Hold on tight for Africa’s second connectivity revolution
From the iHub in Nairobi to the Co-creation Hub in Lagos, and from the HiveColab in Kampala to the BongoHive hub in Lusaka, the proliferation of information technology incubators across Africa is giving rise to a new generation of Internet entrepreneurs who are in the process reconfiguring the business landscape and building a digital continent.
The first generation of African telecoms moguls – s Phuthuma Nhleko of MTN, Mo Ibrahim of Celtel, Mike Adanuga of Globacom and Strive Masiyiwa of Econet – were the pathfinders who defied the sceptics and helped build the mobile operator networks that enabled Africa to leapfrog fixed-line infrastructure and move directly to mobile phones.
Now a new generation of start-ups is leveraging 2G and 3G networks, the advent of broadband via the marine fibre-optic and national backbone cables, and the proliferation of smart phones, to launch an array of applications designed to solve other infrastructure deficits in the finance, retail, power generation, agriculture, healthcare and education sectors.
Wider internet and smartphone access enabled tech start-ups to provide mobile banking services in remote rural communities where traditional bricks-and-mortar financial infrastructure could never reach. Now, it is facilitating the growth of on-line shopping portals able to reach millions of consumers. These are providing off-grid solar-powered lighting systems for hundreds of thousands of homes, equipping farmers with apps providing veterinary diagnoses, crop planting guidance and virtual market places, and even tackling the continental curse of counterfeit goods by checking the authenticity of medicines, seeds, cosmetics and motor parts.
Safaricom’s M-Pesa mobile payments product is easily Africa’s most widely-acknowledged ‘leapfrog’ application, which began with a few thousand subscribers in 2007 and now has 22m Kenyans – 70% of the adult population – making $150m-worth of transactions each month. But it is by no means the only such service: the World Bank estimates there are 90 tech hubs across Africa, which have given rise to some 3,500 tech-related ventures. These start-ups attracted $400m of venture capital funding in 2014, which is expected to rise to $600m by 2018.
Very few of these start-ups have so far attained scale, but tech giants like IBM, Google, Facebook and Microsoft, along with China’s internet and mobile phone value-added provider Tencent – whose WeChat app is now challenging the dominance of Facebook’s WhatsApp messenger platform in Africa – have recognised the continent is host to one of the world’s fastest-growing and most innovative IT markets, and are vying for a slice of the action.
In Nigeria, online shopping portal Jumia – founded in 2012, and now one of the country’s leading ecommerce websites – notched up more than 100m visits in 2015 in Nigeria alone. Founder Tunde Kehinde has since set up Africa Courier Express (‘ACE’), which aims to streamline the logistics of delivery for ecommerce companies, providing tracking and pay-on-delivery for ecommerce companies across the continent.
M-KOPA Solar, a Nairobi-based company that uses mobile phone technology to lease off-grid solar-power lighting systems in Kenya, Uganda and Tanzania, is one of Africa’s fastest growing solar energy providers that has used pay-as-you-go technology to bring power and light to more than 300,000 homes in the region; it is adding 500 new customers every day. Customers make a down-payment of Ks3,500 ($34.25), pay a daily fee of Ks50 via the M-Pesa platform, and if they keep up the payments for a year, they own the photo voltaic system, which is Ks20 cheaper per day to operate than the equivalent cost of kerosene.
Kenya’s iCow app provides farmers with three SMS messages a week – at a cost of $0.03 each – giving them advice on how to look after their cattle and poultry. Agricultural know-how in Africa has traditionally been passed from one generation to the next by word of mouth. Now, farmers can benefit from the latest advances in animal husbandry, which has helped trigger a four-fold increase in yields per animal. The iCow app has already attracted 160,000 subscribers, and is generating revenues of $748,000 a year, with millions more farmers yet to join up.
Ghana’s mPedigree app meanwhile offers those with a mobile phone, a pharmaceutical verification service to check the authenticity of medicines; fake drugs are serious killers, and account for around one-third of all medicines on sale. By texting the product code number to a central database, consumers are instantly able to establish its authenticity. The service is free to consumers, and mPedigree recovers its costs from manufacturers. The service is spreading rapidly across West and East Africa, and is now expanding into seeds, cosmetics and motor parts, where counterfeit goods are also a major problem.
The scale and range of technological innovation is extraordinary – from Nigeria’s Fashpa, providing updates on the latest women’s fashion, to Botswana’s Modisar, a cattle-tracking app, and from Uganda’s Yoza, a laundry service app connecting washerwomen to clients, to Nigeria’s Jobberman app, bringing workers instantly in touch with job vacancies.
Most of this innovation has taken place with rudimentary 2G and 3G technology, which is not sufficiently fast and reliable for more demanding applications. In addition, with costs for cellular data of around $5 per megabyte, most African businesses have been hesitant to embrace the full potential of the mobile internet.
But that picture is rapidly changing. According to the GSM Association, the mobile operators’ lobby group, 4G Internet-enabled technology accounted for 1% of Africa’s total connectivity in 2014, compared to a global average of 11%. But 4G connectivity is expected to grow to 6% by 2020, as more 4G spectrum becomes available. Moreover, sub-Saharan Africa is expected to add another 400m smart phones to the 100m already in use, over the same period. That combination of cheap handheld computing power and fast mobile connectivity, will be transformative.