Digital waves breaking across Africa – looking at the where and the what of this new landscape
6 October 2017
Nobody can really dispute that Africa is going digital. The only question is how fast and how wide the impact of digital is being felt. This week Russell Southwood reviews the evidence he’s collected over the last five years to give some preliminary conclusions.
In early 2012 Balancing Act launched a web TV channel on You Tube called Smart Monkey TV (1850 subscribers) to look at creators and innovators in Africa. 13% of the 850 videos I’ve shot have attracted over 1,000 views. The web TV channel was followed by two e-letters Digital Content Africa (2,000+ subscribers) and Innovation in Africa (1,500+ subscribers).
Over the five years I have interviewed over a thousand people and what follows is based on a mixture of those interviews and data pulled in from other sources. Throughout this time I’ve been trying to track the progress of Africa going digital and to separate out the hype from what is really happening. It’s a difficult task to identify what’s happening because it stretches across many different industries and the very particular circumstances of over 50+ countries on the continent.
In telecoms terms, it is clear that there is a slow but steady continent-wide shift to data. The impact of this shift varies enormously by country but it is now not unusual for mobile operators to report that 20-30% of the revenues are data (including SMS). Cheap smartphones have encouraged this shift and again penetration levels vary but are often around 20-40%.
Operators in countries at both the richer and poorer end of the spectrum report that 70-80% of data is used for You Tube streaming. There are now local caches in several countries for Google, Netflix and Showmax. Cloud delivery platform Akami also has a presence in several countries. For Netflix to have a local cache presence, industry sources tell me that there has to be over 12,000 subscribers in that country.
I track digital start-up user numbers. Yes, I know they are often exaggerated and do not usually state active users but even little white lies are revealing. With some exceptions, local start-ups rarely break the 50,000 users mark and most are in the 5-10,000 range. The big players tend to be internationally backed start-ups like Jumia and Uber and services that have been seriously promoted (and sometimes backed) by mobile operators.
The small African start-up’s lack of a marketing budget really does create a huge market gap that even creative uses of social media make it hard to overcome. One of a small number of notable exceptions has been Kenyan edtech start-up Eneza:
I still speak to people and hear people at conferences saying that Africa lacks the necessary content for digital services. If I was being snarky, I would simply say but what about the 20 pages of news I curate fortnightly on digital African content?
But perhaps again numbers are more convincing. One of Africa’s largest You Tube channel operators, Nigerian distributor Aforevo gets 120 million views a month. I spoke earlier in the week to a music label that told me that it is getting 60 million views a month. Indeed in a bizarre turn of events Aforevo contacted me when it was affected by the advertiser boycott of You Tube in May this year:
At this level of users, there are real revenues for the channel operators despite the low amount of revenue per ad view in Africa but the number of organisations and individuals at this level of views remains relatively small.
So the reality is that there is plentiful online content from a small number of countries but much less from the rest. The content big-hitters include: Nigeria, South Africa, Ghana, Kenya, Tanzania, Uganda, Ethiopia, Angola and some Francophone countries (mainly Senegal, Cote d’Ivoire and Cameroon).
Smaller countries have You Tube channel operators with views in the low millions But these kinds of views figures tend to be accumulated over several years and include a healthy contribution from diaspora viewers. Perhaps a better metric is actual subscriber numbers.
Nigeria has between 0.5-0.7 million subscribers to channels at the top end. Ghana has channel operators with subscribers between 41,000 (Stonebwoy) and 194,000 (Official Sarkodie) at the top end. At the lower end Guinea has subscribers at the top end between 5,000-10,000.
Social media has created new forms of media on the continent, competing hard with existing print media that has struggled to keep up. Most of the key African newspaper markets have attracted large online readerships but the revenues from online (usually via Google) have been tiny. Those managing to stay float – papers like the Mail and Guardian – have been forced to find new revenue streams:
But digital has also created the equivalent of a tabloid, popular press with things like Ringier’s Pulse and the Linda Ikeja blog but also new media challengers like Zimbabwean Nigel Mugamu’s 263Chat: The mobile phone – as Namibia’s Lucy K demonstrates – has become the way to tell the story:
But these successes can’t hide the fact that online advertising does not support the business model of specialist or niche publications. Big Cabal’s Seyi Taylor told me that despite reaching 200,000 people with Tech Cabal, the online advertising base alone will not support it.
African politicians have not been slow to grasp the significance of the Internet and social media and have simply shut down the Internet at difficult times at considerable cost to their own economies. On a more positive note, some are actually getting to grips with communicating with their citizens. Buhari’s social media person Tolu Ogunlesi is showing what can be done:
Digital advertising as a percentage of total advertising spend is growing. Recently in Namibia a leading agency told me that 10% was the benchmark for its clients but elsewhere this is more likely to be 5-7% despite the growing numbers online. This digital growth is eating at the edges of TV and radio spend.
So what does this mean for mobile operators and others in the telecoms and internet space? Mobile is the media and services delivery channel that comes close to having the penetration of radio. However, operators need to change how revenue shares and operator billing are operated if they want to build on this fact.
Digital advertising is potentially a new source of revenue for operators but they need to show some sign of understanding how it works. On the plus side, one pan-continental operator is building an online ad sales platform to compete with Google and Facebook. Given their almost monopoly positions in their respective fields, they need more competition.
Digital services (and payment) are becoming more popular but it remains a slow process. Uber has reported getting 100,000 users in Kenya in six months and the physical battles around the service in Kenya and South Africa show it is having an impact. Jumia and Konga in Nigeria have established an e-commerce bridgehead.
Konga’s numbers give some indication of its reality: it has a customer pool of 750,000 but 200,000 active customers. The transition that has to be made is from someone buying a phone as a one-off purchase to making more regular purchases. The launch of its food deliver service Konga Daily in Lagos is what it thinks will bring this about:
Much of the digital transition has been fuelled by the African start-up ecosystem. This has been funded by a mixture of 100% private investment, private investment with soft funding and donor funding. The more successful country start-up ecosystems interestingly include pretty much the same list of countries as produce digital content with some exceptions. It remains the case that a number of African countries are still too small in economic terms to support a full range of digital services but the picture is constantly changing.
The opening digital space is inspiring development organisations to use their funding to improve how services might be delivered. CIAT’s Andy Jarvis speaks eloquently about how digital changes will make Big Data services possible for smallholder farmers in Africa:
The telecoms industry in Africa – more than most industries – need to pay attention to access to energy and start-ups in this field have begun to deliver some early off-grid successes. This has pushed the boundaries of what rural Africans can expect to have: solar power has opened up access to mobile recharging, lighting, fridges and TV. One of these start-ups BBOX has around 200,000 users for its solar units and is one of four larger start-ups in this space:
All of the developments described above are things that will fuel the sale of data. Any operator concerned about where new revenues are coming from needs to have someone in their organization tracking these developments. That person or that team needs to be subscribed to some or all of the e-letters and channels below:
Digital Content Africa is a fortnightly e-letter covering TV and film, music, social media, media, digital advertising and other digital content and services. It’s essential reading for anyone interested in Africa’s digital transition. We have already produced 96 issues and these can be viewed on this link:
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