ISSUE NO 4

What follows is a news update on my African trip (Zimbabwe, Zambia, Kenya and Uganda) for Balancing Act. If you’ve been sent this and previous news updates and they’ve bored you to death, let me know and I’ll take your name off. What follows are impressions mixed with bits of hard information and occasional estimates. Sometimes first impressions or estimates are wrong so let me know if you think I’m "off the mark" at any point. Any feedback/ideas much appreciated. This version includes factual amendments mailed to me and interesting additional points that appear in double brackets.

• Web site content

Alongside North America and Europe, there are very few web sites. For example, Africa Online in Zimbabwe hosts 88 web sites and has 140 corporate customers.Whereas the web in the "north" grew out of academics and techies and the corporate world caught up later, in Africa the corporate world is leading the way. Much of what exists is functional, first-generation, company "brochureware". Not surprisingly many web sites are tourism-related, advertising things like safaris and hotels.

In what is at present a small market, sectors like NGOs (more or less equivalent to the voluntary sector in a domestic UK context) will be a substantial part of the market: many are multinationals and have an obvious set of requirements that follow from this status. For example, it is estimated that there are 400 registered NGOs in Kenya (the largest by size of economies of the countries visited) , including the regional HQs of many orgs like World Bank, WHO, etc. One NGO told me that it was getting 500 "hits" a week but that most of these were coming from the US.

Wherever I went I asked people to recommend web sites that had what they considered was good content or design. Other than people commending their own sites, there was a degree of embarassement that not many examples sprang to mind. Nonethless there is a steady growth in both interest and sites. One web designer reported that he was getting an enquiry a day about designing web sites, mainly from companies.

More complex uses of the web are constrained by bandwidth availability. ZBC, the Zimbabwean state broadcasting company is unusual in offering a version of video streaming but there is no internet radio or developed web content alongside the state controlled or private sector broadcast companies. There is no MP3 music content. (The words "no" and "first" are always dangerous ones to use in these circumstances. Tell me if I’m wrong).. In part the limitation is one of what might be imagined. There are none of the heady airware developments that seemed to provide the creative fuel that actually later gave birth to real content and uses in the UK and Europe.

(A repondent from Uganda writes: You should check out Radio Bridge Overseas Zimbabwe. Their URL is http://members.vavo.com/radiobridge and they're producing audio content for the internet.

Most of cities and large towns in the countries visited have internet cafes. For example, there are 7 internet cafes in Harare. They are often mostly used by tourists.

Everyone is concentrating on the provision of infrastructure (connectivity) and web design and content is not always at the forefront of people’e minds. Some quite significant discussions are taking place amongst the larger players about content development but these have yet to have much impact on the market.

• ISPs

Most countries had a number of ISPs and more continue to set up. However there was a common pattern in all the coutries visited. ISPs start out with enough bandwidth capacity and in a local context provided a reasonably good service. This attracts lots of customers who migrate from other ISPs and the capacity and service goes down. A new ISP starts up and the customers start to migrate again. Many of the ISPs have little financial backing and quite small subscriber bases. Interestingly in Zimbabwe, one of the more dynamic mobile franchise operators (Econet) has recently brought several ISPs that it has merged to produce a larger ISP. Interesting things may follow?

There are apparently three continent-wide ISPs but I only came across one: Africa Online which is backed by London venture capital company African Lakes. It is rapidly expanding its country coverage. Country-by-country the state of play is as follows:

Kenya: 4 main ISPs. Africa Online. I-Connect, Form-Net (?) plus 2.

Zimbabwe: 28 ISPs, most are small except for Africa Online, Internet Unlimited, the consolidated company put togther from purchases by Econet and Samara (purchased by M-Web).

(One respondent wrote: In Zimbabwe, the availability of universal dialup access should not be overlooked. This is provided by the national telephone company, the PTC, through franchise holders at very low cost. A single access number can be used anywhere in the country for the cost of a local phone call + 20%.)

Zambia: Three main ISPs. Zamnet (with e80% of the market), Coppernet and Zamtel. Africa Online about to open there. Zamnet was one of the first ISPs on the continent and came out of the University of Zambia’s Computing Dept.

Uganda: 5 ISPS (?). Infocom, Infomail (U) Ltd, Mukia Internet Service and Swift Global (U) Ltd.

The number of subscribers is usually in the low 000s but this does not completely describe levels of usage. As anyone e-mailing to Africa will know, a number of people often use a single address. The access offered through universities and companies again increases the overall levels of usage. The question is how many people use a single address: best estimates put it at between 3-5 people using one subscriber address. Even on this kind of ratio, the markets are comparatively small at present. Opinion was divided (crudely) between the larger players who believe that growth wiil continue and many of the smaller players who believe it is peaking. To be fair, even if it has peaked, the larger players will continue to grow through new country openings and and acquisition.

On a country by country basis I was given the following estimates of subscriber levels:

Kenya: Africa Online (10,000) Plus 25-30,000 for its e-touch service (see below). 200 communications centres. There were 100,000 PCs in Nairobi 2 years ago.

Swaziland: Africa Online (1000 subscribers)

Zambia:e 5500 subscribers.

Zimbabwe: 12,000 -15,000 subscribers. Apparently traffic goes up during the school holidays. ISPs like Samara (3500), Data Control (3500-4000) and Africa Online. Balance between the rest of the ISPs. M-Web (c 20,000 subscribers in South Africa) have just come into the market from South Africa and appear equally as well funded as Africa Online. Most believe they will drive down current access rates. They also own Digital Satellite TV through which they will be able to promote their service.

Uganda: Swiftuganda has 2,000 subscribers and they are one of the smallest. The estimate would be more accurate at around 6,000-8,000.

Africa Online’s e-touch service is providing an interesting way to expand the market. It offers a free e-mail address and fixed fee usage. It has been launched in Ghana (through the Post Office) , Kenya and Tanzania. It is in part aimed at the "briefcase businessman" but has attracted much wider usage, especially as a means of people keeping in touch with friends and relatives overseas. The impact of the African diaspora in future developments should not be underestimated.

The main barriers to wider access are phone rates and bandwidth. A number of people have websites hosted outside the country because of access problems.

(A respondent from Uganda writes: Both Infocom and Swift Global are now pushing wireless connections. We're seriously considering it. The initial investment is high (about $1800), but after installation you pay a flat rate of $250 per month for the internet service and on-line time, which is about half of my current phone bill alone. The wireless connection also eliminates the bandwidth problems. Within the past month, the wireless equipment has been marketed heavily to all the large office buildings in Kampala. Many are buying, from what I hear.)

Although Governments are keen to promote the internet and e-commerce, there is (with certain exceptions) very little detailed understanding at a ministerial or policy level. So there is little common ground between the developers of the web and government and this affects the way in which issues of infrastructure are addressed.

(On another continent entirely, a respondent reported on friends who have spent the last two years setting up an internet business in Brazil. They got out of the ISP business early, and are making their money now by designing and hosting websites for corporate and government clients. Their servers are all in Miami even though their customers and programmers are all in Brazil. They have just completed their first round of VC funding in the states and look towards an IPO (don't they all!). However, it struck my respondent) as a reasonably solid model that could work in other parts of the Third World.

• Designer index. Shift from producer to service economy

Most of the economies of the countries visited might be characterised as producer economies. Consumer markets are not characterised by a wide range of high spending consumers and the service sector is by European standards small. There is not the frenetic competition for consumers attention. The markets are relatively small and there are not many brands competing. Government controls competition both directly and in directly and as a result the level of local competition is low. In terms of the local economies, the national telcos are "cash cows" and although privitisation is begining it has not yet produced major change except in Uganda. For example, access rates in Kenya are about twice what they are in Uganda whereas the respective size of the economies would suggest that the reverse would be the case. With a national monopoly on bandwidth, internet entrepreneurs come against bandwidth problems that are hard to shift. It’s a bit like paper rationing for UK publishers in World War 2.

The lack of competition means that key skills are less developed or appreciated. Writing and broadcasting are subject to a high degree of state control, even when in private hands. Design often thrives on competing in contested markets. Although traditional craft design is ever present, its modern equivalents are not usually highly regarded. For this reason as I went round I asked how many designers there were in each country as this will be a key skill in the next phase of of the development of the new economy in African countries.

Zimbabwe has a designers association, GRAZi that has about 40 members. It also used to have a Webmasters Association with about the same number of members but it seems to have fallen into abeyance. Since the current crisis in the Zimbabwean economy, a number of webmasters seem to have left the country.

Kenya was the most developed with between 1-200 designers. It is a relatively large sector including major ad agenciesand 2-3 design schools. One company reported 50-60 applicantsevery time it advertised a design job. By contrast, there were not more than 5-10 designers in Zambia and Uganda and some of these were often involved in other activities.

• Telephone systems.

The most notable thing about the land based telephone system in most of the countries visited was its low level of functionality and its vulnerability. In Zambia there are large hoardings offering rewards for informing on those who steal copper cable. It goes into bracelets among other things. While we were in Kenya, thieves stole the connecting cable to a major new exchange causing what is never a terribly robust phone system to "crash" in large parts of the country. These thefts are probably what are jokingly referred to in NGO circles as the "informal re-allocation of resources."

There are problems with bandwidth and general reliability of the line in Zimbabwe, Zambia and Kenya but much less so in Uganda. Calls simply don’t go through or all lines are engaged. For example in Zambia users often switch off graphics when using the web and lines cut out with alarming frequency. To get over the high access rates in Kenya a higher education consortium has negotiated a package of lower rates with the national telco. Because of the vulnerability of landlines (to extreme weather and theft), the use of mobiles is growing rapidly and the number of mobile users is/will (depending on where you are) overtaking/overtake landline usage. In Kenya the regulatory function has recently been separated out from the national telco and a number of mobile franchises offered, several covering rural area. Given the costs of PCs, it is not hard to imagine that the next generation of mobile phones with e-mail and internet access will be very popular.

• Governance and Govt issues

Corruption is an issue. It was reported in the Zambian press that the last Nigerian military dictator has salted away 650 million US dollars in a Swiss bank account. One business person in Kenya remarked that "Government in Kenya is bankrupt now that the politicians have finished looting it."An IMF team was visiting Kenya at the time of my visit to negotiate new loans to the Government and there was a lively debate in the press about the impact of corruption on the effective running of government. In the countries visited, I did not experience the street-level corruption reported in places like Zaire but was told frequently of backhanders paid when Government contracts were let. Since the development of the infrastructure of this new media economy will frequently involve national telcos controlled by politicians, this will remain an issue.

• E-commerce

There is much talk of e-commerce but not much sign (beyond the odd web site) of it taking off. The banks are reluctant to provide the financial cover and credit cards are offered on a two-tier basis: local and international. Large parts of the economy function almost exlusively on barter or cash and credit is not widely available to individuals. E-commerce will take off with those companies that already have in place reliable fulfillment sytems. The value of forex (foreign exchange) in controlled economies like this will make it particularly attractive to businesses of all sizes. Setting up systems (like e-souk) that would allow micro-businesses to present themselves credibly and efficiently in North America and Europe has the potential to exert an enormous impact on how businesses might develop.

• Project ideas

I spoke to a number of people who are interested in developing pilot projects with Balancing Act and these will develop (or not as is the way with exploratory discussions) over the next year.

• Conclusions

Whereas before I went out to Africa everyone I spoke to was pressing me about the difficulties of the lack of infrastructure, I came away feeling that (however creaky) it is in place and can only improve. Agencies like Oxfam rightly contrast the costs of supplying this infrastructure with the need for funding things like fresh water supply. However the technology can’t be "uninvented" and Africa will have as stronger need to be connected as other parts of the world.

The overriding need is to develop design and content that will support things that people will want to use.

Kabissa is a Balancing Act project.
For further information about Balancing Act and its pilot projects, contact Russell Southwood on southwood@boyden.demon.co.uk or ring him on +44 171 720 5993.