Switching on: Africa’s vast new tech opportunity

A somewhat dated article on Africa’s technological rebirth which has been the subject of numerous posts in this blog and in other observant media and net channels for some while now, is still interesting in that the innovation and action found in African Cities which can be seen beyond the surface “noise”  that usually lmakes European and American observers cry out “hopeless” and look no deeper. The late 20th Century project by Rem Koolhaas’  Harvard Project on the City resulting in 2005 DVD of LAGOS which I only recently saw is a fitting contrast even though Rem points out in it how over the 4 years of their project they could see deeper into the City and saw how it was changing ,  By Pete Guest  on Wired.co.uk

In 2011, visitors to Africa looking for war, famine and pestilence have to dig a lot deeper than in the past. At Nairobi’s Jomo Kenyatta International Airport, hardened missionaries have been replaced by gap-year students clustered around iPads, and on the streets the bad old days have given way to another holy trinity: Premier League football, Toyota Hiace minibuses and cellphones.

Isis Nyong'o, Nairobi

Africa’s national economies have grown consistently over the last decade. Even in the depths of the financial crisis, GDP growth exceeded three percent: more than in any other region of the world. Improvements in security, Chinese investments and soaring commodity prices have all played a part in transforming the continent’s prospects.

Saheed Adepoju, Abuja City Photo Liam Sharp

Beyond macroeconomic factors, though, technology is driving profound changes to economies and societies across the continent. The hundreds of millions of mobile handsets and billions of airtime minutes only go some way to describe the scope of entrepreneurship that underpins Africa’s technological revolution. From mobile payments to telemedicine and advertising, there is a common pulse of innovation, driven by an irrepressible combination of aspiration and necessity. This is the new Africa.

How popular are mobile phones in Kenya?

Just ask the hordes of airtime vendors working Nairobi’s gridlocked traffic, selling scratchcards from garlands around their necks. The country has a population of 40 million. At the turn of the century, the number of mobile-phone users was around 200,000. There are now 22 million.

The devices have supplanted not just the country’s fixed-line telephony industry, but also the manner in which money is spent. Companies led by Vodafone’s mobile-payments giant M-PESA have filled the vacuum left by the moribund local banks in a country in which, according to the World Bank, around half the population live under the $1.25 (77p)-per-day poverty line. One such company is PesaPal, a web-and mobile-payment platform set up by Agosta Liko, 35, that integrates with Kenya’s main mobile-payment services.

M-PESA (M for mobile; “pesa” is Swahili for money) emerged from a joint project between the UK’s Department for International Development and local operator Safaricom. Its model was to use the existing network of mobile-credit sellers that had sprung up in petrol stations, general stores and bars across the country. People were already exchanging airtime as a way of transferring money. M-PESA formalised the value exchange, turning thousands of sales agents into micro bank branches and millions of mobile phones into wire-transfer services. Users can store up to 50,000 shillings (£350) in their account, with Safaricom taking a transaction fee of between 30 and 150 shillings whenever a user sends money. In 2010 there were 9.5 million M-PESA accounts, compared to 8 million traditional bank accounts in Kenya.

A 2010 Massachusetts Institute of Technology report said that 75 percent of all households with an M-PESA account used the service to store money. Its success has opened the door to an economy that is no longer entirely cash-based, sparking a wave of innovation from local technology entrepreneurs such as Agosta Liko.

Agosta Liko, Nairobi

When M-PESA was emerging, Liko was in the US, working on payments, wire transfers, fraud management and loans processing as a systems engineer at First Citizens’ Bank in Raleigh, North Carolina. In 2007 he took this experience home to Kenya to found Verviant, a software-services business. Here he saw that the emergent mobile-payments industry chain was missing a link. “Mobile payments are for transferring money to your grandmother or your children,” he says. “There was no world class payment system targeted at consumers. There are two million Visa-card accounts versus more than 16 million mobile-money accounts, so we built a solution that would allow any Kenyan to pay using mobile money and also allow Kenyan businesses to accept Visa payments from abroad.”

PesaPal aims to bridge the gap between mobile accounts and company bank accounts, in the process breaking down a major barrier in the development of ecommerce. It is already partnering with Zuku, the fastest-growing ISP in Kenya, as well as the Nairobi Stock Exchange, where the public can buy stock information using mobile credit, and, he hopes, trade stocks directly.

“Right now, Kenyans pay to pay, or pay to make payments. We want to do away with this.”

If anyone qualifies as a grandee of Kenya’s online ecosystem it is Joe Mucheru. Like many of his generation of entrepreneurs, Mucheru, 42, returned to his homeland after a stint working abroad — in his case, the UK — attracted by the untapped potential of the internet in east Africa.

“When I got my first installation of Netscape [in 1997] it came on a floppy disk with Netscape 1.0. It cost $1,000 [£620] for the installation, and the installer then went off with the floppy disk,” says Mucheru, now regional lead for sub-Saharan Africa at Google and office lead for East Africa at Google Kenya. There was government resistance, too. Much of the industry was still nationalised and there was unease over the proliferation of communication technology. “The president had banned fax machines; there was this whole idea that information being spread by faxes was dangerous,” Mucheru says. “[President Daniel arap] Moi had put out a decree that there was no email in government.”

In 1998 a new telecommunications act broke up the state monopoly over the sector and an infrastructure started to develop. The state-owned internet service provider Jambonet began to expand its coverage and lowered prices. “But sometimes there were seven-day timeouts when Jambonet was down,” Mucheru says. “The whole country had to wait for the internet.”

Mucheru, together with Njeri Rionge, launched Wananchi, which means “citizen” in Swahili. An internet service provider, the company pioneered “triple play” — TV, internet and telephone services — in Kenya. Business grew as the telecoms sector began signing distribution deals with international broadcasters to feed the local appetite for European football. (Last August the group signed a merger deal with Mitsumi Cable Vision and rebranded as Zuku.)

Africa Infographic by Wired

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2 thoughts on “Switching on: Africa’s vast new tech opportunity”

  1. As a person with a background in journalism, I find your blog right up my street, “Switching on: Africas vast new tech opportunity Urban …” I will keep checking for interesting additions to your blog,
    Thank you 🙂

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