want to verify that we are not a briefcase company. Why it matters, I will never understand.”

This year, Grace wanted to Trademark the name ‘Cakes.co.ke’ so as to protect an identity she has worked hard to build over the last 3 years, and also in line with her Franchise model of expansion. It was thus quite disappointing to find out that the Kenyan government has no legal provision for Trademarks that have .co.ke extensions to them.

“That’s when I really felt the pinch of being held back by Government legislation, or the lack of for that matter”

Grace has now expanded her business to include a Training School where she trains interested clients in Cake making. She did not think twice about employing the same Web Marketing strategies as those used in her business to promote the Training School. It still works like a charm, she says.

“No matter how you Market, at the end only one thing matters; is it a Good Product?”

Grace shared with me an anecdote of a client who bought Cake from her in 2009, before leaving for a long stint abroad. When the client came back to town early this year, she gave Grace a call asking that she delivers to her the same Cake she made 2 years ago. The client couldn’t remember what type of Cake it was. The only thing she remembers is that she loved it! For me, that will always be my biggest Strategy, making amazing Cakes. She concludes.

12:25

Case Study: How Kenyan SME earns 60% of its Revenue from the Web (Part 1)

» ‎ Afrinnovator

Africa is undergoing a wonderful renaissance, driven by Internet and Mobile Technology. In just 10 years we have leaped from a 0.4% internet penetration rate to 13.5% internet penetration rate, according to Internet World Stats. We have embraced mobile technology, making it a part of our day to day business, at times setting the pace in innovation such as is the case with Mobile Money. True, we have a long way to go. 90% of African businesses do not have online presence, and only 2% of Global online content is from Africa. However at the rate we are going, this will change, soon.

Stories such as that of Grace Murugi and her Cakes.co.ke business not only inspire, but also shed a light on the opportunities available to African businesses if we embrace Internet and Mobile technology, be it in operations or in Marketing.

Her passion for baking Cakes and Pastries goes way back, but only while in campus did she commercialize it, albeit on small scale. It was a simple business model. She got orders from her fellow Campus students, did the baking at home and brought the cakes back to school for delivery. She posted a couple of posters and printed a few business cards but mainly relied on referrals and word of mouth to get her business.

Grace was pursuing a Computer Science Degree and had a career in Technology awaiting her upon completion in 2009. She however opted to continue Baking Cakes.

With a layman’s knowledge of Marketing and an appreciation of e-Commerce, she decided to use the Web in promoting her fledgling business. Her Computer Science background gave her sufficient skills to build a simple website as well as get herself website hosting and domain registration. She read online tutorials to learn some Search Engine Optimization and the basics of Social Media Marketing, and subsequently used the skills acquired to set up a Facebook page and a twitter Account. Since then, she has been posting daily photos of and updates about her Cakes.

“My business is where it is today because of my Website, my Facebook Page and my Mailing List”

For two years Grace has relied on her Website, her Facebook Page and her Mailing list to get new and repeat business. She now generates 60% of her Monthly revenue from Website leads, and wants to grow this percentage further. Her website is her ever fresh Catalogue, her Facebook page enables her to update her clients daily and get their feedback. She also sends out one Email update per month to her Mailing List of Eight Hundred clients. These are clients who are too busy to follow her on Facebook or visit her website every day.

Every morning, after ensuring that all her Baking needs are taken care of, she settles down with her iPad to check her email messages, respond to queries on her Facebook page and Twitter Profile as well as track the previous day’s traffic on her Website.

A beaming Grace proudly says that the strategy is working.

Cakes.co.ke is currently ranked no.1 on Google Search for Cake related Keywords in Kenya. Over time, she has mastered the art of Content Marketing. She says that her best kept secret to being ranked no. 1 is the daily updates on Cakes.co.ke and her Facebook page. The website is rich with information on her Cakes, and her happy Clients. The few minutes spent on her website and Social Networks each morning have brought her hundreds of clients each month through Search Engine Leads.

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This case study was put together by Alex Muriu (@alexmuriu) the same guy who brought you the Mobile Web East Africa Infographic!

9:31

The ICT Funding Gap in Kenya

» ‎ Afrinnovator

The Missing Middle

While capital has flowed rapidly to satisfy the needs of the largest and — thanks to the microfinance boom – the smallest African companies, SMEs have fallen into a “missing middle.” SMEs in the missing middle are starving for capital. They are too large for micro-finance institutions, too small for main-stream private equity and not serviced by commercial banks, which prefer to focus on high-value, low risk corporate clients. – From Open Capital Advisors, “The Missing Middle”

One of the often cited challenges many startups in Kenya (and much of Africa) face is that of finding relevant funding for their startup especially in the earliest stages, what is known as seed funding.

The situation has somewhat improved over the past few years but still there seems to be a gap remaining. In recent times, some innovators and entrepreneurs have found an aveue to get the funding they need through participating in pitch contests such as IPO48 and others.

The Capital Markets Authority (CMA) of Kenya, fairly recently carried out a research study and published a report titled, “Impact Investing: Challenges and Opportunities in the East African ICT Sector”. The report sheds some light on the funding situation in the region.

According to the report, ICT contributes 3 – 5% to GDP on average to the East African countries (based on 2008 data). The ICT sector is, however growing at about 8 – 12% on average across the region. According to the report, in Kenya, the ICT and transport sectors combined contribute about 14% to Kenya’s GDP, more than manufacturing:

One interesting observation from this report is that the major source of funding for Kenyan Small and Medium Enterprises (SMEs) is from personal loans and from friends (50.3%).

It would appear that the largest funding gap is currently at the early stage or ‘seed’ level, particularly for software startups. Other sub-sectors have varying funding gaps though:

Let’s face it folks, raising seed funding is hard enough for normal start-ups- I would say its at least twice as hard in Africa – Mbwana Alliy

The telecoms market is currently dominated by fairly large companies that have the capacity to raise any necessary funding from a wide array of sources. Smaller firms have a harder time acquiring medium term (5 – 7 years) capital.

While the cost of capital may be high for companies in the hardware sub-sector, these companies have the ability to use their equipment as collateral to access financing such as trade financing and working capital financing from banks, and vendor financing from equipment suppliers.

Within the software sub-sector, companies dealing in established and well-known brand name software would appear to have it easier than the smaller startups that are working on a custom idea that has not yet picked up. Established brand name dealers and re-sellers for example can more easily obtain some trade financing from banks when they have established clientele and purchase orders.

Business Process Outsourcing (BPO) firms also face significant challenges as far as funding goes. These companies typically will need heavy investment in order to acquire equipment, train staff and also for marketing. This is compounded by the fact that to be highly competitive, a BPO firm will need to attain some significant level of scale, for example in terms of the number of call center seats.

This is an excerpt from an upcoming report by Afrinnovator titled “Kenya Technology, Innovation and Startup Report 2012” Look out for it!

12:00

Online Reputation Management in Africa: A Compelling Case for Business, Government & the Consumer

» ‎ Afrinnovator

Naazneen Parkar is an independent Online Reputation Analyst from Kenya with experience across the web with key focus on Kenya, South Africa and more recently Canada. Naazneen has a passion in the tourism industry and more importantly the link between online marketing and tourism.

Digital and its benefits are not new to any of us. Looking back at the success of 2011 it is evident that in Africa internet accessibility is drastically increasing with mobile devices driving the majority of this growth. As this continues to take place, the importance of monitoring and measuring online performance grows as more people throughout Africa get connected.

On the continent, online reputation management (ORM) is advancing in Southern Africa; however there is a lot more room for growth in the rest of Africa. On the web it has emerged as a new frontier with some uncertainty but many stakeholders look at ORM as, at best, a form of risk management. However, ORM is equally a form of risk management as it should be a form of opportunity spotting and possibly even more.

By focusing on three key stakeholders namely, businesses; consumers and governments it is interesting to see how each of them have the potential to embrace online reputation management to maximise their impact.

African Business: From FMCGs to Start-ups

Focusing on the risk elements of a business can be very limiting. For instance, one of the main benefits of online conversation is the fact that it is user generated. People are constantly having conversations with their colleagues, peers and brands about various topics. Not only is this information unbiased but it is recorded beyond geographical boundaries helping provide deeper insights into the market and consumer behaviour and perception. Another added benefit is not only can this conversation be accessed week-by-week but it can also be used to identify trends one year within the market. A case in point would be to examine the sentiment of consumers of a big Pan African name brand like OMO detergent or another fast moving consumer good and see how that changed a year after they began social media.

Entrepreneurship in Africa is definitely one of the driving forces of any private sector in an African economy. Monitoring online conversation provides entrepreneurs with market insight at a much affordable price when compared to conducting fully-fledged surveys. It helps small businesses think smarter and use innovation they get from using technology that searches across the web for their consumers who are writing and speaking about them.

This provides an opportunity to outwit competition by making calculated decisions based on opportunities identified through online conversation. A case in point may be a pair of users discussing where to buy insurance from, though speaking about a larger healthcare provider, a salesperson can take the opportunity to share their perspective and gain a business lead in the real world through monitoring the virtual space.

The African Government

One of the problems in Africa is our leaders are not held accountable for their mistakes. This is changing thanks to initiatives such as Kenya’s Open Data Initiative and incentives are being put in place to take government data and put it in the hands of journalists and developers to make stories and services that citizens can use to keep their leaders more accountable.

As the African online community our level of awareness is increasing and our tolerance for incompetence is decreasing. Online networks have the potential to be used as a platform to bring together our community in one common space. By identifying these communities and monitoring what they are saying, a database of information and possible legislation can be drafted. A case may be when Kenyan Chief Justice Dr. Willy Mutunga took to joining the social network. This opened up a new avenue to discuss and deliberate what had been an archaic legacy judicial system. Twitter went as far as to profile his story here.

Secondly, there have been several campaigns recently geared towards driving awareness and driving change in the African people. In Nigeria, we had #OccupyNigeria recently and for both governments and interest groups or lobbyists there is a need to quantify the impact of these conversations.

Just after the Arab Spring, Afrinnovator covered an infographic of tweets and conversations online. View it here.

By being able to measure how many people have been touched by our message, we can further drive and push the democracy at a government level or even that of the concerned citizen.

Governments in Africa also need to take into account that worldwide online and digital spend is on the rise in the developed world. Mobile platforms have definitely revolutionized online penetration in Africa. Recent statistics state that mobile connectivity could increase national productivity by 15%. In order to propel this growth, governments need to start implementing policies and resources for monitoring and measuring.

The dawn of eGovernment means that they are now obligated to listen, if not participate in the conversation and relate with constituents through the web or mobile phone. Consequently ensuring Africa’s infrastructure and government service delivery grow in line with the developed world.

The African Consumer

Consumer experiences have the opportunity to be personalised through online monitoring. Companies will be able to identify loyal customers and build personal messages or customized products based on their conversation. Not only does this help develop a personal touch, but it provides a competitive advantage since very few African companies have embraced this mode of thinking and service.

The mass market approach is still very popular in Africa. And there is definitely a gap and need for more companies to embrace individuality. As our industries become more and more competitive, consumers will be looking for that personal touch and one-on-one interaction. Mobile network operators in particular are tapping into this by delivering customer service on social networks from Nigeria, Kenya and South Africa. Having information and profiles of each of the customers actively talking about a brand will help differentiate those that have loyal customers to those that don’t.

As a whole, there are plenty of opportunities for all stakeholders to maximise on. Users in Africa have access like never before and brands need to change their focus to listening to these voices. Many have taken to social networks with a reactive mindset and ORM brings in the opportunity to listen and act on the data as part of informing a proactive approach to web and mobile. At the end of the day, online monitoring can be used as more than just mere risk management but take it a step ahead to business intelligence. What will differentiate successful companies and entrepreneurs from their competitors are those that are one step ahead, listening to consumer needs and spotting the opportunities is that differentiating factor; or as trendwatching put it, brands that are “flawsome.”

Do you believe there’s a place for online reputation management in African business, government or with consumers? Let us know, share your thoughts in the comments.

6:15

Systems Thinking Applied To Why M-Pesa’s Economic Impact and Wealth Creation Lessons Affects the Ecosystem and Not Just the Bottom of the Pyramid

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Niti Bhan is Founder at the Emerging Futures Lab. Niti integrates her multidisciplinary background in business, design and engineering with a global perspective to offer immediately actionable insights and strategic directions for successfully entering the challenging markets of the developing world.

Much of the topic in today’s discussions on Africa especially here on Afrinnovator is the mobile phone. When it comes to M-Pesa and its socio-economic impact in Kenya, we find that some of the issues why it became a runaway success in Kenya have not yet been duplicated elsewhere. Beyond the obvious brought up in most articles of “…it’s the banking regulations (or lack thereof)” or “…it’s the distribution network.” I believe that if we can frame the problem (and thus the potential solution) correctly, we could make a big difference to the many ways we attempt to enable and support social and economic development projects.

For purposes of clarity, I’ll also refer to the mobile phone as the mobile platform, since the phone aspect is but a feature of this handheld device. It has played quite the role among what is popularly known as the BoP or Base/Bottom of the Pyramid, yet when I think about the very many pilot programs and attempts to spur development via the mobile platform or, as in the case of M-Pesa, to launch game-changing mobile money transfer systems elsewhere, what immediately comes to my mind is a reflection on the issues that plagued the analysis of the success of Asus’ eeePC when it was first launched back in late 2007.

We take affordable and portable netbooks for granted today but back then in time, the category did not exist until Asus launched their 7″ Linux-based, open source, rugged and durable beauty for around USD 400. It was referred to as a “subnotebook” back then and caused much head scratching among the developed world’s leading lights. Nevertheless, it spurred all manner of competitors to focus on the two most obvious elements of its perceived success criteria – “price” and “form factor”. Whereas I argued, that what made the Asus eeePC so successful was its fundamental premise – to be an easy to use affordable device squarely aimed at emerging markets and how it was this positioning that drove every other element, including its form factor and price. By focusing only on the obvious, without taking the holistic thinking and underlying value proposition into consideration, competitors were overlooking many of the details that supported its initial success.

Framing the Debate on M-Pesa
I see something similar happening with one of the most obvious success stories in the “Mobile as a platform for economic development of the BoP” bandwagon. M-Pesa shows up in most analyses of “Business models or mobile thingies that are helping the poor” reports churned out so faithfully by researchers everywhere, yet the question arises, should it be even considered in that sandbox of things that help the poor in the first place? And by doing so, are we overlooking some of the factors of what makes it work so well in Kenya as well as misinterpreting that it was meant to be used only by the poor?

When the first reports of M-Pesa’s hiccups in South Africa came to light, it was then that Wambura Kimunyu first tweeted to me about the lack of the banked that were critical to spur the unbanked and thus the overall uptake of the service. That is, if the M-Pesa ecosystem did not have enough banked people with money to circulate, then there wouldn’t be enough unbanked nor would there be enough money to circulate leading to the challenges that they are facing in South Africa now. You needed the banked to bank the unbanked. It sounded counterintuitive but over time as I observed many different facets of this activity across different strata in Kenya it came to me just how much sense this made. It also proved how relevant this aspect was for the success of anything that should be considered as a means to improve incomes among the BoP when using the mobile platform or otherwise.

Adding Systems Thinking to the Debate
That is, for any solution designed to enable the flow of wealth – mobile money transfer for example – or improve wealth creation at the BoP – it was not enough to simply target the poor alone. It would not work as a “Solution for the BoP” primarily because the BoP do not have any liquidity. Even if they do indeed have assets especially in rural areas, or they do not have the cash for it to flow through the system in the first place. Thus solutions aimed at improving economic activity for the poor needed ‘non poor’ actors in the ecosystem in order to inject cash into the system and thus make it flow and grow initially.

Taking this thought one step further, M-Pesa – assessed as a holistic ecosystem for financial transactions – has been so very obviously successful in the Kenyan context primarily because it is used by everyone, regardless of their economic standing or “bankedness.”

And thus, when ‘solutions on mobile to help the BoP’ are considered, they should be looked at in terms of the complete ecosystem including the critical question of where the money will come from in the first place? Without which, they will limp along as a cash-poor system with little wealth to circulate, achieving nothing for the BoP in question. Look at this article on M-Pesa repositioning itself in South Africa towards higher income brackets and away from the original target audience of poor rural women.

Solutions to Improve Economic Conditions For the BoP Cannot Be Focused Only On the BoP
Rather the focus needs to shift to complete ecosystems that fill a vacuum of need – usually in infrastructure or services – that include actors from differing socio-economic strata in order to make a viable difference to larger population involved. Not only is M-Pesa a clear example of this framing – it filled the vacuum of “how to securely and affordably send money” – but it did so for everyone and anyone who wanted to do so.

Similarly, when I consider my favourite example of the Mumias Sugar Company and their payroll management pilot program for their daily wage sugar cane cutters, I see the same potential for a greater impact on social and economic development for the lower income demographic involved in this system. The solution is one that is win-win for all stakeholders – from the company who don’t need to send armed guards with cash into the fields, to the workers who no longer need to carry sums of cash around with them on payday and even have savings accounts now.

I also hear that real-time inventory management and other enterprise level solutions for supply chain management are also moving onto the M-Pesa/mobile platform in Kenya – again involving the tiniest duka (small retail store) as well as the big name manufacturers or distributors. Again we can see the potential impact on inventory management and thus, cash flow, even at the bottom of the retail pyramid where it’s most critically needed. We can project the potential that it will improve the economic standing or at least smoothen the variability of income streams that these smallest players in the informal economy require.

Will all stakeholders benefit? Yes. And will the members of the ecosystem who happen to fall into the so called BoP category benefit? Most likely. And more likely than if only the lowest segment was involved in a system of this sort rather than participating in the larger ecosystem of buyers and sellers.

The Bottom Line
Bringing all this back to the framing of the solution and the analysis of the success factors, I believe that a simple shift away from seeing only the obvious – mobiles! money! Bottom of the Pyramid! – system level solutions that fill critical infrastructural and service gaps in locales where there are few or inadequate alternates and that serve many including the BoP can and will do far better to improve the economic wellbeing across the board of society that those that focus on one demographic alone.

Author’s note: With thanks to Wambura Kimunyu.

What do you think? Is M-Pesa’s value from the Bottom of the Pyramid overstated? Chime in below in the comments.

18:17

Before You Develop The Next M-solution

» ‎ Afrinnovator

Source

Mobile is probably the greatest thing that ever happened to Africa, and more specifically, tech in East Africa. With 64.3 million subscribers in 2010 and growing (50 million in 2009), it’s only sensible that tech businesses would focus on developing mobile products. M Pesa’s success has been hailed world over, it’s no suprise that every other app is called “m-something” or “m-the other”.

The question I feel the tech community needs to ask and answer is…

“Should we all be in the m-hype or are there other, more lucrative business opportunities?”

I believe there are gaps in software development that remain unfilled, but aren’t interesting or “sexy enough” for our techies, they don’t make good news items, and for that reason remain the reserve of off the shelf software makers and foreign software companies. In the 5 or so years I’ve been in finance, I’ve had to buy all the software off the shelf, save for payroll software, and it would be good to know why we don’t have local solutions for this, yet we have the talent.

Just to name but a few:

Accounting: Every business worth it’s salt buys an accounting solution, mostly off the shelf. Small businesses for example have QuickBooks as the only affordable solution. For Kshs 40,000, a business is able to buy a software that runs well but cannot be in any way customised to fit the business’ needs. In addition to this, the business has to invest a further 30,000 or more in a local payroll software which doesn’t “talk” to QuickBooks. Why hasn’t any techie thought of collaborating with an accountant to build a good bookkeeping software? A company I once worked in had a local solution, which crashed after 1 year of struggling with the provider to get him to perfect it, we never got a refund for the purchase.

Stocks Management: A few months ago I sent a tweet asking for referrals to local stocks management solutions. I got none. One of the companies I work in is about to spend in excess of Kshs 500,000 on an off the shelf stocks management solution, and a tidy sum in monthly support. Why should this money go to a foreign company, yet we have techies working their heads off at the iHub every day?

Hotel Reservations: I’ have come across only one locally produced software for this, and as you may guess by now, it malfunctioned so much, the property had to replace it with the world standard software at a cost of Kshs 1 million (in addition to Kshs 200,000 spent on the original software).

Others are ERPs, Virtualization Solutions etc etc

Allow me to digress a little; I don’t understand how software developers sell a product that doesn’t work well, and still expect payment when it fails. I just don’t. When I buy shoes at Bata and the heel comes off at the first wear, I will get a credit note refund, why can’t we get refund for software that crashes? International software providers will give you trial period, in Kenya that’s unheard of.

While I have nothing against mobile applications, I feel any sensible software developer should be looking into Business solutions for various reasons:

Businesses have actual software solution needs and are already paying unreasonable sums of money for it. This isn’t the case with consumers. The average mobile phone user will get all apps free of charge. To successfully monetize a mobile solution, you have to meet a need that’s common among almost all the mobile users in the region, and this is why M Pesa has succeeded. It is hard to build a different product with such universal usability. If you insist on going mobile, make sure that the customer actually NEEDS your solution, and it’s not something you’ll have to create a need for.
Businesses are easier to sell solutions to. Most m-products are aimed towards the masses and require extensive user education and marketing for the users to adopt and start using. Consider mobile banking; as much as banks have invested millions in marketing it, and the M Pesa rider has made it attractive, I can confidently say it’s not a money maker for the software providers (yet). I believe it’s much easier to patiently build a solution that works and get a few businesses to believe in you.
Mobile products are mostly focused on the Bottom of the Pyramid and for that reason have a revenue model that banks on their adoption by a large number of users. A business solution on the other hand has various revenue models; software purchase, licenses on number of users and support fees that a developer can slowly build on.

I’m sure there are other advantages but there’s a reason why most of our developers are going the ”m-way”. My theory is that a business solution is too much work. To be credible as a local software developer, one has to:

Research about the business. For example if you’re trying to build an accounting solution, you have to study accounting, understand how a CPA thinks and QuickBooks works.
Spend lots of time working on and testing the product to make sure it has zero errors.
Market the product to skeptical clients. Most of us have been burnt by locally developed software before and won’t give your solution a second glance unless it has a trial period.
Make a sale, train, and keep giving the client attention

“Yeah, that sounds like too much work, I’d rather make my widget, “m-something” or “m-other”. It will give me media airtime, win me awards, get me invites to conferences, and if I’m really lucky a bank (or Safaricom, Google, Facebook, Twitter), will buy it from me in 5 years, then I’ll retire!”

In my opinion, whenever it sounds/looks/feels glamorous, there’s no money to be made. Companies that are doing real stuff are rarely in the news.

I’m I being harsh in my assessment of our tech community?

19:37

Infographic: Mobile Web Africa 2012 Visualised including Statistics, Quotes and Insights

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10:02

Live Blog: Mobile Web East Africa Day 1

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22:23

From Mobile Money to Mobile Finance: Effects of Mobile Money on household, community and national economics

» ‎ Afrinnovator

Back in 2011, Erik Hersman, Ken Banks & Rudy De Waele curated a presentation dubbed “Mobile Trends 2020 Africa“, a collaborative outlook. Essentially they sought the views of different people across the continent who are players in one way or another in mobile on what they thought the future of mobile in Africa held and what it would be like in 2020. I was honoured to give my 5 thoughts on what I thought would trend in mobile within this period. One of my predictions was that: “Mobile money will shift economies on a large scale and across borders.”

So it came as a rather interesting discovery to learn that according to a recent Africa Development Bank (AfDB) research study, increased uptake of M-PESA, which is the literal mother of Mobile Money, is said to be contributing with some level of significance to the levels inflation in Kenya. Inflation was a major problem in the Kenyan economy in 2011, having hit a high of 19.7% towards the end of the year.

It seems we have already got to that point already where mobile money is becoming a matter of concern as far as national economies are concerned. According to an article titled “M-PESA linked to rise in Inflation“ in the Business Daily, a Kenyan business paper:

Increased uptake of M-Pesa, Kenya’s dominant money transfer service, has fuelled inflation as the service grew large enough to influence implementation of monetary policy, an African Development Bank (AfDB) research claims.

Then very recently a discussion broke on local Kenyan discussion, Wazua, on speculations that Safaricom, Kenya’s top MNO and M-PESA operator, would buy a bank. Whether such speculations are true or not, one thing is for sure, mobile money has come a long way in a relatively short term and it’s for sure that mobile money is affecting economies at the household level and at national level so that now we can study the finance and the economics of mobile money. This area of M-Finance, as it were, will become an area of increasing interest in future, perhaps it will be even necessary for universities to include this topic as an area of study in itself or within finance-related courses.

The household level

William Jack of Georgetown University and Tavneet Suri of MIT Sloan in 2009-10 carried out a survey in which they sought to investigate the “Economics of M-PESA“, apparently the survey had the blessing of the Central Bank of Kenya, Safaricom and Vodafone.

Perhaps the most interesting effects of mobile money on households relates to ease of movement of funds & saving capacity.

According to the previously mentioned survey, it appeared that M-PESA encouraged people to feel safe to keep funds in their M-PESA account for fairly extended periods of time. On the other hand, mobile money also affords an easy, and cost friendly means of moving money.

It is true that Safaricom is moving massive amounts per day via M-PESA is estimated to move about 2 billion shillings daily, and according to a Safaricom report, between April and September 2011, they moved Sh. 314 billion. It’s interesting that this amount is actually a minor fraction of the total money moved within the country. According to the same report (based on fairly dated information):

…the volume of transactions effected between banks under the RTGS (Real Time Gross Settlement] method is nearly 700 times the daily value transacted through M‐PESA. On the other hand, the average mobile transaction is about a hundred times smaller than the average check transaction (Automated Clearing House, or ACH), and even just half the size of the average Automatic Teller Machine (ATM) transaction. Thus M‐PESA is not designed to replace all payment mechanisms, but has found and filled a niche in the market in which it provides significantly enhanced financial services.

It would be interesting to learn what the current share of total transaction volumes is being handled via mobile money versus other means (if you have any tips please comment below).

The Community Level

Beyond households, mobile money is affecting local community economics. The introduction of mobile money and it’s effects at individual and household level eventually spill over and start having effects in communal life.

The Bill & Melinda Gates Foundation funded a project dubbed “The Financial Services Assessment” project in 2010 that was designed to examine the impact of financial services on the lives ofpoor people across the developing world. Part of their outcomes relating to the effects of M-PESA were published in a paper titled “Community-Level Economic Effects of M-PESA in Kenya: Initial Findings“, authored by Megan G. Plyler, Sherri Haas and Geetvea Nagara of the IRIS Center, University of Maryland.

According to their findings, M-PESA had four overarching economic effects at the community level:

Local economic expansion: In essence, the team found that, M-PESA facilitated increased money circulation which had an effect of increasing local consumption, which of course means more business for local store owners and the like. In addition new business and employment opportunities arise out of for example the establishment of M-PESA agents, existing store owners could also diversify their offering by including this service that is now in much demand
Security: Other than physical security (i.e. muggers realizing that few people carry liquid cash) the study found that M-PESA contributed to money security, that is by enabling people to safely store funds in their mobile money account
Capital accumulation: Being able to save money instead of spend it enables wage earners to accumulate financial resources on their phone safely even without having to have a bank account or resort to a less secure mechanism such as keeping cash under the mattress
Business environment: “M-PESA reduces the overall transaction cost of moving capital along a network and increases the flow ofcapital. While the amount of money M-PESA moves is relatively small among formal financial systems in Kenya, the number of transactions and volume of flow is increasing and covers larger segments of Kenya’s population in terms of income, age and depth and breadth of access (Jack and Suri, 2009)”

The National Level: Monetary Policy

This is where things get really interesting. The effect at the household and even community level are almost predictable from the earliest signs of successes of mobile money. The national economic effects however have been more gradual and have become more and more pronounced with the increased adoption and use of mobile money services.

In fact, the issue of the macro-economic impact of mobile money has spawned academic interest and conferences to discuss these issues. In 2010, for example, The Columbia Institute for Tele-Information (CITI) at the Columbia Business School hosted an event dubbed “The Macroeconomics of Mobile Money” to discuss the impact of mobile money on the macro-economic situation.

1. Impact of Mobile Money on GDP

Menekse Gencer of mPay Connect Consulting gave a presentation at the CITI event (there’s a paper based on the same presentation as well) looking at the impact of mobile money on GDPs of emerging markets. According to him, mobile money has triggered improvements in GDP. Menekse notes a statistic that a 10% rise in mobile subscribers in emerging markets would lead to a 0.6% to 1.2% increase in GDP. Why would mobile money make contributions to a country’s GDP? According to Menekse, the answer lies in 5 forces that are inherent to mobile money:

The ubiquity of data transmission that mobile provides means that financial services can be extended to reach people who were previously unreachable.
Mobile money as a new industry that is precipitating new investments for new ventures, new jobs and new revenue streams for existing companies
Mobile money as an infrastructure supporting new businesses in other industries
Mobile money formalizes the informal financial sector , enabling savings, loans and investments in lieu of “cash under the mattress”
Mobile money enables efficiencies associated with digitization and reduces frictions associated with cash (such as theft or ‘shoe leather costs‘)

2. Impact of Mobile Money on Monetary Policy

a). Monetary Policy – Effect on Money Supply

Mobile money would affect money supply in two ways at least as per the M1 definition of Money which combines the currency in circulation and demand deposits:

Currency circulation: Mobile money creates a situation where people have more money in their pockets in the form of mobile money. What happens if these stores become vastly more than actual cash in supply?
Demand deposits: Traditionally demand deposits have been considered to include easily accessible funds stored in demand deposit accounts in a commercial bank. Well, how does storing money on your mobile phone fit into this? Further more, what if you could move the money off shore

b). Monetary Policy – Effect on Velocity of Money

The velocity of money is the average frequency with which a unit of money is spent in a specific period of time. This is the issue the AfDB research we quoted earlier found – simply put, money held in M-PESA accounts has much higher transactional velocity.

“Evidence shows that the transactions velocity of M-Pesa may be three to four times higher than the transactions velocity of other components of money.

“The increase in the velocity of money induced by these activities may have in turn propagated self-fulfilling inflation expectations and complicated monetary policy implementation,” said AfDB in a brief on inflation dynamics in selected East African Countries.

Conclusion

The fact of the matter is that mobile money is not only disruptive in terms of technology, but also as far as economics goes. And this trend will continue into the future perhaps becoming even more interesting as the uptake of mobile money increases, mobile payments and mobile transactions become mainstream and even cross border as well as integrated to other forms of money stores.

8:00

Battle of Social Networking and Online Communities in Africa

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Last year whilst visiting an aunt in south west area of Tanzania called Kyela, near Lake Malawi- I put my samsung cheap android smartphone on the dinner table . My cousin immediately reached it pulled up the Facebook app and used my profile to friend request me! I remain hidden on Facebook and he wanted to make sure we stayed in touch. I was shocked- I am pretty sure he had never seen an Android Samsung before- but had clearly been on Facebook on internet cafe’s or through his feature phone- especially given that this remote part of Africa is a 2G/Edge zone.

In the beginning… What makes a social network successful?

Social networking is fragmented in Africa- there is no clear winner. Also unlike the rest of the world, African consumers may skip portals such as Yahoo! and other local variants and leap frog straight to social networks. The battle ground is mobile as the key platform to grow the next stage of users- arguably feature phone and those who upgrade onto smartphones such as Android. Facebook is growing at double digit rates across most African countries that matter, some would even argue that Facebook is helping drive ICT adoption in Africa. Of the 140M Internet users in Africa, almost 40M users have Facebook- or just over 1 in 4. And I would argue that by current no.s they are now neck and neck with Mxit as the largest social network in Africa (over 40M users). Although Mxit is clearly a leader in active users in South Africa (10M).

Time spent on any network is really important for obvious reasons-but one of the most important is that its a means for many apps to reach and try engage the masses of where they spend most of their time. As such the importance of social networks in Africa cannot be understated. First of, entry and exit points into these networks are key. For example, Yelp was initially discovered via google search due to the lack of local listings on Google, this gap provided an opportunity for Yelp to be discovered via SEO and even led to buyout offer from Google. Yelp may IPO this year. And a few weeks ago, you saw what happened with Mocality? A rogue Kenyan employee tried to destroy the value they had created by stealing their listings. Using Mocality as an example- its important to consider 2 distinct value generating strategies for social networks- one sided vs two sided. Mocality built up a huge business listing which then provides a clear value to attract users to the service. Without a large enough listing, you don’t provide enough value to users. Contrast this to a more one sided value such as Mxit and even Facebook. They built up value by allowing users to communicate with each other. With Facebook it was photos to communication. For Mxit it was clearly communication, offering a way for users in the African context to community cheaply instead of using expensive SMS. Only later once they built a huge audience, did they offer solutions for business and brand pages and become a 2 sided network as means to start generating via advertising to connect the 2 audiences.

Mobile is clearly a strong entry point for networks in Africa as Mxit has proved over the last 10 years to become the biggest social network in Africa and are now being challenged by Facebook given their momentum on mobile as well. Now with the growth of broadband and mobile internet, there is bound to be a shakeup. Mxit needs to adapt and move upstream, and Facebook needs to come down stream (hence the purchase of Snaptu last year). And then you have wildcards like Binu who are sneaking in with real practical solutions using BOTH feature phone adoption and the cloud to offer an entry point to other services mainly messaging, Twitter and Facebook and other content such as ebooks in the absence of smartphones… Lets use Facebook as an example again- what was their entry point? I would argue “the connected generation” at Universities- starting from vanity photos and growing all the way to social games and applications- controlling your entry point as an online community leads to very different outcomes. The Facebook generation is not the myspace generation is not the yahoo generation.

Facebook has very creative localization strategy for making the network available in key languages (something Mxit has not yet if they plan to expand across Africa and indeed the world). However Mxit has figured out how to monetize on mobile given their starting point, something which facebook has not on mobile yet nor remotely in Africa (although there are increasing no. of Africa advertisers). Mxit was recently bought for a rumored bargain price of 5OOM rand (~$60M) by World of Avatar. Alan Knott-Craig, now at the helm, may be looking to beef up and flip Mxit to a big network such as Google. But at this rate they feel more like a “yahoo!”-highly relevant still especially given their obvious local strengths and mobile offerings but quite an old network by standard measures.

At $2-4 a user- Facebook probably generates at most $80M/year in revenue from africa. Comparison with Mxit (if you take the lower bound on mobile, they are probably generating $20M minimum revenue a year from monetizing the 10M users in South Africa. South Africa is a key battle ground given the favorable demographics, spending power and maturity of advertising networks (by that I mean brands actually know how to spend money online to reach users vs many parts of Africa where billboards, radio, TV and print still dominate). But the growing middle class and the fact they will spend time on mobile across Subsaharan market provide excellent growth opportunities.

Vanity metrics (like registered users) can mask real underlying engagement drivers. For Facebook, the fact that half users come back every day is very impressive + the fact that they are the biggest social networks around photos make it a great platform for reaching a broad audience with their fine grained targeting features. Meanwhile, Some networks are just a cheap way for users to send messages (IMs) in the face of SMS costs- this is a category that Mxit falls into (with some 750M messages sent per day), although they now have games, music, news etc… but its not a robust a publisher/app development platform as Facebook at this rate- Facebook has an army of developers growing every day that can build social apps outside and inside its network from Games to Music.

Startup Networks- What can African Social Networks do to differentiate?

I decided to start with the big networks for a reason- it should follow logically from above how tough building online communities and social networks. Mocality, Mxit and Facebook provide great examples of some best practices of how to reach scale and hence some big barriers that exist if you try to compete with them head on.

Regional or Diaspora affordable Communication: These networks start out as mainly 1 sided networks that allow users to communicate with each. The recently launched Afroterminal- is more focused on Diaspora Africans. Understanding local customs, languages and culture is key to success.
Business and Commerce related African Needs: Mocality mentioned earlier, focused on being the place to find local listings. Getting business online is a key initiative and battleground (ahem, Google) as it is an onramp to monetize small businesses and besides Kenya you have many opportunities for this in other African countries. Take Tanzania, there is Bongolive and Rasello that are starting to do this. In this category I would also add networks that provide career related networks (LinkedIn becomes a gorilla to compete with)
Entertainment & Lifestyle: Some networks are purely a place to go find enjoyment. For instance Naijapals provides an avenue for users to watch nollywood movies. Others can be formed around music, games and even gossip. In Tanzania, Jamiforums (Lifestyle) and Issamichuzi (Gossip) are some of the most trafficked sites. Accessing and delivering content, often in a user generated matter is core skill.
Strong Vertical Needs: I could class these are serious needs in Africa such as health. For instance Young Africa live from the Praekelt Foundation is an example of a network around health issues. These type of networks have a big enough audience with a very defined and often pressing need. Again, strong unique content or having a strong entry point around the core need is necessary to get these sort of networks going.

Key challenges for building an African social network

Ability to technically scale the website with real engineering talent and managing cloud computing infrastructure. Remember Myspace or Friendster?. Anyone can put together a pretty looking site but it takes real engineering skills to scale a service to millions of users. Mxit has over 150 staff, Twitter and Facebook have armies of engineers that make the site load super fast. This is a key weak point for many new startup networks in Africa.
No monetization path- Presence of online advertising networks as well consumer payment platforms for online transactions and/or subscriptions (e.g. virtual currency). Telcos are well positioned to partner with network and integrate mobile payments as virtual currency in Africa. Mxit already offers a currency, Moola, that users can use to purchase virtual goods. When talking currency- its important that users are also validated with a real identity, for terrorism and anti-money laundering services, again, good telcomms relations here may help.
Provide a targetted audience for advertisers- Mxit is clearly positioning themselves as one of the largest mobile advertising platforms in Africa. If you go down the advertising model, you need good sales and account staff who can actually convince brands to switch away from advertising on radio, TV, print and billboard and use networks. Some networks in Africa have started to tap this but as you scale you need more sophistication- ability to track results and engagement and provide feedback and accountability to advertisers so that can see they are actually getting good value from their advertising dollars. Local presence is critical and works well with big brands. What about smaller businesses? Its much harder due to their fragmentation- is there a self serve system? Look at how creative Mxit has been in targeting diaspora e.g. targeting students for colleges abroad (mixit Boston Uni example)

Inability to innovate fast enough to address new emerging needs and platforms and take an ecosystem approach to maintain distribution and relevance. E.g. don’t get caught in the transitional period- like going from feature phones to smartphones, the challenge that Mxit faces right now. Be available everywhere (inc. feature phones) so that users can actually reach you on their device of choice and if they switch or upgrade. Strong networks will embrace and design for diversity- i.e. mobile web and tablets (HTML5) whilst having native apps on key platforms- Android, Nokia, blackberry and of course features phones.

Mapping the Africa social and interest graph has potential unlock a huge amount of value. Facebook and twitter are already providing citizens with a greater voice to scare Governments as we saw with Nigeria, Tunisia, Libya and Egypt in Africa alone in the last year. Beyond that what other change can these networks bring?

18:04

The Role of Government in Promoting Tech Innovation in Africa

» ‎ Afrinnovator

In talking about the efforts to promote technology and innovation in Africa, we tend to focus a lot of attention on private initiatives such as innovation hubs and the like. It is clear, however, that without a supportive, forward thinking government, it would be very difficult to move things forward.

Ultimately a generally stable government creating the right environment for business and investment is critical for tech, innovation and startups to take off. More specifically though, it is imperative that governments also understand the specific opportunities that are there in the area of ICT, and not just the opportunities but also the challenges that exist because at times governments are best placed to provide the best solutions to some challenges such as by enacting enabling legislation.

Thankfully, governments in places such as Kenya, South Africa, Nigeria, and other countries on the continent have not been ignorant of this. This is evidenced in some initiatives such as setting up organisations specific to the growth of the local ICT sector e.g. the ICT Board of Kenya, government investment in local tech startups, investment in infrastructure and bringing up tech parks that aim at drawing in investment from outside.

Nigeria’s ICT minister, Omobola Johnson, recently had a chat with ABN Digital about the Nigerian ICT sector and what the ICT ministry is doing to promote the sector. What’s interesting is that, while she was speaking about the local, Nigerian, situation, many of her observations – challenges, opportunities… – are very similar to other areas on the continent. Let’s take a look at some of these:

Challenges:

1. Local Consumption

Ms. Johnson identifies the fact that many companies in Nigeria will opt for foreign built enterprise software whearas the country has skilled IT people who have created solutions that work. This is a common problem on the continent. Somehow, enterprises generally do not trust locally built solutions vs. foreign built software which tends to be more expensive and at times even requires importing relevantly skilled personnel to handle the software.

This creates a situation where not only are local developers not getting appropriate support to build and maintain their software but also where they’re being overlooked as far as labor is concerned to install, run and maintain the software. (Read: Mending Africa’s Tech Skills Gap & Tapping into it’s Youthful Population to Power Innovation in Tech & the African Renaissance)

2. Funding

This is a classic challenge across many African countries. The number of Angel investors is growing but still there is a gap as far as securing seed funding is concerned. Mbwana Alliy recently wrote an article looking at the issue of raising seed capital for your tech startup in Africa. As he noted, the dynamics of raising funding on the African continent is are very different from what is the norm in other areas of the world. It would appear to be quite easy to create a startup and at a very early stage, get massive amounts of funding in places like Silicon Valley. In Africa, things are quite different. Ms. Johnson notes that to move local software development enterprise forward, the traditional, collateral-based funding options are not going to work.

…let’s face it folks, raising seed funding is hard enough for normal start-ups- I would say its at least twice as hard in Africa- even though Africa is uniquely positioned and there is rising curiosity and recognition of real growth investment opportunities outside of BRIC countries… Mbwana

Some governments have stepped forward to provide an alternative for funding through grants such as the Kenya ICT Board Local Content Grant.

3. Intellectual Property

Another issue that Ms. Johnson notes as a major challenge to the young Nigerian software developer is the risk of losing their innovation to a much larger entity where some other entity that has the muscle basically takes ones idea and runs with it. She notes the need for appropriate IP to protect local innovators.

The issue of Intellectual Property however is one that at times needs to be approached with caution – too much of it or applied in an inappropriate manner and we could end up stifling innovation instead of fostering it.

Strategies to maximize opportunities

1. Industry Standardisation

As far as the issue of local enterprises using locally built software, sometimes the enterprise defends it’s position as far as importing technology and skills by noting a lack of quality in local software. Ms. Johnson suggests creating a standardisation mechanism that upholds standards as far as software development is concerned – quality standards for the software itself, documentation etc.

This in part is what has led countries such as Kenya to launch certification and standardisation programs such as Kenya’s “Chipuka Certification” for software developers:

The Kenya ICT Board launched today, Tuesday, February 7, 2012 introduced a certification program that will offer credential examination for software developers in Kenya. The Certification program dubbed ‘Chipuka’ which stands for “To Emerge” is being designed in partnership with Carnegie Mellon University. The certification will help employers to easily identify software developers that have the skills necessary to carry out IT jobs to a professional and world class standard.

This particular initiative in Kenya, was also created to address the current IT skills gap in the country:

A study carried out in 2011 by the Kenya ICT Board and IDC, revealed that there is currently a software skills gap in Kenya. Although there is a high demand for software development in Kenya, few companies source these skills locally. At least a quarter of companies surveyed said they were not satisfied with the quality of IT professionals in the local market. As a result, nearly a third, plan to contract external providers.

The survey predicts that the demand for software developers will grow by 135% between 2011 and 2013.

2. Incubation

Incubation and innovation centers create spaces to consolidate entrepreneurial activity, foster innovation and impart other relevant skills to enable innovators turn innovations into products and a business. Private initiatives particularly as far as innovation hubs go are thriving across the continent. The government can step in and give even more thrust to these initiatives, of particular help would be more incubation centers in public universities. Places where university students can take the skills they are learning and apply them to innovative enterprise.

3. Develop local market

The fact is that to develop the local IT industry, enterprise support is necessary. Enterprises can create great demand for relevant skills and products. As Ms. Johnson notes “We may not be able to build the big enterprise software overnight… but there are elements of integration… ” and these are areas where local tech entrepreneurs can come in to create value and grow local IT industries

2:55

5 Reasons You Need to Be At Mobile Web East Africa 2012 This February

» ‎ Afrinnovator

In Kenya’s technology past over the past four years there have been some hallmark moments that have began waves and changes that shifted the course of history in technology here. Contacts, coffees and conversations have been sparked in boardrooms, hallways, Skunkworks meetings, cafes and nowadays places like Nairobi’s iHub.

Mobile Web in East Africa 2012 Logo by all amber

Two years ago, however, there was one discussion that much like a pendulum, swung into place a series of events that few have looked back to connect the dots to.

We frequently write about all amber and their conferences and it was in February of 2010 that they staged the inaugural Mobile Web East Africa conference in Nairobi. Afrinnovator’s Will Mutua was there in person to live-blog the two days with a series of curated tweets and tidbits on the proceedings. During this, however, at one segment in the first day’s program Mr. Peter Arina, then Chief Commercial Officer at Safaricom took to the stage to deliver an address on mobile internet usage in Kenya.

During his speech and the subsequent Q&A, he was challenged and Safaricom lambasted on their approach with developers, their openness to business ideas and the developer community and their pricing strategy for products for the Kenyan market. And unlike in today’s conferences where most of this happens in the “backchannel” on social networks, this happened in the ballroom at the Intercontinental in Nairobi and was preserved and documented through Twitter mostly.

This may have seemed like a mere afternoon spat with a few loud voices in the room, but it set forth what can only be seen as a shift in how the M-Pesa founding company communicates. Just over 3 weeks later and Safaricom formally took to social networks Twitter and Facebook and have since become somewhat of a beacon of what corporate social media looks like in the East Africa region. They then put it to the community to vote and nominate leader who would work with the telecommunications provider to mend their relationship in what has come to be known as the Safaricom Innovation Board (though not sure what the status on this is at present).

Since then their approach, availability and openness has dramatically improved and they are quick to acknowledge and listen if not respond to developers. Given not all of these initiatives have born fruit, the point is that they began to listen and participate; be it from senior leadership in the company to internal staff.

Mobile Web East Africa returns to Nairobi on the 22nd and 23rd of February with the aim of taking the mobile monetisation & content creation dialogue to the next level. Taking place at the Southern Sun in Westlands, the conference promises to trigger conversations and thought that could shape not only the country, but the rest of the region in the mobile space. Here are 5 reasons why Mobile Web East Africa is a “must-attend” this year:

1. PanAfrican Perspective
Speaking to top local blogger Bankelele recently about the event once this week, he mentioned what made the inaugural conference worthwhile for him was to see another African market and their progress in mobile juxtaposed with the Kenyan market. Be it advertising spend, successful campaigns and rich insights into what was happening in and around Kenya and South Africa.

The rich information and geographical spread made for a fine time in what Bankelele frequently refers to as “reading the tea leaves” for the Kenyan market. This year, a greater regional focus with a lens on Kenya but an eye on Tanzania, Rwanda and Uganda means the principles, pointers and practices shown at the conference will keep Africa and East Africa at center stage.

2. Audience and Ambience
I attend a range of conferences every year and one thing that gets my attention is the organiser’s approach towards audience interaction. Having spoken at previous all amber events, it’s no secret I appreciate their “roundtable” format. Sparking stimulating conversations with fellow participants and with the panel at the event is one of the reasons we had the Safaricom debate in the first place and always leads to rousing discussions.

3. Scintillating Speakers
The speaker list this year is impressive. A variety of local, regional and international names jetting in to speak. Multi-platinum record label Roc Nation will have their Head of Digital Briant Biggs speaking. Not to mention one of the world’s top 50 women in mobile entertainment, Emma Kaye of bozza.mobi. Regional speakers include Johan Nel of Umuntu Media and Emeka Okoye of Vinkantti Software while locally we can expect Karanja Macharia, CEO of Mobile Planet, Jessica Colaco of iHub Research and Taha Jiwaji of Bongo Live! among others.

Full disclosure: I will also speaking at the event.

4. Startups & App-Developer Subsidy
For app developers or those who are part of start-ups, there is a 50% subsidy for you to attend. Conditions for eligibility are any of the options below:

You represent a company that is under 2 years old and has less than 10 employees
You are a Mobile Application or Games Developer

They are also happy to consider applications from individuals representing NGOs and Academia. To apply you can email info(@)allamber.co.uk. For a list of testimonials from people who have attended using the subsidy and more details you can go here.

There will also be an App Developer Competition at #MWEA2012 where your app gets voted on and the winner at the event stands to get $1,500 worth of advertising spend on the InMobi network, free entrance to the conference (a refund where applicable) and the pitch before the audience, not to mention their subsequent applause. More on that here.

5. The Future of Mobile
Afrinnovator’s been doing plenty of prospecting on what the future of mobile looks like on the continent in 2012. And Kenya or as most are beginning to christen it “Silicon Savannah” sets out to prove worthy of the title.With the convergence of some of the smartest minds in the industry and stakeholders from all across the value chain in mobile present in the room we can expect to do better than just read the tea leaves, but brew up a piping hot cup as well.

All things considered, this event ranks as a “Must-attend” and Afrinnovator intends on keeping you posted on developments and proceedings in the buildup to Mobile Web East Africa 2012. Register here.

13:44

MFarm Makes Unreasonable Institute Finals: How You Can Help

» ‎ Afrinnovator

13:28

Mending Africa’s Tech Skills Gap & Tapping into it’s Youthful Population to Power Innovation in Tech & the African Renaissance

» ‎ Afrinnovator

In a rapidly changing technology world, it’s not only important that one understands how to do your current job/technology well but also be exposed to new ones, particularly in open source and cloud computing and mobile development technologies that may not have originated from the enterprise segment or the 10 year old technology used by your bank. – Mbwana Alliy

In a previous article looking at doing tech business in Africa, we found that Africa’s youthful population is where it’s at. Majority of the African population is under 30 years of age with two thirds being under 25 according to the Africa Commission. We saw that presented an unprecedented potential market for those who can understand this demography and provide what they are demanding.

On the other hand, this youthful population also presents a massive potential labor force. According to the Africa Commission, by 2015 youth will account for up to almost 30% of the total African labor force. If appropriately skilled and exposed, this youthful population can easily provide the brains and smarts to power Africa’s renaissance particularly as far as technology and innovation go.

Douglas Cohen, in an article titled “The IT Skills Gap is Everyones Business“, explains the ICT skills gap in South Africa:

There is a shortage of ICT skills in the South African market. That is a fact. There is however a difference of opinion on the scale of shortage. The National Department of Labour last issued a National Master Scarce Skills list in April 2008, indicating the ICT sector needed a minimum of 37,565 IT professionals to ensure adequate skills in this sector. However, the results of a more recent ICT survey, conducted by IT Web and the Joburg Centre for Software has found the department underestimated, by almost half, how many ICT skills are needed in SA. The suggestion therefore is that the ‘real’ skills shortage can be as high as 70,000 practitioners – more than 25% of the current workforce.

The Right Education

The World Bank Knowledge Economy Indicator comprises innovation, education and ICT scores and measures a region’s innovativeness relative to these. As the diagram above shows, Africa lags behind other regions as far as this measurement. But even more important is the relation between education and innovation. Regions with better scores on education tend to be more innovative.

Crippling Tech Curricula

A few years back I had the opportunity to work briefly at Microsoft East Africa as what they call an Academic Developer Evangelist. The point of the role was to influence college and university tech-related academic programmes so that they adopt and teach the latest Microsoft developer tools and technologies such as .NET. The job gave me an opportunity to gain some insight into the state of technology education across the East African region.

What I quickly realised was just how static tech curricula were relative to the dynamism of the real world of technology. Most students were stuck at the level of outdated, obsolete concepts (across the open source and proprietary spectrum) that put them at a disadvantage upon graduation. Many tech firms have to re-train fresh graduates upon hiring them so that they can come up to speed with the realities of technology in the real world.

Industry – Business Gap

The tech curricula problem is aggravated the more by the gap between industry and the academic world. The problem is simple, ICT-related businesses operate in the ‘real world’ of technology that is highly dynamic. To be competitive, they have to be constantly on the look out for what’s new, and adapt rapidly when things change – when new technologies come up, when the major tech companies such as Google and Microsoft take strategic routes that set the pace for what direction technology will develop in future… The most successful ICT companies have to be agile.

On the other hand, the academic world is sort of closed up in a cocoon of relative stability. The same things are taught year in year out, with little or no change to reflect the reality of the world of technology. Unless a student is exposed elsewhere, or they happen to be really curious, they’re stuck. To make matters worse, the education system often trains students to not be inquisitive and explorative.

In Kenya, many have complained against the 8-4-4 curriculum saying that it’s basically a system that encourages cramming and regurgitating. The fact of the matter is that even before they get to university, students have already been accustomed to receiving without question what the teacher gives them, then getting an exam where all they have to do is give back to the teacher exactly what the teacher gave them in exactly the same way, or else they fail.

Mr. Macharia, CEO of Seven Seas Technologies in Kenya notes:

“ .. there’ s an urgent need to incorporate industry needs in university curricula across all our universities to ensure industry relevance… Time has come for all the stakeholders in the higher education sector to join hands and tackle the skills deficiency problem to avoid sending out to the job market graduates trained under IT environments not aligned to the dynamic ICT Industry. It is costly to have fresh graduates, hired as engineers on the bench and not billable for several months before we can actively deploy them to customer environments, a practice quite the opposite in the accounting industry.”

Solutions

What are possible solutions to the skills gap dilemma? Altering university curricula is a long process, you can’t just wake up tomorrow and say, “hey, lets drop this and start teaching that.” and just do it. Are there other alternatives? Is there anything that’s currently providing a solution?

1. Tech hubs

Tech hubs across Africa are providing brilliant spaces for learning to take place outside the confines of strict curricula. Before tech hubs it was difficult for students to get direct access to and interact with industry practitioners. Meetups and tech talks in these community environments provide great opportunities for the exposure of students. With the right exposure, at least the student can then take the initiative to go out and learn for themselves.

2. Industry Steps In

It may not be the core business of industry practitioners to provide training to young students but it is to their advantage to have the necessary skills readily available. This is what must have led the likes of Seven Seas Technologies to invest in training freshly graduated university students.The alternative, importing the necessary skills, is a costly affair. Perhaps more companies should step in to fill this gap in like manner, at the end of the day, it is to the benefit of the organization.

3. Third party initiatives

One of the best examples is Coders4Africa:

Coders4Africa was created in 2010 through the efforts of five friends who collectively have over 40 years of experience in the software engineering and development field. We are a not-for-profit organization with an initiative that focuses on providing professional training and certification on a variety of platforms to 1,000 African software and application developers by the year 2016. After years of interaction with technologist in Africa we decided to focus on software development as a way of giving back to the communities we originated from. Being born and raised in Africa although educated in the United States, gave us an advantage in regards to bridging the gap between Africans and the diaspora. - Kwame Andah (Co-Founder, Coders4Africa)

At the end of the day however, innovation is not just a matter of having raw skills. It’s about applying those raw skills innovatively. It’s about thinking outside the box and applying the necessary skills to create.

The beauty about tech skills particularly when it comes to programming, is that these skills can be easily acquired by the individual. The World Wide Web harbours a wealth of great learning material that is free to use, plus the necessary tools are also available for free download. Several great influencers and innovators in technology were not even schooled in tech but were self-taught

11:55

Why You Must Never Forget About the Humble Feature Phone in Africa

» ‎ Afrinnovator

Jonathan Hoehler is Chief Technical Officer and Business Analyst at Starfish Mobile International based out of Johannesburg, South Africa. With over 8 years in the mobile telecoms space in Africa, he’s been an evangelist frequently seen on the conference circuit speaking and presenting on the future of mobile on the continent. Follow him on Twitter and find more on his Slideshare.

If you are anyway involved in mobile, technology or gadgets you will know that the focus of the vast majority of reports, articles and statistical data is around the growth of the smartphone handset segment globally. Some estimates during the middle of 2011 estimated that around 472 million smartphones would be sold worldwide by the end of the year.

The table below from research firm Gartner estimated that in quarter 3-2011, there were 115,1 million smartphones sold globally.

That is a significant number; however smartphones only represent one portion of the entire handset/device ecosystem. Using Gartner information again, we can see that total handset sales across all phone segments is massive and that smartphones make up approximately 26% of all handset sales in the third quarter of 2011.

That means that 74% of the remaining handset sales are made up of entry level and feature devices.

So what about the humble feature phone?

Defining a feature or smartphone phone is a minefield because the definitions change so rapidly due to the improvements in technology and cost efficiencies in manufacturing. I maintain that if you put 5 mobile executives into a room and ask them to define what a smartphone is you would get 5 different answers and opinions. So for purposes of this article, I would like to classify a feature phone as a device that supports WAP (GPRS/Edge) connectivity, has a colour screen, can send an MMS message, has low-resolution camera and lastly supports J2ME native applications.

The feature phone segment dominates mobile connected devices globally. There are numerous reasons for this,

10 years of device sales
An established and installed base of users
Cost of ownership and affordability

Globally the segment is dominated by Nokia Series 40 handsets (S40). Nokia estimated that nearly half of its 1.5 billion S40 handset shipments are in active use today, with 675 million active owners of S40 phones in the world.

This is a significant part of the market and it should not be discounted at all when looking at mobile services.

Below is a graphic from a mobile research firm called Vision Mobile which illustrates the size of the feature phone market in comparison to smartphones globally (collectively called the “connected device” market). Smartphones make up 27% of the graph below, leaving 73% that are feature phone devices.

Feature phones in Africa

Nokia is the dominant OEM (original equipment manufacturer) of mobile handsets in Africa. One estimate has positioned Nokia with a 65% market share across all Africa. The vast majority of the devices supplied by Nokia can be classified in my view into the following:

Basic 2G handsets like the Nokia 1110. These devices are the bottom of the pyramid devices which allow for phone calls and SMS messaging
Low-end feature phones (2.5G WAP) devices like the Nokia 5130 XpressMusic
High-end smartphones devices (3G and up) like the N and E series Nokia phones

To see an indication of Nokia’s market share in the connected device market, two mobile platforms, namely InMobi and Opera Mini, provide great insights into Nokia usage across Africa.

InMobi is a mobile advertising platform serving mobile WAP banners across Africa. In Q3-2011 InMobi served over 15 Billion WAP banners to connected devices across the continent. This is a snap shot from InMobi Research, please take note of the Nokia information provided in the snapshot. 61.1% of available impressions where made from Nokia Devices on the InMobi Network.

Opera Mini is a third party mobile browser that has over 144 million monthly users globally. In June 2011 Opera Mini released their State of the Mobile Web and data for 10 African countries was provided - Opera looked at the top 100 handsets used in each of the top 10 African countries, of the 100 total handsets listed:

Nokia: 89
Samsung: 7
Sony Ericsson: 1
Alcatel: 1
Apple: 1
LG: 1

Incidentally the one iPhone was from Ethiopia.

What does this mean for Africa?

There is a huge installed base of feature phone devices across Africa which is made up largely of Nokia devices. There are many reasons for this market share including but not limited to the quality of the devices and superior battery life (an important consideration due to intermittent power supplies across Africa)

Smartphones are coming into Africa thick and fast with other OEM’s like Samsung and Huawei leading the charge with cost competitive Android based smartphone devices. However it takes time for these devices to find their way into the hands of subscribers. As is evident from the data, most of the handsets that subscribers currently use are feature phones and the status quo will remain as such for the next 2-3 years.

Any organization looking to provide mobile services in Africa needs to factor this into their plans especially when it comes to the ever-interesting debate between mobile web versus mobile app (a discussion for another time).

In South Africa, for example, probably the two most common feature phones in the market currently are the Nokia 5130 XpressMusic and the Samsung E250. It should be noted, if you are developing mobile web or even mobile applications for the mass South African mobile market and not designing for the E250, you are doing it wrong.

I would like to point out that mobile applications that have J2ME (Java) versions will still have the biggest potential audience reach in Africa. Any developer will tell you that developing for java is a nightmare and rightfully so BUT if you would like to see attract the biggest possible audience in Africa, that is the starting point for any developer.

Don’t forget about the humble feature phone, they make up a large part of the handset universe and are not going anywhere anytime soon.

Is this true, is there more to the feature phone than meets the eye or are we approaching the age of the smartphone from here on out. Sound off below in the comments.

7:10

7 steps to raising Seed Investment for Africa focused Tech Startups

» ‎ Afrinnovator

I have observed quite a few startups trying to raise seed investments for tech startups in Africa over the last few years. I myself raised $150k for Tanzania’s first e-commerce travel portal 2 years ago. I have also seen startups here in Silicon Valley raise money as part of my work at i/o ventures. And yes, I was at Pivot25 last year and saw the significant angel investment gap that exists when most investors present were saying they don’t put in less than $1M and had little to no relevant tech experience. Impact investors are also showing interest in Africa but they don’t seem to be taking any real risk with early stage tech startups, when technology probably offers the most impactful and scalable change in Africa. But let’s face it folks, raising seed funding is hard enough for normal start-ups- I would say its at least twice as hard in Africa- even though Africa is uniquely positioned and there is rising curiosity and recognition of real growth investment opportunities outside of BRIC countries. I see both sides, Africa originated start-ups coming to Silicon Valley to find tech savvy angel investors, to foreigners (mostly Americans) trying to raise money everywhere for a new market as they bring their pioneering spirit like Africa is the last gold rush.

I will start each point with generic advice applicable to any start-up and then I hone in on Africa relevant issues-“Reality of Africa”. I hope this helps start-ups navigate a difficult but necessary process if we are to see more entrepreneurial activity and to grow the ecosystem in Africa.

1. Make sure you are ready – Checklist

This first step is actually common everywhere, entrepreneurs think they deserve financing when its just an idea in their head all the way up to startups showing significant progress but are probably stalling and need significant technical/business help and capital infusion to grow their venture. Also fundraising takes a significant amount of time and if the team is small, it might actually harm the business for key individual founders or CEO to spend 6+ months pitching to investors. Its important to appoint someone in the team to focus on this more (usually the CEO)- poorly prepared startups on the funding road doesn’t help either side. A startup with a single founder is disadvantaged vs a well rounded team that compliments each other. So its key to make sure you have hit key milestones before putting your startup at more risk by spending time on the road searching for funding- you might talk to 50+ potential investors before you get anywhere.

Next, having a product or service out in the marketplace with early customers/users and even revenue is extremely important, I underlined and bolded that for a reason. Investors have many choices to invest and they need to see your company making traction. Last week at 500 Startups demo day here in Silicon Valley, the batch of 34 startups not only proved to me that the bar is getting higher, but its also getting more international as well with significant strong representation from Brazil. India and China which are already hot. With the cost of launching internet startups continuing to drop wherever you are, we will only continue to have more quality startups surface and compete for investors attention- traction is a real currency. The only exception is if you are already an accomplished entrepreneur and have proven to make investors money- then money might be chasing you vs the other way around. But even then, companies like Color here in Silicon Valley that burn millions of dollars with no traction still exist based on founder reputation. Past success is not indicative of future performance, but it certainly helps.

REALITY OF AFRICA: Being ready in Africa for seed investment is definitely different from western markets. Its harder to show revenue for a consumer mobile/Internet start-up- ad networks are just developing, significant scale on internet or mobile users is harder to achieve, and payment ecosystems and trust on the Internet in Africa (different on mobile) is is not mature- but this is changing fast. On the business side, most don’t understand technology that much to decide between different offerings- however, if a technology solution solves are unique problem and gets adopted by a mainstream customer, being first to market has a huge advantage. What I have also seen in Africa is how much startups overplay their intellectual property advantage “my mobile money solution is proprietary” and so have been in stealth and not launched does not cut it. First of all, enforcing intellectual property is hard in Africa given the legal system, second if you don’t share your idea with others how will you grow your team and add value? The point is that it’s not that IP is useless, many companies do very well on this- but just don’t think your web or mobile startup built with open source technologies has IP that is more valuable than getting real customers and revenue. Many African startup founders also downplay their previous success too much, if you ran a successful tech development firm for many years talk up the experience, it shows that you have what it takes to recruit local staff and build a business. If raising money from Silicon Valley, traction for Africa startups has to be very high to generate interest and compete against what other options angel investors have and because of the unfamiliarity of the market at this stage. What becomes hard is companies that can’t bootstrap to show enough traction, its hard to do a energy/clean tech startup without raising significant capital vs a mobile/web internet startup.

2. Create a clean and short deck + put startup on Angel List and VC4Africa- but it’s no substitute for business planning and deep analysis and connecting face to face with potential Investors

A great deck not only communicates the problem and solution- it also creates an emotional connection and inspires whoever who is looking at it to want to learn more. The deck is often e-mailed to investors, they take a look for 5 mins and then they decide whether to follow up and learn more. Treat the deck that way- its not a full business plan. Here are some guidelines:

Don’t put too many figures/statistics – limit to 3 per slide- be selective of the most important ones
Use strong visuals showing the product, screenshots of the service in action
Focus on the team, achievements and unique to address this problem.
Make sure the deck flows and tells a story about how you came across the problem, who you are and how are best positioned to provide the solution
Keep to no more than 10-12 slides, shorter is better. Other supporting data can be put in an Appendix.

Its harder that one thinks to create a great deck with the requirements above- its a continuous process whilst getting feedback and knowing who the audience is also key- getting a designer to polish up the deck may even be needed. A 1-2 page brief may also be a good idea. Also don’t be afraid to be creative and show off relevant skills- for instance, check out this great HTML5 deck by DressRush (now renamed Tailored, a graduate of 500 Startups) that is both easy to go through and got a lot of buzz online- it shows the team gets how to market and promote.

This brings me onto Angel List. This has become the “LinkedIn for Startups” and although right now it’s heavily Silicon Valley startups and angel investors it has scope for international use if both startups and investors abroad use it – so right now its useful if you are targeting Silicon Valley investors. Some of the features that are great on Angel list including newsfeed notification of progress in your startup, you can put advisors, early investors etc… In short it becomes a place where investors can discover and track your progress.

However, you should also be sure to have solid business analysis behind your startup and industry. When investors dig deeper in a 2nd or 3rd meeting they’ll ask for this- showing that you’ve done the work rather than dismiss the questions as irrelevant is the way to go. But if investors ask for data that doesn’t exit or impossible to predict in an early stage startups, it might be a sign that they are just looking for an excuse to say no as part of their “due diligence process” or just don’t get technology in Africa.

REALITY OF AFRICA: The deck for an African start-ups needs to focus a lot on the problem being solved and traction (users or revenue) the business has achieved more so than in western markets. Given that cutting edge engineering skills are often lacking in Africa, highlighting the development teams previous programming accomplishments will go a long way to ensure that the product risk is minimal- good design is also a big differentiator. A good mix of local and foreign talent that compliments each other especially for a business with significant on the ground presence- can anyone in the team speak fluent Swahili when operating in Tanzania and trying to address the bottom of the pyramid market? Also note, a deck targeted at social impact investors will look very different from one targeted at traditional investors in terms of content and what is important- this leads onto the next point- what sort of investors are ideal for your venture? But first, a word on analysis- focus on key assumptions- why did you chose Kenya over Nigeria or South Africa? Does Africa really need another mobile money online solution and what problem are you really trying to solve? Will people really find and download your application? There is a lot of data on the growth of Africa tech these days- take this deck that came out last week curated presentation of stats, data, graphs, analysis and insights on the mobile telecoms sector prepared by Jon Hoehler and Andrew McHenry . How do these numbers help support your startup? Next also be sure to outline how the funding you are seeking to raise will help you achieve your next goals (something often overlooked)- will this get you to revenue, scale, launch a new product or are you just topping off funding because you are out of money to fund operations?

In Addition to putting your profile on AngelList, another option that might have less tech savvy angel investors is VC4Africa.

3. Identify a short list of relevant investors- key criteria for Africa.

Startups can waste lot of time pitching to the wrong investor audience- at the same time you never know whether an investor is interested in your space or not- it’s a balance in time management so it’s key to think thoughtfully about who you may want to target. Start with you closest connections then move out that from there. Don’t forget to include friends and family in this- since they know your character best and can provide moral support.

Do they have any money (obvious I know) AND a connection or interest in your space.
Do they understand technology like the delicate balance between growth and profitability?
Do they provide value add knowledge, networks and mentoring? What is their expertise?
Do they treat their investment like putting money in the bank and getting interest or is it a risky bet at the casino but they learn and have fun. Is this a “feel good” or “impact investment”- make sure you line up on this. Sometimes their investment is just a way for them to “learn about the space”.
Are they investing for a small stake in a big pie of big stake in a small pie?
Do they have the bandwidth to help you based on other investments and their day job? Remember a savvy angel investor has many options and some like to get really involved, others more hands off. Are you the best option right now and why?

REALITY OF AFRICA: Unlike Silicon Valley and other parts of the world- this list is likely really short- there are just not many active angel investors in Africa who understand technology, start-ups and pass this list- and there are not enough rich uncles in Africa to go around and support all entrepreneurial endeavors of friends and families (but this is slowly changing as success stories realize they can give back to the ecosystem and also make money). And even then, not many investors are accessible or even know how to angel invest- significant networking help is needed to reach them and get above the noise. African Diaspora living abroad have significant capital they could mobilize for your venture- there are many Kenyans, Nigerians, South Africans etc.. living abroad who might be looking to invest back home. Extending further, the Indus Entrepreneurs (TIE )network of indian diaspora has links to silicon valley that inc. tons of angel investors might overlap with the Indian population that may have resided out of East Africa. They might be eyeing Africa as an attractive investment in technology especially if India has becoming increasingly competitive, saturated or too corrupt and bureaucratic. In Silicon Valley, a connection to The African Network (TAN), might also be able to help. The middle east is another option- UAE, Oman are heavy investors in East Africa for instance.

A word on impact investors- they started in microfinance where they realized you could profitably serve the poor in India, Bangladesh, Latin American and in Africa and have now moved into other areas (health, education etc…), its a new industry and as a result many change their investment strategy as much as the wind in the Sahara or Indian ocean changes direction! Some are more stable than others and clearly state (or can be deduced from their investment portfolio). Impact investors are also less likely to ask about high financial returns and how you will exit your company by selling to tech multinational as they mainly care about what “impact” you are making- such as no. of jobs created, reduction of malaria prevalence, serving an under-served population etc…

4. Connect and educate with potential investors- ask for advice and you might get money. Update progress on Angel list. Draft and test your e-mail pitches, find investors at conferences, use your social skills well- how you interact and reach investors is a key skill. It’s like dating… It also communicates what you might be like to work with. The most networked people do better in business than just being smart and savvy- this is doubly as important when it comes to getting angel investing- it is about who you know and who can refer and vouch for you.

STOP! Before you proceed- go through 1-3 a few times. 4 becomes your point to start talking to people and work your way to investors. Oh and 1-3 is called “creating a company”- you’ll be repeating it again and again for further rounds of funding. No shortcuts, learn to do it once because you’ll be doing it again.

REALITY OF AFRICA: Africa needs tons of education to foreign investors due to preconceived notions of Africa despite growing interest- as a result they might be risk averse right now until they get more familiar with the continent- try avoid the “driveby investors” who might not add much value apart from their money. For local investors it means focusing on how the technology works. Even after foreign investors “get Africa” its really hard to anchor themselves around the needs of Africa since they are not living and breathing the problem you are trying to solve. An American team pitching to a traditional American investor who has never been to Africa would need a lot of education- they might even need to come with you to Africa to see the problem you are trying to solve first hand. People are just waking up here in Silicon Valley to the wonders of Africa mobile banking about 2-3 years late even though M-PESA is already a tired story. This means increasing the time it takes to raise money from this group of investors. European investors might take less time on education but they might not get the technology aspects as much as a Silicon Valley investors- also their risk appetite and familiarity with tech angel investing is likely to be different. An ideal investor would be some foreign expertise that brings tech and management discipline/experience and a local investor who can provide local context and connections.

5. Practice the pitch and work up to your favorite investor(s)- Know the toughest questions upfront and address them intelligently and honestly. You might have to go through “Gatekeepers” who have the connection to the high profile investor, understand their position, don’t assume they will just make an e-mail intro out of the blue. Treat them well- their job is not to refer every start-up, it defeats the point of a gatekeeper. Note the common questions (note: not many are technology related- no one cares if you built it in php vs ruby!). Sometimes you’ll get questions to which there are not good answers- don’t be afraid to say “I don’t know”- its a mark of maturity, but be sure to convey that you will find out or are actively working to solve that problem and you are a fast learner.

REALITY OF AFRICA: For entrepreneurs originating from Africa, the pitch delivery needs to practiced to perfection. Being able to pitch in 6-10 minutes is daunting for most entrepreneurs, but it should be an opportunity to distill your startup into the key elements- an elevator pitch as the call it. In Silicon Valley, you never know when you might have to talk about your startup, could be in conference, in a bar or in an elevator (hence the elevator pitch(! So most startup founders can talk about their startups really succinctly .

If you have to talk too long- see point 4 on education. You might need to follow up or prepare with the person introducing “referring” you the investor. Here is a checklist of questions you should watch out for and have good answers ready:

Africa is the dark continent- its unstable right?
Do Africans have real money to spend?
There is serious currency risk, check out the inflation in Kenya and Uganda? How will your business handle it?
Nigeria is the best place to do a start-up right? It’s a big market! Why are you in Tanzania?
Can you hire the technical and managerial talent to grow your venture?
How will I get my money back via- Exit?

6. Scoring an anchor and influential investor can significantly boost your chances but be careful who this is? Refer to point 3. Accelerators and incubators act a lot for this a “stamp of approval” but also make it efficient for investors coming to visit a region in Africa. In Silicon Valley, getting vouched and having influential personalities such as Ron Conway or Dave McClure can get you a long way to closing your funding round. Angel-list again is another way to make this process more efficient, but it is no substitute for face to face interaction if you can get it. Sometimes you are better off preparing really well and scoring an introduction from someone influential than trying to talk to a mass of investors who don’t understand you (at least in the beginning).

REALITY OF AFRICA: Incubators and Accelerators popping up in Africa are helping to solve this. Accelerators like the Umbono in South Africa or Meltwater in Ghana can be a fast track to get to this step- it might take you 6 months to get to this step on your own or 3 months if your join the “right accelerator”. Be sure to evaluate them properly, the founders can have significant connections to real tech investors, others may have different intentions all together- who is the Ron Conway of Africa? The person might exist but they might not be as publicly visible as the Silicon Valley equivalent. Try get yourself into the regional pitch contest in Africa- for example Pivot East in Kenya that is organized by the iHub and sponsored by many other startup friendly organizations that provide proven regional and global visitbility.

7. Be wary of terms and make sure you have a clean cap table- but don’t overly negotiate. You are getting married but it’s one of many spouses on the long road to success. Term sheets for startups are becoming increasingly standardized across the world. Some VCs are even providing their standard ones on their website you can customize For example, passion capital in the UK (wish more African VC funds would do this!).

REALITY OF AFRICA: African investors not familiar with start-up term sheets and a country’s legal framework around concepts such as employee stock pools (setting aside shares in your company to motivate new employees with success in the company) and convertible note (a hybrid debt/equity investment instrument common in early stage start-up) might harm a start-up by demanding unreasonable terms and not ensuring the risk and reward of start-up team and investors are adequately balanced. This can kill a start-up. The big advice here is to find a lawyer that understands both sides and can educate appropriately. Do your research- the links above from sites like Quora can help you get educated fast.

Finally- remember the old investment cliche- “we invest in people not ideas”- its actually true. Treat your angel/seed investor the same

17:42

Doing Tech Business in Africa: A Few Lessons from Twitter’s Rise in Africa

» ‎ Afrinnovator

Very recently Portland Communications released some data from research carried to find out about the usage of Twitter in Africa. The report was received quite well and received some notable attention across the web. Much of what has been written has looked mostly at just the implications of the research on primarily social media and it’s use and growth in Africa. But I’d like to take a different turn and perhaps use some of the insights from this research to shed light on the subject of tech startups in Africa and what works.

Qualitative vs Quantitative Factors

According to the report, South Africa is the continent’s most active country by volume of geo-located Tweets, with over twice as many Tweets (5,030,226 during Q4 2011) as the next most active Kenya (2,476,800) and third comes Nigeria at 1,646,212 tweets. This continues to give credence to the idea that these three are the countries to watch as far as technology and innovation in Africa go.

Mbwana recently wrote a very well thought out exposition on what factors to look at when selecting which country is best to do business in Africa. Among the factors, Mbwana points out that one should look at are regulatory and macro-economic factors. Looking at rankings based on World Bank and IFC data, these three countries feature prominently among the top 15 countries in Sub-saharan Africa that are easiest to do business in – South Africa ranks 2nd, Kenya 9th and Nigeria 15th.

It is interesting, however, that based largely on more quantifiable terms such as taxation and credit rankings, the latter two of these three countries do not appear to be the most promising to invest in a tech startup relative to others on the list. There appears to be other factors that are making these countries rise above other states that would seem obviously better candidates when considering where do a tech startup than these.

It seems the more qualitative aspects have a strong bearing on where to do tech business in Africa. Borrowing from Mbwana’a article two key qualitative considerations are:

An entrepreneurial support network – Startup Culture:

Basically is there a critical mass of other like minded people in the country? People you can learn from, people who’ve already interacted with the system and have learnt how to go about things in that country when doing tech business? In any case having more people trying to achieve in the same area as you are also makes it exciting to do business and creates a great ecosystem to operate in.

Perhaps that’s why so many tech startups move to Silicon Valley, there’s something about being in a place where there are many people competing and co-operating and those clusters create great feeding ground for investors. Vibrant innovation hubs such as Nairobi’s Innovation Hub and Nigeria’s Co-Creation Hub are indicative of the presence of a strong entrepreneurial support network.

Lesson: Don’t forget the qualitative aspects. Balance out the quantitative aspects verses the more qualitative ones.

Local Culture:

In ‘Pondering Africa’s Tech Investment Potential for 2012 and Beyond‘, we noted how devastating it can be for the foreign investor to fall into the mis-understanding that Africa is one country, with one culture.

The diversity of cultures in different parts of Africa has a strong bearing on not only how people do business there but also on how consumers will respond to products – not just the product itself but how it is presented and the messaging around it. You can have a great product and kill it with your advertising messaging.

A great example of how understanding the culture can make a great difference in how well the target market take up a product in Kenya is Safaricom’s advertising. Many of Safaricom’s products were more widely received than competing offerings simply because they understood local Kenyan lingo and incorporated it in product names and advertising messaging.

For example, transferring airtime credit from one’s Safaricom line to another is dubbed “Sambaza” the competing Airtel service (this was really the mistake of Airtel’s predecessors, Airtel seems to be doing much better) called their own similar offering “ME2U”, people took to Sambaza versus ME2U and nowadays you’ll hear a Kenyan with an Airtel line saying they want to “Sambaza” credit to another Airtel line…. this is a bit hard to explain given most of the people reading this are not Kenyan but it’s exactly the same thing as saying you are going to “Google something on Yahoo”

Lesson: Keep in mind the context of your operation

The Youth of Africa are where it’s at

The report indicates that 60% of Africa’s tweeters are between the ages of 20 and 29. That’s pretty amazing if you think about it.

According to the 2011 Africa Youth Report compiled by the Economic Commission for Africa:

The majority of Africa’s population is below the age of 30… Young Africans are the key to an African renaissance and will remain players in and advocates of social transformation and development in many spheres. The enormous benefits young people can contribute are realized when investment is made in young people’s education, employment,health care, empowerment and effective civil participation

According to this document from the Africa Commission:

Almost two-thirds of the population in Africa is below 25 years of age. More than 20 per cent, or almost 189 million, are youth between 15 and 24 years of age. This share will remain more or less constant for the next 10 years.

This presents an unprecedented market and labor pool (Read: Kenya Julisha ICT report: Invest in new skills. It’s called Human Capital) if tapped. Many are tech savvy and connected unlike ever before on the African continent and they are willing to learn & try new things. They do not have immediate memory of colonial times, and so are not living with that burden on their minds, they see a world open to them to explore, where they can compete with contemporaries from across the globe, and share and learn from them.Thanks to the Internet and web (particularly delivered via mobile) they have ready access to information and this has empowered them.

Lesson: Tap into the youthful African population

Reflecting again on the Twitter report, it is interesting that majority of Twitter users in Africa are using it to stay connected with friends – 81% of those polled saying that they mainly used Twitter for communication with friends. One could easily draw a parallel between Twitter and SMS messaging (only that Tweeting is cheaper). Perhaps one reason why Twitter is picking up is that Africans can already relate to sending short messages via mobile and so it is really to turn to the internet based for communication with friends – the principle is the same.

Lesson: If you’re introducing something new, it could be helpful if you can mimick something that’s already common to increase adoption rate

The Power of Mobile (duh)

The Portland Communications research indicates that close to 60% of tweets from Africa are sent via mobile phone. Now, the amazing link between Africa and the mobile platform is not a new subject but one that deserves mention over and over again. The simple fact is that the mobile device will remain the most powerful platform to reach the mass market in Africa for some time to come.

There are companies that are doing pretty well by tapping into this. For example, ForgetMeNotAfrica brings internet messaging and social networking to every mobile phone including the most basi ‘feature’ phones without WAP.

11:35

Building Websites that Work in Africa

» ‎ Afrinnovator

It is interesting that sometimes it’s not the most robust and well designed solutions that get picked up by consumers. Great design of course is something of great importance when designing a piece of software, an app or a website. And clients will gravitate to well designed (graphically, not in terms of user experience), well tested and robust services. But sometimes, it seems, it’s enough that something simply works!

Africa is a bit of a late-comer to the internet. Since the .com boom and bust, the internet has evolved and grown in leaps and bounds. It’s only a few years ago that the term Web 2.0 emerged, giving an identity to what the web had evolved into. In terms of technology, particularly on the software side, much has come about. There are a myriad of frameworks for developing robust web applications and web services based on a wide array of standards.

The technology today affords the creation of some great looking web apps with solid engineering behind them. At the turn of the millenium, the websites were pretty well, boring, at least as compared to the standard today. Even, a person with little or no programming knowledge can create a great looking website in a few minutes using WordPress or other such blog and CMS platforms.

Yet it still occurs that at times consumers do not turn to the most well designed website to satisfy their needs. Sometimes it just boils down to who was first to market and who is offering a service that works, and one that works without failing.

Back in 2008/9 one of the suggestions going around within Kenyan tech-circles about how easy it is to create a ‘Kenyan’ Craigslist and how it would be quite easy to make it pretty successful. Craigslist is one of those few websites that survived through the .com boom/bust period. But one pretty amazing thing about Craigslist is that, at face-value, it’s not a work of genius in terms of graphic design. It is actually at best, simply a list. And it works, people use it, and they’re making money off it.

Here in Kenya there are two very popular websites that prove this point both owned by Cheki Africa Media. Cheki.co.ke (currently ranked 49th in Kenya on Alexa, top 10 locally) is a used cars website and brightermonday.com (Currently ranked 45th on Alexa among all sites visited by Kenyans and top 10 locally) is a jobs site. Both do not have what one might consider stunning graphic design even compared to other players in the same market, but both have become probably the leaders in their industries and have expanded to other East African countries and even to Nigeria. Both sites provide a very specific service and do a great job at what they’re made for.

In Nigeria, Nairaland is ranked as the 10th most popular website and 2nd among local websites by Alexa. Nairaland is a basic online discussion forum. Nothing fancy.

Question is, why does it happen that at times the successful site is not the greatest looking one? If you’re planning to create a web offering in Africa there are some important lessons here.

First to market

Africa is Rising. And technology is the main engine. Things are also happening fast! There are many opportunities to offer online services that have not yet been tried in different regions of Africa but those opportunities are being filled up fast! People are seeing the gaps and filling them.

So, sometimes it’s best not to get stuck on getting everything right as far as look and feel go but of more importance would be getting into the market fast, first and with a product that works, hence raking in the customers and possible revenues before competition shows up. Then work from there, you can add on great graphic design afterwards. Just make sure you have a solid product, that’s scaleable. You can add on the great graphics work later – that’s why you iterate in product development.

If you are offering a great service, and customers catch on and engage with your service, it is unlikely that they’ll jump ship when someone else comes by who’s offering exactly what you are offering with a better looking skin on it.

User Experience Design trumps Graphic Design

As far as design goes, it’s wise to throw out the baby with the bathwater. Don’t just cobble up something and serve it to the customer and say, “Hey, it works!”. You may not want to hold up the product because of the graphic design side of things but user experience is everything. If you’re going to spend time on design, spend as much of it as you can on getting aspects of user experience and user interaction just right.

Mobile Web Rules in Africa Design Specifically for it

In Africa, it’s worth noting that most internet consumers do not have the luxury of the full scale desktop browser experience. Much of Africa’s internet usage is via mobile phone. In Kenya, for example, statistics have shown that 99% of internet access is done via mobile. And as far as mobile web browsers go, in Africa, Opera Mini is probably the standard.

Therefore it would be wise to invest in creating a custom site for mobile, or making your website mobile friendly. As far as web design for mobile goes, the cardinal principle is to minimize. Minimize on the number of graphics you have, minimize on the number of actions a user needs to do or number of pages it takes to accomplish a task.

Conclusion

It’s better that it works than it looks great but doesn’t work. All the same there is a minimum as far as design goes, it may work but it may look really awful. So get the balance, but don’t be over-concerned about getting the perfect graphic design on the first iteration. Andrew Mugoya recently published an ebooklet titled ‘Help, I am a developer with no clue about design – 6 1/2 tips for developers with no access to designers‘ that’s target at developers who can’t get dedicated resources for design that could help get the minimum as far as design is concerned. The simple tips in this book offer simple, practical ideas for the minimum as far as design goes.

14:30

Doing something about bad design

» ‎ Afrinnovator

9:53

WezaTele’s MyOrder Powers Mobile Ordering

» ‎ Afrinnovator

Weza Tele is a visionary firm that leverages on technologies such as, USSD, Mobile Web, and SMS to provide order management, distribution, tracking, circulation and validation solutions. Weza Tele also offers reliable customer service, support and maintenance to its clients.

Myorder Enterprise provides a tailored, deployed solution that automates order management, tracking and validation across the enterprise. At its center is a dashboard where distributors and customers, manage inventory, generate reports, and view performance trends.

SMS ordering: New feature in Myorder Enterprise

According to the CCK Kenya latest report (2012), there are 27 million mobile subscribers, SMS per subscribers per month growing by 125% from 8.5 SMS as at June 2011 to 18.99 SMS at September 2011.

Weza Tele has tapped into this market by developing an SMS-based ordering service for its clients that they are currently working with in the industries of publications, cosmetics, beverages, grocery & food stores as they strive to reach their vendors and end users with an easier way for them to order from their simple phones.

It is easy to use and integrate into your current sales process and the service consists of 3 simple steps:

Register
Order your items
Orders confirmed

How does the SMS ordering service work?

For End Users

The system enables registered customers to send in orders in a simple and memorable format. This works from a basic phone with no need for an Internet connection.Everyitem on a catalogue a code is assigned that further simplifies the ordering process. We translate the codes, calculate the total price, and send you an electronic confirmation

Our software also has built in error correction mechanisms. For instance, if you incorrectly type in your order information, then the system is able to automatically correct that and figure out what you meant to type. It then sends you an smsconfirmation before your order is further processed.

For Distributors

At the heart of the software is a simple and well-designed dashboard. This enables you, as a seller, to manage customer information, orders, prices, products, reports and recipients with control rights. You can also periodically receive orders by email,formatted as Excel spreadsheet with customizable fields you would want to see.

Benefits:

Ease of use – No special equipment needed hence more flexibility when ordering. Works with any mobile telephone that can send Text messages (SMS) or email.

Fast – simplifies the process for both customer and retailer, as the customer avoids the likelihood of being held in a phone queue and the retailer gets structured, aggregated orders from time to time.

Low Cost – Free registration.

Convenience – Buyers send from their mobile phones and receive SMS notifications to confirm orders.

Simplicity - There is no hardware or software to install so that in a matter of minutes its up and running.

For more information contact us:
Sam Kitonyi
CTO, Wezatele
Email: apopheniac@gmail.com Mobile Number: +254 710 742 134

5:05

Angaza Design plans to revolutionize energy access with Solite mobile money pay as you go

» ‎ Afrinnovator

Globally, over 1.5B people lack access to grid electricity for lighting and battery charging (600M in Africa). Lack of access to clean, reliable energy also makes it impossible to break the cycle of poverty. There is no denying that one of the biggest challenges for Africa is to solve this energy crisis. Relying on the electricity grid means frequent blackouts at the mercy of old systems that cost billions to upgrade and as the lower income consumers transition into the growing middle class, the pressure to serve them becomes immense. Impact investors including Omidyar Network, DFJ Social and Acumen fund have backed companies such as D.light Design serving both East Africa and India. The solar lighting business is a hardware business and as a result, its a distribution business- razor sharp margins, high upfront hardware costs serving lower income populations that need it the most and cut-throat competition including chinese companies make this not an easy business. For a startup, demonstrating scale quickly to attract further growth capital is a significant challenge. In fact the biggest competition is what a majority of Africans already use through necessity and habit, Kerosene lamps- a dirty, unhealthy and unsafe fuel that is environmentally destructive. We need all the innovation in this area to meet the goals of clean sustainable energy for the growing demands of emerging markets around the world. I think its fair to say the chinese solar or battery powered lights are the largest marketshare holders in this segment, exact numbers are hard to obtain- but from what I have seen in Tanzania, they are absolutely dominating and competing on price. So how does one begin to compete? I believe the right distribution channel mix and a unique design and business model are the only ways to succeed in an otherwise very commodity environment- would your rather be an Apple or Amazon in the tablet space or a Dell or HP? Being mediocre exposuses yourself to being crushed in the middle (especially by chinese knockoffs in the low end). We see this everywhere- the iPad and iPhone are well designed and capture higher end tablet users, the kindle does well because it has great design, low upfront cost subsidized by content- understanding your ultimate customers’ need through a design based approach also dramatically increases your chances of releasing something people actually need.

This where Angaza Design comes in. Founded by Lesley Silverthorn, an ex-Designer from the Amazon Kindle team has decided to tackle this problem and take a different approach.Their first product, SoLite, apart from being way smaller than the competition, has amazing brightness, enough to light up a whole room and be used stationary rather than hand held, many lighting companies make compromises on the brightness and build quality to achieve a low price pont. The team spent significant time in Tanzania researching the needs of potential customers before finalizing the design-what they say is a “human centered design” process- right from the books of Stanford Design School and renowned design firms like IDEO. Angaza noticed that most low income Africans can’t afford the upfront costs of solar lighting products. So they decided to combine Pay-as-you-Go model to subsidize the hardware. This is a similar approach to EGG-Energy in Tanzania that rents out batteries through a network of charging stations.

Can you get quality products and services to the bottom of the Pyramid?

One big difference with Angaza’s approach is to utilize the increasing ubiquity of mobile money services to help streamline collection of payments and to provide quality to the bottom of the pyramid customers- we have seen this used to great effect with companies like Bridge International Academies in Kenya within the education sector with great results. The projected pricing of SoLite (and this will change market to market once they scale up) is an upfront cost of about $15 and a stream of ongoing weekly or monthly payments for energy access. This seems competitive with companies such as D.Light design and Barefoot power which charge $10-20 for a more inferior light (bigger, less bright and of somewhat lesser build quality). When talking about product quality and specifications, the World Bank and IFC operate an interesting organization called Lighting Africa that seeks to provide market information and educate the industry about off-grid solar lighting products. They have a handy section on their website where you can view specification sheets of products that have been “certified” for use in Africa. Angaza Design hopes to submit their specs here too. Curiously enough, one of the market leaders, D.light design, have their spec sheet only available on request, which sort of defeats the point- so you have to ask yourself why? Similarly, the true market leaders, chinese knockoff lights are obviously not listed at all. I feel in part, the organization is trying to simultaneously protect intellectual property and raise quality, but they are erecting barriers to entry for potentially new innovative lighting companies- Lesley, the founder of Angaza Design, told me that it costs about $3,500 in total to certify each new model, but it’s an outdated mode when products are constantly iterated and improved based on feedback, this leads to a very costly and lengthly certification process for a company like Angaza using their human centered design approach with updates every 6 months or so. Certification is great, but it should not be cost prohibitive and add unnecessary red tabe for startups trying to innovate.

Angaza’s emphasis on quality will mean a high component and manufacturing cost which is why the pay as you go via mobile money seeks to lower up front cost down to the competitive market price whilst ensure the long term cost of energy in is also competitive with dirty kerosene. Presumably after a while customers will be free of the payments- but until then they have to purchase “energy credits” to use the lights. This is revolutionary if they can pull it off as it helps change the game especially if they solve the final challenge- distribution. When I asked the team about who they have worked with to date, they mentioned that are selling their product in 6 countries so far and partnered with Solar Sister, an NGO in Uganda that employs a team of women (solar sisters) who sell solar powered products. They hope to continue doing so and looking to working with other NGOs and partners- one of the reasons for them going down this approach is that they feel they need to work with partners who can help educate customers the benefits of using their product/service offering. You can read about my thoughts about OLPC and how hardware companies need to do this to achieve scale- they agree with me that the “driveby drop” model of hardware does not work very well in Africa- Angaza are hence very customer focused in working with partners and ultimately customers who can rapidly educate and respond on both sides- advertising is achieved through word of mouth. Angaza is currently preparing to pilot with communities off the grid near Arusha, Tanzania- I asked them why they chose to be lolcated there (readers might feel startups blindly select where to do tech startups in Africa), and they chose mainly on finding strong partners and the ease of which they can reach off grid communities within 20 minutes driving distance from town- try getting anywhere like this from Nairobi or Dar es Salaam!

Integrating with mobile money will be a challenge- given there is no real robust API for services like M-PESA, they will have to automate and build this feature and make it tamper proof within their own walls- something that I feel mobile money services should offer down the line (e.g. a recurring billing feature) for developers to take advantage- a perfect example of why an API is needed to unleash innovation in payments across every sector including energy access.

Challenge of fundraising - Crowdfunding to the rescue

One of the final challenges for Angaza to date has been securing seed funding, an all too common problem. I have argued before and hinted in many posts that impact investors have historically been absent from early stage funding of less than $1 Million, backing more proven companies- they also seem too rigid in thinking about funding competitors who may have a different approach or may even be serving a different market. The company sort of surprised me with their approach of using a crowdfunding site IndieGogo to raise money for their up coming pilot. I have met with the team a few times and they have indeed had a hard time raising funding here in Silicon Valley for their pilot- they have a great designed product and initial sales in 6 countries, you’d think impact investors or otherwise would be interested- nope, too early, not enough traction. Angaza call themselves an “early stage for profit international social venture”- caught between traditional investors who are unfamiliar and are uncomfortable with the space and impact investors who feel they have bet on similar companies and are unwilling to fund a competitor. Crowdfunding is a great way to get people involved to get the word out about their venture and raise the smaller amount of funds that are required to initiate and run the pilot to which they can get the results to validate their model and raise traditional seed financing. I think using crowdfunding sites to raise pilot financing for highly risky prototypes and pilots is a smart strategy, many prototypes have been launched this way if communicated and marketed correctly. Like any financing mechanism, crowdfunding has its place- lets not be deluded that you can seed fund an entire company this way. Ultimately you want value added investors who can help you down the line for scaling, hiring, strategic advice etc… But maybe they’ll attract further capital via this strategy once they demonstrate more results.

7:45

Which African country is best to do a tech startup? A Decision Framework

» ‎ Afrinnovator

In recent conversation that have spanned the last 6 months, I’ve been getting the same style of questions from foreigners who recognize the growing opportunities in Africa and want to jump in. “Which is the best country in Africa to do a tech startup?” Sometimes the question is underlying in the comments I have seen in this blog “Hey, you talk so much about Kenya, what about Nigeria or South Africa- we rock too!”. But more recently the question is more vital when I get an actual startup or investor making a decision between 2 countries to launch their startup or to make investments. Or maybe down the line they realize there are better fortunes in another country- e.g. D.light Design, a darling of the impact investing, industry recently moved from Dar es Salaam, Tanzania to Nairobi, Kenya.

So where to launch a tech startup? There is no right answer- what I want to offer here is a decision framework based on real data and trends that I have seen- this should help people assess their situation and move forward and get on with their startup. However picking a country to launch should not be taken lightly- This framework can act as a guide to assess at each stage that is practical- for instance you may grow up in one country, but your needs mean you have to move to another country to take advantage of further opportunities that might restrict growth.

What Kind of startup Organization are you trying to build?

At pivot25 last year, I remember asking a kenyan lady who had a shirt business “this is a tech conference- what are you doing here if you are in the t-shirt business?”, she replied, “I am curious, I want to learn more”. Then I asked her “why are you selling t-shirts?”- she replied and I will never forget it “Look around, people where second hand t-shirts from China or elsewhere all the time- Kenyans deserve much better”. This is the sort of entrepreneur attitude I like, she is very mission driven- and it also says a lot about the environment you are in and kind of organization she wants to build. Answering this question should get most people halfway to deciding where to do any startup and that includes tech. Each country in Africa has a unique offering for the kind of company you are trying to build- If you are importing materials or products you may want to be near a port such as Dar es Salaam or Mombasa, which one is easiest to deal with, which one offers the best road network to move your products? If you intend to build a tourism related company like when I started Yellow Masai, you want to be in an area with all the safari tour operators and major landscape and the angel investor actually owned a hotel on Kilimanjaro, this drove me to set up the company in Arusha, Tanzania- its also easier to hire talent that understand the tourism industry.

Look for strong Macro economic factors- but the right ones.

On the surface, the best countries in Africa for a tech startup are simply the ones with the best internet and mobile penetration figures, large middle class populations and fastest growing economies (GDP)- these include South Africa, Nigeria, Ghana, Egypt. But this is sometimes limiting.
When I talked to Golden Gate University students last week, I used the Mckinsey diagram that segments countries to explain the dynamics of African countries and the implications. Exports per capita show the raw output and productivity of a country, the diversity of the economy shows essentially how much a country depends on mineral resources. Both taken together are extremely important and can help drive decisions. Nigerians like to say “hey, we are a bigger country and there is more money here- we are a big deal!”- but their economy is very dependent on oil exports- so much so that look what happened in the last week when fuel subsidies were removed and the price of petrol doubled. So what? Well it drives the expectations of that country and internal economy dynamics- a lot of talent is in the petroleum economy, why should talented folks leave and join your startup with no revenues when they can make more working in the established industry- money aside, maybe that programmer you are trying to hire in Nigeria would never leave that oil company because his parents expect him to get a steady job (in Oil), find a nice wife and settle down. I use Nigeria and oil to illustrate this example but it also applies to one other factor- dependence on AID. Some countries are so dependent on AID it makes up as much as half the economy- Tanzania is a good example here. But it also implies the sort of talent you can hire there- expats who expect a steady salary, drinks at the Yacht club every night and paid for driver to take them to and from work. In the bars you might meet a very attractive Swedish lady who when asked “what do you do?”- would reply “I am here to start an NGO and save Africa!” Again, the implications are clear- maybe she raised $100,000 in grant money and hires 5 people from the local University and then when they leave they expect the same sort of job at the next place. An African country historically concentrated too much on one industry (especially natural resources such as oil- look up resource curse) can be very negative on their economy for trying new things- and tech is all about new ways of doing business and efficiency- so I am sorry, but more often than not AID industry professionals don’t cut it in the tech startup world.
Check out South Africa on the chart- No wonder over half African investment in private equity ends up there- its both a big country, well diversified with high export earnings- its hard not to consider South Africa for a tech startup on the continent- but even this masks other considerations before one should jump into a country.
If you are building a social enteprise and raising impact investing capital, you may actually benefit from looking at other metrics beyond which countries are the richest, but which countries have the most NEED and hence your impact. For instance, where is malaria having the biggest infection rates if you are doing an mhealth app around this problem? The countries that have the most need tend to be the ones that have the worst macro economic conditions- I recently learnt that malaria has been responsible for 1% negative GDP growth countries have experienced in the last 50 years- no wonder Bill Gates is investing his money to make an impact in this area.

Watch for Barriers, Regulatory Environment that might open or block Market Access to a country that might otherwise look lucrative

Despite my concerns about economic diversifcation, when you look at raw market size, numbers can also be deceiving. Nigeria is absolutely the single biggest African market right now with a population of 160M and with over half that with mobile phones- its lucrative indeed. But down the line the East African Community (EAC) presents a potential 120M people between the member countries Tanzania, Kenya, Uganda, Burundi and Rwanda- and a possible single currency soon. Size is not the only thing that matters (yes its true!), market assess does. Take mobile banking- in Kenya you have 15M people mobile users with M-PESA and 7 transactions a second. Whilst in Nigeria, there are supposedly 11 mobile banking companies that are operating and the regulatory environment meant that they had to apply for those licenses. The potential for mobile money in Nigeria is certainly huge, but its still very early and without a strong agent network and so fragmented, its hard for mobile money to see the growth and success that Kenya does right now- when half of adults use one system- regulation has hindered the growth of mobile banking thus far and once licenses were released- 11 services jumped into the market. That being said, Nigeria is forecasted to hit 20M mobile banking users by 2015.

Another example on regulation is Tanzania’s very odd 18% VAT phone tax which has been abandoned by neighboring countries. What is strange is that there are no such taxes on traditional PCs – I once saw someone on a mailing list in Tanzania ask someone who was going to Kenya whether they’d buy 10 Android smartphones so they can avoid the high prices in Tanzania- the tax makes a difference for higher end smartphones. Phone manufacturers like Nokia and Samsung absolutely hate this since it denies them a chance to sell higher margin phones where they will make their money in the future. The point is, Tanzania smartphone penetration which is strongly correlated to mobile web access may remain stubbornly low compared to its neighbors. And the data when digging deeper shows this- New Government stats show that whilst Kenya only just edges Tanzania in mobile penetration (68% vs 45%), the web penetration gap is much wider by 3 times (36% vs 11%).

Support Network, Doing Business & Entrepreneurial Ecosystem
An energy startup founder pondering which lawyer to work with recently told me that the 2 lawyers she had talked to had a 25 to 1 difference in pricing to incorporate their company! The exact no.s were $25,000 vs $1,000. Yikes! I responded “Welcome to Tanzania”. This illustrates how hard it is to do business in Tanzania from a very serious decision of which lawyer to use- who you know and work with matters tremendously, or risk being ripped off or cost prohibitive for foreigners to enter.
Similarly- closer to tech, hubs are now popping up all over Nairobi inc. the iHub and Nailab- it is now getting “cooler” to hang out at these spaces and bump into likeminded people with a community- peer to peer networking as well as regular visits from investors and tech industry, mentors and officials. In short, tech workspaces like the iHub backed by the industry make doing business in technology much easier not to mention bringing legitimacy to the tech scene in the country. Nigeria just opened up their first workspace end of last year, Co creation Hub, last year- a fragmented tech scene does not help investors and likeminded people trying to connect with each other. South Africa has a number of spaces and initiatives around Silicon Cape and when coupled with talent it helps launch your startup faster. Word of caution- in contrast some workspaces or incubators are heavily influenced by the world bank or government bodies such as Senegal, Tanzania and Rwanda- whilst an incubator is better than no incubator at all, one that fosters a strong community and doesn’t feel like a “big brother”/Government is watching – i.e. best run by the private sector or at least not too influenced by Government, makes the most sense.
Another factor of the ecosystem is expectations of investors and valuation of technology and startups. Because of the understanding of the impact of technology in the economy, some investors make unreasonable demands on startups such as asking for 50% equity stake of a business for a very small valuation. Closely related is the willingness and comfort of big companies to buy startups at decent valuations to provide a return to investors and especially the entrepreneur for taking the risk in doing a startup- we have since little to almost none of this appreciation in Africa to date, but global companies like Visa with the recent acquisition of Fundamo may begin showing the way. You can bet that technology startups will disrupt banking and media and other industries in Africa as the internet has in the rest of world, how quickly do the incumbent companies recognize this and pay for innovation or suffer a death from the disruption? Countries that encourage this and hence coordinate the entire ecosystem end to end will have a more dynamic IT industry.

Competitive Dynamics
Whist Tanzania may not be as business friendly as our Kenyan neighbor- there is generally less competitors for that market for a given sector- this can be a significant advantage. Note that with the EAC such advantages will erode away just as it happened in the Euro as free movement of labor, capital and good makes it easier to transact across the region. Tanzanians need to shape up fast or they will see Kenyans eating their lunch. A lot of middle managers in Tanzania frequently come from Kenya. At the same time lack of competition is also a bad thing, for instance the example of the $25,000 fee to incorporate stems from the fact that there are very few qualified lawyers in the country and most focus on the big concentrated industries such as mining with little regard for the needs of startups.

Unique industry advantages & Startup Lifestyle

I’ve slammed Tanzania (disclosure: I am Tanzanian) quite a bit- but it does have some unique benefits related to lifestyle. When I am working in Dar es Salaam and I am very tired, I can take a $10 2hour ferry ride or $70 flight in 20 mins if I am in a hurry and be in total paradise. Zanzibar is such a laid back place- one long weekend there and I am fully refreshed, its a great place to go recover and sometimes my best thinking over the last 10 years has been there because I spent time to recharge. I always tell my US friends- that $1 spent in Zanzibar is probably equivalent to $10 of luxury I would spend anywhere else. I mention this because it is important to maintain a good work-life balance. One of the reasons Silicon Valley is so great is because it has amazing weather and offers access to a variety of outdoor activities- you can go snowboarding one day and surf the next. There are obvious opportunities in tourism but also trade- did you know that the kariakoo market in Dar es Salaam is one of the biggest markets for imported products in East Africa- access to the Dar es Salaam port recently has made this a big trading area. Merchants come as far as Rwanda, Malawi, Burundi and Zambia to buy everything from flat panel LCD screens to clothing.

Kariakoo Tinga Tinga

Another factor related to lifestyle is expectations of startup life- many investors claim that in many parts of the emerging market too many entrepreneurs have aspirations to build a family business and have no expectations that their investors to which they raised money from who may want to see an exit (whether acquisition or dividends). VCs don’t fund family businesses- they are looking for big regional if not global businesses. The sort of startup life you want and who you want to draw investments from can impact where you need to be. One of the reasons I left yellowmasai, the travel website (yes, I am no longer involved) was because the investor’s expectations were different from mine and the investor wanted to just address the Tanzanian market not go regional which would require new outside investment or go head to head and compete with other companies. This point is closely related to “the kind of organization you want to build” which in turn informs the sort of investor you want to attract and ultimately where you are likely to find this.
South Africa may win here given their links to the global market, talent and investors that expect this. Take a recent conversation I had with South African serial entrepreneur Vinny Lingham about where he finds seed investors- he has learnt to always try raise money in Silicon Valley because it aligns his expectations of the kind of returns and hence the kind of organization he wants to build. Even though South Africa is an excellent market, it has some of the access to angel investment problems common to all the regions in Africa and indeed many countries around the world except Silicon Valley. Having been in the Silicon Valley region for a number years, you see countries as diverse as Finland, UK, Brazil, Singapore, Netherlands, Norway, Canada, Chile come flocking here to learn from the best and become more competitive- some very proactive governments even have technology trade missions or offshore hub/embassies here to help the startups from their region- example is the new innovation house Norway. When will African countries begin to do this? Of course not every country can afford it- the next best thing is to send delegations, like the Kenya ICT board did last year and in previous years- it can also help mobilize diaspora talent that there are opportunities at home.

Be Global: Take advantage of all the countries and their diversities.
The best startups treat the world as flat, and from day one are opportunistic about where they source customers, talent and investors. The most diverse networked entrepreneurs will do best. Apple designs and markets in California and manufactures in China. Tablets can be designed in Nigeria and manufactured in China too. Lets promote more regional trade within Africa to help each other out- it is exciting that Kenya’s M-PESA has inspired other startups and even big companies to try replicate their success.
One country that stands out a lot for financial access, doing business and transacting across the continent and indian subcontinent is Mauritius. It offers some of the best tax advantages thanks to its treaties with numerous African countries and has transformed itself as a financial hub, a lot of it has to do with its political stability over the years and Government push to be able to do this (note: its a very diversified economy based on the chart I pointed out earlier). Botswana with its International Financial Services Centre is trying to be a financial hub too given similar advantages and ambitions. I think startups that grow in substantial size and start expanding across the region might think about reincorporating their startups in hubs such as Mauritius, Botswana or South Africa- especially if there is a remote chance of getting acquired by a multinational company or they want to float on a public exchange via an IPO.

Promote your own country and don’t be afraid to enter others
As readers may know, I am very biased towards East Africa. I don’t speak French, Portuguese or arabic to be able to navigate the other half of the huge and diverse parts of Africa, but I am eager to learn- I hope I have demonstrated that there is diversity and no one country is the only place to launch a startup. I expect more country advocates to step forward and put forward their case for why their region of Africa is uniquely positioned to do a startup. I have friends in many other African countries and I always seek to be educated about the opportunities there for the sectors I am interested. This brings me onto a final and important point- the country you should enter almost always the entrepreneur needs to understand intimately all these factors and in particular people who can guide them through the unique environment- many emerging markets countries including Africa have unique cultural and business practices that are best understood by working closely with trusted people. Great people make startups work not just huge metrics. Don’t be like this guy for example who only spent 6 months in Chile and concluded that Chile was not fit for startups- more that Chile did not accept him because he was not patient enough to find the opportunities. I strongly believe comfort and familiarity and a healthy appetite for risk make most places in the world ripe for startups. Remember, if Mo Ibrahim can start a mobile operator in the Congo, then why not elswhere? Also like D.Light, don’t be afraid to move on as your startups needs grow to exploit new opportunities- whether its going to Mauritius, Nigeria, South Africa, Malawi (heck try South Sudan!) or Silicon Valley to support the growth of the venture. Partnering with other organizations both within Africa you build a trust with in other countries can help you . Most of all, remember, what kind of startup are you trying to build?

9:57

Apps4Africa 2011 Winners: Innovative Apps Combating Climate Change

» ‎ Afrinnovator

Originally from the Appfrica blog

Appfrica is the organizer and facilitator of the second annual Apps4Africa competition which rewards African technologists for developing creative solutions to some of the continent’s most challenging issues. 2011 was the second year we’ve done Apps4Africa, the first year culminated with this congratulatory message from U.S. Secretary of State Hillary Rodham Clinton:

Last year the theme of the competition was Climate Challenge, which means all the entrants should have focused on solving climate change and adaptation issues that affect their local communities. Over the course of 7 months our teams are going to over 15 countries to support the competition, answering questions and hosting workshops. Since we’re now two thirds through the competition, I wanted to share descriptions of the 6 winners from the East Africa and West/Central regional competitions.

The East Africa winners were announced on January 14th, 2012 at Villages In Action in Kikuube, Uganda. The West/Central Africa winners were announced on December 8th, 2011 in Durban, South Africa at the COP-17 Climate Change Conference.

East Africa Winners

1st prize of $15,000 – The Grainy Bunch by Eric Mutta (Tanzania)
The Grainy Bunch is a national grain supply chain management system that monitors the purchase, storage, distribution, and consumption of grain across the entire nation. It was developed with the understanding that selling “the effects of efficiency” to actors in the grain supply chain is much easier than selling “the effects of climate change”.

Grain is nicknamed the “white oil” which lubricates the engine of Tanzanian growth. Even short-term disturbances in its supply chain adversely affects hundreds of thousands of people. To ensure both food security and economic security for all Tanzanians, a system is required to both monitor and facilitate the supply chain of grain, from the soil to our plates.

2nd prize of $7,000 – Mkulima Bora – Stepheno Maleche, Gerry Nandwa, Joseph Onginjo and Oliver Otieno (Kenya)
Mkulima Bora enables farmers to input the type crop they wish to plant into an app, then it cross-checks meteorological data to determine if the crop is suitable given the timing and location. Mkulima improves farmer yields, saves them time, and money

3rd Prize of $3,000 – Agro Universe – Oliama Brian, Daniel Mumbere, Nabuto Josephine, Bossa Alex, Sanya Duncan, Olwenyi Victor, Kato Charles, Masaba Kizito, Kalema Moses, Namuyiga Winfrey (Uganda)
Agro Universe allows farmers with agriculture products or livestock to alert the app’s community so that they can buy and sell goods from each other. It works on both mobile and the web. The aim of Agro Universe is to create a regional marketplace where products can be sold that may have no demand in the user’s immediate area but that might in areas farther out.

West/Central Africa Winners

1st prize $15,000 – HospitalManager by Victor Ogo Ekwueme (Nigeria)
HospitalManager is a web-based application that helps hospitals and health organizations prepare for disasters such as floods and storms. More frequent heat spells, rains, and floods are leading to heath emergencies, both due to the event itself, and later to water related disease. HospitalManager will help hospitals in Nigeria, and potentially throughout Africa, identify patterns in patient visits following rains and floods, so that staff can better prepare for these situations and save more lives. Hospitals can anticipate incoming disease and emergency patterns using real time climate forecasts. On longer time scales it will allow policy makers to plan locations of new hospitals.

2nd prize $7,000 – Eco-fund Forum by Assane Seck, Guillaume Blandin and Markus Faschina (Senegal)
Eco-fund Forum is a web-based community organizer and geo-localized data exchange tool to help individuals and communities working on sustainable resource management throughout Africa to share their own experiences on best practices. Thus they will better understand and respond to the climate change challenges impacting each specific local context. For example, coastal communities in Senegal that suffer from erosion can learn from neighbors that are successfully and durably overcoming the same problem by regenerating and preserving a littoral forest. Furthermore, the Forum will give those communities a voice which should alert political decision makers to address climate change challenges in time.

3rd prize $3,000 – Farmerline by Alloysius Attah and Emmanuel Owusu Addai (Ghana)
Farmerline is a mobile and web-based system that furnishes farmers and investors with relevant agricultural information to improve productivity and increase income. Lack of information about weather patterns and about which crops grow best in a changing climate hurts rural farmers’ yields. Cell phone use is growing rapidly throughout Ghana, including in rural areas. This mobile tool can help farmers in Ghana to get information about agricultural best practices down to the farm level, including choosing crops best suited for their specific location, and how to prepare for changes in the weather (including dry spells, changes in seasonal onset, and extreme events).

East Africa Honorable Mentions

CoHeW – Geno Juma, Nicholas Mugah
The CoHeW program is designed as an aid to the community health worker (CHWs). The program will have a two pronged approach; it gives stop gap solutions to the respondent and serves as an information gathering tool for the CHWs. The ministry of health and other health administration planners need a source of information on likely occurrences of diseases and projected disease outbreak periods.

AgriRight (Plant it Right) – Wamahiga Grace, Njeri Winnie, Harun Mwangi
AgriRight is a mobile app that helps farmers plant crops that are right for a particular area.Many farmers, plant crops which are not sustainable for a particular area, which leads to a waste of resources (time, money, energy). They often incur huge losses, reaping very little or no crops at all.

West/Central Africa Honorable Mentions

iProtect
An application that allows residents report issues like bush burning and deforestation in real time via SMS. It’s a citizen reporting and preparedness project that allows the public to alert the greater community of emergency events.

Mobile Agri Business
Mobile Agribusiness is an agriculture application for farmers to have information, skills and to connect them to available market in real-time in DRCongo. The project aims to create a mobile market place for farmers in Congo.

What’s next for Apps4Africa? Well it’s too soon to say but the Climate Challenge will begin in the Southern Africa region in a few short weeks. Bookmark this post and come back in early April to find out who the Southern Africa regional winners will be! If you’d like to get involved with Apps4Africa or the winners, please email us at info@apps4africa.com. Many of the entrants are choosing to open source their code which you can find here on GitHub.

13:52

Pondering Africa’s Tech Investment Potential in 2012 and Beyond

» ‎ Afrinnovator

[In 2012] New investor interest thanks to continuing coverage of Africa economic growth potential vs other markets- especially in the attractive mobile segment (700M subscribers barrier will definitely be crossed in 2012). – Mbwana Alliy

It is clear that Africa’s fate has been changing and will continue changing in the coming months and years. Perhaps one of the remarkable evidences of this is depicted in two Economist articles. In the year 2000, The Economist ran an article titled, “The hopeless continent“, the article went on to paint a rather dark, and indeed hopeless, picture for the future of the African continent, citing the negative effects of civil wars, poverty and disease on African states. Fast forward one decade into the new millenium and The Economist in 2011 runs another article postulating the exact opposite, “The hopeful continent“,

Over the past decade six of the world’s ten fastest-growing countries were African. In eight of the past ten years, Africa has grown faster than East Asia, including Japan. Even allowing for the knock-on effect of the northern hemisphere’s slowdown, the IMF expects Africa to grow by 6% this year and nearly 6% in 2012, about the same as Asia.

Africa is now considered by many to be the place to invest in for the future. This has also been supported by the kind of resilience that the continent has shown amidst the financial turbulence in the past few years that has gripped the west. According to this article by Charles W. Corey back in 2010:

African economies have shown resilience in the face of global financial adversities, have passed the stress test and can be expected to achieve economic growth this year, says Donald Kaberuka, president of the African Development Bank (AfDB).

Addressing African finance ministers April 26 in Washington, Kaberuka acknowledged that the global financial crisis has done some damage, but said African economies are expected to average 5 percent economic growth in 2010 and 6 percent growth in 2011, with some countries forecast to achieve an even higher rate.

In many African countries, he said, the crisis has “only been a setback.”

So it’s only logical that we are seeing more and more investor interest in Africa. In 2011, it became clear that one of the areas of particular interest as far as foreign investment goes is the area of technology and innovation. Of course there has been specific interest in very specific countries as far as this goes but the fact of the matter is that the stories of technological innovation from Africa that have gone global such as Ushahidi and MPESA (we need new examples to talk about) have drawn the eyes of potential investors in this direction. The number of foreign seed investors in technology (particularly from Europe, though we are yet to see how the eurozone situation will affect things in 2012) for example in Nairobi, Kenya has increased.

There are, however, a few pointers for both foreign investor and investees to consider if we’re going to reap the most out of the oppotunity

For the Foreign Investor

1. Learn the continent: Africa = Diversity

One of the most devastating mis-understandings among foreigners is that Africa is a single country, with one culture. This mindset can be devastating to potential investors. The fact of the matter is that the African continent is diverse and the diversity has far reaching implications on not only how to relate to people but also how people prefer to do business in different parts of Africa. The business culture in some countries is really fast paced and aggressive whilst in other areas there’s a kind of laid back, easy going culture. Foreign investors need to take time to study their chosen country for investment and understand what the people are like, what their culture is like, then adapt and approach investments with that understanding.

2. This is not America or Europe: Africa = Uniqueness

Still on the issue of culture, foreign investors also need to understand that Africa is a unique playing ground. Do not approach Africa with the idea that things will work here the same way they work elsewhere just because they work in those other places. In fact, going back to the issue of the rich diversity of the continent, one strategy may not even work for two different countries within Africa! With the diversity of the continent comes the uniqueness of states and regions within the continent. These two amazing qualities of the African continent are in part contributed to by the histories of the different states, whilst many African states got their independence from colonial masters around the same period in history, their experience of colonialism set them on vastly different tracks in some cases.

3. Shed the veil: Africa != Aid

There’s still much mis-information and resulting mis-conceptions regarding Africa out there. I remember once working on a project for a foreign client and the guys’s daughter once asked her father (my client) whether I lived in a hut and whether we had elephants walking about all over. It was kinda funny really, but also a bit sad. Mention Africa to many foreigners and the ideas that float to the top of their mind generally revolve around, aid, AIDS, malaria, poverty, civil war and famine. Many others believe Africa is one big charity case. Many stick to only what they see on TV, never going beyond that. Sure these issues face many African states, but they are a) not a one size fits all description of all 50+ states on the continent, and b) not the only story to be told even in some of the areas plagued by some of these evils.

Africa is also a place of innovation and entrepreneurship, and many Africans are hardworking people, not to mention the physical beauty of the contient

Some notes for potential investees

1. Funding is not everything

Andrea Mugoya calls this the ‘funding addiction‘:

I’m not against funding but as I mentioned in my ebook, getting funding for the sake of getting funding (or as an end goal) is dumb! I’m still amazed each time I see ‘funding’ being used as a measuring stick or as a major goal for a startup. I tweeted recently, “only fraudsters and scam artists see funding as an end in itself”. Genuine businesses or NGOs consider funding simply as a means to an end. Further, they would avoid external funding if they could. So why would entrepreneurs seek (or be encouraged to get) funding at the earliest opportunity, sometimes even before they have launched or tested their concept?

2. Don’t just copy

Sometimes you’ll here about someone building the ‘Kenyan Facebook’ or ‘Nigerian Twitter’ or something of the sort. While the aim may be to create a similar service that caters to the specific needs of that country, many times it’s a matter of simply copying that service and hoping to sell it locally without adding anything unique or innovative to the offering. Not only is this an un-innovative approach but also not very likely to succeed since the local population may already be using the other service heavily and so have literally no incentive to use your product, not only that but the entrepreneur may create for themselves a competitor whom they have neither the capacity or resources to compete with.

The challenge for the potential investee is to come up with something unique and as we have noted before, one thing would be to create something that solves a very real problem in the every day lives of local consumers.

22:49

Learning Ruby on Rails, Fighting the Funding Trap and Other Interesting Things

» ‎ Afrinnovator

Riding the Rails
One of my goals this year is to learn Ruby on Rails. When I first decided to get into web development (proper), about 7 years ago, my analysis lead me to PHP/MySQL. After coding two major sites literally from scratch (including the now defunct Jijini Markets), I decided it was time to find a CMS or web development framework. My search and comparison analysis lead me to Drupal, which I’ve now been using (religiously) for more than 3 years, including for most of the sites we’ve done at Asilia. Drupal is great for CMS websites but I find it too ‘heavy’ for web apps, hence my decision to try out Rails. I’ve also missed the buzz of learning something new and further think that it would be good to have Rails in our Asilia toolset.

I’m still in the early stages but have already got my initial “Hello world” app done. For anyone else interested in learning Rails, these are some of the resources I’ve found useful:

http://tryruby.org (Ruby tutorial)
http://railsforzombies.org (an interactive intro to Rails)
http://ruby.railstutorial.org/ruby-on-rails-tutorial-book (online book and Rails tutorials)
http://rubyonrails.org/applications (list of sites using Rails)

Happy coding!

Fighting the funding addiction, one addict at a time
Sadly, the new year always throws up the usual flurry of tweets and blog posts about how this year will be the year for African startups to grab all the funding coming Africa’s way.

I’m not against funding but as I mentioned in my ebook, getting funding for the sake of getting funding (or as an end goal) is dumb! I’m still amazed each time I see ‘funding’ being used a measuring stick or as a major goal for a startup. I tweeted recently, “only fraudsters and scam artists see funding as an end in itself”. Genuine businesses or NGOs consider funding simply as a means to an end. Further, they would avoid external funding if they could. So why would entrepreneurs seek (or be encouraged to get) funding at the earliest opportunity, sometimes even before they have launched or tested their concept.

Refreshingly, I’m not alone in my thinking. None other than the creator of Ruby on Rails, (also a partner at 37Signals) feels so passionately about it that almost every talk he gives touches on it, including one he gave to Stanford University MBA students. Check out his site for more on his views – there’s generally good and interesting advice for entrepreneurs and developers.

Design: The missing link
Another focus this year is design (or better appreciation of good design). I’m lucky that, at Asilia, I work with fabulous designers who, not only educate me on design, but also make sure everything we put out has had a qualified designer’s input. In Africa especially, design seems to be the missing link. Loads of great apps (probably solidly built) but lacking that special ingredient that will make them killer apps – great design and UI.

Apart from my colleagues, one designer whose work I’m continually inspired by is Swiss Miss. She’s got one of the best blog’s I’ve come across and is involved in some very cool project: TeuxDeux (one of my favourite apps), CreativeMornings and Tattly. There’s also this very inspirational talk she gave that’s worth watching.

Steady, organic growth and more to come from Asilia
Officially, Asilia launched in August 2010. So 2011 was our first year of experiencing what it means to build up a portfolio of clients, submit annual results, recruit staff and do everything else that comes with running a business.

I’m very proud we’ve managed to grow (in every sense) and still be self-sustaining. We acquired many new clients, went from 3 staff members to 7 (5 fulltime, 2 freelancers) and completed or grew several in-house projects, including Afriapps and Afri-Love. More excitingly, 2012 promises to see this trend continue.

What this has taught me is this: If you focus on putting out a great product/service and offer great customer service, customers/clients will flock to you and your business will grow. And this, ultimately, is the basis of building a sustainable business. Sometimes we forget that.

20:38

A Mobile Money Wish List for 2012

» ‎ Afrinnovator

In an effort to identify the 12 major tech trends to look forward to in 2012, Mbwana Alliy, noted that 2012 would be a landmark year for the growth, innovation and increased adoption of Mobile Money in Africa. What specific growth/innovation areas would be most anticipated? ere’s a wish-list:

1. More mobile money powered convenience services – both online and offline, mobile money has enabled a lot of convenience to the consumer. It has been said that many foreigners to countries such as Kenya, the birth place of mobile money, find it hard to fathom that people pay for such ‘trivial’ expenses as taxi fares from their mobile phone. The convenience of mobile money has gone on to be applied to a wide variety of areas, from organisations paying employees via mobile money, paying your insurance premiums or paying your electricity bill. It would be great to see wider and even more innovative applications of mobile money in 2012.

2. Tighter integration of mobile money at the POS (or better stated, powering micro-payments via mobile money) – This is closely related to the first point but it seems that it should be noted separately. Mobile money operators have made efforts to provide a means to pay for your shopping at the supermarket via mobile money, it is still quite a hassle, and a definite area for further innovation.

3. Mobile Money to power Africa’s E-commerce Age – Companies such as PesaPal have innovated to bring mobile money onto the web and online payments. The MNOs have also made strides to partner with banks to provide prepaid debit cards that would facilitate online payments. Perhaps this point is not so much for MNOs and mobile money powered online payment gateways such as PesaPal, but for others who can create solid e-commerce businesses that now take advantage of mobile money.

mobile money

4. Disruption/Original Innovation – Erik noted the decreasing tendency of mobile network operators to want to step out of what is already raking in the revenues.

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.

This being the case, it is up to third party innovators and entrepreneurs to really come up with original innovations based on mobile money that really disrupt the mobile money ecosystem. It would be great to see more innovations that find smart ways around the big boys to provide some really innovative solutions.

5. APIs please! – Mbwana predicts that this could be the year when finally one or more of the major mobile money operators opens up their platform via an Application Programming Interface that allows third parties to hook in and innovate. It would definitely make it much easier for original innovation to take place. APIs would also increase the size of the ecosystem by making it easier for innovators to join in and provide more services, which would in turn attract more consumers and so on. It would be great to see mobile money being mashed up with other open APIs on the web, for example how about a service that allows anyone to send money from PayPal to MPESA seamlessly?

In conclusion…

Whatever the case, one thing is for sure, one can definitely expect more innovation in the mobile money industry – whether bottom up or top down! Last year VISA got serious about mobile money by acquiring Fundamo and formally joining bandwagon. Just this action alone could force the giants of the mobile money world, who for the most part right now are the Mobile Network Operators, to wake up. Another simple contributing factor would be the simple fact that mobile penetration is not only on an upward trend but is out-pacing expectations.

23:53

Some Popular Android Devices in the African Market

» ‎ Afrinnovator

This is a guest post by Rebecca Jones of gizmowatch.com

Mbwana Alliy, in his widely popular article predicting Africa’s tech future for 2012 noted that one key trend will be the increased adoption of Smartphones among Africa’s middle class as well as the gap between feature and smartphone being bridged more and more.

Smartphone adoption will grow among Africa’s emerging middle class as entry prices for an unlocked phone continue to dip below $100. Nokia/Microsoft Symbian/Windows Phone and Google/Samsung Android will battle for smartphone dominance- Nokia’s strong brand and feature phone momentum will prove to be an advantage. But affordable Chinese smartphones led by Huawei’s Ideos will continue to tempt Africans to upgrade. – Mbwana Alliy

When you talk Smartphones in Africa nowadays, it’s almost impossible to ignore mighty Android, Google’s open source Operating System for mobile devices. Google has been keen on growing it’s foothold in Africa and Android has been a major contributor to Google’s efforts. Coupled with the burgeoning middle class that’s powering Africa into it’s future, Android could see increased adoption as Africans with greater spending power seek the hallmarks of the middle class lifestyle. According to an article on The Guardian:

The African Development Bank (AfDB) says Africa’s middle class had risen to 313 million people in 2010, 34% of the continent’s population – compared with 111 million (26%) in 1980, 151 million (27%) in 1990 and 196 million (27%) in 2000.

Africa has a young, fast-growing, fast-urbanising population. Many countries have benefited from a commodities boom and a 10-fold rise in foreign investment in the past decade, notably from China. Africa’s productivity is growing by nearly 3% a year, compared with 2.3% in the United States. Arguably, governance is improving, elections spreading and dictatorships and wars declining.

The following is some popular Android devices from around the African Market:

Huawei IDEOS

Based on the tremendous popularity of the IDEOS upon launch in Kenya, it would be safe to say that the IDEOS set the tone for the future of affordable Smartphones. According to this statement by Huawei, the IDEOS U8150 sold about 60,000 units within the first five months.

Mr. Herman He, CEO Huawei announced that, “Since the IDEOS launch five months ago, so far over 60,000 pieces have been sold and we are moving towards the 100,000 piece mark with its share of the local smartphone market at 45% in the first quarter of the year, making it the top selling device with February alone reaching 73%.”

The 3G capable phone runs Android 2.2 (Froyo), boasts a 3.15 MP camera, 256 MB RAM, 240×320 touchscreen, and a 528 MHz ARM 11 CPU

Samsung Galaxy S

This cell phone has 1 GHz Samsung Hummingbird processor giving excellent 3D graphics experience with exceptional speed. The phone carries 4 inches screen which is better in size as compared to the iPhone and other Smartphones. The resolution comes to around 800 by 480 and is manufactured with Gorilla glass which is fairly robust and scratch resistant. At the back, you will find a 5MP camera which can shoot video in 720P at 30 frames per second.

Motorola Milestone

This device is also called Droid in other markets, which is seen 13.7 mm thick having an impressive slide out full QWERTY keyboard. The touchscreen comes to around 3.7 inches pretty similar to the HTC hero’s screen commonly seen in other android phones. It supports the Android 2.0 software which is best suitable for the quad band GSM and the dual band 3G support. You also get a multi touch support which is not seen in Droid in the US market. The camera of the phone is 5MP; you will find A-GPS and Wi-Fi support with MicroSD slot and the RAM as 256MB.

Sony Ericsson Xperia X10

Earlier Sony Ericsson often came with Windows, however, with Xperia X10 you can find the company switching towards the Android OS. This phone runs the Android 1.6 unlike what you see in the Motorola or Samsung Android based phones. One of the important features of this device is its interface which is a modified as compared to the other phones. The interface TimeScape which is a social networking interface best suited to access data from number of social media sites like Faceboook, Twitter, Myspace etc. Similarly, you have MediaScape which extracts a number of multimedia content in one player. The processor used in this phone is 1 GHz Snapdragon which gives excellent processing speed. Also the device has MicroSD slot which contains both the wi-fi and GPS.

Motorola Dext

This device is considered to be the best cell phone for social networking crowd coming through the Motorola’s MotoBlur service. With this feature you can store the social networking profiles online and then get them on your phone devices. With this interface you can customize all your incoming emails, texts and social messages in such a way that it makes sense to you. The phone runs Android 1.5 and has 5MP camera with wi-fi in the MicroSD slot. The touchscreen over this device is pretty small as compared to the Milestone. Unlike the Milestone, this device too carries a slide out QWERTY keyboard and a built in GPS system.

23:55

Thoughts on OLPC-XO 3.0- Is it the right tablet for Schools in Africa?

» ‎ Afrinnovator

In my last post, I predicted tablets would start surfacing into the mainstream in Africa this year, especially within education. When I wrote that post I had not even given a second thought that the One Laptop Per Child (OLPC) would be a factor to consider. And I still don’t think they will be at this stage even with all the buzz and excitement coming out of the Consumer Electronics Show (CES) which kicks off this week. I personally think CES is increasingly becoming a bad predictor of what’s hot in the coming year- last year, Android tablets were meant to go mainstream with the introduction of Android 3.0 Honeycomb- that did not happen as much as Android smartphones took the world by storm. I also don’t think launching a tablet aimed at the developing world will elicit the sort of reaction from the right audience- are there any school teachers from the developing world or indeed African ministries of education going to be in Las Vegas this week?

The XO3 tablet actually looks really good. Great hardware design. Very thoughtful on specs and ports you’d expect on a tablet to allow all sorts of accessories from external drive, mic/headphone to multiple power charging port options. The power and charging feature have me most excited- the ARM chipset power efficiency and the cover doubling as a solar panel makes solar and hand crank charging practical. 6 mins cranking gives 1 hour usage, 1 hour solar charging gives 2 hours of use- not bad.

Continuing on the hardware side, it would be nice to have 3G wireless connectivity option (expensive and power hungry I know). But I feel this allows the tablet to be a lot more mobile given the growth of mobile internet in Africa- I feel relying on wifi in the classroom is limiting, after all the tablet is meant to be owned by the child and hence taken home- how are they meant to do research and homework when wifi at home is not guaranteed? 3G may also not be guaranteed but as I predicted- I feel it will grow this year to support smartphone growth and even then 2G speeds may still be able to allow the device to download ebooks- always on connection is better than no connection in my opinion. I guess they can just be books loaded for offline reading, 4GB space is plenty to hold this type of content.

On the software side, I am relieved that there will be an Android option- I feel like the linux based Sugar OS is pointless given history of linux projects backed with organizations with limited support- why not build on Android and further customize for educational needs? This is where we start to hit some of the issues I have with the OLPC model.

I did some digging and found that the OLPC initiative has shipped around 2M laptops since they begun 6 years ago. When you hone in on Africa, they don’t even approach 250,000. Its pathetic really- the OLPC has not delivered on its mission (at least in Africa) yet and it has to do with its distribution model. The devices have always been sold via Educational ministries and here lies the first problem, in Africa this is just not practical unless you go via President Kagame in Rwanda who has an iron fist rule and can push things forward quickly. Recently there were suggestions of air dropping laptops and tablets to schools-I am assuming a response to get around corrupt governments? All this still doesn’t help address the core mission of OLPC- education and getting as many devices out there as possible.

The gadget and hardware business is becoming increasingly fast paced and risky. And the commercial market has proven time and time again to be the best way to both reduce price and increase volume to the masses…Even then, success is not guaranteed, look what happened to HP and blackberry with their tablet forays last year? In contrast look at Amazon’s kindle fire, the only real competitor to the iPad- important lessons can be drawn here. Ultimately it comes down to price in Africa (and indeed other parts of the world)- lets hope they can hit the $200 price point at retail ($100 would be near impossible in Africa this year). Then there is the $35 Indian Aakesh tablet- a wild card initiated by the Government, they have shunned the OLPC model by at least taking charge of their own destiny- in this model they have dummed down the tablet functionality and are probably heavily subsidizing it to hit the $35 price point. India’s market is so vast, they could easily sell 5M in 1 year and be considered a success.

So is the OLPC XO 3.0 right for Africa? I would say no if they intend to achieve their mission anytime soon… Here are some things I would do to improve OLPCs model in Africa:

Diversify the distribution model: They should consider partnering with mobile operators to distribute, market and subsidize as well as add a 3G wireless chip. These organizations already have scale in Africa and they can help distribute the tablet much more efficiently and are more aligned to partner. Safaricom sold 350,000 Ideos smartphones in less than 6 months- how many other smartphones and phones were sold this way? Try 600M since.
Build better on the ground partnerships & Focus on content distribution: Take advantage of AppStore (yes, stick to Android) for local distribution of content and empower developers together with educational ministries, education NGOs within target countries to develop content. Working with mobile operators also makes it easier to do so. By working with local organizations on the ground they can better assess content and other needs- they can also be valuable training partners for teachers who can then teach students. “Driveby tablet dropping” will not work.
Learn from Amazon, pick one use case and nail it, then expand: Amazon started with the kindle ebook reader, proved there was demand then scaled out to other use cases before bringing it to a full blown tablet over time- the model is less risky than betting on a bunch of tablet features up front and not have any traction, this would avoid the mistakes of Blackberry and HP. It also helps you focus on price initially and tier additional features over time.
Change the name away from OLPC: The name is already outdated, just as Apple Computer became just Apple, they need to recognize that their mission is likely to be served by doing PC laptops anymore. Tablets are perfect for education, recognize that fast or be outsold by others. Laptops/PCs are better suited for productivity. I would be very surprised if they didn’t do this soon- otherwise they will just create confusion and sound outdated.
Become a social enterprise, Charities can’t compete in the hardware business: They should move away from a not-for-profit model. A fully profit model would be too hard for them to transition at this stage, so they should do the next best thing and become a social enterprise- this would allow them to access more capital for scaling up from the growing number of impact investors interested in education within Africa. They can then address more practical distribution models vs relying on Governments and air drops. Better distribution models for both the devices and content that I mentioned is ultimately the name of the game in the hardware business. Right now OLPC is a design house with very limited scale- and after 6 years, they should be scaling out if they are to achieve their mission this decade.

Here is a good video from the verge to learn more about the device.

6:04

15 Skills African Tech Talent Must Acquire in 2012

» ‎ Afrinnovator

Guest post by Appfrica CEO and metaLayer’s Founder/Director of Product – Jon Gosier.

In the American and European tech space there’s a growing problem. There’s so much funding available for early stage startups that everyone and their college dropout buddy is starting-up, leaving no one out there to hire.

It’s one of those first world problems: “We just raised 4 million dollars for our social network for redheads but we can’t find any developers…frowny face.” If Silicon Valley is having trouble hiring top tech talent, then it means that there’s also a drought in the NGO space. Even the biggest non-profits are suffering from the same lack of technical resources.

If you’re an African developer, this is a huge opportunity. Focus on acquiring (or maturing) some of the following skills. Talent in these areas is elusive even in the U.S. and Europe, being good at them will make you far more employable (or fundable if you want to start a company), globally as well as locally:

For Technical People

Ruby on Rails A lot of web startups use RoR because it’s a great language and it also impresses investors. However, they quickly realize that it impresses because Rails developers regularly command high salaries due to such high demand.
Python Django The Jan Brady to Ruby’s Macia. Actually, Python is probably more in demand these days simply because more developers are competent in it. It’s also great for mobile app development which makes it useful for all those SMS apps local firms are dying to build.
iOS – the iPhone continues to dominate the smart phone arena. It’s less relevant if you’re targeting a local audience (there go with Android or stick with Java), but if you are building apps that you want to sell internationally then there’s no app store with a richer economy for developers than Apple’s.
Data Visualization All that ‘open data’ out there is irrelevant. What’s relevant is data that can be used by anyone at any organization, with minimal fuss. Visualization makes it easy to relate complex datasets to those too busy (or too lazy) to analyze them. Data vis goes beyond any specific programing language, but it is a skill and it’s one that Africans can find a great deal of opportunity in.
Math/Statistics Before one can visualize anything they need the components to visualize. If you’ve got a strong grasp of statistics and analysis, distilling information so that it’s actionable for others (who usually don’t share this skill) is a highly lucrative path to pursue.
Semantic Analysis Despite what everyone thought, the semantic web is here to stay. It hasn’t become a ‘new web’ like some once thought it might, but semantic technologies (sentiment analysis, natural language processing, text parsing) have become the methods that are routinely used to power some of the web’s most popular applications. These skills are incredibly lucrative. The growth of the ‘Big Data’ industry is fueled by them.
NoSQL & NewSQL Modern web apps require a great deal of backend engineering to deal with and keep track of all the byproducts of social, sharing, and content creation. There’s two schools of thoughts on this: one is that by doing more of the work on the application side (on request), applications can scale faster while handling more operations from more users. That’s the non-relational approach. The other school of thought is that there was nothing wrong with the old way of doing things, which stores data with the values the application uses for retrieving them later. The challenge was that this created a bottleneck at the database level which often lead to slow or stagnant apps. The new thinking around NewSQL is to keep the relational model and simply build better database software that allows for more throughput. Entire companies are being built of each type of database (see: Cloudera, Vertica, 10Gen), pick the one that makes sense for you. Also, this is the fuel for the Big Data/Open Data rocket ship.
jQuery/Javascript/Ajax Modern web apps do most of their processing on the front-end. As I mention above, this often means the application side is where most of the logic for the web app lives, while the database becomes a place to store and retrieve. For these types of web apps, front end logic is critical. Given the rise of the Jquery framework this is probably obvious, yet solid front-end developers are few and far between.
Hardware Engineering The ‘maker’ movement amplified by Afrigadget and Maker Faire Africa highlights another opportunity on the continent, the localization of manufacturing. Whether it’s bicycles or mobile devices, companies local to the continent that design and build things are scarce.

For Less Technical People

Design Look at the majority of African websites. Most websites made by African developers still look like they were made in 1999 using the GeoCities default templates (translation: Fugly). Blegh. There is a bounty out for good African designers. The mistake a lot of programmers make is they assume design is about technical know-how. It’s not – it’s about a sense of aesthetic and attention to detail. If you are a lazy designer, you’re not a designer. If you are a programmer who thinks design is superfluous to your application, then you’re doing it wrong. There’s also a dearth of design talent in the U.S. and Europe and a good designer can command the salary of a top programmer. Where are the African designers?
Writing You would be surprised at the number of people who can’t string together a well-written, cohesive, consistent thought in written form. Coupled with the rapid proliferation of social media (which, by the way, consists of mostly written messaging) the ability to write and write well has become incredibly important. I say this because you are not at a disadvantage if you are a non-native speaker. Example: Ariana Huffington is a non-native English speaker and she built a highly influential and powerful new media outlet that rivals old-school powerhouses like CNN and FOX on the web. It’s about being able to convey your thoughts cohesively and convincingly. It takes practice, so keep blogging!
Project Management Being the person who can cultivate the best traits from your team of peers is a huge asset that has always been rare. Many people manage, few excel at it.
Videography – We’ve all heard that there isn’t enough local content being produced for African audiences. One of the reasons is the lack of local producers. However, this is changing. More countries are becoming home to an African creative class who are producing film, television, and web shows locally. Can this be lucrative? I think so. As bandwidth falls in cost, eventually the demand for local content may not come from international viewers but the pan-African audience.
Critical Thinking/Problem Solving Deductive reasoning. The ability to deduce conclusions and the reasons why they have occurred. To do this, you have to be able to consider all sides and all aspects of a problem…even the ones that you don’t like. You have to be able to challenge assumptions, this includes your own. It is a skill to be able to analyze the intricacies of why things happen or if someone’s argument isn’t grounded in reality, and to be able to explain your conclusions to others. This will make you a better anything.

There are companies all over the world looking to hire people with aptitude in these areas, but being in Africa puts you in a position of power because there will be as great a demand for you at home as there is abroad. Does this mean you’d have to relocate to another country? Not necessarily, many of these skills can be outsourced to you or your company.

In 2012 learn the things that are in demand so you can build firms (or offer services) that capitalize on these global trends.

Article originally published here.

What do you think? Agree with Jon’s points or think he’s missed the mark? Sound off in the comments below.

0:31

Agricultural Innovation and other sectors in Africa require a Systems Thinking Approach

» ‎ Afrinnovator

I remember starting my first job after University working in military and commercial flight testing at QinetiQ (formerly the British’s Defense Evaluation Research Agency), I spent 10 weeks in an introductory program and almost a year in a rotational program in 3 different roles before I became a systems engineer, a multidisciplinary job. The first 10 weeks was still the most memorable. I spend 1 week in an aircraft hanger working with ground air crew and mechanics, spent 1 week working with certification authorities that approve safe equipment, and I even got to refuel a fighter jet and wave it off on take off. 1-2 weeks in different testing environments, I even spent 1 week in the aircraft hanger library reading aircraft log books (very boring!). Later I would play tennis in tournaments during lunch time in the summer with test pilots and it was just like Top Gun’s volleyball scene- those pilots are fiercely competitive and take massive risks! Something I would bear in mind when trying to work with these pilots in a real flight test environment.

3 years later, I left the job having an extremely solid understanding in the importance of systems thinking both on the technical, managerial and organizational approach. You cannot work in aerospace without having a firm grasp of all the interconnected systems and how to work with people, even more so when doing risky flight testing in a traditional bureaucratic industry. 10 years later, the systems thinking informs 90% of how I work today on the toughest problems.

When I read Professor Calestous Juma’s book “New Harvest”- Agricultural Innovation in Africa, one of the recommendations that resonated with me the most was the systems thinking approach to how to enable innovation. Rather than do a formal book review- (read Amazon’s here), I wanted to talk more about the big takeaway for me, a systems approach, and how it relates to innovation in Africa.

It is clear that to achieve Africa’s agricultural objectives in food security and trade there are many interconnected parts. Many African Governments clearly don’t have the capacity to achieve what is required and there needs to be collaboration with many organizations- also it is apparent even in the technical realm, the convergence of different scientific disciplines from ICT to biotechnology and even the nascent field of nano-technology- clearly many of the technological capacities are currently not present in Africa and will have to be both imported in the short term and researched in Africa to build in this capacity long term. On the organizational level, Regional Economic Communities such as the East Africa Community (EAC) need to be strengthened, strong political will and leadership is required to maximize the trade potential of the agricultural output to feed Africa and even the world. Without fixing the transportation/logistical infrastructure in Africa, how can you move food easily from one place to the other cost effectively? Despite this, Professor Juma’s book shows that Malawi, a land locked country that seemed to be in a hopeless state and in 2005 with 5 million citizens requiring food aid could transform itself. In 2 short years, Malawi managed to shock the world and achieve great strides in agricultural productivity. President Bingu wa Mutharika even took over the Agricultural department personally and showed great leadership by spending 16% of the Governments budget working with new technologies, ignoring traditional naysayers in the aid industry- the results speak for themselves, by 2007- the country had its biggest surplus ever and begun exporting to neighboring countries- extremely inspiring. But the big conclusion- take a systems approach and you can solve the toughest interconnected problems.

Many other problems in Africa require a systems approach- if you read my 3 part series on mHealth, I deliberately brought in an mHealth researcher and a MD practitioner building a health system where one does not exist. As my colleague states “mHealth does not exist in a vacuum”. I had also written about the importance of genomics research coupled with cloud computing, you bet that this is connected to improving the healthcare sector in Africa, especially when African countries, technologists, private and public sectors need to work together.

One more example to hammer home the point for those working ICT: If you are building the “Amazon or Ebay of Africa”, you won’t succeed without solving consumer trust and user behavior issues including fraud and building a network of merchants and agents. There is no formal resident or business addressing system and a reliable and effective postal service in most parts of Africa that the west enjoys to allow you to deliver retail goods ordered online. You have to develop your own good “delivery system” if you want to build up this sector- a lot of this calls for African originated innovation. They call Silicon Valley a tech “eco-system” that delivers innovation for a reason. Look at Apple- I would argue they are the most succesful tech company in the world because they leveraged a systems approach from building an incredible supply chain from China to the rest of the world, working with the best of industrial design and creating an insane tribal marketing fan base. Systems thinking approach is everywhere if you look hard enough.

I even pushed Will, the founder of Afrinnovator to open up more categories to tag on this blog, including health and clean-tech/energy sector (and clearly now Agriculture). A convergence of disciplines, sectors and working in a systems approach is what is needed to push Africa innovation forward.

10 years ago, when I asked my boss at the aerospace company how one can begin to understand all the systems, he replied “Try to be the expert at your level of the system, and push to understand all inter-related systems around you”. I have followed that advice ever since.
I urge you to take time over the holiday break to read Professor Juma’s book- it is packed with great background information even if you are not interested in food security and agriculture, you will realize after reading it how important it is to Africa and most importantly I personally hope it inspires everyone to adopt a more systems approach to working in Africa, that includes, entrepreneurs, corporations and even investors, yes investors (read this post on how some emerging market VCs have even adapted this to their investment strategy). In Professor Juma’s own words from his tweet to me today ‘ “Get more people to read it, especially the youth.”. The Complete ebook PDF can be downloaded for free.

5:00

12 predictions for Africa Tech Scene in 2012

» ‎ Afrinnovator

It has been a banner year for the Africa technology scene as the world begins to turn to the continent- the Economist Africa rising cover story article was for many, a big validation in the future opportunities as well as challenges for Africa. The best follow up post worth reading is by Professor Juma of the Harvard Kennedy School in the UK Guardian blog, both recognize the importance of the technology scene in supporting Africa’s prosperity.
In the spirit of the new year and holidays, I compiled 12 predictions for 2012 based on my experience and trends I am seeing as a Silicon Valley professional, observer and participant within the East African tech startup scene, many inspired from stories we covered here over 2011. Here’s to a great year in Africa Tech. I hope to continue covering this exciting area next year and beyond.

1) Feature phone to Smartphone + a touch of Tablet: Smartphone adoption will grow among Africa’s emerging middle class as entry prices for an unlocked phone continue to dip below $100. Nokia/Microsoft Symbian/Windows Phone and Google Android will battle for smartphone dominance- Nokia’s strong brand and feature phone momentum will prove to be an advantage. But affordable Chinese smartphones led by Huawei’s Ideos will continue tempt Africans to upgrade. Tablet usage will begin growing as prices drop below $200 starting within education sector. Check out the the Nigerian tablet from Encipher based on Android, locally designed hardware customized to a big local market like Nigeria is a smart strategy if prices are kept in check. RIM’s Blackberry will continue to be adopted by the elite and corporate circles- one of the last bright spots for RIM declining dominance who initially popularized the smartphone category.

Huawei Ideos

2) Evolution & Maturity of Mobile Money: Mobile money will begin to grow with other mobile operators in other countries (emulating the success Safaricom’s M-PESA in kenya)- after operators refine and adapt their marketing on how to emulate Safaricom’s success after some slow starts. For example, Gates foundation provided Vodacom Tanzania with marketing support before the service started to take off this year.
New models of mobile money will be explored that are less dependent on mobile operators, such as Pagatech in Nigeria, but their growth will be slow given the lack of a strong agent network to begin with. More application of mobile money into vital sectors from health, education and energy but financial services will still remain big. Long awaited Mobile Money APIs will finally arrive, empowering developers to build more interesting applications. Recent Mobile money outages such as seen with MTN Uganda will not be tolerated and steps will be taken to further regulate as more money is put at risk as billions are transferred.

3) Mobile Commerce & Payment Wars Intensify: Africans will begin to gain more trust from mobile online commerce as trusted global brands including as VISA, MasterCard and Paypal enter and compete to play in the ecosystem they previously ignored. We may well new unexpected players such as Google and even local banks (maybe another acquisition of a startup like Fundamo this year?). Verticals that solve key problems in ecommerce will take off first these include remittance, travel, education and healthcare. We will also see many hybrid models bridge the mobile money world to conventional payment, banking options as was evident with Mastercard/Airtel/Standard Chartered‘s Pay Online solution.

4) Mobile broadband Internet Access and the 3G Divide: Mobile broadband rollout will start going more rural, but the urban story will continue to grow strong. The Urban/Rural “internet digital divide” will be a topic of conversation as much as feature phones vs smartphone debate. Logically otherwise why should a low income African living in rural areas buy a smartphone if 3G coverage is spotty? Smartphone adoption and mobile broadband are obviously positively correlated.

5) Mobile Health coming of Age but still not mature: MHealth projects will begin to move from pilot to scale and impact investors will salivate at the results. We have seen this with Praekelt Foundation in South Africa and expanding into Tanzania. The successful launch of MedAfrica in Kenya. However business model sustainability will remain a challenge for startups that don’t achieve broad scale to survive longer than 1-2 years.

6) Media disruption takes root: Social media, led by Facebook growth will continue – we will begin to see Facebook API used in more apps. From social gaming niches to media. Africa’s advertisers might even leapfrog into more effective social media marketing bypassing traditional banner/display ad networks- with exception of mobile (Inmobi is a clear leader here).Twitter will continue to break the news faster than traditional African press can keep up- new opportunities for new media niches will be exploited to take advantage of this disruption. We might see the chaos of Arab spring fueled by social media head south as African citizens demand more for their Governments.

7) Rush and stumble to Invest in Africa Tech: New investor interest thanks to continuing coverage of Africa economic growth potential vs other markets- especially in the attractive mobile story. But most new investors will be spending the year “getting to know” Africa and be largely risk averse. They will realize that Africa is a “delegated market” coined by Helios Investment Partners Tope Lawani- and no one size fits all, rather searching out unique opportunities on the ground vs rely on vanity macro-economic country metrics. Smart investors will set up offices and presence on the ground at key hubs and hire mix of foreign and local talent, while others will attempt what I call “driveby investing” from abroad, many will not succeed in adopting to the local culture fast enough. Private equity or late stage investing will continue to focus on much needed infrastructure to support growth and of course on those Tech parks.

Rise of Angel & Seed investing “Sea Turtles vs Resident”: There will be more seed funding for African tech startups as investors realize they need to take more risks to generate deal flow and more tech savvy angel investors begin showing up in Africa to fill the void. Domestic tech investing will start to take off as more capital is mobilized from the Africa elite class and successful first generation entrepreneurs realize the strategic value of investing in Africa tech vs other areas. Returning Diaspora, similar to the “sea turtles” of China in the first wave of tech startups there, will lead the charge based on technical and business skills, but resident Africans will learn fast and outsmart diaspora/sea turtles with their unique understanding of the local market- teams that combine a smart mix of both local, foreign and diaspora talent are poised to win. Events such as Pivot25 and Convergence will be the primary go-to areas to find investments, but smart investors will look harder in unexpected places.

9) Impact Investors figure out what “impact” actually means in Africa and add Tech to their portfolio: Impact investors (a growing movement and a confused asset class) will realize software is eating up the world and that includes Africa but many investors will move on to the “next big thing” (first it was microfinance, then health, education and energy) but balance it with investing more on livelihood via job creation for real impact as they realize jobs for Africa’s youth is the continents biggest challenge for stability. Others of course have already figured this out- such as Omidyar Network.

10) New Africa Tech Hub Challengers emerge: Nigeria will emerge (“Silicon Lagoon”?) as a region to challenge Kenya’s “Silicon Savannah” but Kenya will still lead based on strategic position, business culture, welcoming policies and hungry talent- this will accelerate post 2012 election. Silicon Cape in South Africa will also continue to exert influence with the launch of Umbono accelerator.

11) China lays down infrastructure, India and West builds services: Increasing multinational corporate interest in Africa, led by mobile, business process outsourcing, cloud computing vendors and hardware. China and India based firms will lead the charge in new firms operating in the region with their respective strengths. China will continue to exert their influence by providing cheap hardware, networking equipment and infrastructure- India and the west focuse on services and software development.

12) Africa Tech Talent and Skills shortage is real. Steps to strengthen continue: A continued focus on education and incubation as a key pillar in building an African entrepreneurial tech community. Kenya ICT board showed this in their Julisha Report.Diaspora talent will begin to help out more in building tech communities at every level from technical capacity to finance. Government incubators will begin to show their weakness- a realization that technology excellence, passion and fostering of a strong “hacker” communities are key to succeeding. World Class Universities will begin to build partnerships with African educational institutions to strengthen a tech ready talent pool as we saw with Carnegie Mellon and Rwanda. Corporates such as Samsung will further roll out training programs, others will follow in their lead.

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A Rising Tide: Africa’s Tech Entrepreneurs – Erik Hersman's (@whiteafrican) Talk at NetProphet 2010 Erik has posted on his blog (whiteafrican) the talk he...
The snowball effect in the Kenyan (and African) startup scene The premise behind the move to found and launch Afrinnovator...
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5:00

Willstream taps migrants and diaspora to disrupt remittance

» ‎ Afrinnovator

Merry Christmas Africa! I thought this post is well timed for those abroad sending their best wishes home.

Remittance payments to Africa are among the highest anywhere, over $440 Billion a year- infact the payment flows sometimesexceed foreign assistance African countries get in aid, often with a heavy commission cost to Governments, NGO and development consultants. Nigeria receives over $9 billion in remittance flows a year, whilst Kenya and Senegal receive over $1 billion.

Africans such as myself have migrated abroad in the last 4 decades yet many have retained links to family members and constantly send money home. The main channels to do this have been companies such as Western Union that focus on mainly the cash remittance services.

Willstream hopes to change all that by providing a better means for migrants to control the flow of their hard earned money to where it is intended. Sending money to loved ones is not as simple as it sounds, the delivery is largely dependent on an intermediary, whether family member or not, it may on occasion be misdirected or just slow down critical payments that affect lives in areas such as healthcare and education. In fact over 70% of remittance flows are targeted to healthcare. By changing the distribution model of remittance from person to person transactions to more of an ecommerce play where migrants send money directly to merchants (via local banks) and the beneficiaries can redeem the service (alerted via SMS)- This helps merchants by tapping into a critical channel, diaspora/migrants, instead of relying on the customer to pay with money they might not have on hand which they may receive inefficiently via traditional remittance money transfer services.

Willstream is founded by an accomplished team that has worked in the field of mobile money in the last decade and have been frustrated by the promise of mobile money to solve certain payment problems- mobile money has often been tangled up in the aid and telecommunication industry and has not yet been effectively extended to commerce and trade. Whilst it is important to allow easy airtime top up that primarily benefits mobile operators’ customer retention, and similarly microfinance is made vastly more efficient with mobile money. Trade and commerce is still an open field that may be seeking a solution beyond what mobile operator controlled mobile money platforms can offer.
Where is the M-PESA API?. What if I want to send money from Tanzania to Kenya via mobile money?…. Lets not try fit every payments solution in Africa around traditional mobile money.. Or as they say “try fit a square peg in a round hole”.

Willstream does not even rely on mobile money at all for its solution! They focus squarely on the problem of empowering migrants to control the flow of their funds to family members’ need back at home by tapping the power of web and mobile. That’s why they have begun to focus on the healthcare verticals by partnering with Senegal’s hospitals and targeting migrant populations that for historical and other reasons have clustered around France and the United States (each country will differ). Affording to Tofenne Kama, Willstream’s founder- Senegalese hospitals including Clinique Medickane, a diabetes treatment centre, have been extremely keen to adopt their solution in the pilot stage, their concerns often center around time to payments (1-2 weeks- very good) and how they can further leverage the platform to communicate with their existing patients. For instance a hospital can create a health care for a family on the platform that migrants can select as part of package to “stream” home.

Early results from Willstream’s pilot in Senegal show that the demand comes mainly from women, around 70% of users. This should not be surprising given the global trends that women control a big portion of household spending- its hence likely to be that women migrants or diaspora are most likely to send assistance to look after their families.

Collection of payments is often one of the toughest problems for any African merchant operating in a service or retail business. One of the promises of mobile money has been the ability to allow convenient transfer of money and to transform the way business is done. As I have argued in a previous post on payment wars- some of the needs Africans have with mobile money may go far beyond what the mobile operators are willing to do. Credit Card companies such as VISA, Mastercard and American Express in the west often started by a consortium of banks have done well by building out an extensive merchant network to handle commerce even in the digital/online era. Paypal has also been at this forefront for ecommerce- although none of these have established themselves in the same manner in Africa yet. There lies an opportunity for Willstream to carve out a new merchant and user network focused on the diaspora remittance flows that could potentially disrupt companies such as Western Union. From the migrants’ point of view, think of Willstream as a virtual credit card targeting the diaspora with merchants in their home countries. From the merchants, it feels like a customer relationship management portal where they can also manage incoming payments from abroad.

Whilst a look at Western Union’s website shows some interest in tapping mobile money to better improve their distribution model, it has to be as encompassing in involving local merchants to be directly competitive with Willstream.

One of the big questions that quickly comes up with Willstream’s service is the cost- “Great, I can control my money better- but what commission do they take?”- Willstream takes between 5-7% for payments less than $500 and they take a flat fee of $30 and 1% of the transactions for greater than $500. Willstream estimates this translates to a 20% saving via traditional means of sending money when you take into account the risk of money being diverted. The real value comes in keeping hospitals in business (critical cash flow) and beneficiaries getting treatment at hospitals and keeping children in school via on-time school fees…. Take that AID industry! Directly measurable and sustainable as long as migrants and diasporas send money home to support their loved ones- talk about aligned human incentives.

Let us watch the rollout and uptake of their service very carefully as building out the merchant and diaspora network will take a solid go-to-market strategy that will be unique for each country and their customer service, user experience which translates to a level of trust that will need to be as high as traditional remittance services, not to mention the other important elements in any commerce solution such as fraud prevention, adoption and support by the banking and regulatory environment within each African country. The service is likely to benefit urban areas first before impacting rural primarily based on strengths of merchant networks and likely beneficiary locations- given the growth in urbanization of African cities, this isn’t a bad place to start.

Merchants interested in signing up for the service can visit merchant.willstream.com.

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Kenya's Equity Bank taps into Mpesa's mobile payment system A sweetheart deal between Safaricom and Equity Bank will increase...
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16:01

From Open Data to Open Action

» ‎ Afrinnovator

“The thing to remember is, Human beings do not socialize in a completely random way. There’s a tangible reason for us being together, that ties us together. Again, that reason is called the Social Object.” Hugh MacLeod

The Open Government Partnership declaration commits members to support civic participation in addition to making data on government activities open to the public. In Africa, Kenya made history as the first country in sub-Sahara Africa to implement an open data initiative giving citizens unprecedented access to valuable datasets. 40 African countries have since signed up to the OGP and I believe they are at different levels of following through on the spirit of the declaration.

A sign at Fort Jesus in Mombasa, Kenya.

The value of open data to citizens is unquestionable. This year, Kenyan software developers have launched mobile apps that leverage open data to provide services to citizens. They have mostly been in the healthcare and agriculture verticals but services in education and entertainment have begun to emerge. These are very encouraging signals coming out of a country that only a decade or two ago made it almost impossible for citizens to know what the government was doing. These apps may not have been possible without access to the huge amount of data the government holds and is now making available to software developers.

However, we shouldn’t think of only mobile and the web when we talk about leveraging open data. “To turn raw data into ‘edible’ content that citizens can consume and make decisions with” should be the overarching objective for anyone looking to improve citizen participation in governance through open data. This edible bits of content should be easily consumed on the now ubiquitous mobile devices in Africa as well as on old fashioned news print and billboards. Jyri Engestrom refers to social networks as “object-centered sociality” meaning people connect because they have a reason to and that reason is usually an object (in the loose sense of the word). Moving from mere intentions to action may start with little more than an object (physical or otherwise).

Citizen participation starts with ignition; the spark that gets the fire going. Sparks are generated when conversations happen. Human beings having conversations about an issue can be inspired to transform intent into action, finding within their conversations the things that tie them together. Social objects are the reason sparks start. They provide the license/excuse for conversations between people (sometimes total strangers) to start. If we use open data to create social objects offline as well as online, we can mobilize citizens for social and political change and a better quality of life. However, these social objects need to be relevant to the audience, tapping into their concerns and aspirations as individuals and as a community.

Developing more effective programs/initiatives around democracy and governance therefore needs better intelligence about the citizens and their communities as well as better alignment of organizational goals with the people’s needs. It’s about taking a user-centered approach to project design which can fundamentally change how eGovernment and civil society work. It also means taking a multi-platform approach so that insights gleaned from open data are not relegated to digital silos accessible only by the privileged few.

Social Objects in Open Governance

It is not uncommon to see small groups of men hurdled around a newspaper at a news stand on weekday mornings sometimes in animated debate. The newspaper’s content is already a social object our society is familiar with and one that can be leveraged to transition citizens from intent to action. Here are four ideas that can help us on the road to better initiatives that find relevance among people.

Find the issues your people actually care about. Not everyone is likely to be moved to action by the same message. Figuring out which segments or archetypes in the community resonate with your cause makes it possible to design highly effective initiatives. Furthermore, the issues citizens care about can be fundamentally different to those NGOs and civil society organizations think people should care about. If we take the time to listen, we will hear them.
Build appropriate local social objects. Mobile apps in a region with low mobile phone penetration is a recipe for an endless pilot program. Billboards, FM radio talk shows and print ads or posters would be more effective. For instance, using traditional media to highlight statistics on misappropriation of local government funds would probably spur those in that community to action if done using appropriate channels. It is also likely that this same information would be completely irrelevant to citizens in a different locality, hence the need to think local as well.
Include feedback and amplification. The conversations sparked by the social object need to be captured. Including a mechanism to capture these conversations and amplify them allows people to hear related conversations happening across the ‘room’. Additional or even opposing points of view are introduced creating richer dialogue and better outcomes (in my opinion). These conversations can be captured via call-in shows, text messages or even social media.
Update objects with a conversations layer. Once open data has been published, social objects created and conversations are happening around the piece of data that was published, its time to publish an update to the existing dataset with a layer of the people’s opinions. Sometimes people think they are the only ones with an idea or pain around an issue. Updating the social objects with this layer of feedback creates awareness about the scale of public sentiment and could inspire action.

Open data requires not only that the veracity of data be maintained but its freshness as well. This means social objects need to be updated, new conversations captured, objects updated and the cycle repeated. It also calls for a multi-channel approach to civic participation programs that take into account the role ICT is playing in the community and the level of comfort citizens have using new or existing channels to speak out.

(This post originally appeared at the Semacraft blog)

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12:08

Three lessons from Ushahidi: Learning from Ushahidi’s history

» ‎ Afrinnovator

The Ushahidi crowdsourcing platform recently secured an additional $1.9 million round of funding from the Omidyar Network spanning 3 years.

Ushahidi has definitely grown from strength to strength since 2008 when it was created and first deployed, really as a hack creating a quick solution to an evident problem at the time. The solution happened to work well and picked up momentum, drawing the attention of many across the globe. Powered by a small community of local developers and volunteers in Kenya and it’s diaspora, the ‘hack’ took shape as a powerful tool for crowdsourcing information, particularly during crisis situations.

Beyond the Kenyan crisis, the technology was revised and improved, drawing more and more developers and more eyes to the interesting innovation. This included the Omidyar Network and others who poured in some fuel in the form of funding that allowed the founders of Ushahidi to focus and create, this time not spontaneously out of the urgency of creating a solution to a present pressing problem but intentionally, a solid platform that could scale not only technologically but also in terms of applicability. This has seen Ushahidi turn from just innovative application of existing technology (the original solution was basically a Google maps mashup) to really innovative technology such as the SwiftRiver initiative.

Of course, history bears witness to the difference made in the last few years. The technology has been developed and refined, and in the process, off-shoots such as SwiftRiver have sprung out of the main shoot. The original team has grown significantly with more dedicated staff and the community has also grown significantly. Ushahidi has drawn global attention and has earned a place next to MPESA as one of Kenya’s best technological ‘exports’. Ushahidi has also been deployed to varying use cases including election monitoring, crisis mapping and organising large scale efforts such as the Snowmaggedon. The technology has been employed by major corporations, particularly media houses such as the Washington Post and Al Jazeera as well as individuals particularly through Crowdmap, the ‘Ushahidi in the Cloud’ initiative.

Great strides have been made, but as Juliana Rotich notes on announcing the new round of funding, Ushahidi has yet to find it’s feet as far as revenue generation is concerned. The organisation is still very much reliant on private foundation grant financing:

We’re now moving into the next phase of Ushahidi, where we’re exploring ways to diversify funding away from our historically private foundation grant funding, by increasing earned income revenue. This includes direct customer revenue through Crowdmap, B2B revenue through SwiftRiver SaaS offerings and continuing our value added services work on custom deployments of the Ushahidi core platform.

Three lessons from Ushahidi: Learning from Ushahidi’s history

One of the cool things about Ushahidi verses it’s counterpart Kenyan success story, MPESA, is that it represents a very contrasting path of development from which innovators and techpreneurs can learn a lot from. Whearas MPESA was somewhat the child born with a silver spoon in it’s mouth, that is, it had a large organization providing an institutional framework and support – both technical and resource-wise (both monetary and human) – from it’s conception, launch and growth, Ushahidi’s story follows a different path.

Ushahidi was conceived from humble beginnings, really just an idea from a handful of individuals who were not even a formal organization of any sort, just friends and acquaintances who were themselves separated geographically. They did not have major financing or extra hands to develop the technology. Their budget probably was only a domain name and the hosting. And not only this but they did not have the luxury of time! Their country was being laid waste and they knew they could do something to help the situation. They certainly secured major funding later on but that was further down the line.

So, here are a few lessons we can pick up from the history of Ushahidi. (All of which I am constantly learning personally through personal experience, sometimes painfully, both with Afrinnovator and African Pixel)

Solve a Problem: Necessity & invention

What is interestingly similar about both Ushahidi and MPESA is that they both solved an existing problem very well and that is still fundamentally the basis of their success (Read: “Necessity & Invention: Africa’s story of mobile conquest & why utility beats ‘coolness’“). The lesson is simple, as Guy Kawasaki puts it, ‘Make Meaning’. If you set out to solve a real problem, really well, and do it, chances are that money will follow.

Don’t wait for funding: Build it and they will come

One of the most paralysing mentalities for the innovator is that “I need funding (VC or angel) to create my product/service”. And so the innovator either lies dormant, waiting to get some funding in order to build their product, while in the mean time they probably go only as far as pitching their ‘idea’ to potential investors but never really going all out, or they sell out too early. The moment someone proposes putting some money into their ‘idea’ they immediately take it, not realising they could have given up their stake in their company for something they could have accomplished without external funding at least at that stage.

Someone once advised, “Do what you can with what you have until you can absolutely not do anything else“, what they meant simply was, there’s always something you can do with the resources at your disposal without first thinking ‘I need funding’ and quite often you can actually do much more than what you think you can do with whatever resources you have at hand. If you can code, or design, or sell your product/service yourself, do it, you don’t have to wait for external funding so you can hire a programmer and a designer. Another way of saying this is, “start right where you are“.

Patience: Progressive, predictable growth

Tied in to the previous lesson is progressive, predictable growth. Simply, don’t run before you can walk, and don’t walk before you can crawl. Sometimes for many an innovator/techpreneur, there’s this tendency to want to grow really fast. So if they have the financing they will literally go on a spending spree, hiring more staff than are necessary at that point in the life of the company, renting an unnecessarily large and expensive office when you don’t have to just yet.

On the other hand it may refer to wanting to build everything at once, in other words, wanting to have all the desirable features in your product at once at launch. This creates a situation where the innovator/techpreneur can either get stuck trying to put everything into their product before launch and sometimes it can be costly, such as if someone else with more resources beats you to the punch.

This is where versioning and creating a roadmap for your product can be of great help. First off, a roadmap allows you to build progressively as you also grow your company. So you can maybe build the initial product with just the skills you have, maybe as a programmer, perhaps this first version does not need really comprehensive security features which you don’t have the expertise in. So you release it, hopefully get some revenues from the initial offering. Then for the next version you can consider getting a specialised programmer for the security features that will be needed for that release, the good thing is, you are already in market and you’ve made some money that can support the new hire.

Secondly, it’s also great for consumers to see progress, especially if it’s predictable. They know there’s additional value to coming. The trick is just not to keep them waiting too long i.e. Release early, Release often.

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18:43

Mobile Health in Africa: The Entrepreneur’s Guide – Part 3

» ‎ Afrinnovator

This is a guest post by Amy G. Lehman, Executive Director of Lake Tanganyika Floating Health Clinic (LTFHC). This is the final post of a 3 part series on mhealth in Africa. Click Part 1 and Part 2 to catch up on previous posts.

I want to thank my colleagues, Mbwana Alliy and Karen Cheng for their interesting and insightful pieces on mHealth. I am honored to be a part of the dialogue, and in my usual role of choice – as a “Gadfly” for the ultra-rural populations in sub-Saharan Africa, and for the populations around Lake Tanganyika in particular. I would like to raise some issues for people to think about, and in doing so, hope to encourage closer collaboration between the tech and delivery sides of health care, such that we each help to inform the other about what’s possible and about what works.

As a practitioner in an ultra-rural location, I have long followed developments in mHealth and telemedicine and been excited by the possibilities. Unfortunately, I work in a place that is still largely without cell phone access, much less broad-band, so issues regarding connectivity, 3G availability, bandwidth are of paramount importance to me in discussing how mHealth can change the health care landscape.

There was a short article in The Economist this past August called www.africa.slow that specifically discussed Sierra Leone’s internet connectivity problem, but also listed several other countries with the identical issues. One of those countries is the Democratic Republic of the Congo, which, like Sierra Leone, has experienced tremendous instability due to war, and in fact faces an even greater uphill battle to achieve decent connectivity – due to the massive size of the country, the continued instability in certain areas, daunting infrastructural challenges, as well as investor fear (both founded and unfounded).

The longest coastline of Lake Tanganyika is in the Democratic Republic of the Congo, and so I have personal experience in trying to address the connectivity problem. I also want to add that the second longest coastline is DRC’s neighbor, Tanzania – a country without many of the above listed problems – and yet the western corridor of the country is still largely without connectivity as well. My organization, the Lake Tanganyika Floating Health Clinic, has decided to attempt to crack the problem along the Congolese coastline by adapting simple technologies that have been used for oil and gas surveying in the past, to see if we can create a system that allows the far-flung, mud-hut health centers along the lake to communicate with the Regional hospital. Currently, they cannot – and this is one of the reasons the Regional hospital cannot fulfill its mission to support the health centers.

But in piloting this “proto-network,” several questions are begged:

What kind of information should be transmissible at this stage in the game? What do we expect these health centers to do, given their chronic lack of supplies and access to appropriate health care education, coupled with extreme needs? What do you do when you establish communication, but still have extremely high transportation barriers (One very common example would be this: Currently, if a woman experiences obstructed labor in the villages along the lake, the baby dies and the mother either dies, or develops a fistula. Is it helpful to send a text to the Regional hospital to say this is happening when the outcome will be the same? Yes, we need to collect data on incidence, but we may also create an unintended consequence of raised hopes, and subsequent disappointment or disillusionment when the technology can’t produce an immediate change in outcomes).

Central to health care education is hands-on collaboration and learning in a physical health care setting – regardless of whether that training takes place in a tertiary care American hospital or in the Moliro Heath Center in Moba Territory that has no electricity nor running water. Personal collaboration between health care workers develops several things simultaneously – practical skills, that can also be performed under supervision to achieve proficiency; clinical diagnostic skills; camaraderie; empathy for the patient. These last two elements should not be underestimated in importance, and often are the qualities that can mean the difference between life and death in difficult situations. From my personal experience, it’s clear that this is still the gold-standard in training, at any level. Again, an example from maternal health: If one has never inserted a urinary catheter in a sterile way to treat an acute fistula, chances are you won’t be successful with remote coaching. You also have to have a catheter on hand. This is one of the main reasons why we are working so hard to create an actual physical platform (in the form of a floating hospital) for service delivery and education, that can accommodate the supply chain problems in the basin, as well as the extreme lack of infrastructure.

Technology to Real Solutions

Having said that, I am a true believer in using technology to help augment and maintain skills and knowledge that has been introduced initially in a face-to-face manner. And there are also other uses of technology that can be immediately deployed that don’t focus around direct patient care per se, but instead provide ancillary services and data collection from rural to ultra-rural areas – places that have traditionally had serious under-reporting or mistaken reporting. The National Institute of Medical Research in Tanzania, for example, has been piloting an incredibly innovative and effective program using community health care workers to send epidemiological data via SMS. I am a strong believer in the ability of health care workers, even at the lowest level of formal education – including NO formal education – to learn to use cell phone technology to accomplish important tasks. One of the keys to success is adequate initial hands-on training.

I also think that trying things out in conjunction with local partners is a great way to fasten upon real solutions. We, for example, created electronic medical records for 30 Congolese women (the first, ever, in Moba Territory, and maybe most of the DRC) who traveled with us across Lake Tanganyika to the Tanzanian side, where we were able to provide surgery for their fistula injuries. Working with a long-time AMREF surgeon’s intake form, personal collaboration regarding operation performed, cell phones that could take digital pictures, and my employee Anderson’s tiny laptop that runs on Linux, we created really accurate and I must say beautiful e-records for our patients. Those records now exist in the cloud and are password protected. Because connectivity is still a problem to contend with, we also provided paper records to be kept at the Regional hospital. As our “proto-network” develops, we will be able to access and add to those records. In the mean time, it allows us to remotely keep track of our patients, and when we have a connection, augment the record with our physical follow up visits. This cost us nothing – except a lot of time. Another key to success in the ultra-rural areas is allowing everyone the time they need to develop, trouble-shoot, practice.

My parting thought is the following:

A core concept in delivering health care service in the ultra rural areas is that communities need to be able to “call for help” – whether the call is related to a labor emergency, cerebral malaria, a cholera outbreak, a severely burned child. The communities need connectivity to do that. But it’s clear that this is not enough. Health care systems in general need to be strong and developed enough to be able to realize the full advantages of telemedicine and mHealth services so that we can engage in true capacity-building of local health care workers in pragmatic and effective ways.

Amy Lehman recently spoke at TEDxWomen in Amsterdam- a worthwhile video to understand the challenges and opportunity in her work. Highly recommended for the development and impact investing audience.

Please think about supporting the LTFHC during this holiday season: https://npo.networkforgood.org/Donate/Donate.aspx?npoSubscriptionId=1004645

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17:36

Pivot East – Regional Mobile Apps. Developer Conference to be Held in June 2012

» ‎ Afrinnovator

The second edition of East Africa’s regional mobile apps. developer competition and conference will be held on June 5th and 6th in Nairobi. The progression of events dubbed Pivot East will begin in January 2012 with a call for entries to the mobile applications competition. The competition which culminate in 25 of the best mobile mobile applications competing at the June 2012 pitching conference. Eligible contestants for the competition will be individuals and companies domiciled in Uganda, Tanzania, Rwanda, Kenya, Burundi and South Sudan. The pitching conference will have a rich audience of investors, development partners, telecoms operators and other industry players from East Africa and across the globe.

Building mobile innovation powerhouse

East Africa is increasingly being known globally as a breeding ground for mobile innovation. Deliberate efforts are required to sustain the favourable attention and momentum for the region to retain its position as a mobile innovations hub. Pivot East is an incremental effort to consolidate and showcase the region’s progress towards becoming a global powerhouse for mobile innovation. By leading the world with mobile money innovations such as M-pesa, the region is well placed to churn out more mobile innovations. This is more so with the launch of m:lab East Africa, the regions facility for mobile entrepreneurship training, incubation and applications testing in Nairobi. Other tech hubs and incubation centers have also been established recently in East Africa as part of a growing ecosystem to develop and nurture innovation alongside entrepreneurship.

Pivot East also builds on the successes and lessons learned from Pivot 25 – the region’s first mobile apps. developer competition and conference held in 2011. Pivot 25 was organised by m:lab East Africa and its consortium partners led by iHub and eMobilis. The m:lab East Africa consortium which also includes The World Wide Web foundation and the University of Nairobi aims to identify, nurture and help build sustainable enterprises in the region’s knowledge economy. The mobile apps. competition and conference is therefore one of the Lab’s ways of improving chances for the most talented and promising mobile entrepreneurs “bubble up” and are showcased so as to receive support requisite through various access to markets, and access to finance initiatives.

Building on Pivot 25 in 2011

ThePivot 25 competition in 2011 attracted over one hundred (100) entries from across East Africa in five (5) categories. The five categories were “Payments and commerce”, “Entertainment, gaming and utilities”, “Business and the enterprise”, “Government, education and agriculture” and “Health”. Twenty five (25) finalists in total were chosen and five(5) from each category were selected to present their applications at the pitching conference on 14th and 15th June 2011. The finalists were trained and coached to improve their skills to pitch their applications before the conference.

The 2011 conference was attended by over 300 people who included angel investors, venture capitalists, corporate executives, senior government officials, representatives of development organizations and researchers. The panels of judges for the contest were composed of industry experts and global thought leaders. The conference proceedings were live streamed by Capital FM. The competition and conference also received much coverage from local and international media including being featured in the Time Magazine.

Overall competition winner MedKenya pitches as panel of judges looks on

In addition to five category winners receiving $5,000 cash prizes, the overall winner, MedAfrica (then MedKenya), won a fully paid trip to pitch their application at DEMO.COM in Silicon Valley and were voted one of the top ten applications at DEMO. Finalists also found exposure to sources of finance, business partnerships and markets for their applications through the conference and the Demo Pit component of the event.

To Taha Jiwaji, PIVOT25 was a “Great experience boiling down a business concept into a crisp sell-able message and concept.” Taha was one of the finalists hailing from Tanzania and fronting his “Bongo Live” application. Asked to comment on his experience being in the competition, Jeremy Gordon, another finalist from Kenya with the “NikoHapa” application said “So far, our experience at Pivot25 has opened doors for us to become the successful company we know we can be, and we’re now doubly motivated to make it happen.” According to Kariuki Gathitu, who contested in the finals with the “M-Payer” application, “Young innovators like the ones who showcased at pivot25 will definitely heal Africa with the power of their minds.”

Many pivot 25 contestants have gone ahead to achieve notable progress with their businesses including attracting venture capital and acquiring new customers. Seven of the finalists competitively secured a space at m:lab East Africa’s business incubation facility.

Information about the PIVOT25 competition and conference can be found at http ://pivot 25.com

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9:27

Nigerian Card Game WHOT! is The New Game Taking Over iOS, Android and Facebook

» ‎ Afrinnovator

WHOT! Is The New Game Taking Over iOS, Android and Facebook

WHOT! is taking on the digital gaming world and being regarded as the best iOS, Android and Facebook casual card game.

The popular mobile and online card game is gaining followers due to the addictive multi-application availability and the exciting interaction with plenty of twists and surprises!

WHOT! is similar to Uno card game and is easy to learn and offers players challenges and rewards, making it one of the most popular card games in the world.

The game is the creation of nKanika, Inc. nKanika is the one to watch, as they are creating the next generation of free to play games for mobile devices and the open web. The company was founded in October 2011.

The key features in WHOT! include:

Detailed Graphics
iOS & Android – Intuitive style menu manipulation and selection using your finger
Universal app for iPhone™, iPod™ touch and iPad™ and Android devices
4 fun and challenging levels! More to come
Real life rewards for achievements and points in the game using Kiip Rewards
Automatically tracks and saves all of your game stats
Free to play on Facebook
Online Achievements with Game Center support
Select your favorite card faces to use, just $0.99.
On-screen “How to play” instructions and button actions.
PC-style menus allow easy and intuitive configuration and navigation.
Retina Display support
Heyzap Integration for widespread discovery
Multiplayer – Coming Soon

WHOT! is the company’s first title and designed for iOS and Android devices as well as Facebook. Amaete Umanah, the founder and CEO of nKanika said “ This is a splendid achievement. The bar has been raised, the gauntlet has been thrown down and we can’t wait to show the world our vision of our next iteration of WHOT! and our upcoming titles”

WHOT! is very easy to learn and is played with just one finger! Kids and adults are enjoying the competitive scoring and are quickly becoming addicted to the spirited game.
The new diversion is receiving rave reviews from tech gaming magazines and blogs and being touted for its classic fast-paced and exciting method appealing to all ages. Participants are able to compare their game scores to others worldwide on Game Center, and strive to improve and complete all the achievements. Some of the challenges are easy and others are only achievable by masters!

The program is simple and the web portal located at http://www.whotcardgame.com features complete game instructions so users may become acclimated with the gaming progression quickly.

WHOT! can be played on Facebook but requires the Unity 3D Web Player to work and is one hundred percent safe.

The game is available for download at:
iOS
http://itunes.apple.com/us/app/whot!-free/id476619050?ls=1&mt=8

Android
http://www.getjar.com/whot

Play Now on Facebook
http://www.whotcardgame.com/game

WHOT! has its own Facebook Fan Page and new and experienced users are invited to connect and join for updates, news and information at http://www.facebook.com/pages/Whot-Card-Game/198110233594592

Learn more by visiting http://www.whotcardgame.com/

ABOUT nKanika, Inc

nKanika is a multi-platform, global interactive entertainment and licensing company. nKanika is creating the next generation of free to play games for mobile devices and the open web. The company was founded in 2011 by Amaete Umanah and Ime Etim. WHOT!, the company’s first title launched on late 2011 for iOS, Android and Facebook and has already grown to be one of the largest social games on mobile and has set the standard for financial performance.

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4:09

Let’s put a smartphone into a feature phone and beat Moore’s Law

» ‎ Afrinnovator

What percentage of mobile phone users in Africa are smartphones?- A common question that comes up here in Silicon Valley. My typical response has always been- “It’s low now, but Android phones are selling like hotcakes and it’s only a matter of time till the price comes down and the masses can afford a smartphone.”

I am starting to revise my view. What is actually happening is that there’s a race for cloud services in demand now vs the realities of Moore’s law. The law which states that the price of computer chips will half for the same amount of computing power every 18 months- has remained true over the last 40 years and has enabled computing devices to get ever more cheaper, smaller and more powerful. 5 years ago, we barely had colour display phones in the market, now they are very common. In the next “few years” we will likely see smartphones achieve mass adoption. That is if manufacturers decide to design for that price point faster. Nokia has a dominant advantage in Africa in the supply chain and distribution of feature phones which are keeping phones as low as $30- and as long as they keep selling in volume, Nokia might not need push smartphones to Africa so quickly. It might be quite hard for smartphones, which come loaded with large touch screens, sensors such as GPS, acceleratomers receivers etc.. to hit a reasonable price point to force users to upgrade time even if Moore’s law is on the device’s side- realities of the supply chain and distribution might mean we have feature phones as dominant phones in Africa for quite some time. Many african consumers are price sensitive after all even if they aspire for a smartphone.

In the meantime, the thirst for cloud services that internet connectivity brings is here now for Africans to come, and this means that those who are using feature phones might get left out of the cloud services being delivered via smartphones.

Earlier this year- Facebook acquired mobile company Snaptu which deliver Facebook and other services to feature phones (up to 2,500 different devices)- this is a huge validation from a cloud company of the importance, growth and staying power of feature phones. And the numbers for Facebook adoptions are growing at double digit rates, month over month.

I came across another company today that is betting to beat Moore’s law as to what devices will deliver cloud services to the masses first that currently have feature phones. That company is Binu out of Australia. The idea is to squeeze smartphone like applications that connect to the cloud through a java enabled feature phones. The idea is brilliant- it helps deliver cloud service functionality such as facebook, twitter and other content including e-books such as Qur’an and Holy Bible bundled via one simple app- they boast 10X the speed and 10X less data- and according to their blog- they have exceeded 2M downloads in less than a year since they are in operations. They also remind me why the Opera browser has over 70% marketshare in Africa currently- efficiency pays in Africa.

Ultimately smartphones will get to Africa- but we should not wait for the cloud services that are being built for them to not reach Africa now.

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11:57

A Discussion on Local Content within the African Context

» ‎ Afrinnovator

When listening to discussions on local content, it is sometimes a bit vague what the intended meaning is. Is it content that is created locally for local consumption exclusively? Is it content that is just created locally but could be consumed by anyone, anywhere? Is it content that is not necessarily created locally but is consumed locally? If anything really, just the term ‘local content’ is quite ambiguous in itself as really what we are concerned with here is ‘Local Digital Content’. What really is local content? And why is it that there’s such a push for more local content?

In today’s globalised world, it has become harder and harder to any one or any nation to exist in it’s own little cocoon, disconnected and totally cut off from the rest of the world. Over time the developments in telecommunications, faster and more efficient means of transport, the Internet, the World Wide Web, and other factors have led to an ever more increasingly connected world where people, goods, services and perhaps most importantly (in a world that relies heavily on the knowledge economy); information. At the heart of the local (digital) content is really about information represented as bits and bytes stored on computers and travelling rapidly across networks.

Perhaps a more refined term that would help us understand local content is ‘locally relevant (digital) content‘. The real value of local content is in it’s relevance within a particular culture. That relevance is what makes it desirable for consumption by people within that locality. Again, however, globalisation has led to a situation where sometimes there are gray areas between differing cultures from different parts of the world. The fact is that cultures have been opened up to influence from other cultures that are both near and far from the physical location of a people. So as far as local content is concerned, there could be, as we will see, a lot of content that is interesting for people within a specific culture that is not necessarily restricted to that locality.

But why the push towards promoting local content? Even Internet Father, Vint Cerf, noted the significance of local content and was among the 3 key memes we identified during his talk at the Nairobi innovation hub during his visit there. Governments are also seeing opportunities local content significantly, in Kenya for example, the Kenya ICT Board has set out a very focused agenda for local content in it’s ‘Tandaa‘ initiative.

‘Tandaa’ is a brand of the Kenya ICT Board that promotes the creation and distribution of locally relevant digital content through the Tandaa Symposium and seed money to ICT entrepreneurs.

Through the Tandaa initiative, the Kenyan government has proceeded to hold events to promote local digital content generation and even providing capital through its local digital content grant initiative. The government has also not left it to private sector to generate local digital content but is making it’s own efforts such as the Kenya Open Data Initiative through which the government is opening up access to public data in a way that is easily consumable and programmable.

From the government’s perspective, local content generation creates jobs for people – the programmers, designers, animators, videographers etc that it takes to create content and possibly businesses as well. Engaging content also means that it’s interesting to the public who will be interested in consuming this content – watching a video, reading an article, playing a game – engaging content can be monetized and that means there’s an economic incentive there as well. In addition there would be skills learnt or transferred in the process – programming, animating etc.

The private sector of course, sees the opportunity in local content and major companies, from Nokia to Google are banking on local content:

Nokia focuses on local apps, content in Kenya

Electronics manufacturer Nokia is planning to rollout handsets in Kenya embedded with local applications and content, in order to boost mobile sales in the local competitive market.

Kenneth Oyolla, General Manager, Nokia East and Southern Africa says mobile application marketing is a rapidly growing sector and advertising channel for brands.

Oyolla says teaming up with local developers to create local content and applications for phone users is gaining momentum.

“Increase in use of apps by the youth and middle class is spurning an unprecedented growth. We are looking at local apps critically and would increase our investment in local contents,” says Oyolla.

Nokia is planning to invest in local applications as developers seek to create more relevant mobile user solutions.
“Locally, the growth of mobile Internet subscription coupled with a significant use of smartphones is key to the growth of mobile application segment,” says Oyolla.

Earlier on we mentioned that the relevance of content, such that it becomes interesting to people has been greatly affected by globalisation and the blurring of cultural boundaries. Let’s break this discussion down into the different kinds of locally relevant, digital content that emerge out of this influence:

Locally Produced, Locally Consumed

This is content that is created within, say a country (if we take people of a country to have same prevailing culture, generally speaking), that makes sense really only within that cultural setting so that it would only likely be consumed by people from that culture or who understand the culture. A very simple example would be a joke that only a native would understand and consequently laugh to. This kind of content contains elements that are unique to the local culture.

The Kenya government has very specific intentions for more of this kind of content through it’s initiatives. Take this quote by Dr. Bitange Ndemo:

The PS in the Ministry of Information and Communication, Dr Bitange Ndemo said with the laying of the fibre optic cable nearing completion there is need to generate web content for the enormous bandwidth that will be in place early next year…

“We don’t want a situation where Americans or Europeans will use this resource to drive their content and we later end up not having ours. We have already created an enabling environment to make the cost of access low,” he said.

This is also the kind of content that is likely to be most attractive for the local population.

Locally Produced, Globally Consumed

This kind of content is locally created, through the use of local resources and talent but given the impact of globalisation on cultures, the content ends up being relevant across different parts of the world or at least with other similar cultures from around the world.

This is perhaps sometimes overlooked but perhaps has even higher chances for better economic returns than the previous kind which is locked in within a small area of relevance, so to speak.

To show the contrast, take for example a website that provides purely local content that is only makes sense for people in that country, say Kenya. In this case there’s a limited scope for distribution of the content. Secondly, given low internet penetration rates in many African countries, the number of people who actually get to interact with the content limits distribution further. Of course, mobile would be a better channel but there are kinds of content that are not best suited for mobile or perhaps would be too costly for the consumer in terms of data rates, such as video content.

On the other hand, take a website that produces content that is not just relevant for that specific country, but also across say, all of Africa. Africa is definitely a very diverse continent culturally, but there are also similarities, again, particularly because of globalisation e.g. just the fact that many countries are english speaking. The dynamics change and chances for success increase significantly because now there’s a bigger population hence wider distribution and the combined e.g. internet penetration rate means more people can access your content. Jobs and businesses are still created locally, yet the content has possibly global distribution, meaning more opportunities for economic success.

A good example is the Tinga Tinga Tales. These are animated children’s stories based on African folk tales from around Africa. That appeal not only to African audiences but also to other cultures.

Globally Produced, Locally Consumed

Lastly, content can be relevant within a locality yet it is not produced within that locality. This is sort of the darker side of globalisation. It can be argued that for example whereas web content is concerned, majority of content consumed within African countries does not originate from within the continent. It is content that is produced by the likes of BBC, Al Jazeera, Yahoo and other major multi-national companies.

In this case, since the content is not produced locally, there are no jobs created locally or skills transferred in the course of creating the content. In addition the content sits on platforms outside the country so that even internet traffic is largely external. There’s very little economic gain to the country.

A brief note on platforms

Something interesting to note as far as local content generation is concerned as far as where that content is hosted is that much of the content that is generated locally ends up sitting on platforms that are not located or owned locally. For example, Facebook hosts tons of content in the form of wall posts, notes etc that is created by people from within say, Kenya, but that content is on Facebook’s platforms. Same case with, for example YouTube. This has led to initiatives by some of these companies to promote local content e.g. Facebook Zero and YouTube Kenya but the content still ends up on their platforms and is consequently demanded from those platforms, which at the end benefits not local businesses but a foreign company.

This creates a mixed set of fortunes for a country such as Kenya – there are opportunities for example for wider distribution of content by local producers, yet there is a limitation in the number of jobs that could be created such as the programmers and designers it would have taken to create and maintain the platform as is the case with platforms such as Whive in Kenya and Blueworld Communities in South Africa, that are targeted communities that serve the local population

One final note, the world is flat

The thing with local content and the impact of globalisation is that really, anyone who is able to understand the cultural context from anywhere around the world can come up and create content that is even only relevant to a particular community. In other words, I don’t have to be Kenyan to make Kenyan-relevant content. This means that there is the reality of international competition for local content to contend with and not only that but one can find aspects of a nations culture being ‘acquired’ and profited upon by foreigners.

Perhaps it would be best to open discussion at this point…

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22:10

M-Pesa: Beyond the Buzz

» ‎ Afrinnovator

Image by smagdali via Flickr

This is a guest post by futurist and technologist Soud Hyder.

I’ve been meaning to pen my thoughts on this over the better half of this year but time has nonetheless been very elusive. I happened to watch a video recording of a panel discussion about technology in Africa and naturally M-PESA seems to permeate through the discussion in one way or another.

Two points were raised that identified the non-agnostic closed wall nature of M-PESA and other payment platforms as an Achilles heel and the impact of M-PESA as well as its correlation to GDP.

In my opinion putting M-PESA into perspective would probably shed more light into the realities. M-PESA is a Vodafone product licensed to its subsidiaries the glory of which is Safaricom in Kenya. Now Vodafone is a PLC; Public Listed Company that operates in market economies. Meaning its intrinsic nature is to be a profit maximiser, it is not a charity. Hence it develops IP and seeks to monetise its IP through market dominance. If you look through all the successful financial and payment systems in the world, they are walled gardens of sorts and built on locking in critical mass and strategic partnerships. Secondly dismal scaling financial systems in Africa is not the fault of firms but rather the immaturity of economic policy within the regions. The lack of economic integration means that constituent states have different laws, regulations and systems and makes scaling financial systems a pipedream.

The buck lies with the regulator I would say. In the case of Kenya M-PESA’s success can be hugely attributed to the laissez faire approach in regulation that allowed M-PESA and mobile money in general to function under a tiered regulatory framework where M-PESA funds are linked to a series of trust accounts held by several commercial banks. The fact that the electronic (virtual) money is 100% backed by funds in trust accounts which are M1 (currency in circulation + deposits) means that M-PESA associated funds are regulated by the Central Bank of Kenya further implying that the electronic money is indirectly regulated on a tiered level.

But what happens when a little project grows far too big well too soon? When it affects millions of lives (directly affecting at least 33% of your population)? When it grows to turnover between 20% +and 30%+ plus of your GDP in 2010 and 2011 respectively? When the IP owner is a foreign based entity with significant portions of the service housed outside the operational country? Isn’t it a national security issue?

Worse still some serious systemic risks are emerging. It has been argued that the tiered regulatory framework for mobile money that CBK has employed plugs the inherent systemic risk of having a 100% directly unregulated mobile money payment system and Safaricom’s inherent world class internal self regulation as well as trust account modus operandi mitigates the operational risks.

Well for a small system operating within the economy that is acceptable. But when you have an indirectly regulated system growing in significance and amassing significant GDP throughput then there is an inherent systemic risk resulting from the laissez faire approach in regulation. The growth of M-PESA exposes Kenya’s banking system to liquidity shocks. Again it’s not really clear how the supervisory framework CBK has actually works, but logically a tiered scheme delays information flows, meaning that problems cannot be spotted on a real-time basis.

The bigger M-PESA grows, the more money in circulation (M1) it holds, though distributed across several commercial banks, it would take a bit of miscalculation by one of the banks and a significant system outage of M-PESA (which have been rampant of late) to trigger a liquidity deadlock, which could further lead to a shutdown of the banking system and a collapse of small and or risk inclined banks. Furthermore restricting the service to one operator and having no direct regulatory control on the M-PESA framework without any QoS restrictions places the banking/payment system in Kenya in a bit of limbo. The blame lies squarely on CBK for allowing the system to grow to such a scale without facilitating a secure and reliable operational environment.

On the other hand it can be argued that M-PESA has increased the efficiency of the Kenyan economy by catalysing the velocity of money. Which in turn has boosted and strengthened the internal economy. But then again quantity theory economists would argue that it can be linked to inflationary pressure because M.V = P.Q where M is money in circulation, V is velocity of money, P is price and Q is quantity, however this is not a universally agreed upon theory. Nonetheless I do believe that M-PESA has strengthened the dynamics of the local economy but also exposed it to other challenges and risks that do not seem to be addressed.

The lack of direct regulation makes it almost impossible to figure out what really is happening. There is information all over the web with figures and graphs of M-PESA but no centrally available validated information or reports on at least publically relevant information on the status of the system. M-PESA seems to be more of a black-box, it works really well, nobody really knows how it works and God forbid let it not break before all stakeholders realise the sheer magnitude of the monster they created.

Original post here.

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14:47

The Glue of Innovation: Creating a supportive culture for innovation in Africa

» ‎ Afrinnovator

“Just as energy is the basis of life itself, and ideas the source of innovation, so is innovation the vital spark of all human change, improvement and progress” – Ted Levitt

In a recent article on innovation, we looked at ‘The engine (people & skills), the environment (policy and regulation), the fuel (funding) and the glue (startup culture) of innovation’. The aim was really to look at some key components that it takes for a thriving ecosystem of innovation to be born, develop and grow. In this post, we’ll zero down on the last aspect, which I think is the most important of all: The Glue of Innovation.

The right kind of culture is literally the fabric upon which an innovative ecosystem develops and is woven. Culture generally can be described as:

The set of shared attitudes, values, goals, and practices that characterizes an institution, organization, or group – Wikipedia

Innovation

So what makes up this glue? After watching the Sparkhouse video below titled ‘The Innovators’, perhaps we can summarise some of the key components that make up for a great culture of innovation and work into building on those, particularly here in Africa where as we have seen before, innovation holds the key to unlocking our potential.

Innovation is a bit like sculpting… you have a block of stone and you can see something in it: you have a spark of creativity, and you abandon yourself to the freedom of creative impulse, you go to work at it, chipping off bits and pieces, carving here and there, turning the stone this way and that, until you free the creation that was trapped within.

The spark of Innovation: Inspiration

“There’s some point where you get together and you say, ‘ok, this can happen!’ and you have a vision of the future and you commit to it” - Bre Pettis, CEO, MakerBot Industries

There’s no innovation without inspiration. Inspiration is the spark that ignites innovation. And inspiration can come from all sorts of places. From things that are just cool, to things that solve real human needs. All the same it’s hard to build something innovative without genuine, ‘original’, inspiration – which can sometimes be hard to come by. In Africa, perhaps much of the inspiration would come from our immediate environment – things that could be done better, real problems faced by people every day.

The culture of startup culture: Creative Freedom

Another definition of culture is:

the act or process of cultivating living material (as bacteria or viruses) in prepared nutrient media

And after inspiration, is creative freedom. Freedom to pursue the idea from an idea to something that works. This is the kind of environment or literally the culture or medium for the idea to grow and take root, for the innovator to prototype, experiment, refine, polish and finally unearth the product, service or artifact.

“It’s about enabling creative freedom” – John Laramie, CEO, AdStruc

Several things contribute to the right culture to emerge: in particular the right education system particularly at the university level that allows self-learning through experimentation and active engagement in innovative pursuits is of utmost importance, the right regulatory environment especially where protection of one’s ideas and creations is concerned without at the same time stifling new creation, access to the necessary tools to make it happen…

The right culture is not only important at the macro-level, so to speak, but also at the micro-level. Is there a conducive environment for people in your company to think up new ideas, try new ways of doing the same thing, experiment with alternatives, to adapt when things change or when the rug is pulled from under your feet?

Do your homework

Get excited about something, have a good idea, do the due diligence, do your research… - John Laramie, CEO, AdStruc

Much as innovation is largely about experimentation, it would be foolish to go in blind. Does your product or service offer some real value? Is the problem really there or did you create it? Are there alternative solutions that work better? Will people buy it? (And particularly in Africa:) Can people buy it? Do they have the purchasing power for what you are offering or do you have to explore alternative models for monetizing your product

Never walk, or work, alone

As it has been said, even the lone ranger needed Tonto.. and their horses. To make something big and meaningful is seldom possible by the efforts of a single person hacking at their computer in the dead of night. It takes working with other people to create and ship product – co-founders, programmers, designers, office administrators.

“Go within yourself, but seek out the people who can help you get it made” – Sarah Blakely, Inventor/Founder, Spanx

And perhaps even more importantly would be getting the input and opinion of people who see things differently from the way one sees them. They say focus creates blind spots and sometimes the innovator is so focused on what they see in their minds eye that they require a balancing factor to bring about a sense of reality

No Innovation without Action!

Success is 10 percent inspiration and 90 percent perspiration. – Thomas Edison

One of the most crippling inhibitors to innovation is when people are waiting for the right set of circumstances to start. A few years ago the excuses ranged from the lack and inhibitive cost of bandwidth to the lack of startup funding. It’s not like these challenges are not there, they are there, and there will always be some challenge in the way of the innovator – but innovation demands perseverance. One can’t sit there and say, there’s no this and no that, and the other is not in place.

Get excited about something, have a good idea, do the due diligence, do your research… but go for it! – John Laramie, CEO, AdStruc

You’re never going to understand everything, you’re never going to know everything about your business, just do it – Ben Kaufman, CEO, Quirky

Got the idea? Done your due diligence? Well, kick into action and get going! The classic tale is told of a farmer who stood out on his farm with seed in his hand waiting for just the right time to plant, when the clouds had gathered just enough so that his crop would get the rain immediately it came. And then the rain came suddenly and without warning and the poor farmer was drenched as he scrambled to plant seed into soil that was getting soaked and flooded.

Innovation requires sometimes ignoring prevailing circumstances and charging forward. Let the right circumstances find you well into the execution of your idea. Let the investors find you having built your product or service and it’s already out in the market – you will definitely get a better equity-for-capital bargain because your startup has more value than if you go looking for funding without a working product, or one that’s been tested in the market.

Get on that bicycle and cycle: Try-(Fail)-(Iterate)-Succeed

If you’re not failing every now and again, it’s a sign you’re not doing anything very innovative. – Woody Allen

Not many inventions, if any, take flight at the very first attempt. If you’re going to innovate, you’re going to have to get comfortable with the idea of failing, and then getting up and trying again. To the innovator, failure is not doom but an opportunity to learn. Learning how it’s not done is one step closer to learning how it can be done.

Make Meaning

It stands to doubt that the sole purpose of innovation as something intrinsically human is purely economic – at the end of the day, don’t just make money, make meaning.

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20:21

Android Developer Challenge 2011 Finalists Share their & Experience Lessons Learnt

» ‎ Afrinnovator

On Thursday, November 17th, Gbenga Sesan held a Google Plus hangout with finalists of the Android Developer Challenge (ADC), Sub Saharan Africa. The hangout was an opportunity for African web developers, entrepreneurs and Internet marketers to hear from the winners about their experience building winning applications, what their experience has been like since winning the contest and their plans for the future.

The session was held simultaneously in Nigeria, Kenya and South Africa with audiences tuning in from Co-Creation Hub in Lagos, iHub in Nairobi and Umbono in CapeTown. Interestingly, the session’s host, Gbenga Sesan hung out with the finalists from Murtala Muhammed Airport in Lagos en route to Addis Ababa. Given his track record, we really wanted Gbenga to host this hangout and it was nice to see it happen live despite his busy itinerary.

The hangout kicked off with an introduction on the various apps from the ADC finalists. This was followed by a series of questions by Gbenga where he asked the Challenge’s finalists about what skills and qualities helped them design their applications among others.

Most of the Challenge winners unanimously cited perseverance as the key quality that helped them emerge as winners with Richard Marsh of Wedding Plandroid emphasizing that patience and a focus on value coupled with perseverance helped him develop his app.

In addition, Afrinolly’s CEO, Chike Maduegbuna noted that developing a clean user interface for the app was key to their winning the competition. According to him, the Afrinolly Team wanted to make a world class app and this helped them stand out from the competition.

Gbenga asked the finalists about their plans for their applications especially around partnerships and monetization. Olalashe’s developer, David Lemayian said that he is currently in partnership discussions with security companies in Kenya to integrate the app with their systems and that monetization plans are in the works.

Chike Maduegbuna of Afrinolly said that the Afrinolly team is focusing on partnerships with content aggregators, network providers and device manufacturers to help drive up the app’s adoption. According to him, Nokia recently approached Afrinolly to develop a version of the app for their S40 series. Afrinolly is also in discussions with network providers to use the app as a means of spreading apps consciousness among Nigerians.

As regards monetization, Herko Lartegan whose newly formed company, Starburst games recently got angel investment for his app, Rainbow Racer, courtesy of the Umbono program said that he intends to keep the app free while Gerald Kibugi ofShoppers’ Delight said he plans to market the app to help drive up its user base.

To round up the session, Gbenga asked the top three questions from the hangout’s Google Moderator page. The page registered about 20 questions and 133 votes from about 31 people from Nigeria, Uganda, Mali and Ghana among others.

The top question on Moderator was posed by Femi Taiwo from Lagos, Nigeria who asked thus:

Whenever I’m building an app based on my own ideas, sometimes it’s difficult to freeze the feature scope to choose between what should be included and what should not. What helped you with those decisions- especially because you had one shot at this?

In response, most of the finalists advised that he focus on the core features that are central to the application’s usability as this will ensure that users are satisfied.

Overall, the session was a great way to connect African developers and entrepreneurs with this year’s winners so they could learn from their experience.

To watch the full hangout session, check the interview out on YouTube below.

Originally posted on CP-Africa

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13:44

Africa: Innovating into the Future

» ‎ Afrinnovator

In this day and age, innovation for any organisation or nation is not an option, it is a necessity!

If you do not innovate you will simply be left behind. And as we noted in the article, “Necessity & Invention: Africa’s story of mobile conquest & why utility beats ‘coolness’“, this is especially the case for the African continent. Africa has been for the longest time relegated to the back of the classroom, the backward, wartorn, black sheep of the world. But today it is emerging, and African nations are betting big on technology and innovation as the stepping stones to rebuilding themselves.

But what will it take? What are some of the components that are necessary for African states to innovate into the future?

People & Skills: The engine of innovation

Mbwana Alliy asserts in his article examining the Kenya ICT boards recently released Julisha Report, makes the assertion that there should be very deliberate measures to build human capital:

The conclusion by many is that a skills gap is emerging given both the trends and the current supply of talent locked up in traditional ICT industries. What makes Silicon Valley what it is, is the continuous learning that occurs among the talent that moves into new jobs and new technologies. – Mbwana Alliy

The simple fact is that technology is a highly dynamic field. Things change a lot and they change fast! Some of the concepts that came into play a year or so ago have either been subsumed by new knowledge in that area or at least have had developments to the underlying principles. If technical knowledge changes so rapidly, it means that an undergraduate student getting into a technology-related field of study will most likely be lacking in relevant knowledge upon graduation if their university is stuck teaching outdated concepts or is not closely relating with what’s going on in industry.

Therefore, there needs to be a move to strengthen technology curricula and also increase linkages between academic institutions and the real world of innovation – the startups and companies that are innovating.

One final point for Government officials and International Development professionals reading this – you may want to allocate more of that lavish tech park money to skills development - it will build valuable human capital to support the industry and hence economic growth. - Mbwana Alliy

Policy & Regulation: The environment of innovation

Without a proper environment that allows the innovators to play. The policy and regulatory environment in any country can mean the difference between a caged, walled-off, restrictive and prison-like environment that does not make it easy for innovators to get creative and offer new products and services; or an open playing field.

Regulation is really a bit like the Goldilocks fairy tale – too much of it will stifle innovation and cause stagnation, and too little of it may leave consumers vulnerable and unprotected. There needs to be just the right amount of it if the right kind of enabling environment for innovation is to be achieved. The right regulatory and policy environment, for innovators could mean the difference between an imprisoning, jail-house experience, or a fun play yard experience that supports invention and creativity.

Regulation - Prison vs. Play Yard

For example, in the case of mobile money, as the GSMA notes, “Regulation continues to be the most complicated issue for mobile operators wanting to be involved in mobile money”. According to a paper titled “Mobile Payments go viral: M-PESA in Kenya“, the authors note that one of the contributing factors to the success of M-PESA and mobile money in general in Kenya was the existence of a supportive regulator:

Regulation of mobile money can help to secure trust in new mobile money schemes. At the same time,regulation may constrain the success of a mobile money deployment by limiting the scheme operator’s degrees of freedom in structuring the business model, service proposition, and distribution channels. In the case of M-PESA, Safaricom had a good working relationship with the Central Bank of Kenya (CBK)and was given regulatory space to design M-PESA in a manner that fit its market.

The CBK and Safaricom worked out a model that provided sufficient prudential comfort to the CBK. The CBK insisted that all customer funds be deposited in a regulated financial institution, and reviewed the security features of the technology platform. In turn, the CBK allowed Safaricom to operate M-PESA as a payments system, outside the provisions of the banking law.

Funding: The fuel of innovation

Two years back, getting financial support for your tech innovation was not very easy. Thankfully, today things are changing. Looking at the case of Kenya, for example, it is definitely much easier now to get funding at the seed level than it has ever been. From pitch contests such as Pivot25 and IPO48 that have led to the development of businesses out of ideas such as M-Farm and MedAfrica, to fully fledged VC style funding such as eVentures Africa and other similar investment funds, there is now more funding available and it is more accessible.

All the same, there’s still a lot of room for more. As Erik Hersman notes, we need more investors pouring seed funding at the bottom of the pyramid.

To make the tip of the pyramid bigger, to have more success stories in the tech space, there is only one option: you have to make the base of the pyramid broader… Invest seed funds into local tech entrepreneurs. – Erik Hersman

Mbwana’s article ‘Innovation funding in Africa: Are VCs & Impact investors taking enough risks?‘ points out the same thing:

[There is still] a significant gap for early stage investing in web and mobile startups that constrains potential innovation. – Mbwana Alliy

The future does look bright though – such indications as crowd-funding platform, GrowVC making it’s initial forays into Africa are an indication that not only are investors looking at Africa, but they are finding something to invest in.

Startup Culture: The glue of innovation

Once you’ve got all these components: the engine (people & skills), the environment (policy and regulation), and the fuel (funding) of innovation, the glue, that is the startup culture, is what pulls everything together. Without a supporting culture that encourages people to innovate, invent and keep at it despite failures, then all you have is an empty shell.

The startup culture is really a culture that is characterised largely by experimentation, something that is contrary the sometimes prevalent status quo culture of security and finding a nice job, keeping it cool and not rocking the boat.

This is where tech hubs, for example, are making a big difference. They are bringing together dynamic, passionate people, and giving them the right environment to do what they do best – ideate, create, disrupt.

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6:00

Mobile Health in Africa: The Entrepreneur’s Guide- Part 2

» ‎ Afrinnovator

This is a guest post from Karen Cheng, a mHealth researcher from University of California Irvine who has experience working on Africa healthcare. This is part of 3 part series on Africa mhealth opportunities. Part 1 is viewable here and in December, we’ll have a final post from Amy Lehman who is a practitioner Doctor working on the exciting Lake Tanganyika Floating Clinic where she amongst main things, she plans to deploy a “proto-mobile” network to serve a population without mobile access!. My colleague, Mbwana Alliy, has given me big shoes to fill, with his excellent lead post on the technology infrastructure and business models to support mHealth in Africa. My job is to put this all in the context of healthcare and identify some priority areas.Without a doubt, there are many opportunities to use mobile technology to improve healthcare services and people’s quality of life. Healthcare systems are complex and dynamic, as is the human body’s health system. This means there are many places along the “healthcare continuum” to intervene and improve health.In Africa, most healthcare resources are directed towards infectious diseases. These diseases are spread person to person (or, in the case of malaria, yellow fever, and dengue fever, they are spread person to mosquito to person) and are caused by viruses, bacteria, parasites, etc. The person may suddenly become very ill, leading to fear and anxiety among family members who are unprepared for the person to become so ill. Treatments exist for many infectious diseases but may be too expensive or not available to average Africans. The most talked-about infectious diseases in Africa are HIV/AIDS, malaria, and tuberculosis.Gaining more attention, however, are non-communicable diseases. These are diseases can be equally debilitating but are not spread person to person. Lifestyle, genetics, and environment can all increase the likelihood that a person develops one of these diseases. Examples of these diseases are cancer, cardiovascular diseases, and obesity-related conditions, such as diabetes. Many of these diseases can be treated but require long-term care that may be unrealistic for most Africans (long-term care means more doctor’s visits and ongoing medications, the cost of which rapidly adds up).

mHealth has the potential to give people greater access to life-saving healthcare. Although public health and medicine have made significant advances in the last century, many Africans do not have access to that knowledge or those services. Health education is limited, and there is a well-known shortage of doctors and other medical professionals in sub-Saharan Africa. We need greater collaboration among technologists, entrepreneurs, and public health and healthcare professionals to develop innovative solutions to delivering care.

Prevention

Almost all infectious diseases can be prevented, and the risk for developing most non-communicable diseases can be reduced. This strategy falls under the general term prevention and is associated with the fields of public health, preventive medicine, etc.

As mobile phone access and ownership increase, SMS becomes a clever and viable way to educate people about diseases for which they might be at risk. Some examples are text4baby in the United States and Text to Change’s HIV/AIDS awareness project in Uganda. Mobile phones can also be used to connect people to health advisors; one aim of Project Masiluleke in South Africa is to connect callers with trained operators who can direct callers to HIV testing centers.

Sensors are also destined to become a key component of mHealth. As their accuracy increases and cost decreases, sensors can be used to detect risk factors, such as lack of physical activity or environmental toxins. Sensors like the FitBit are already on the market in the U.S.; it measures physical activity and transmits data to a smartphone. Sensors to measure air pollution (a contributor to asthma and other respiratory diseases) are being used in cities across the world, and even sensors to detect driver’s alcohol level are being used to try to prevent drunk driving.

Diagnostics

Diagnostic tools are absolutely essential to correctly diagnosing a person’s illness and to recommending and monitoring the treatment. Few laboratories in sub-Saharan Africa have the equipment and materials to meet the needs of their countries’ population. Those that do are usually located in major cities in wealthier countries.

Low-cost, mobile diagnostic tools are needed throughout Africa, and particularly in rural areas. While many of these devices are still in the research phase, there are high hopes that these kinds of tools can soon be commercializable. Researchers are turning cell phones into microscopes and tools for eye exams. Portable ultrasound machines are commercially available but the cost needs to come down for wider use in Africa.

Cell phones can be used to set up phone or video consultations with healthcare providers to diagnose patients from afar.

More work will need to be done to bring down the costs of at-home testing. Already in wealthier countries, we see the wide availability of digital thermometers, at-home pregnancy tests, and even glucometers (glucometers enable diabetics to monitor their own glucose levels).

Treatment

It is probably the potential to improve treatment that draws the most enthusiasm for mHealth. Mobile technology opens new possibilities for delivering medical care to people who currently do not have access. Many people in Africa live one or two day’s travel away from a health facility. And when they arrive at the health facility, they wait in long queues and may not be seen by a medical professional that day. This results in wasted money spent on transport, lost wages for the time they are away, and overall frustration with the healthcare system.

Telemedicine or telehealth is one mHealth solution that can bring medical care to people in remote areas. In this model, lower skilled health workers meet with patients in or near the patients’ homes. The health workers assess the patient according to a protocol and send text data or images to a more highly skilled healthcare professional in a distant location. The higher skilled professional evaluates the information and makes a recommendation. This model works really well for specialties that rely on visual assessments, such as ophthalmology and dermatology, but it is also being used for remote monitoring of infant health.

SMS can be used to remind patients to take their medications and to come in for follow-up appointments. Medication adherence is really important, because when a patient does not finish taking a course of medication or skips doses, it makes it more likely that the virus or bacteria will become resistant to that medication. The patient becomes more sick, and their healthcare costs increase. Research has shown that these simple reminders can increase adherence.

SMS can also be used to check on medication supply and on medication quality, as stock-out and counterfeit drugs are both common problems in Africa.

Health records

A relatively unexplored area of mHealth is using mobile technology to maintain and retrieve health records. Most people in Africa go to a doctor as needed and pay for services as needed. This means that most people do not have one doctor who oversees all their care. When people seek services across multiple care providers, it is really important for the doctors to have access to patients’ complete medical history.

Electronic medical records and health IT systems are being developed specifically for Africa. Examples are Open MRS and Jembi Health Systems. See this link for more information about the health IT systems the Rockefeller Foundation is funding. However, these systems tend to be built for hospitals and clinics to use; the patients do not control who has access and cannot contribute directly to the health record.

Mobile technology opens the door for ordinary patients to have greater access to their health records and to be more proactive about their health. It has the potential to turn the traditional ways of delivering care upside-down. The opportunities are abundant, and the time is now!

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6:00

Kenya Julisha ICT report: Invest in new skills. It’s called Human Capital

» ‎ Afrinnovator

Earlier this week, the Kenya ICT board released some interesting statistics in the Julisha Report on the Kenya ICT ecosystem. I love these sorts of reports and I believe they are crucial for both domestic and foreigners to understand where to focus to improving the ICT industry and where investments need to be made.

From a comparison and benchmarking point of view- it is clear Kenya is a leader in technology adoption in Africa especially for its size compared to other countries on the continent. It also uniquely positions itself to serve the East African population of some 120-200M depending on which other countries are included nearby. Many foreign firms will choose Kenya for its base across the region.

Future is all mobile:

This is the least surprising fact, the story in Africa is all mobile. Whilst measuring traditional PC usage is important, especially for the business segment, I believe for the African consumer, mobile is by far the most exciting story, especially when you factor in the cost of PCs vs plummeting costs of smartphones and tablets- the magic price point is sub $100 and I believe tablets and smartphones will continue to come in a that level if they are to sell in any significant volume to African consumers. Hence, the next generation of African consumers will likely leapfrog straight to tablet even after owning a simple internet enabled mobile device or of course a smartphone. There are even tablets being manufactured in Nigeria. What does this mean? Developers should be investing in learning mobile technologies if they want to address the african consumer market- this means platforms such as Android, mobileweb, HTML5 and Nokia/Windows Phone are crucial, as well as the technologies behind mobile banking should they want to better monetize and expand into non traditional ICT areas such as health care, retail, entertainment. In short, we need more mobile training/incubators like the mLab.

Social networking is huge:

This trend is everywhere, not only unique in Africa, but according to the numbers and how you interpret them at-least 10-25% of internet users in Kenya are on facebook- you can cross reference the no.s to get up to date data from SocialBakers on Africa. Social networking is hence a technology that knows no boundaries and its effect (negative and positive) will impact Africa in many ways.
There is a clear thirst for Africans to stay connected with friends and family. As such, this bodes well for any social media or social enabled applications, from news, media/entertainment to advertising. It also means that Governments who continually try suppress information at the anger of citizens will face huge risks and we may see revolts similar to Arab Spring.

Talent is concentrated in IT support

Now that we’ve left the demand side, lets focus on the supply- the talent. It is not surprising how much talent is in the ICT support sector- I am guessing many are supporting banking and mobile operators mainly because these jobs are stable paying ones- it may also be that universities/colleges are feeding them the human resources in these sort of skills. This also aligns with the fact that a majority of the industry is still in hardware, communications and business segments (software reselling)- a good thing for laying down important infrastructure, not only in Kenya but across the region that Kenya supports.
What does this mean for startups? The problem with this is that it may lock up talented computer professionals in technologies totally reliant on their job. I know this well from my Microsoft days. In a rapidly changing technology world, it’s not only important that one understands how to do your current job/technology well but also be exposed to new ones, particularly in open source and cloud computing and mobile development technologies that may not have originated from the enterprise segment or the 10 year old technology used by your bank. The longer one is in this job, the more outdated you will be when you leave and you realize the broader computing world has moved on. The correct phrase here is “watch out for the consumerization of IT“. One thing I’d like to have seen in the report is whether ICT employers in Kenya are actually investing in training and if so, what areas? If not all, which I suspect, then my point becomes even more valid about the risk of lockin on outdated ICT skills. Do you know how to use the Facebook API? How about HTML5 and android development? It is unlikely that a computer support professional even knows these technologies if not being trained unless they are dabbling on it on the side (if this is you- good for you! You are investing in your future). One thing to watch out for- as cloud computing gets more and more adopted, it will kill traditional ICT support jobs for maintaining decentralized data centers and servers in organizations as it all becomes more centralized and consolidated- this is a worldwide phenomenon for enterprises and governments wanting more ICT efficiency and cost savings.

Skills gap and focus on education and training

The conclusion by many is that a skills gap is emerging given both the trends and the current supply of talent locked up in traditional ICT industries. What makes Silicon Valley what it is, is the continuous learning that occurs among the talent that moves into new jobs and new technologies. When I read “project management”, I just read “management” and the ability to use skills beyond the technical to add value to the industry. Clearly if 10-20% of the current ICT professional population went down this path it would help expand the industry. Also making it easier for foreigners to bring in skills from outside and we are clearly seeing this with the increasing no. of foreign or diaspora talent flocking home in numerous startups to support the growth opportunities in Africa.

One final point for Government officials and International Development professionals reading this- you may want to allocate more of that lavish tech park money to skills development- it will build valuable human capital to support the industry and hence economic growth. Also any policies that lower the price point of internet enabled consumer mobile devices cheaper than $100 will continue to increase the consumer demand side as Africans grow their spending and enter the middle class.

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6:30

An East African Mobile Entertainment Overview: Music Discovery, Nano-economics and Mobile Money

» ‎ Afrinnovator

Recently, All Amber invited Afrinnovator down to cover and participate in Mobile Entertainment Africa. Below is a summary of that first talk, which painted a snapshot of some trends and key learnings from the East African mobile entertainment scene.

Silicon Savannah: the new catchphrase describing the East African and Kenyan region, the innovation and dynamism taking root there and the temperature for creating disruptive companies and sparking growth in the region. Home to the iHub, iceAddis, Hive CoLab, the IDEOS phone and the epicenter of the global Mobile Money revolution. This is East Africa.

If we take a snapshot of each of the main countries there and their respective mobile populations:

Kenya has 26 Million Mobile Subscribers with 63% Mobile Penetration in the country. The corresponding mobile internet users for the East African region are spelt out in Erik Hersman’s slide above. According to the Communications Commission of Kenya (CCK) when they published the last quarter’s rise of 12% to 25M was the highest seen all year. This can be attributed to a number of factors including a hypercompetitive spell between market leader Safaricom and newcomer Bharti airtel. Within the handset manufacturers side, competitively priced handsets from manufacturers and subsidies/partnerships from Mobile Network Operators helped drive volumes.

Which brings us to the posterchild for the revolution so far, at least in Kenya. The ~$100 smartphone (now approx $70)

The Huawei IDEOS phone. Since the beginning of the year there are estimated +400,000 IDEOS in the market. Thanks to this, Android Marketplace and consumer education around apps and the app economy has grown.

Google Africa responded to this by including Kenya as one of localization nations for the Marketplace with local currency billing albeit no mobile money solution present yet.

The drive for local apps also led them to invest through Google’s Android Developer Challenge (ADC) where semi-finalists all get presence on the Android Marketplace and winners take home $25,000 for their local apps. Winners and more on that here.

“Kenya is an economic powerhouse in East Africa and its mobile telephone market is ranked as one of the most competitive in Africa.”

Eeva Nuutinen, FinPro Project Manager

But more importantly, let’s see how the countries weigh up in the East African community. For most, Kenya remains the epicenter of those looking to penetrate the African market. A great market to observe to put your finger on the pulse of what’s going on in East Africa.

Hard to look at this region without a reintroduction to mobile money. M-Pesa (M for Mobile and Pesa – “money” in Swahili) is the most popular mobile money transfer platform. According to Central Bank of Kenya it transferred $850M in 2010 with total volume of transactions processed exceeded $9 Billion and recently lauded for soaring past Western Union’s frequency of transactions.

As far as their partnerships with banks, one special mention is M-Kesho a partnership with Equity Bank where together they’ve pioneered the agency banking model with over 30,000 Registered Agents pioneering a new low-cost model of retail banking. One which CEO Dr. James Mwangi describes as “…banking through your shopkeeper.”

All this context is well and good, but in the scheme of how it applies to entertainment, more importantly value added services and the industry we needed to establish that context to dive in.

The Ecosystem.

Ideally what any mobile entertainment owner/operator aims to do is connect two things: Sources of money to uses of money.

Sources:

•Airtime

•MNO Wallets

•Banks

Uses:

•Information Services

•Media

A highly cited statistic by JBB Research in one of their Africa reports projected the Kenyan mobile entertainment market to be worth $165M by 2013. The Value Added Services estimates for the year from several industry voices remain slightly skeptical:

Current estimates of Digital Music in Kenya stand at $12M while for the Value added services (VAS) industry is closer to $40M.

Per capita income aside, if we look at mobile penetration and the masses behind M-Pesa, in this case the bottom of the pyramid, or the next billions (references to this and this) we find that one Kenyan nuance plays a role in the success of the mobile industry in Kenya.

Moving through peri-urban areas of Nairobi or most towns you will find even the smallest SKUs of fast moving consumer goods typically get divided and subdivided at a retail level for consumers who can afford a scoop of cooking fat or half a packet of milk (served and sold in a plastic bag) as opposed to the smaller unit found in a supermarket or main shop. This “nano-economy” of goods and services purchased and exchanged piecemeal speaks to a larger trend. In a country where Note: the highest denomination of mobile phone airtime in the country (on the Safaricom network at least) is Ksh. 10 ( $ 0.10)

Within the entertainment industry in Kenya, you have several products that have tapped into this phenomenon and achieved tremendous success as a result of creative micro-billing.

Malipo Pole Pole – Swahili for “Paying slowly” pioneered by Cellulant to allow people to make micro-payments for music downloads via their airtime. This

Okoa Jahazi – Swahili for “Save my ship” or “Save me” this is an airtime advance of between Ksh. 20, 50 or 100 where Safaricom, the mobile service provider takes 10% of the amount you ask for. The services’ success has seen it piloted in other emerging territories within the Vodafone footprint including South Africa.

Skiza Microbilling Options. Safaricom’s ringback tune service Skiza at their initial launch, charged Ksh. 20 a month for the service of having people who call you hear your favourite song. There wasn’t as much traction as anticipated. Upon changing this to a micro-billing model of Ksh. 5 a week traction was achieved and success followed.

Point: Microbilling for entertainment breaks it down to smaller manageable payments that appeal to the lower levels of the market who still want to consume content just need a more flexible structure to pay for it.

This is David Mathenge, known to many as Nameless.

As a successful Kenyan Afro-pop performing artist, he derives his value from strong hit singles and follow up appearances, endorsements and his own business ventures funded by his brand. He doesn’t need to release an album because the mechanics of the market don’t support artists through album sales. He released his debut album in 2004 and has survived with this smart tactic since, having delved into film production, music production and diversifying investments within the entertainment industry around his brand.

One commonly quoted statistics that surfaced speaking in online piracy and later piracy in general is that piracy accounts for 95% of music sales. The best an artist is going to do is 5%. The best.

Locally, there’s typically a 2 week window for pirates. This is because once a song’s discovered to be a “hit” it works its way through the system including a trip across the border where it is mass produced and copied to return and flood the grey and black music market across Kenya.

The Music Value Chain is messed up.

The Music Copyright Society of Kenya has lost the trust of the artists and the mandate to prosecute and act on their behalf thanks to wrangles and mismanagement. This leaves Premium Rate Service Providers (PRSPs) to connect directly to artists and/or record labels and make arrangements directly.

You can innovate around this dilemma or you can innovate to solve it.

To solve the dilemma one needs to look at the challenge for artists. The challenge for the artist is the capital to fund the hit single.

One company innovating the landscape of the industry is Cellulant. With their “Studio to Deck” program they’ve used their connections and partnership with financial institutions to connect artists to finance and capital to produce singles with a revenue split and digital music rights to Cellulant to deliver the content through their system.

Mobile Lotteries: Now you see them, now you don’t.

One of the popular stories of the past year involved a company known as Flint East Africa. They held two lotteries, the first began as “SMS 6868” charged at Ksh. 50 per SMS and later changed with no notice (but substantial branding) to “SMS 6969 charged at Ksh. 69 per SMS.

Their “reward” was over $12M in 3 Months after which the lottery was renewed and they generated large revenues once again in the second “reloaded” round.

Thanks to a lack of firm regulation and a gap in enforcement between the Betting Control and Licensing Board (BCLB) and the Communications Commission of Kenya, Flint East Africa changed the game mechanics from a simple single SMS entry mechanic to a questionnaire format (multiple SMS) that charged for each SMS answer into the game, multiplying revenues at the expense of the end user.

Sources and estimates have ranged from conservative to speculative ranging between Ksh. 30 000,000 to Ksh. 120,000,000 a day for Flint.

With over Ksh. 1.2Bn in 3 months the Kenya Anti Corruption Commission stepped in and began investigations that remain inconclusive into the ownership, structure, charity payment (every lottery must pay 25% of profits be donated to charity, of which this was never fulfilled)

One interesting end result of this was that everyone within Flint’s supply chain began some sort of play into the lottery space. The television station partners began their own SMS lottery games using their media coverage and audiences, notably KTN, NTV and currently Citizen Television.

Mobile network operators who had revenue share agreements with every mobile lottery also launched their own with very similar game mechanics, banking on the trust they have with their audiences. They’ve used similar entry mechanics albeit simpler on the “the more you SMS, the higher your chances of winning” and as to the ethics of this approach, given the circumstances the jury is still out.

And yet when it comes to the opportunities that mobile entertainment offers, where are the local innovators and those making the most of these gaps in the market? Further up, another bottleneck is lack of capital which we’ve looked at in a number of posts and articles before.

Nokia have really made headway recently with +30 apps have been reportedly been created by Kenyan developers, some exclusively for Nokia’s Ovi Store. Most are locally-focused, though some are promoted across the Ovi Store globally, hence bringing in revenue from markets with operator-billing in place (still no confirmed date for this in Kenya). Nokia is actively promoting these apps throughout traditional media including billboards, radio and below-the-line on behalf of the developers in an attempt to capture the market.

Conferences investing in this gap of success stories of apps and startups over the past few months have included:

Pivot25 Conference: $75,000

IPO48: €40,000

With IPO48’s investments all being in the media and entertainment space, the Estonian/Danish investors recognise the opportunity and are pushing these developers and startups to produce content and working with mobile operators to begin to deliver it to the Kenyan market.

One of the greatest challenges to mobile entertainment however, is delivery. At a MNO (Mobile Network Operator) level Safaricom is trying to address this. Last year they launched a partnership with Opera Mini, the popular mobile browser. Earlier in 2011 they piloted a white-labelled option of the popular browser “powered by Safaricom Live.” seen above.

This beta version pointed to Safaricom’s existing portfolio of value added services but a source at Safaricom pointed out that this could change to become more of a mix of Safaricom’s portfolio and what’s already popular on the Opera Mini service since this was a pilot phase.

According to Opera Mini’s State of the Mobile Web and their recent survey on Social Networks use on the Opera Mini platform, Facebook accounts for 67% of all pageviews in social media (and since Facebook is the #1 accessed site in Kenya it therefore accounts for 67% of all pageviews on the mobile web)

However, “social” is yet to be integrated as part of the fold in spreading and delivering mobile entertainment content especially popular content such as music.

Which leads to the big opportunity…

Delving into Music Discovery and giving better access to news and information services that can link up social and music discovery could prove to be “right on the money” for the future of content across the continent.

Your thoughts on Kenya, East Africa and the mobile entertainment scene? Music Discovery: hotbed or overrated for the African continent? Speak your mind in the comments below.

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5:00

Visa gets serious: Let the Africa Mobile Payment Wars Begin

» ‎ Afrinnovator

A student at the University of Dar es Salaam in Tanzania was asked by a former lead engineer at paypal during a mentoring session almost a year ago “Why are you not using Amazon web services for cloud computing?”, he replied “I don’t have a credit card to set up the service”…. The student could afford the popular pay as you go service that startups use to host web services, he just did not have the plastic card with the logo and account to access it…. Ironically, “pay as you” business model was arguably pioneered at scale in Africa where 96% of the nearly 700M mobile subscribers use to pay for their mobile service and ultimately kicked off mobile banking.

Africa is a mobile money leader globally, there are currently over 40M mobile money users in Africa and forecasted to hit 350M by 2015. Earlier this week, VISA, the credit card processor giant announced the launch of their new mobile money offering for developing countries that came directly out of the $110M acquisition of Fundamo from South Africa earlier this year.

The unstated benefit about the acquisition and relaunch of the service is the rapid pace of innovation it now sets in the mobile money space in Africa and in turn broader emerging markets- the target market for the launch of the new service are in Uganda and Nigeria via MTN mobile operator’s key markets right in the heart of fast growing economies with millions of unbanked population in both east and west Africa. But given Fundamo was already established in some 40 countries, we can expect the roll out to happen fast across broader emerging markets.
This should wake up the established mobile operator backed mobile money services, such as Vodafone, who have historically paved the way for mobile money adoption under Safaricom’s M-PESA in Kenya. But have not yet been able to replicate the success quite yet in other countries. Success has been local, but the game is about to shift across the continent and go global.
In this post, I evaluate the offerings and my take on what the future should or might look like- its fair to say that the mobile money space in Africa is about to get red hot.

Things are starting to heat up with the big players
As mentioned, the entry of VISA in conjunction with MTN should wake up the sleeping incubents in the space. M-PESA as a technology platform has remained pretty much unchanged since launch in Kenya, the technology is built on USSD which gives a broad reach across all types of phones.The agent network is one of the biggest strengths, given the huge physical footprint across the country, also Safaricom’s high marketshare (currently around 70%) also helps cement the network effects that many technologies have enjoyed in past such as Microsoft Windows OS, Google in Search, Apple’s iPod. In each of these areas, competition and innovation has often propelled even these incumbents to act whilst they print money. Erik Hersman has has argued that many mobile operators have been asleep especially in countries with over-regulation such as South Africa and Nigeria and hence not innovating, it’s also easy to forget that ultimately, a mobile oberator’s core competency is not necessarily in this- they have to maintain and expand network coverage by investing heavily in latest wireless technologies such as 3G, 4G/LTE etc… not to mention compete ruthlessly in marketing and getting hold of the best handsets with other competitors- sometimes price wars can break out in the race to sign up and retain as many subscribers as possible. Mobile money is currently less than 10% of mobile operator revenues.
As we race towards mobile saturation in Africa, mobile operators will begin to turn to value added services such as mobile money to focus more on retaining customers than trying to sign up new ones- this often requires a different corporate strategy, but ultimately it means innovating. The best way to wake up these giants is innovation from an unlikely source… I believe that source is now the payment processors such as VISA, e-commerce & remittance players and the growing number of m-commerce startups springing up to serve real consumer problems.

Before we get into evaluating them- lets begin with understanding what makes a mobile money offering successful.

As mentioned, technology ubiquity and reach is critical. USSD and SMS have been the primary consumer facing technologies that enable this, which in turn have excellent ease of use qualities that allow anyone in Africa to easily operate it. Although that has not always been the case- in Tanzania, the services sometimes vary widely with different implementations. Transaction based SMS on the whole is not the best user experience for mobile money compared to session based USSD- despite its current advantages, however I believe that in future, USSD is simply inflexible technology to take us to the next level and the web is ultimately the platform best positioned to take us further.
Marketshare does play a role… Safaricom’s dominance in Kenya absolutely helped propel and spread the mobile money service, and the lack of interoperability hinders others from being able to catch up easily. Its also a virtuous cycle, most people don’t realize that the business model of mobile money is highly dependent on huge investments in the agent network, also a key factor in establishing enough float especially in rural areas and the fact that it helps retain users and enable upsell of prepaid airtime services, instead of relying on costly prepaid vouchers- this can attribute to more than half the economic value of the service, not the transactions themselves as it is easy to believe. In other words, as a startup trying to create your own mobile money service- the going is going to be HARD if you don’t have the infrastructure advantages an incumbent mobile operator has. As a result, a mobile operator like safaricom has no incentive to open up their platform via some API initially- the gains don’t outweigh the cost and focus unless you are a strategically big enough partner for value added integration- this includes mainly dealing with large merchants or banks such as with M-Kesho or what Craft Silicon is succeeding in doing.

Door is open for more innovation:
But this leaves a gapping hole for innovators to fill. How does one integrate with online and mobileweb? How does one allow a regular merchant to accept and process multiple mobile money services? And finally how do you move money across borders?
The problem with many of these features is they require some deep platform engineering investments and they often expose security flaws if not done correctly- it is certainly a huge risk if not done correctly that may scare a mobile operator into opening up their platform- the initial service probably was not designed to do this from the get g0- that’s why partnerships such as VISA/MTN between an experienced credit card processor and a mobile money operator originated service are so powerful and compelling .

I was the CTO/head of product of one of Tanzania’s first online ecommerce travel site for flights, hotels, tours. I spent many months last year picking the right solution to accept both credit cards and mobile money in Africa- In the end I settled with 3G Direct pay for 3 reasons:

They were serious on fraud and security
They offered all credit cards and would add incrementally mobile money services (they have M-PESA and Airtel money in Kenya)
They were well adopted and trusted in the travel space (take a look at their clients).

I had one big feature hole though- dealing with cross border mobile money, after all I was in the travel business. I would have to set up a merchant account in every single country and after evaluating numerous mobile money online integration services only Intrepid Data Systems offered a compelling enough solution via iPay to solve this- but lacked the 3 points above that are crucial to get going.

This is where VISA comes in and why they are so important. As a company founded from a consortium of banks and later spun out as a separate company, they not only get openness, APIs and integration, they also get security and fraud prevention (important globally and even more so in Africa) and finally they also get ecommerce with more recent moves in the west with acquisition of cybersource. As a result with their new offering they can offer secure cross border african mobile payment services and even some interoperability among the telco mobile money services should they wish. The other aspect, is their huge network of global merchants. Try booking an international or regional flight with a closed mobile money service? Its not easy. A few months ago, Airtel along with Standard Chartered have been innovating and created “PayOnline”, a very compelling solution that gives you a temporary MasterCard credit card for the transaction (with currency conversions factored in).

What I conclude from this is that VISA/MTN and MasterCard/Airtel are now well positioned to serve the emerging middle class who increasingly will want to buy e-books from amazon, Facebook credits, apps from Android market and other things that middle class users around the world currently enjoy- its actually huge and opens up a bigger onramp for millions in Africa ready to consume services and trade. In short, VISA solves a problem I had last year and many others trying to set up ecommerce companies that can scale across the continent and the world.
New exciting startups are popping up all the time, such as KopoKopo. They intend to be the software as a service solution that lets any merchant accept mobile money. Almost like a web point of sales system for mobile money. I feel that startups like Kopokopo will succeed if they can build out a network of merchants faster than their other startup competitors but also faster than giants such as VISA/MTN and Mastercard/Airtel which bring along its other advantages.

One thing to note, its ok to only deal with mobile money if you are serving customers who just need mainly local payment services- this is the immediate needs of the majority of africans coming from the unbanked. However for the fast growing middle class, as I mentioned, if they need to buy an ebook online they would need VISA/MTN and Mastercard/Airtel advantages to transact with regional and global merchants. And once the integration of the mobile and web world becomes even greater- VISAs offerings become even more compelling for both mcommerce AND the ecommerce world.

I believe there are two big players largely missing from the current equation. That is Paypal and Google. Paypal is largely adopted globally and arguably worth more than the core ecommerce giant eBay itself. They have yet to make serious waves in Africa and they can be a potential challenger to VISA and open even more payment options. They recently announced that they process millions of mobile payments per day. And they bought mobile payments company Zong this year as well for $240M, which you have to believe is part of their entry solution into mobile payments in emerging markets and particularly strong in the virtual goods space as Facebook growth in Africa explodes. I see a strong possibility they will collaborate with Vodafone group and integrate paypal with the M-PESA solution. Whilst Paypal launched last year in South Africa and supposedly you can open an account in Kenya but you can’t easily withdraw into a local account as you’d expect as is evident in this customer service post. Combining M-PESA and Paypal would make the last partnership between a carrier and a online payments company that has all the ingredients to win the future web and mobile digital space in Africa.

Google has yet to make serious waves in the mobile payment Africa- but given the growth of Android, Google wallet with potentially NFC enabled smartphones and strength in online services we should not rule them out quite just yet especially if they decide to partner with one of the big mobile operators such as Vodacom if Paypal doesn’t already.

So in the near future, this leaves 3 big consortium mobile money/mcommerce players in Africa in terms of potential subscribers based on the current mobile subscriber numbers: VISA/MTN, Mastercard/Airtel and potentially Paypal or Google/M-PESA(Vodafone). Orange potentially left out in the cold if they don’t do something bigger. MTN seems to have a big lead in subsaharan Africa when you factor out Egypt- otherwise Vodafone is not far behind.

MTN – 100M
Airtel- 48M
Vodafone- 52M (87M inc. Egypt)
Orange 18M (50M inc. Egypt)

But who will win? Will a Paypal-like startup emerge totally independently of mobile operators within Africa? One has to wonder where this leaves startups like Pagatech in Nigeria that went the direct route of building a mobile operator agnostic mobile money service? Can a mobile money service truly survive without being backed by an operator.

There will clearly be multiple solutions to pay around the world, led by the different credit card processors VISA, Mastercard, AMEX etc… to paypal and even cash, wire, Western Union etc.. Mobile payments have been the only significant technology acquisition activity that directly relates to Africa tech startups and I believe we are just getting started.

But whoever enables the most innovation and integrates to solve real payment/financial services related problems of Africans are best positioned to win- and this can be categorized into 3 areas. Willstream is one player I like for instance operating in Senegal currently because they focus so squarely at a problem- combining remittance health gift voucher services to unbanked populations.

Who has the biggest merchant network for the service that drives a virtuous cycle and creates a network effect similar to that done by companies like Microsoft, Google have exploited. This also includes who wins the hearts and minds of developers to build out service and enable more merchants to transact.
Who has the most secure and hence trusted solution
Which service has the best user experience and seemingly works across local, regional, global- online and on the phone via USSD or otherwise.

The one thing that these 3 have all have in common- “ownership of the customer”. And customer can be defined as both the tech developer building solutions and the end user themselves… Where would ebay be without paypal? When will that Tanzanian computer science student be able to pay for Amazon web services and tap into key infrastructure for cloud computing?

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14:02

Why it may be better to be employed (first)

» ‎ Afrinnovator

Guest contributor Andrew Mugoya is the Author of ‘African Apps in a Global Marketplace‘ and the Founder of Asilia (an international creative agency) and Afriapps (a showcase of great African apps).

Andrew Mugoya

Entrepreneurship is all the buzz. Founding your own startup has never been easier and has never been more encouraged than it is now. So we all want to do it. And many of us are. Employment is for suckers, right?

Wrong!

Unfortunately, most of the stories out of Silicon Valley (the assumed utopia of start-ups) focus on the founders, co-founders and investors. You’d be forgiven for thinking that it is only made up of entrepreneurs and founders. The hundreds of thousands of employees, many of them very talented engineers, designers or developers are the not-so-public side of the Valley. Quite a number of startup founders also happily give up owning their own business to effectively become employees when they are acquired by, say, Google or Facebook.

So you have to ask: Why would so many talented individuals, located in the best place to be a tech entrepreneur (with all its access to investment, ideas and, ironically, employees) opt to go into employment?

At Asilia, we struggle to get good developers in our Kenyan office. It is not that they do not exist. It is simply that many of them want to have their own startup. The African tech industry is in danger of being flooded with more bosses than workers. The benefits of employment have been drowned out by all the hype about being your own boss. For the sake of the industry, employment needs to be portrayed and seen as a viable option. Not necessarily for everyone, but for most, especially for the young and the inexperienced who are starting out in their careers.

Employment gives you a chance to improve and perfect your skills prior to embarking on your own venture. You also get to learn the many soft skills you need to progress in any career or business. Leadership, teamwork, communication, marketing, discipline, time management, project management, client management, meeting targets, etc. You can also start to build your industry networks. And you can do all this while being paid a steady, relatively stress-free income.

Running a business is a balance between technical and soft skills. Although many developers may have the technical skills, many of them simply lack the soft skills necessary. Employment is often the best training ground for these skills.

A scary statistic to keep in mind: On average, only 10% – 20% of startups are successful, 20%-30% are OK (break-even or have modest profits) and 50%-60% fail. What this means is that majority of startups are unlikely to be successful. For many would be startup founders, employment may be a better option rather than condemning yourself to a lifetime of poverty and misery in the name of being your own boss.

Bottom line. For most people, running your own business is not a good idea – at least not early in your career. Fortunately or unfortunately, we all think we are among the few that are the exception. The challenge is knowing if/when we are not.

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14:27

Necessity & Invention: Africa’s story of mobile conquest & why utility beats ‘coolness’

» ‎ Afrinnovator

It is said that necessity is the mother of invention and indeed that could perfectly describe Africa where it comes to innovation particularly on mobile.

Utility vs Coolness

In a great talk at TEDxVienna Alexander Oswald, Head of Marketing at Nokia, tells the story of how he and his family visited Kenya and were immensely shocked at just how much people in Kenya were able to accomplish via mobile phones. From sending and receiving money, to banking and paying for utilities & shopping from their phone, to the use of mobile in tracking the price of agricultural produce and even automatic insurance payments to your phone and getting notifications from your child’s school about their performance in an examination or them not attending school (phew)! And furthermore, all these were not being done from smartphones and really cool apps that just seemed to work magic, but in his words (paraphrased), “This works even on the ‘dumbest’ of phones”.

Alexander in his talk awes at these amazing inventions and makes comparison to the fact that despite his living in a world top 10 economy, he can’t get many of the same kind of services via mobile! Interestingly, Alexander, towards the end of the talk, concludes by stating that after 10 years in the mobile industry he has simply concluded that the top 10 economies simply have ‘too many resources’, and says, “The scarcity of the resources there brings out the best of people”; and he is right.

Why was MPESA such a success? Simply put – it was a necessity. Pre-MPESA (sounds like when someone asks ‘how did we ever survive without Google?’), people still had to do all the things that MPESA has enabled them to do. Let’s put this in context. In Kenya, most of the working class are in urban areas, their parents likely live in rural areas.

In the Kenyan culture, it is ordinary and even expected of one to take care of their parents and even their siblings once they are able to. This mostly means sending money back home to your parents for all sorts of things – their upkeep, your siblings school fees etc etc. Pre-MPESA people still had fairly ingenious ways of accomplishing this – from sending a relative home with the cash, to using bus services to send the cash, to mailing the cash sandwiched between carbon paper so someone handling the post does not see the money through the envelope and decide to pocket it.

MPESA simply solved a very real need that almost every (at least adult) Kenyan was facing, they did it simply – all you needed was a phone of whatever kind, even the infamous ‘mulika mwizi’ (Nokia 1100/1200 type of phone); they did it efficiently – MPESA agents are everywhere! and they did it at a reasonable cost to the consumer. Kenyans bought into it hook, line and sinker!

It all boils down to critical mass!

Still, while the cost of phones is coming down and lower cost phones are getting more features than your average ‘mulika mwizi’, the solutions that are really taking off are not so much the ‘cool’ apps but those that are solving real needs, at low cost and are accessible across all kinds of phones that means either SMS or USSD.

In a discussion with a local expert on the issue, it came out that most Kenyans, particularly in rural areas are not even aware of what an ‘app’ really is!

Does this mean that there’s absolutely no market for smartphone apps locally? Nope. It doesn’t, it just means that if you want to make something that will gain massive adoption, fast, then your best bets are not with smartphone apps. Does it mean that there’s no market for simply ‘cool’ apps? Again not at all, as the expert I was talking with noted, entertainment for example, is also a need perhaps ‘cool’ smartphone apps may not be accessible to the majority, but one could definitely make a business by targeting the relevant demography.

On the other hand, for local app developers, there are also other markets that can be targeted that are not necessarily local. Who says you can’t develop something that catches on in the west? And there are also many opportunities to develop enterprise apps for corporate clients.

All about the numbers

All the same, whether building for the ‘dumb’ phone or the smart phone, the success or failure of consumer facing mobile solutions always boils down to ‘how many people will download and use your app?’

Alexander gives a brilliant illustration of this during his talk by giving some numbers about the likelihood of people download and using smartphone apps regularly and as he notes, even with a substantial marketing budget, chances are you could end up only getting a minimal percentage of users to (a) know about your app (b) download it (c) use it once, and then use it again and again.

Path of least resistance

In conclusion, it would appear that the path of least resistance for local app developers looking to make a quick killing is still with creating ‘low tech’ solutions that are accessible to the majority and that solve a very real need in the consumer’s every day life. As Mbwana noted, ‘Let’s unleash SMS: Africa’s best distribution platform‘

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20:10

How not to launch a Data.gov

» ‎ Afrinnovator

I woke up this morning at 4am US West Coast time because I went to bed very early in anticipation of some early morning phone calls to East Africa.
Checking my twitter stream I saw that the Tanzania Government had launched a Open Data website initiative (Kiswahili) along the same lines as guided and launched in New York recently by US President’s Obama and US State Department under the Open Government Partnership of which a number of countries inc. Tanzania had signed on.

The general consensus so far from the twitterse has been negative. The complaints on twitter started mounting and I gladly participated. Where is the data? The SMS no. set up does not work. The site was loading slow or not at all for a lot of people.

But as a critic I also am keen to understand how this may have happened but also having dealt with African Governments I have some theories of how we actually got to this situation- I hope it forms some sort of “How not to” discussion and lead to progress to make things better. I am a concerned Tanzanian and global citizen.

Where is the leadership and did they listen on stakeholder consultation?: My first question would be who was put in charge to build this and did the Government actually talk to all the stakeholders. There are plenty of techies around on the ground and abroad to consult (after all the idea came from the west, NOT from within).
Some organizations I was communicating on twitter actually are on the ground building their own data transparency services are the ones who actually tipped me off. The main one that the Government clearly talked to was Twaweza lead by Rakesh Rajani who actually prepared a pretty great presentation to the Tanzania Cabinet.

Some of the twitter conversations stated that they are still in listening mode and all ideas and suggestions are welcome- if so, they should communicate this on the website.
In any case if effective consultation was done, they would know what is the “minimum viable product” for launching such an initiative.

No benchmarking: An excuse could be “we don’t know what we are doing, we are just launching this”. I would fire back and say, there are plenty of examples out there in the west and even in East Africa. Kenya’s Open Data initiative was launched in a huge fanfare and by many respects, set a global example. My friends here in Silicon Valley were shocked. Take a cue from your neighbor and try match it. The current site just does not even come close and comparisons will always be drawn by the global community

Adequate planning and Capacity: This is where I could be wrong. Did a plan get put in place to launch this? Or was it just thrown together in haste on orders from up above? On one hand, as a supporter of lean startup principles, its great to launch something rough, but as I mentioned in the benchmarking- there has to be a “minimum viable product” for something like this- and putting up a webpage and some wording and videos is not a viable minimum. I would have been happy with at least one dataset. More to the point, was there the right skillset or “capacity” allocated to work on this to do a proper implementation?

Culturally is Tanzania Ready?
This is a big one… This may come as something totally radical to the Government and even the stakeholders and are just completely not really prepared to open up the closet… In that case it’s just embarrassing to put out a website like this with no data sets- it actually lowers the credibility of the seriousness of the Government more than if they had not even launched the website in the first place.

I could be wrong though- and I would like to open up a dialogue here for those who might have been involved in this project to find out more about it and any future plans.

I am pretty passionate about open data, as I wrote in a previous post and I believe it can help Africa unleash innovation and welcome more of such efforts but they should be done properly.

My suggestions are though are actually 2 fold:
- Get a twitter account and other social media presence and have an authentic conversations to take any suggestions and concerns (in the meantime- may want to get that SMS no. working also)
- Shock people and show you mean business by starting with a very serious data set that cuts right into the real issues into why open data is important. I would start with opening up Government petty cash spending on “per diems” related to travel and entertainment. I believe there is much waste here and it is not so much the money, but the time away from office of officials flying to Washington, Seattle, Geneva and other far flung destinations- it takes away valuable leadership capacity within the country.

Here is a great post from Vijana.Fm that talks more about the process for Tanzanians and others interested to learn more

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12:44

Tanzanian & Rwandan Startups Making Content Publishing via SMS Work

» ‎ Afrinnovator

According to an official report released by the GSMA, Africa is now the second largest mobile market in the world. The report showed that over the past five years, Africa’s mobile subscribers has increased by 20 percent every year, and is expected to reach over 735 million subscribers by the end of 2012. (IT News Africa)

The common denominator on mobile, platform-wise, (as Mbwana noted in his last article) across all devices is SMS, and here lies the power of SMS as a mobile content delivery platform. Local content generation has been cited as an area of great potential in Africa and for African tech startups. But content is only as good as how much of it is consumed, the more content is consumed by the target audience, the better for the content producer – hence for the content producer, reach and scale is of paramount importance to their success. And mobile, particularly SMS, is a powerful medium as far as reach and scale go. As we noted from the 3 memes we picked from Vint Cerf‘s talk during his visit at the Nairobi innovation hub – content + mobile = huge potential.

On the other hand, SMS also poses some challenges for the developer and content creator. For one there’s a limit on the number of characters you can have in a single text message. Of course, this is not an insurmountable challenge since Twitter has proved that people can get pretty creative with a mere 140 characters. The difference of course for the content creator on Twitter and on SMS is that there is a cost per SMS, and so the more content you need to publish in a single text message, the more the cost per SMS. Of course, the cost of SMS is going down over time and MNO’s are looking more and more away from SMS/Voice to data revenues.

Many startups in the west rely on huge distribution channels that inc. facebook, twitter, e-mail and Google SEO and adwords. I believe in Africa a different approach to distribution is required, one that puts SMS at the cornerstone of a startup’s marketing and distribution strategy, especially as SMS costs continue to go down. (Mbwana Alliy)

With all this there are still startups that are making content generation and distribution via SMS work, these are just two examples from Rwanda and Tanzania:

From Rwanda: Nyaruka Bizito

This is a pretty innovative service was a Pivot25 finalist. Nyaruaka publishing platform allows anyone using any kind of phone to become a premium SMS provider and earn some money.

The service works like this: a user creates content using a unique identifier by sending a simple SMS command to the Nyaruka service, once created the content (a joke, sports update etc) can be retrieved by anyone else simply by SMSing the unique identifier, Nyaruka retrieves and sends back the content to the requester and the content creator gets paid!

From Tanzania: Bongo Live

Bongo Live was also a Pivot25 finalist. Bongo Live offers several services targeted primarily at businesses and organizations.

Their targeted opt-in based SMS advertising service allows subscribers to receive offers and discounts of their interest whilst advertisers can target their niche demographic with measurable results. A group messaging component allows advertisers to send SMS to their existing contacts. According to the founder, Taha Jiwaji, in an interview:

Bongo Live is changing the way businesses reach new customers as well as stay in touch with existing ones. Our opt-in targeted sms advertising service lets businesses reach their target audience directly on their mobile whilst offering consumers deals of their interest. Businesses can also communicate with.

Bongo Live also offers group/bulk SMS across all network providers in Tanzania.

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10:59

Gbenga Sesan to host Google Plus hangout with finalists of the 2011 Android Developer Challenge

» ‎ Afrinnovator

9:03

Kenya WordCamp 2011: Naivasha

» ‎ Afrinnovator

WordCamp is a conference that focuses on all things WordPress. This past weekend, November 12th and 13th, bloggers, developers and fans of WordPress packed their bags and headed out to Naivasha for the inaugural Kenya edition of this conference.

Despite a three hour delay in the program schedule, the conference kicked off at a high note with a few opening remarks and a presentation by the Kenya ICT Board, one of the sponsors. One of the well known programs that the ICT Board is conducting is the promotion of local digital content through the implementation of the three year Tandaa Grant program. It was a pleasure to hear from them at this forum, considering that WordPress is also providing a platform to push out local digital content.

Below is a list of speakers and summaries of their presentations:

Moses Kemibaro, Dealfish Regional Manager and a seasoned blogger was the first speaker up, giving an account of his blogging journey since he first registered moseskemibaro.com in 2005 to when he joined WordPress in 2007 and his achievements since. Moses uses the blog as personal journal and speaks his mind. Currently, his focus is on tech and he informed us that his most popular content was in form of lists, exclusives(videos, interviews), news, product service reviews. One of his most popular posts to date is his review of the Huaweii Ideos. According to Afrigator, his blog ranks second and he has made up to $500 in AdSense not counting the amount of money he makes offline speaking at conferences and independent consultancy because of the view of him as an expert: All thanks to his blogging.

Francis Waithaka, a consultant in SEO, gave a presentation on integration of social media into the blog, highlighting various strategies to employ to give your blog visibility, have efficient internet marketing and search engine optimization (SEO). These included Fresh Content, Optimization of titles and images and promotion of blog through the various means at your disposal (email, Facebook, Linkdin etc).

Kelvin Jayanoris of Dukapress gave an overview of their product which he had been developing on Wordpess since 2004. They use a freemium business model and generate revenue by selling additional addons and plugins to customize online shops. Dukapress has grown by building features based on user feedback and currently has a 4.5 star rating with over 22000 downloads. It is unfortunate that most of their users are not local.

Njeri Rionge led an open session creating realistic revenue models around African blogging. She advised that innovation, business and focus blogging should be connected to a value proposition which can be in monetary terms as returns for the time spent online. Bloggers should articulate their conversations online and ought to research and plan to back up the knowledge they are putting up.

Angela Oduor of Ushahidi presented on Ushahidi, and how Ushahidi has integrated WordPress in a plugin, UshahidiPress, that embeds reports in blogs, as well as how they use the platform in their internal communications.

Eric Kotonya of CrossOpen talked of his product, which is in beta. He was also proposing that we are all codes: PIN, VAT, Index numbers ID numbers and presented a Platforms Value Proposition i.e a platform like WordPress as an accelerator and as a passive way of collecting data from the public.

Boniface Mwangi started by selling books in the streets. He was inspired to become a photographer by reading a Mohamed Amin Book and now uses his photoblog to trying to engage people in dialogue through photography while sensitizing the public about the on goings to get a reaction out of them. He urged the audience to use their skill and talent in business to improve our country as well as use power of information to empower people.

David Mugo presented on Africa+Wordpress emphasizing on blogging mobile due to the wide impact of mobile phones in Africa. He spoke on how to transforming your blog to a mobile site using the WP touch plugin in a bid to get your blog to the larger mobile audience. Further, he provided different options one can use to publish content from the mobile phone.

Anthony Mwangi of Sprint Interactive defined what Content Management System (CMS) and why wordpress is most powerful CMS in the market. Programmers keep enhancing the features and the various themes available,the flexibility, Plugins and Social Media Integration available at WordPress make it a powerful platform.

Wamathai a local poet and event organizer, shared his story. He found Facebook as the first outlet to share his work with friends who could comment on it.He later started blogging in 2009. Wamathai also talked of protecting one’s work as a creative writer through disclaimers and other licenses.

Njeri Wangari, another local poet, gave a presentation on why become a blogger and described blogging as an avenue to give expert opinions, venting, sharing experiences, give advice and creative writing. She also spoke on the local blogging communities BAKE and POWO and why it was advantageous to join one.

Huston of Skyline Design,a web designer and developer, gave a talk on Intelligence and Aesthetics when designing a blog and stressed on specializing on either design or developer skills when working on a blog and doing a good job.

All in all, it was a good 2-day session but there is room for improvement with future conferences should the talks move away from the general and become more specialized and focus-group based.

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16:18

Is My Tech Idea Viable?

» ‎ Afrinnovator

If there’s one question I’d love to answer:

Is my tech idea viable?

Unfortunately, despite my daily interaction with entrepreneurs, no one asks me this question! When I was offered the opportunity to write on here, I thought this would be a great forum to answer my unasked question. The tech world is rife with ideas, but only a select few make it to becoming businesses and it’s for a good reason.

When I think of code, I imagine this

Before you start writing code for your next software/app/website or {insert the next ‘winning’ idea here} it would be good to answer all of the following questions:

1. Is my idea solving a problem?

Most people mistake this to mean that the idea must be original. While originality is great, we can only have so many original ideas. I usually tell entrepreneurs to focus on ideas that are viable but aren’t well executed by current players, technology that has worked in other markets and can be customised for the African market, and idiosyncrasies about Africa and Africans that create unique problems that technology can solve.

However, don’t quote this post the next time you pitch a Kenyan version of Facebook suitably branded ”Uso Kitabu” (direct translation of Facebook in Swahili), and you get kicked out of the boardroom. When you replicate Facebook, Twitter, or a search engine and claim it’s a product for Africa, you’re being lame. You’re not solving any problem, because these things already exist and work well even for Africans.

2. Are there people willing to pay for it?

I’ll use an example here, but before I do, a disclaimer:

This example is in no way related to a business idea I have encountered.

Traffic jams are a serious problem in Nairobi. So serious, that when IBM did a commuter pain survey, Nairobi was the third runner up. Well, the results are debatable, but the problem isn’t. So I decide to come up with a mobile application which will help commuters identify routes that are traffic free, reducing their pain. My idea has passed the first test. Let’s see if it passes the second test.

Are there people willing to buy a traffic application? I haven’t done a survey yet, but as a typical Nairobi driver, I’m unlikely to buy an application. Reason being, we’re fairly disorganized in our planning. If you follow Kenyans on Twitter, you will be amazed at how shocked we are every morning and evening when we ‘discover’ traffic on our way to and from work. Somehow, I don’t see these people investing in traffic management applications.

In my case, I’ve used Kenyans on Twitter to test the marketability of my idea. An entrepreneur needs to pick an objective sample to use his product and give honest reviews before he rolls it out for sale. Even better, look to sell it to a few people before rolling out, just to test whether there’s market for it.

For online businesses, Advertising revenue doesn’t count as a revenue model. You should have a level of control on your revenues. Hoping that advertising agencies will like your site enough to advertise on it isn’t in your control, this should be a supplementary income line.

3. Is my idea scalable?

Is your idea so country or region specific that it cannot be deployed all over the continent? As an entrepreneur, it’s good to think big right from the start even if you don’t have the resources to implement all over the continent.

Even better, something that’s useful all over the world.

Internet usage in East Africa has grown tremendously over the last few years, but we still have a long way to go. We currently have 118 million internet users in Africa, which seems like a drop in the ocean, compared to Asia’s 1 billion users and America’s 0.5 billion internet users. That said, 118 million potential customers is a pretty good number to target!

There you have it. If your idea has passed those three tests, in my opinion, you can start developing it.

Good luck!

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11:00

Let’s unleash SMS: Africa’s best distribution platform

» ‎ Afrinnovator

Over the last week we have heard incredible data that has shocked the world around the growth potential of mobile in Africa exceeding expectations. The future looks bright indeed for Africa, and mobile will play a big part…

The lowest common denominator in mobile technology is SMS. This is in wide spread use on all phones and all networks (unlike other sexier technologies like 3G, 4G/LTE, mobile money). As such it is critical and a powerful distribution channel. For western readers out there- SMS is like e-mail is to you and is more important in Africa than you realize. SMS also has the aspect of being a notification channel, whilst e-mail can sit in a folder or spam inbox, SMS pops up and notifies you- as a result the open and response rate tends to me much higher and this has opened up interesting mobile marketing opportunities. Of course, SMS carries a cost, so it’s nowhere near as cost effective for broad reach as e-mail and traditional mobile ads on the mobile web.

You want examples of interesting innovations- plenty abound. Let’s start with Bongolive in Tanzania which is trying to be self-serve platform for small businesses to promote their offers and deals.
I have pointed at the use of SMS and mobile money as a channel for building an supply chain system to coordinate and replenish malaria drugs with SMS4Life in Tanzania. Or even one startup this year’s pivot25 finals is trying to build a full scale premium content publishing platform so that anyone can publish content on SMS.

Despite this, I would argue that in Africa, SMS is not being used to its full potential by startups- mainly due to the mobile network operators and 3rd parties who keep the barrier to access this infrastructure high as Erik Hersman has just posted about. One argument is that they should have high barriers, after all, we don’t want anybody being able to broadcast messages to everyone right and be able to access large lists of numbers? Yes and No. One one hand, the very personal nature of mobile and the fear against spam and privacy are real, on the other hand more SMS driven applications could unleash amazing innovations for the startups that exploit it, not to mention it could continue to extend incremental revenue for carriers. The biggest brands and companies can pay to acquire shortcodes and do very innovative sms marketing campaigns by working with 3rd party SMS providers or the carriers themselves, why can’t small startups? Is there a fear of disruption? How about in Tanzania, where the CCM party has actively used SMS as a way to crowdsource fundraise for their presidential campaign- innovation from a political party! Yes, because in Tanzania, it is possible for you to subscribe via SMS and take advantage of in carrier billing to offer a service. I believe in the political fundraising campaign it was a get a “Nyerere quote” delivered to your phone every day. The service provider only has to provide a reminder to stop once every 30 days. The story didn’t end so well as the system got hacked and was abused and the messaging got out of hand for political gain. Like any technology it has potential to do both good and bad. After all, Nigerian spam e-mails are big business…

Many startups in the west rely on huge distribution channels that inc. facebook, twitter, e-mail and Google SEO and adwords. I believe in Africa different approach to distribution is required, one that puts SMS at the cornerstone of a startups marketing and distribution strategy, especially as SMS costs continue to go down. But there is mobile web , you all say.. Fine I agree. That’s why its even more important. Why not combine both? One of my favorite startups in Silicon Valley is Twilio. Its a platform that allows developers to easily build web integrated cloud telephone apps with low barriers to entry and pay as you SMS pricing. They started in the US and are now expanding into Europe… There are so many SMS powered apps in US now inc. startups like Groupme that was bought by Skype and to Airbnb to notify folks renting out their property of pending guests arriving.

I have a few friends who work at Twilio and you would be silly to think I wasn’t trying to convince them to come to Africa one day…. It’s only a matter of time. You could either wait or someone in Africa can build this… Or we can wait for operators to make it easy, which maybe forever.
Existing 3rd party SMS providers could get into this game, but this could be disruptive to them. A company like Twilio is wired very differently organizationally to a just a bulk sms 3rd party provider- you ned a good team of platform evangelists to communicate to developers rather than sales and account teams talking to chief marketing officers at big brands.

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12:50

Critical Mass: More is better

» ‎ Afrinnovator

Carrying on the conversation from yesterdays piece on Forecasting Africa’s Mobile Future and some of the thoughts about what that future looks like, where the opportunities for entrepreneurs and innovators are, as well as Erik’s ‘Pyramid model and theory’; let’s dig a bit deeper into the aspect about broadening the base of our startup pyramid.

As we noted, the basic concept behind Erik’s pyramid model is that there are currently very few success stories as far as African tech startups are concerned, and at the same time fewer attempts. The base of the pyramid is made up of the upcoming guys who simply have an idea, maybe some code running but no real business or business model, just an idea. The middle level is made up of the guys who’ve come up with a business out of their idea but are playing at the Small and Medium Enterprise level, they have not quite ‘broken through’, at the very top are the likes of Ushahidi and MPESA, the names that are easily recognisable even at big time international conferences. These are the ones that have caused the world to turn around, look back at Africa, and specific African states/cities and say “Wait a minute! Something’s going on there”.

The theory part goes something like this: to expand the ecosystem and get more success stories at the top of the pyramid, we need to put effort into the base of the pyramid, broadening it. The idea is that the more people we have trying at the bottom the more chances some of them will trickle up into the SME space, the more get up that one level, the more chances that a few will break through further into the top of the pyramid.

This is also a meme we picked up from Vint Cerf’s visit at Nairobi’s Innovation Hub, where he talked about the power of building “Bottom up versus Top Down“.

Bottom-up versus Top-down: Tech Parks versus Tech Hubs

Mbwana Ally wrote a piece recently in which he basically critiqued the tech park model that several African governments are using to push innovation.

What I have problem with is the belief by Government officials that these cities will create armies of entrepreneurs and innovation based on this infrastructure… Did Mark Zuckerberg or Larry Page need a gleaming tech city to create Google or Facebook?

Both the tech park and tech hub model are really trying to solve the same problem – that of getting more successes up at the top of the pyramid – only that they use different approaches in principle.

The tech park model is an extremely high capital, potentially lower risk undertaking for governments. In reality it is an attempt to feed the top of the pyramid directly with the hope that there will be a trickle down effect that will then spur innovation locally hence pulling up local innovation through competition or at least falling back to Business Process Outsourcing.

The main objective in these projects tends to fall on the belief that foreign companies will set up their regional headquarters and create jobs as well as the idea that lots of local medium sized ICT firms and business process outsourcing centers will emerge and move in. The model is to emulate the parks that have gone up in Bangalore, India.

On the other hand, tech hubs such as Nairobi’s iHub, Senegal’s Bantalabs, Cameroon’s ActivSpaces and others are attacking the same giant from the feet instead of the head and hoping to chop it down instead of knocking it over. Tech hubs are comparatively, much smaller scale, much lower capital, but higher risk private initiatives. The goal being to grow the base of the pyramid, and then Erik’s theory kicks in.

It may perhaps be left to time and history to show which model will work better (my money’s on tech hubs) in the long run, but one thing’s for sure, the giant must come down and all efforts to bring it down are definitely welcome and it’s better to try multiple things than just one.

Critical Mass

At the end of the day what we really want to achieve, particularly as far as the bottom up approach is concerned, is critical mass. The right number of entrepreneurs and innovators taking a chance, trying and trying and trying and trying and trying, and then trying some more and then some more. The more the better, because the more they are the higher the chances of a few breaking through the ceiling.

Jason Calacanis, a serial entrepreneur – Silicon Alley Reporter, Weblogs, Inc., Mahalo and ThisWeekIn.com- has created a really cool startup event called LAUNCH, they got over 500 applications and close †o 200 of those are shortlisted to launch at the event. The day we’ll be able to give those kind of numbers we’ll know we’re getting there. Jason in the interview below says, “We’re bringing together critical mass…. it keeps the number of transactions up whether that’s people getting hired, investing… ”

Related posts:

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Recapping MoMo Event As we reported earlier on, the first Mobile Monday, Kenya...
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11:36

Forecasting Africa’s Mobile Future

» ‎ Afrinnovator

Co-founder of Ushahidi, Erik Hersman, gave an interesting talk at the recently held AITEC Africa conference in Nairobi, Kenya in which he made some observations, predictions and opportunities regarding the current state and future of mobile in Africa especially looking at where the opportunities are for innovators and entrepreneurs.

It is easy to imagine that the mobile revolution in Africa is overrated but according to this slide in Erik’s presentation, not only has Africa met predictions regarding mobile penetration from a few years back, but we’ve broken through those numbers:

Observation #1: Mobile Web

The mobile web presents amazing opportunities for delivery of innovative services via mobile. The continued growth of this medium is staggering. Many an African’s first encounter with the World Wide Web is on mobile. The MNOs know the potential and are cashing in on it.

Big time international brands however, are the ones pushing most content consumed via mobile web. From Facebook to Google these big name brands provide the highly demanded content. The opportunity is definitely there to provide relevant localised content via mobile web. Based on some expert observations, mobile web is more readily taken up even in rural areas than mobile apps.

And if you’re wondering where exactly to place your bets as far as what kind of content is in demand, research has shown time and again that the top 3 most in demand content types by most Kenyans (and by extension Africans) are: Games, Music and Social Networking/Media.

Observation #2: Mobile Money

There’s really no point in going into the ‘mobile money revolution’ in all it’s details here again, but it’s evident that mobile money has been a radical game changer and great success. However, much as mobile money transfers have been very successful, there’s still a major gap with regards to mobile money enabled merchant services. It is indeed possible to pay for your shopping at some supermarkets in Kenya via MPESA, for example, but the process is quite involving and tedious; in Erik’s words (paraphrased) “Paying is as simple as a painful 7 step process”.

Herein lies an opportunity for innovating a simpler, less involving merchant process that works. There are a number of startups working in this space that are tackling the problem and providing innovative merchant related solutions, some of which include PesaPal, KopoKopo, mOrder and Nikohapa.

The big boys are not innovating much here and have closed out their systems from developers, but it’s not stopping young innovators from looking for ways around.

Observation #3: Smart(er) phones

There’s already a pretty high penetration of android based devices in Kenya, for example, and the number is growing. Companies such as Huawei with their IDEOS line are giving more and more Africans the opportunity to own smart(er) phones at a fair cost. In the long term the trend will be towards an increase in adoption of such Android devices (or similar) and the mobile web while at the same time witnessing lower cost and fewer low end/feature phones (particularly in urban areas one would reckon).

The Problem (Scaling out)

Erik pointed out a challenge with how things currently are with regards to tech startups in Africa and making them successful. It is really a question of how do we achieve the necessary scale? Erik explains:

We have a few good success stories in any one of these cities. There are a handful of great tech companies and organizations that have “made it”. This can be seen as a success in innovation or in business (or in both). Everyone wants to be at the tip of this, and these are the examples we hear of at international conferences and read about in the media.

In the middle we have everyone else, the guys who are still slugging away. They have some clients and revenue streams, but they’re not at the top (yet).

At the bottom, that’s what we deal with in places like the iHub and m:lab. These are those scrappy startups that might or might not have any right being in the place. They’re risky, probably don’t have a solid business model yet, and only a few of them will graduate into the SME space above them.

To make the tip of the pyramid bigger, to have more success stories in the tech space, there is only one option: you have to make the base of the pyramid broader… Invest seed funds into local tech entrepreneurs.

Tech hubs are filing a critical void with regards to this. There are many investors interested in getting into African tech, the success of such products as MPESA and Ushahidi have preceded us and have drawn attention here, but there’s this question that’s still hanging over our heads “What’s next? What’s the next big success?”. We’ve played on these two successes a lot, but we need to see more! This is what Erik is referring to here - how do we see more success stories at the top of the pyramid.

Tech hubs are playing a critical role in feeding the bottom of the Pyramid. They are collating the innovators and inventors, the people with an idea and nothing or little more than that. They are acting as seeding grounds and the places potential investors can visit to get access through to the right startups and innovators to fund.

There is also the need to celebrate successes at whatever level. According to Erik, the market is wide open right now, and opportunities are everywhere. It is so open that really, there’s room for everyone to play and win. We need to work together to grow the ecosystem.

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12:15

Two recently launched web startups from South Africa

» ‎ Afrinnovator

More and more tech startups are coming up across Africa, fuelled by growing interest in tech, innovation and startups in Africa from all over the world, and an increasing realisation of major opportunities online, Africans are finding new grounds to conquer online, on mobile and other tech business areas. Today, let’s take a look at two recently launched South African web startups:

1. Guzzle.co.za

Guzzle aims to act as a kind of a bridge between the offline and online worlds. They search out great deals and specials from major newspapers and other offline sources and then put them online for people to find them easily. So instead of scouring through newspapers, catalogues and other sources for specials, they do all that for you and post them on one online location.

In their own words:

Guzzle searches all of SA’s major newspapers and retail catalogues for the latest specials on everything from Nikons to nappies. We don’t sell anything. In fact, the reason we’re so passionate about this venture is that it’s free (currently, even for retailers), so anyone who has access to the web can log on and start using Guzzle.

Virtusa.co.za

Virtusa is a digg-like website where SA based users can share and discover anything on the SA web, whether it be celebrity news, political news, business, stories, or what ever else. Virtusa is also giving Adsense publishers the opportunity to make money in an advertising revenue share model where the adsense publisher can get up to 80% of ad revenues.

Virtusa builds a powerful list of popular news and stories being shared not only around the world wide web, but also the South African ‘web-0-sphere’ ! As the user, you get to submit interesting news, articles, and stories (the choice is yours), as well as vote for, and rate other interesting submissions. Essentially, this will play a vital role in the popularity of the given submission and will determine how the respective story/submission spreads. The more votes and ‘likes’ a story/submission receives, the more chances of increased popularity as well as possible increased search engine rankings. Moreover, Virtusa also allows you to connect with other like-minded people, create and join groups of interest, and make new friends.

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0:48

Mobile Health in Africa: The Entrepreneur’s Guide

» ‎ Afrinnovator

The mobile technology infrastructure in Africa that has been set up sets a powerful platform to begin to address some the problems around health care access and delivery. As I will mention technology alone cannot address the issues, but likely a mix of services enabled by mobile services can create highly compelling, scalable and affordable solutions to real problems.

Latest figures by the GSMA, show 65% mobile phone penetration in Africa. 96% of subscriptions are pre-paid. The figures might also be misleading because you may end up getting 1 person subscribing to multiple services- so its very important to check per country services statistics and get a feel which carrier offer coverage in that area. Either way, the fact that we are fast approaching universal coverage is good news and offers opportunities to invest or redesign services inc. healthcare. Lets dive into the technology components that have the most potential for delivering mhealth services.

The cloud- the backbone infrastructure
We are in the cloud computing era- this means the need for expensive infrastructure to set up that once cost millions can be pushed onto service providers. Providers like Safaricom and Seven Seas are starting to offer public clouds that brings affordable solutions and turns what used to be Capital Expense into an operating expense. As more data centers go up, the viability only improves. Big uses of using the cloud is to not only store data such as personal health care records at scale, enable scable web applications, but also to offload computational intensive tasks to the benefit of health- one example would be for genomics research I talked about

SMS- ultimate in delivery and notification
Perhaps the single most important and often least appreciated technology is sms. This simple yet pervasive technology is sometimes understated by technologists as to the impact and scale. Billions sms are sent everyday. In Africa, its probably more important communication medium than e-mail and phone calls themselves. Given that it works across any phone, feature of smartphone- it is a service that should be at the heart of many mhealth services. One of the most common uses of this could be to allow users to request information as well as to provide short notifications and basic information. Where it begins to fall short is when you try do too much interactive connectivity to the point where the user experience does not make sense. You might use sms for appointment reminders but maybe not to allow a patient to view their entire personal health record stored in the cloud (but you might initiate it via an SMS request). The trickiness comes in working with a good third party sms providers that can provide the scale, integration, delivery and ease of use that is needed- there is often a high barrier to entry to set up a service and one needs to often set up a deposit account of credits to get going. Another advantage of SMS is that you can use premium sms services as a source of revenue to cover sms costs or even add a small profit margin all seamingly built in.
What is really needed is allow a developer like Twilio onto the continent to disrupt the whole third party distribution business and make it easier to develop cloud enabled SMS applications.

Simtoolkit/USSD- lets add some interaction
This service built into simcards allows more menu based interactive services but it is literally contrained to the simcard level which means working closely with carriers or 3rd party operators that provide this functionality. The big upside is that it works on almost every phone. After all M-mobile PESA in Kenya is implemented using this service, but no surprise it works given its a carrier controlled service. I think USSD may make sense for some very rich interactive mhealth features delivered broadly. Also the cost once the development is done of communicating is much cheaper than working with sms services. While it is not useful as a notification service like SMS, it is often paired with it to achieve good results.

Mobile Web- Rich content & services, backward and future proof
Where SMS and USSD ends, mobile web for rich content and interactivity begins. As Erik Hersman has said in the recent conference in South Africa. Mobile web is the next big thing in Africa and opens so many options. When pages of information, text, images and menus are required (e.g. say for describing symptoms or creating a health information portal), this wins.
A sleeping giant in Africa in the mobile web space is the Opera mini browser, reporting up to 70% share of mobile web requests. The magic of opera mini is that it is bundled with many handsets and supported to be bandwidth efficient making service available quickly and cost effectively. It would be wrong to not mention HTML5 when talking about mobile browsers, set to revolutionize the web and actually allows Africa developers to quickly tap into this technology for delivering rich services without having to go via cumbersome app stores. Some core components not to be ignored in the future are “offline access”, “location based services”, and “web hooks” – all of which allow unique services limited only by your imagination. Of course, the HTML5 standard is not fully supported across all browsers, so need to be careful- but Opera mini supports a no. of them. To my surprise, I was shocked to see that Opera has a appstore and even works with local carriers like Safaricom to integrate mobile money services.
One to watch in this area is windows phone on Nokia devices in future- whilst symbian powered Nokia phones maybe around a little longer, to remain competitive with android- Nokia and Microsoft has no choice but bring richer solutions to market to this region of the world to remain relevant.
The other thing not to overlook about mobile web is that it is backwards compatible with feature phones as well as with emerging tablet computers in future and of course normal computers. A well designed and integrated service with the right views for each develop allows multiple devices to work seaminglessly- and designing that is the challenge.
One final obvious point is to pay attention to connectivity rates and rates, whilst browsers like Opera mini help in this regard- one should not expect to have fast 3G internet available in the most rural areas currently, but this will surely change with time.

Mobile Money- huge potential for fee payment services
This leads on the huge trend in mobile money- forecasted to with 350M accounts by 2015. M-PESA does more transactions than western does globally and responsible for $7B is transfer in 4 years since launch. Mobile money is another service that when well integrated into any pay per fee service can extremely compelling to users. Suddenly the viability of micro health insurance to the masses becomes viable. This is particularly important given the increasing role the private sector is playing in health care and the popularity of fee for service payments to access health services. Again, important to check per country how this might vary. Similar, for mobile money- adoptions rates are vary widely, Kenya is the standout best market for mobile money at 70% adult penetration and dominant and widely used M-PESA. It becomes more difficult in going to other countries like Tanzania, where adoption is still low but growing fast, also fragmentation of mobile money services due to no single incumbent means you have to pay attention to being able to integrate multiple services.
Some surprising problem areas that you may not expect, when thinking mhealth services, its easy to just focus on fee for service- but also look for other problems that can be solved beyond the obvious. For instance, why not help coordinate and pay for expensive transportation to get patients to clinics and hospitals faster. How about allowing diaspora and migrants to directly pay for health service like Willstream is doing with remittance solution in Senegal?

Business models

This is probably one of the hardest areas for entrepreneurs to think about for making a health service viable. The reality is that the people that need the service often have the least means to afford it. As I had mentioned micro-insurance models via mobile payments make a ton of sense as they help bring the masses into a formal healthcare system. Serious Bottom of the Pyramid thinking is required.

Prepaid subscriptions may also work where mobile money is not appropriate- for instance to access content. The ease of use in subscribing via sms cannot be under-estimated, for instance in Tanzania it is very easy to send an SMS to enroll various packages for data and/or content and just as easy to turn them off- all the billing and deduction whether daily, weekly etc.. can be handled for you by the carrier or some mobile technology provider and as I mentioned, premium sms revenue when applied at scale may even cover operational costs of the services- but getting scale is key.
The same approach can be applied for enrolling on USSD enabled service. The downside with this is the need to work with carriers to implement the service and they may take a cut, but the big upside pay off is that if it works, you get instant distributions to millions of subcribers and opportunities to co-promoting efforts to gain adoption. As carriers continue to fight out for marketshare and saturation point is reached- they will increasingly turn to value added services to retain subscribers- one of which would be mhealth services.

The other common way to enable mhealth service is to shift the burden of revenue to the institutions themselves. This includes at the clinic or hospital level, research institution that are willing to subsidize the service on behalf of their patients or target populations. The scope may not be a grand since many research institutions target vertical areas as opposed to broad health issues. However the solution or service offered may be very meaningful and your service may help set up interactions between service providers and patients- for instance an appointment or reminder for doctors schedule is highly relevant to local population, or an app or mobileweb service that allows find a qualified doctor or medical practitioner. What is required here is deeper collaboration with institutions but I feel the results can be worth and may allow the venture to demonstrate a proof of concept and access more serious financing by impact and ordinary investors alike for scaling up. I think this is my preferred approach because it forces the entrepreneurs to build tight partnerships with health service providers rather than trying to provide a service that is mainly technology or information access that might risk being out of touch with the real needs of the local population.

Privacy & Regulatory issues
One of the biggest sticking points of mhealth services in the western world is the privacy and regulatory rules that one might encounter in making a service viable or the bureaucracy that might burden you to even get the service of the ground. For example in USA, the HIPPA rules are critical to observe when handling any patient or health data.
In Africa, given the urgency of such services to solve huge problems and often less concerns about privacy means you have a better shot of lanching mhealth services. This does not mean you can ignore basic issues. For instance, all patient health data should be protected and encrypted when being help on the web. Regulations may require that data be held in data centers on shore rather that on a public cloud infrastructure such as Amazon web services. This area actually remains quite murky given many Governments in Africa’s lack of technology, so it makes sense to help educate and work with authorities then try and alienate yourselves from them. By working closely, you may get unexpected benefits such as a government mandating your technology implementation as a standard. Given mHealth technology and interporably are important when working with different stakeholders, working with Government is probably an absolute requirement.

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20:12

Interview With, Andrew Mugoya Author of ‘African Apps in a Global Marketplace’

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Andrew Mugoya is the author of an ebook targeted at African app developers titled ‘Africa Apps in a Global Marketplace‘. Andrew runs the afriapps website that showcases apps developed by Africans. In his book, Andrew tackles many aspects of app development from user experience, to funding, to marketing and much more. The book is a pretty good read!

Afrinnovator: Please give us a quick intro of yourself?

Andrew: I’m Partner and Technical Director at Asilia – a Creative Agency based in London, UK and Nairobi, Kenya. I previously worked as a developer and Project Manager at several financial institutions in London.

Afrinnovator: Tell us a bit about Asilia & Afriapps

Andew: Asilia is a Creative Agency based in London, UK and Nairobi, Kenya. We offer design and technology services, with love. Our style and designs have been described as very ‘African’ and this is one of the areas we stand out, especially internationally.

Afriapps.com is a platform to showcase great African apps. It is an Asilia in-house initiative and was launched in November 2010. This month is our one-year anniversary.

Afrinnovator: You’ve recently published an ebook on app development in Africa or by Africans within the global context. How did you come about doing this? Did you see a need, was it out of sheer interest in the subject matter… ?

Andrew: I wrote the book after noticing several trends on Afriapps.com. I thought I’d share my ideas, observations, tips and gripes about the industry in general but also offer developers a form of guide in going from app to business and being competitive.

Afrinnovator: Give us some of the main topic areas you cover and some insights that can be found in the book

Andrew: The book is full of useful recommendations for both the industry in Africa and individual developers.

The main take-away for developers would be to focus on the user and the user experience. Design and the user experience are what app development is mainly about, not fancy technology or features. Due to open source software and standardised frameworks, the technology is rarely unique. What is unique is the developer’s and designer’s creativity in using technology to make the user’s experience simple, enjoyable and functional.

For the industry in general, the challenge is firstly, to forge a niche in the global marketplace and secondly, avoid becoming dependent on aid/charity for its survival.

Afrinnovator: What are your aspirations for Africa as far as tech & innovation are concerned? Specifically with regard to apps?

Andrew: Firstly we need to find a niche for ourselves. An area that would be difficult for developers from other parts of the world to cater to. The obvious area that jumps out is Africa. Not just in the problems to solve but in how we are solving them; solving African problems in an African way. This means solving uniquely African problems and being unashamedly African in the design, language and style.

In short, learn from Nollywood.

Afrinnovator: What, in.your opinion, are the 3 best African made apps you’ve seen?

Andrew: It is difficult to pick just one app. Every app we feature on Afriapps has something that appeals to me. However, the ones that particularly stand out are those that offer something uniquely African, are well built, well designed and look uniquely African. Andrika e-cards, Basic Swahili and Twi Phrase Book are good examples.

One other app that stands out for me is Tuvitu from Shimba Technologies. It is a very innovative and popular app that could grow into a powerful platform.

Afrinnovator: Any last word to African app devs?

Andrew: In the book I cover many aspects that developers should keep in mind. But if I was to summarise it, I would say the following: Focus on the user and the user experience – from idea, design, coding and marketing. If you do that, funding and profits will follow more easily than if your focus was on awards, funding or publicity.

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22:00

The Africa Tech Parks & Cities Arms Race- Is it worth it?

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One of the most debated topics in IT innovation industrial policy is the place of tech parks and cities catalysed by African Government’s role in helping lay down important infrastructure.
Kenya’s Konza Tech city is slated to cost $7B. Tanzania’s Rhapta’s city is meant to cost maybe $1B or so. I even got wind of an Angola mega city project slated to cost $10B that includes a tech park. Rwanda and Uganda are also planning tech parks or cities of their own if they have not begun pushing so.

Each tech city or park has different ambition levels. The main objective in these projects tends to fall on the belief that foreign companies will set up their regional headquarters and create jobs as well as the idea that lots of local medium sized ICT firms and business process outsourcing centers will emerge and move in. The model is to emulate the parks that have gone up in Bangalore, India.
Tech parks and cities also can be financed and paid back from the real estate development model and often take a stake from any emerging tech companies (this happened with Plug and Play center in Silicon Valley). They are “safe investments” for the expensive grand projects they are.

What I have problem with is the belief by Government officials that these cities will create armies of entrepreneurs and innovation based on this infrastructure… Did Mark Zuckerberg or Larry Page need a gleaming tech city to create Google or Facebook? Or was it a coincidence that these founders originated from world class universities Stanford and Harvard? Similarly, what is the role of the IIT in India in their tech industry?

To be clear, Tech parks and cities do have their benefits- for one, the economic zones and incentives created should draw some companies to set up there vs the growing overcrowded and traffic jammed cities. The infrastructure itself can help isolate many problems that plague firms in normal city areas- this includes reliable internet and electrical power as well as good transportation links. Local Data center investments to enable cloud computing will clearly benefits everyone and start to take advantage of all that unused bandwidth capacity emerging in Africa.
Infrastructure is important. China’s investments here and even across Africa for instance are essential to both itself and to aid countries they are aiding for growth- not to mention these projects create jobs just to set up in the short term. It’s very similar to winning the bid for the Olympics or World Cup- when executed correctly, the expansion to the economy can be substantial and long lasting to the region.

Tech parks tend to be lead by Governments whose political objectives often trump any real sense of how to really enable innovation and entrepreneurship- which is a lot of cultural, incentives and education. They often ignore economics and the laws of supply and demand. How many regional offices can Microsoft and Google create in East Africa when each city is trying to build its own billion dollar tech park? An outsourcing center still builds a dependency on western market economies, and what happens when another region gains cost advantages just as people are now moving away from India? Or the big companies want to move these functions back onto their own shores or even just invest in their own corporate offices?

Take Dubai- they created a gleaming city from the desert with its vast oil wealth and created an internet city which did attract companies such as Microsoft, Oracle, Cisco to its city. These tech companies mainly created sales and customer services offices for the EMEA region- there was very little R&D and hence innovation. But how many entrepreneurs and ground breaking innovations resulted? How can you expect innovation from Dubai when failure and risk taking in business is treated so negatively? Meanwhile, their neighbor, Israel, even with their conflict problems is able to attract direct investment from tech companies like Intel and the country far punches above its weight in innovation in the tech sector. It is really, a Startup Nation. More Israeli tech companies are on the NASDAQ exchange than all of the companies in Europe combined, and the country has access to more Venture Capital per capita than any other nation on earth. What makes them different? The answer is simple- trained and risk taking human resources.

One saying I have heard from my colleague who has advised many Governments around the world on tech entrepreneurial policy including Brazil is “If you are planning to build world class football team- do you first build a 100,000 seat stadium or work to recruit coaches, find and nurture talent or even continue to stimulate the pride of football in the country?”

There are clearly advocates such as myself of a more bottom up grassroots approach that appeals to the entrepreneur and hacker grounds where universities ARE the infrastructure, vs the corporate mindset of “gleaming campuses” are the infrastructure. Difference is, the former is harder to achieve but has more long lasting results on creating homegrown tech firms.

Another aspect of tech parks and cities is the tendency to try “create a whole ecosystem” from scratch including world class universities and residential areas for the human resources. An all inclusive city makes a lot of sense, especially the university inclusion for reasons I just mentioned- but then the bigger the scope the more likely governments underestimate how much effort and time this really requires- not to mention execution.
Take for example of the University of Dodoma in Tanzania. Apparently on paper, it is the biggest university in East Africa and it costs billions and largely self financed via domestic cash rich pension funds. However when I visited it to try find the head of the computer science department to find out what the plans were for academic teaching I learnt that University students and staff were on strike over student loans and the professors also absent meant that the department had shut down- and there was this gleaming building standing by empty.

University of Dodoma

The same can be applied to innovation and entreprenuership- creating a fancy building or city does not foster entreprenuership- history has shown this. Assuming the parks are built (I would argue that maybe Angola could feasibly build one quickest based on their oil wealth) we may find that many become ghost towns in the short term if no talent develops to fill them.

I am not saying tech parks are useless in Africa- as I mention above, they do have a place and fill critical infrastructure needs, but to depend on them for more then they can actually deliver such as a source of innovation and entrepreneurship is deeply flawed. More of this money and effort would go further to encourage entrepreneurship, attract venture capital firms via policies and last but certainly not least, invest in an educated workforce- the dividends will pay off in time not overnight as many Asian economies have shown.
Singapore and Chile stand out in countries that seem to be making excellent strides and are thinking outside the box, they use human resource incentives over gleaming cities to lure talent which in turn helps infuse a Silicon Valley like culture.

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12:49

A Nigerian, Kenyan & South African Web Comic

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12:13

Plugged Digital Expo

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0:06

Ebook: African Apps in a Global Marketplace

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15:19

Taking a look at hardware innovation in Africa (Part 2) – of hardware & hubs

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In the first part of this look at hardware innovation in Africa we mused about the feasibility of building up an environment in which hardware innovation and development can grow and scale up in Africa.

Founder of the African Institution of Technology and Fasmicro, a company that focuses on embedded systems, microelectronics, mobile apps and software, professor at Johns Hopkins Electronics and Engineering department and also 2010 TED Fellow & speaker at Tech4Africa, Ndubuisi Ekwekwe, in an interview with Memeburn:

MB: Do you feel that Africa has more of a chance competing in the hardware arena than it does in software?

NE: Yes. If you look at it, we simply do software on foundations people have created — we write on .net, Java, Oracle, C, etc, and have yet to create any platform that is indigenous. Contrast that with hardware, where it is unbelievably easier to compete if someone shows you how to make it. The East understands that when you have the labour force with decent education, you can ramp up that sector in any economy and get paid. So, they make the hardware and people have to pay for them while we spend efforts on the software, say Apps, and hardly know how to monetise them because we are competing against Americans and Europeans.

The interesting thing to note here really is the point about hardware innovation being easier to do, scale and market versus software innovation. Being in software, however, it would appear that software is much more accessible (particularly cost-wise) as it is basically knowledge that is easily acquired and the tools as well are more or less readily available. On the other hand Prof. Ekwekwe does have quite an interesting point here! If you can make hardware components and knowledge accessible, the potential is astounding! And this is where initiatives such as the Fab Lab and others come in.

The Fab Lab is an MIT initiative the idea of which is to provide the necessary tools for innovation and invention focused around hardware and digital fabrication:

Fab labs provide widespread access to modern means for invention. They began as an outreach project from MIT’s Center for Bits and Atoms (CBA). CBA assembled millions of dollars in machines for research in digital fabrication, ultimately aiming at developing programmable molecular assemblers that will be able to make almost anything. Fab labs fall between these extremes, comprising roughly fifty thousand dollars in equipment and materials that can be used today to do what will be possible with tomorrow’s personal fabricators.

Fab labs have spread from inner-city Boston to rural India, from South Africa to the North of Norway. Activities in fab labs range from technological empowerment to peer-to-peer project-based technical training to local problem-solving to small-scale high-tech business incubation to grass-roots research. Projects being developed and produced in fab labs include solar and wind-powered turbines, thin-client computers and wireless data networks, analytical instrumentation for agriculture and healthcare, custom housing, and rapid-prototyping of rapid-prototyping machines.

Nairobi University FabLab

In Kenya there are two FabLabs, one in Kisumu the ARO FabLab, and another at the University of Nairobi. The University of Nairobi FabLab initiative is the brainchild of Dr. Kamau Gachigi who is also a lecturer at the university according to this article about him:

Dr. Gachigi hopes that the Nairobi FabLab will serve as “an infrastructure of high-tech business incubators can provide localized manufacturing capacity. . . (with) the potential to release technology-based economic growth for any developing nation or region.” He is optimistic that the FabLab will promote the creation of an atmosphere and culture of innovation and encourage venture incubation in the region

The ‘hub model‘ seems to be working pretty well across Africa particularly partly because of the fact that the hubs are well… just that, hubs – central locations which attract and concentrate talent, tools, knowledge, skills and co-working to such an extent that the small community reaches critical mass within it’s reach and then expands outwards. These hubs so far have focused a lot on software, web and mobile. The Fab Lab is a great initiative because it brings in hardware innovation into the picture. What would happen if these hubs took a more deliberate attempt to include the hardware innovators – not just the CS and IT graduates but also the Electronics Engineering guys as well!

A probable inhibitor, on might recon is cost. Can the hub manage to acquire and maintain a hardware-focused lab purely for experimentation? Well, fortunately today there are several open source hardware initiatives that are aiming to bring down the cost of hardware innovation that could help bridge this gap – examples of these include:

BugLabs: The Bug System combines open source modular hardware and software, a complete application development environment and powerful, cloud-based data aggregation tools to provide a unique, end-to-end M2M and Internet of Things innovation platform for customers.

Arduino: Arduino is an open-source electronics prototyping platform based on flexible, easy-to-use hardware and software. It’s intended for artists, designers, hobbyists, and anyone interested in creating interactive objects or environments.

Beagle Board: The USB-powered BeagleBoard is a low-cost, fan-less single board computer that unleashes laptop-like performance and expandability without the bulk, expense, or noise of typical desktop machines.

Tech hubs such as Nairobi’s innovation hub create a central place where innovators bring in their skill and innovation capacity and the hub provides certain resources to a group of people that would otherwise be expensive to individuals, both technical such as bandwidth and otherwise e.g. good working environment. Its time to include the hardware innovators in what the software people have been enjoying, and indeed the possibilities increase even more when you consider hardware & software innovators under the same roof! The hardware guys build innovative gadgets, and the software people make those gadgets do stuff and as the continent draws more and more investment in tech through angels and VCs, who knows – we could be sending people to go show their stuff at the Consumer Electronics Show just like we had a couple of innovators representing Kenya at DEMO.

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7:00

Genomics Research in Africa- Improving Health by applying cloud computing

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I talked about the need for more market research needed. Lets get more serious. How about more genomics reasearch? Sounds too cutting edge? No. Its become more and more feasible to do, cheaper and more distributed. The intersection of bioinformatics, genomics sequencing with cloud computation may unleash huge innovations globally- to sequence genes faster allowing prediction, diagnosis, monitoring, and treatment of many conditions. Check out this TED talk from Richard Resnick for a background in this field

Don’t believe the internet doesn’t apply here at all- check out 23 and me a consumer facing web service for $99- allows a complete run down of health risk factors in one’s health based on genetics. Imagine getting this down to say $10 in Africa one day…

In Africa, we simply don’t have enough genetic research that allows us to study and understand the effects of non-communicable diseases on African population that are growing by 15% from 2010-2020. Recently, Julie Makani, a researcher from Tanzania, won a grant to conduct sickle cell research part of which involves applying genetics. And in a conversation I had with her on a trip back to Tanzania she pointed me some material that I have been working to understand and how as a web/mobile/software techie with a growing interest in applying these to the healthcare sectors. I urge more African techies to turn to this area. I had previously wrote about innovation funding landscape in Africa- this is one area that many foundations and impact investors are applying themselves- hence there is potentially lots of funding available in this sector, given the obvious huge impact to Africa health long-term. I also mentioned on my last post, the importance of liberating data. Here is a prime example, such data could be locked up in health research institutions in Africa unless liberated on a cloud infrastructure with the right privacy and legal controls in place. Amazon, a leader in cloud computing already has a 200GB genome data set for researchers to work with the public. Of course having an Africa specific dataset helps the continent a lot. Even bigger? Allowing people to collaborate on this across the continent. Could Africa leapfrog the rest of the world and get this done first using modern cloud infrastructure? Only 1% of internet bandwidth is Kenya is being utilized right now and more and more data centers are popping up- there’s plenty of room for this sort of stuff.

Entrepreneurship is about solving unique problems and often applying cross discipline skills- Techies need to hang out with medical and biomedical folks more often to come up with opportunities. It’s harder to build a healthcare venture for sure- but hey, who knows , maybe one day someone might built the Genentech of Africa?

For more information check out this whitpaper published early this year by the Human Heredity and Health in Africa (H3Africa) Initiative to the Wellcome Trust and the National Institutes of Health. h3africa_whitepaper

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22:09

What counts? Need for more Data Transparency & Africa Tech Market Research

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A few months ago, I did some due diligence on a potential innovative healthcare venture in East Africa. As part of this I sourced some data from a no. of sources including the IMF, world bank etc. However, getting more granular data like current prices of medicines and what firms were manufacturing and distributing was really hard. Turning to Government for this data at the highest levels took a ton of time as most of them were too busy, the lower level Government employees were not much help. I also didn’t want to fork out $1,000 for a report written by US consulting firm who may not paint an accurate picture on the data in Africa. In short it was just too hard to get recent and relevant micro data. Even some of the macro data from sources such as the IMF was outdated. When it comes to technology and today’s fast changing world, more data quicker is better and often unleashes innovation when the organization that has access to it opens it up.

To many the chart above on Internetstats.com masks a very murky picture of the state of the internet in Africa. This got me thinking about a cycle that happens when more granular data is not available- for one it makes decision making on investments really hard which in turn perpetuates use of outdated data that masks Africa’s true potential. Lack of more real time market research data is actually a big problem. Blogs and magazines such as this, VC4Africa, CIO Africa and other sources bring well deserved press to what is going on in Africa in areas of tech and business, but more rigorous analysis is needed.
For instance I am encouraged to see that VC4Africa does quite a bit of surveys on things like “most popular langauges for African developers” and various perceptions on VCs in Africa.
Every so often a fantastic infographic comes out that also helps a lot from tech firms and other institutions- for instance, InMobi’s Research that has a section on Africa’s mobile ad impression stats is tech data gold.

For Governments this can be tricky and part of a cycle that limits data being liberated- sometimes power is a result of what knowledge you keep or at-least power is often directly related to being a gatekeeper of information. How many of you in Africa have had to bribe someone to get the data you needed?? I rest my case… Not saying all data should be free- but useful data that brings confidence. Sometimes the data ia available but sometimes limited in the formatting- take for example Tanzania’s registered pharmaceutical products could be redone in a better way.

That is changing though- the ultimate sign of Kenyan Government’s seriousness on this is in recently creating the first OpenData initiative launched by a Governmentin Africa- more African countries should follow suit and if not, others should take the lead and make it part of their mission to help improve the industry and unleash innovation.
It is also encouraging to see Communications Commission of Kenya releasing more data and it being picked up by more mainstream news outlets- that way I don’t have to rely on internetstats.com or inaccurate proxies such as facebook penetration from socialbakers to get accurate no.s to basic questions such as “what is the current internet usage in Africa?” And does that metric really matter? Einstein once said “Not everything that can be counted counts, and not everything that counts can be counted”. And a recent nextweb article proclaims how we are measuring the internet usage might be wrong and actually masks a bigger more important trend in connectivity in Africa and broader emerging markets as it relates to mobile usage.
Western measurement systems would say that there are very few bank accounts in Africa and hence a limited formal economy, yet M-PESA collected $500M in deposits in the last quarter and has more transactions than Western Union globally. Or take the notion that smartphone adoption in Africa is low- but who cares? People still use the killer app- internet browsing common to both feature and smartphones, you certainly don’t need a smartphone to do mobile banking (but you certainly do in the west with companies like Square). One can even use SMS for parts of a sophisticated pharmaceutical ERP supply chain system that in the west would probably be implemented via some Oracle or SAP solution that is dated and was not designed for Africa’s people and infrastructure. The location based services startup Nikohapa allows you to checkin without a GPS smartphone using SMS. So how much does smartphone adoption really matter for emerging markets like Africa? What matters is the usage- I want to know more about this and the more we know, the more we can decide what to focus on and invest in.

Countries in Africa that provide this data and insights on trends more readily will attract more attention and credibility- both publicly and private- it translates to investment in the right areas both domestic and foreign. Many companies and individuals around the world rely on firms who focus on this and do it well. For example Gartner and Forrester. Some individuals even get well respected for their reporting- take Mary Meekers infamous “State of the internet” decks she has produced for years that has become required reading by any techie- if you quote her in your pitch deck around a trend you’ll probably bring more confidence. Africans need to demand more data and insightful tech analysis about what is going on anymore than foreign investors demand it to make investments.

What I call for is the idea of an “African Gartner” that focuses on the right metrics that matter and help change the language of how to think about the importance of tech in Africa.

I’d like to easily know for instance- why does Opera mini have over 70% market share in mobile Internet in Africa? How many SMS messages are sent in Africa and whether that is trending up or down per country and by how much. I don’t care so much about e-mail because its not the main indicator of connectedness in Africa right now (and that should be stressed in the analysis). In USA, SMS usage actually lagged the rest of world and is only now a mainstream way to send messages, meanwhile rest of the world is still hooked on SMS despite growing smartphone adoption. Companies such as Twilio may well come and invest in Africa faster if they knew better SMS usage data

I believe NGOs in Africa can play a big role in this because of their somewhat neutral stance as organizations that are neither Governement or Corporate with a specific agenda. Imagine if there was no Ushahidi… Success is probably part attributed to it being neutral source as an organization and the manner it which is collects data via crowd-sourcing.

Let me try an experiment- Imagine an African Tech ” Gartner Hype Cycle”, which attempts to measure adoption of different technologies along a well defined framework, where would you place mobile money on the chart- where would you place e-commerce? I can tell you that its all backwards compared to rest of the world? Are there any technologies that should be here. Does this model even apply to Africa as far as how technology is adopted?

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19:37

Innovation funding in Africa: Are VCs & Impact investors taking enough risks?

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Innovation in Africa

There are an increasing number of new Venture Capital firms (VCs) present on the continent in the last few years such as Fanisi Capital that operate in East Africa and the recent Adlevo that focuses on South Africa and West Africa. Then there are a new crop of investors known as impact investors which include Acumen Fund and Omidyar network. This is great for Africa as most people believe that Africa needs more investment vs AID, particularly in light of less available foreign AID from western countries and increasing influence from China. I wanted to examine who is funding entrepreneurship innovation in Africa in this, my very first official post as an author on Afrinnovator. Previous posts I wrote as a guest blogger can be found here and here. You can follow me on twitter.

Impact Investors are better than AID systems when it comes to funding innovations in the social sector
Impact investors can be viewed as a new form of “assistance” that empowers entrepreneurs to find innovative solutions to social problems from small farmer agricultural assistance, healthcare to education. They increasingly rely on technology as key tools to achieve scalable solutions. They have funded some exciting companies in these areas in recent years. Bridge International Academies is a $4/month low cost franchise school system in Kenya that relies on ever popular mobile money service M-PESA as an innovative way to ensure funds flow efficiently from parents to schools to teachers. Sproxil is a SMS drug authentication service that combats counterfeit medicines in Africa. Impact investors are welcome because they supplement what were traditionally an AID system that works with NGOs and Governments with a “market driven” system that provides investment capital to entrepreneurs. I will leave readers to judge which is a better way for Africa to innovate its way out of its social problems.
The issue I have with impact investors is the often unclear way to which they assess investments, sometimes very nebulous measures such as “lives impacted”, but they can often be more complicated- the entrepreneur by very definition has to become a “social entrepreneur”, not a bad thing if that’s the kind of venture one wants to build- however impact investors sometimes overlook the indirect social impact benefits of enabling a pure for profit business which inc. wealth and job creation. Yes, jobs that allow africans to contribute to the tax base, be able to feed their families, pay medical bills and send their children to school.
The best thing about impact investors is their patience- they are trading off financial returns for “impact”, their patience in investing is welcome on the continent where often more time is needed for a business to scale out vs other markets. They provide critical dollar investments where other investors can enjoy safer returns in other growth markets such as Brazil, China, Russia and India.

VCs in Africa are not taking enough risk
Venture Capital in Africa on the other hand has tended to fund infrastructure and later stage companies. Fund sizes tend to be around $50-100M, and given the limited board seats venture partners can sit on and hence deals they can make in a given year, minimum investment tend to be $1M. Many of these VC funds tend to profess that they enable funding of the “missing middle”- what middle are they talking about? For certain sectors such as energy and traditional healthcare this may be the case, but when it comes to web and mobile startups, this middle may be the equivalent of “later stage funding”- they act more like private equity (PE) shops than true VCs.
There is a very handy list compiled by the South Africa Chamber of Commerce in America (SACCA) that profiles over 200 funds focusing on the missing middle.

Gap in Early Stage Innovation Investment in Africa
This still leaves a significant gap for early stage investing in web and mobile startups that constrains potential innovation. We all know the numerous trends in mobile in Africa- it is arguably the most powerful infrastructure ever set up to enable innovation and change at almost every single sector or discipline, not just in Africa but globally. VCs are meant to enable this innovation by taking risks and to drive high returns to investors whilst helping to change the world. It is a “home run” business not a “batting average” one, this means in a given investment portfolio of innovative startups, only one huge success can pay for 9 other failed companies. VCs in Africa don’t seem to be taking this approach- often funding companies already doing well and generating cash to which they can put their capital to work.

The pieces that enable innovation are changing- cheaper, better, faster. But talent remains the biggest constraint
The cost of launching internet startups has dropped 90% in the last 10 years (thanks to open source, web frameworks and cloud computing), and the even bigger drop in cost of communicating globally (thanks to VOIP, sms, facebook, linkedin)- it is now possible to set up a venture and adopt lean startup methodologies that can get companies to prove a business for much cheaper than the $1M minimum typical VC investment in Africa. In fact, I would now argue that capital is no longer the differentiator that ensures success at the earliest stage- rather your team and advisors that mentor you and ensure you don’t repeat the same mistakes are most critical. The problem in Africa is that the angel investors who are able to advise such companies are limited or have yet to get into angel investing. In Silicon Valley they are plentiful, entrepreneurs who make it big often give back as angel investors- it is almost expected and is the social norm and a critical part of the ecosystem. Angel investors are actually a sort of impact investor- they take huge risks and are often giving their very valuable time and domain expertise in conjuction with their capital- their help in the very early stages of a company often outweighs the advice any grey-haired VC can ever provide on the latest technological trends, often they can sit right beside you and code or once pioneered a marketing technique in their last company they can apply to your startup so you don’t need a huge marketing budget to get early customers. They act as key catalyst for knowledge transfer and raise the probability of a startup’s success.

VCs often complain (and if not they should) that “there is not enough qualified entrepreneurs to fund” because what they care and focus on is deal flow and building out a bigger team and business. Angel Investors however, typically take someone with potential and mould them into an “investment grade/VC backable” entrepreneur by adding their mentoring/education to get their product or service of the ground. When the two are intwined in an ecosystem- they become very powerful agents of change- if one is missing, innovation is often constrained.

Angel Investment + Incubation = Form of Impact Investment in Educating Entrepreneurs
Where does this leave the state of African VC/Impact backed internet startups? Unfortunately, I would argue not very far- these investors need to take more risks or a new crop of angel investors with tech experience (preferably local) to advice startups needs to emerge that then bridge the gap to VCs, otherwise the innovation potential in web and mobile startups in Africa would remain limited. It is ok to have failed startups (especially at relatively low amounts of seed capital) if entrepreneurs learn- next time they may well hit a home run. Entrepreneur learning IS a “social impact” even if they fail. Are there any impact investors out there who include the “entrepreneur learning” metric in their impact investment programe evaluation? One piece of the puzzle is being built out with the emergence of various incubators across the continent and is encouraging that many of them as sharing best practices and networking amongst each other across the continent to make it an increasingly smaller place.
I recently visited Meltwater.org who have set up a training school and incubator “Meltwater Entrepreneurial School of Technology” (MEST) in Accra, Ghana that fuses technical software development with sort of entrepreneurial MBA. Graduates are expected to work on a startup idea upon graduation that feeds into the incubator. Funding from $20-200k is provided for promising ideas. What I like about MEST is that its backed by a successful tech company with resources and talent globally they can leverage to provide the best assistance to fulfill their mission. If a graduate decides to take a full time corporate job, they can still come back later and join the incubator and secure funding once they have an idea they’d like to pursue. This is an example of a potential future educational system to encourage and combine the elements I mention here to enable more innovative talented entrepreneurs. At an even earlier stage, the African Leadership Academy is playing a key role here in South Africa- we need more of such efforts that help train talent at home which can train leaders and entrepreneurs- such models are inherently time intensive and patience for the long term is required to see the results.

MEST fb garage

Back to AID. It is fascinating to see some of these interesting developments (innovation and entrepreneurial driven change) feeding back into to foreign Aid policy. A new US program called Global Innovation through Science & Technology (GIST) that was a result of Obama’s strategy in muslim countries around the world to engage in entrepreneurship as a source of economic growth, many of which are in Africa.

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12:41

By the numbers: Communications Commission of Kenya Mobile & Internet Stats

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