Open Innovation Africa Summit – The end of the beginning offers new opportunities for entrepreneurs but roadblocks remain

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Sponsored by Nokia, infoDev and the Government of Finland, this week’s Open Innovation Africa Summit (OIAS) in Nairobi focused on how to create the ecosystem that will help develop services and applications for the mobile Internet. Russell Southwood attended and used it as an opportunity to see where things have got to since that last event 18 months ago.

Eighteen months is a long time in Africa in terms of Internet development.Eighteen months ago was almost the point that large-scale use of Internet began to become apparent, particularly social media. Facebook numbers began to grow rapidly from that point and continue to do so. MXit numbers on the continent have also shot up outside South Africa. Venture capital companies like Tiger Global and Sequoia Capital have made significant bets on tech companies on the continent. There are now 22 tech incubator spaces on the continent engaged in the process of trying to breed successful, new companies.

But the obstacles to the creation of a functioning mobile Internet ecosystem remain. Eighteen months ago I wrote a report after the first event that said:” Mobile operators have to decide whether they are “content guys” or not. In the medium term, it matters less what the decision is and more that they simply have clarity. In our view, mobile operators are not “content guys”: if they were, they would know something about how to develop content and not deal with it tactically through SMS aggregators as deals. There is currently no intelligent “content publishing” function in most operators’ structures. So the key issue for the success of data revenues is: how can you create a compelling, financially rewarding ecosystem to generate apps, content and services that users want more of?” Nothing has really changed.

There were no mobile operators at this OIAS event and you rarely see them at any of the mobile web events on the continent. Their channels to receive new content are narrow (both in terms of staffing and launches) and they are holding back content and services development. So if you are a developer or entrepreneur in this space you either have to assume that you find a way to go round the mobile operators (the mobile web but it has far fewer users with handsets to access it) or that you will find a way to deal with them. As we will see later, neither approach presents easy options.

Perhaps for this reason, this OIAS was a much more practically focused event than last time, where people grappled with this central roadblock along with wider issues like reaching the bottom-of-the-pyramid customers; getting Government to use this emerging means of communication and media; and providing finance to create new services and applications.

Mercifully the event had less of the “build a tower with straws and plastic cups” exercises and was a very nourishing mixture of high-level plenaries with good speakers on key issues like leadership and small team-working in streams. You might not like all parts of the programme but all the right people were there and the conversations were rich and rewarding.

The highlight for me was the leadership speakers. Patrick Awauah launched a private not-for-profit university in Ghana (Ashesi) because he saw that African education was based on rote learning and did not produce people who could analyze problems and solve them. Fred Swaniker (also a Ghanaian) travelled the same road and launched the African Leadership Academy. He wants to create a network of 6,000 African leaders and the Academy’s intake is the process for achieving this goal. Each intake gets to access a small VC fund to create companies. There is perhaps some irony that two of the continent’s most articulate leadership speakers come from a country in need of incisive leadership in the ICT field.

However, the stand-out presentation was from Yves Morieux, Boston Consulting Group. He warned Africa not to accept the “poisoned seed” contained in the phrase best leadership practices. He described with great subtlety the awful consequences of trying to respond to the complex requirements of the 21st century. At the heart of this overwhelming complexity was the matrix organization.

He described a car manufacturer that had 5 functional areas and five horizontal responsibilities at the international level and that at regional level there were a further 5 functional areas and 5 horizontal responsibilities. Little surprise that company surveys showed staff members spending 40% of their time writing reports and 30% of their time in meetings.

A Demo event was held where 12 companies got the opportunity to present their company’s products and services and people voted for what they thought was the best one. The entrants included: Umuntu Media (virtual pinboard); M-ganga (a recording system for community medicines); MoMaths (education); Nokia Education Delivery; MyShop (running a small business on a smartphone); WetteIndeApps (Ushahidi-style social network platform); MaxMalipo (payment terminal); Snapplify (content delivery for mobile platforms); M-Shop (as it sounds); MyOrder (ordering platform for businesses); Uhasibu (cloud-based accounting for things like petty cash); and EGG-Energy (portable rechargeable batteries). The winner was Namibian-based Umuntu Media run by Johan Nel.

I took part in the Mobile Information Society Stream that focused on trying to overcome some of the obstacles to delivering mobile services and applications. The team looked at how to monetize mobile content. The ways listed included: mobile income split on SMS; advertising revenues (through companies like inMobi); virtual currencies (like MXit’sMoolah); apps sold through app stores; sponsored sites (like the Guinness football site in Nigeria); and content syndication. The sad truth was that where the income split was favourable (through app stores), there was unfortunately far fewer users with appropriate phones. At almost every turn, the income split with mobile operators (70/30 or 80/20) was the issue on all the other routes.

The team decided that an industry lobby , a mobile content and service providers association (representing SMS aggregators, media and developers) should sit down and negotiate with mobile operators to improve both routes to market and income splits. It would pioneer a Young Developers scheme that would allow those in the scheme to receive a far better income share to offer them some encouragement. Afrinnovator’s Mark Kaigwaagreed to take on the difficult task of trying to get one off the ground in Kenya.

This was one of a whole slew of ideas that were presented to the plenary session at the end of the event. Rather too many of these were about exchanging information and setting up networks (as if these did not already exist) but nevertheless there were good ideas, including a number to improve the financing of entrepreneurs and start-up companies.

For Africa to be successful in this area many things need to happen but two stand out above the rest:

1. The mobile content roadblock described at the beginning of this article needs to be changed in some way. Mobile will not become the powerful media it has the potential to be without this occurring. Africa’s mobile operators may yet live to regret not taking a greater interest in this problem.

2.    A venture capital company needs to invest in an African company and sell it on at a good profit. The more times this happens, the more the continent will attract interest from elsewhere.

•    To follow the exchanges about this news, you need to be on Twitter. Follow us on @BalancingActAfr

New on Balancing Act’s You Tube Channel:

Bosun Tijani, Cocreation Hub in Lagos talks about innovation and social entrepreneurs

Jesse Oguns, blogger at o TeKbits talks about ICT innovation in Nigeria

From the previous week on Balancing Act’s You Tube channel:

Samantha Fleming, Afrosocialmedia on NGOs using social media

Dare Okoudjou, CEO, MFS Africa on selling mobile life insurance and the potential for mobile health insurance

Johan Nel, CEO, Umuntu Media on the launch of Mimiboard, an online pinboard for Africa

Roukaya Kasenally, Director of Comms, AMI on its new mobile news apps incubator

Ofer Ronen, Sales Director - East Africa, GilatSatcom on doing business in South Sudan

A special for Balancing Act readers:

Erik Hersman, founder of Kenya’s iHub in conversation with Russell Southwood, Balancing Act about the successes and failures of ICT4D:

Part 1:

Part 2: