AFRICA’S ENTREPRENEURIAL ICT OPPORTUNITIES - IDEAS WAITING TO HAPPEN

19 April 2002

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Some ICT ideas in Africa are waiting to happen. Others will take a leap of faith or imagination. There’s no magic formula for producing a new idea but you do need to know where to go looking. Russell Southwood looks at the kind of ICT ideas being developed by Africa’s ICT entrepreneurs.

 

The growth of the use of ICT across the continent has lead to literally hundreds of new businesses and has probably (mainly through telecoms) been responsible for one of the strongest streams of external investment. Whole new categories of jobs have been created. There are now several thousand people working in cyber-cafes whose jobs have been part of this growth across the ICT sector. With the perfect vision of hindsight, some of these opportunities were more obvious than others. Nonethless it is worth reviewing the successes and failures of the first wave and looking at the type of ideas entrepreneurs in the field are coming up with.

 

The growth of mobile telephony has been one of the continent’s staggering successes. It provided the entrance point for many new businesses: some - like Strive Masiwya’s Econet - are regionally based but are already aiming at wider horizons. Once the appeal of mobile telephony was established, it became a relatively easy investment proposition. The key numbers - likely subscribers in a population size, cost of delivery, etc - are if not predictable, at least relatively easy to "guesstimate".

 

Another similar field - although much less profitable - has been ISPs and cyber-cafes. With the exception of Africa Online, few of these businesses have been able to "roll-out" a local success in one market into others. The barriers to business operating across the continent are still too great. The lack of a capable operational management cadre is still too limiting. But without business entrepreneurs who can learn lessons across more than one market, the horizon of those involved will remain parochial.

 

Although what happened in the developed world is not a good guide to finding opportunities, it does provide a useful starting point. Businesses in Europe and the USA were looking for ways of reducing business costs by experimenting with ICT technologies. At a consumer level they created internet banks and budget airlines that only sold over the internet. In the back office, they installed server based systems that aimed to make business processes cheaper. These changes have relevance for those businesses in Africa that are either part of a multinational supply chain (eg flowers, high-margin vegetables) or whose operations differ little from those in the developed world (eg banks).

 

At this level Africa has been a slow adapter. Why? There are a number of factors. Many of these innovations were capital-intensive and high-risk. In a sector like banking (even in somewhere like Kenya), there was not enough competition to force these innovations into being. Often the markets are not big enough to generate the returns from the scale of capital investment required. One of the continent’s software pioneers - Jyoti Mukherjee of Software Technologies - recalled the incredulity of many potential customers when she first started talking about server-based software. Nonetheless she proved to be ahead of the wave and has steadily built a business based on its adoption by both the public and private sectors.

 

With the exception of South Africa, the continent does not possess the well developed consumer service markets that fed the dot-com boom: the idea of an internet pizza and video home delivery service would be absurd in Bamako. But South Africa has spawned a considerable number of internet-based businesses that almost direct replicas of their US or European counterparts, particularly in the field of e-shopping.

 

So what are the new ICT ideas waiting to happen? Perhaps it is helpful to try and put the possible contenders into three broad categories:

 

  1. Those that come from a close engagement with an existing market. The type of idea that flows from "people keep asking me for X (X being some kind of better service) and I think we can provide it".

 

  1. Ideas stolen from elsewhere, either on the continent or the developing world. The adoption of internet booking by Kenya’s Flamingo Airlines (see Web News below) owes much to the UK operation EasyJet but if they can make it work, it will be a first outside South Africa. The B2B site e-Sokoni (covered in issue 105) was a straight lift of ideas from the developing world but specified in a way that reflects the realities of the African business environment.

 

  1. Visionary "mind-leaps" by the kind of people who are good at "seeing round the corner" to the future. These are the kind of ideas that Africa needs but finds hardest to take a risk on. There’s little tradition of this kind of entrepreneur: most make money from trading (often importing) or farming opportunities.

 

The entrepreneurship workshops run by Balancing Act asked participants to come up with ICT ideas that could be made into businesses: these provide a useful "sounding board" for ideas in the making. Several common ideas emerged. The idea of a cyber-cafe or ICT services centre in a rural town came up time and again in different forms. The idea of rolling out the kinds of services currently only available in large towns or cities reflects the coming second wave of internet implementation: it has already begun to happen in some places and we know of several people working on it.

 

The second common set of ideas was a company supplying connectivity and related services to schools. This relied on Government creating a market by putting money into equipping schools. This seems a much less likely proposition as successful networks of wired schools (for example in Namibia) have tended to rely on public-private partnerships with companies supplying in kind. But perhaps it may be possible with a combination of donor money and government commitment and resources.

 

The two most promising ideas were a franchise operation offering existing cyber-cafes commonly sourced services and a GPS tracking system for trucks (particularly those carrying petrol). The first idea came from people in the Cyber Cafe Owners of Kenya and reflects the lack of core business skills amongst some of those who have chosen to become cyber-cafe owners. It provides a way of getting strong business systems, a form of common branding and offering jointly negotiated bandwidth. Doesn’t it sound a bit like Africa Online’s e-Touch operation? Well, yes but a bit of competition is never a bad thing. The GPS tracking system for trucks allows owners to know where there trucks are and make sure errant drivers are not siphoning off part of their load.

 

It works with easily obtainable technology and the benefits to the customer are are very clear. This need to focus on how the product or service might benefit the customer is all too often forgotten. No-one can afford technology for its own sake in Africa. Nevertheless as Victor Senye of the Botswana Development Corporation found, all too often ICT entrepreneurs start by selling you the "features of the technology involved" rather than the potential benefits to the customer. An entrepreneurial idea using ICT has to (in the jargon) to "leverage" the advantage of technologies. It has to make a business process cheaper or offer a new or improved service to the consumer.

 

So what will be the ideas of the future? Well let’s roll the dice and see a few:

 

- The most widely distributed device in Africa will be the mobile phone in all its variants. This has to be the basis of a range of products and services that make it work harder and respond to people’s needs. There are already a range of ideas in play in terms of content: market information for farmers, traffic jam information for city dwellers (see In Search of The Business Model below) and sports information for the football-mad.

 

- Related to the above. Wireless technologies offer endless opportunities that respond to the difficult geography of the continent.

 

- There’s already several attempts across the continent (most notably Afripa) to create a Smart Card. There are already several cards (for mobiles and the internet) that users can recharge at ATMs and by phone. How great is the distance between this and a card that can make the continent’s time- consuming transactions (for example paying utility bills) easier? Isn’t this the core of an African "pay-as-you-go" version of the credit card?

 

- Leveraging technology in business processes. Large parts of the multinational private sector are 3-5 years behind in this respect and there are interesting "catch-up" opportunities.

 

- Offering e-transactions via agents: the user goes to the local cyber-cafe to order something. The cyber-cafe owner is the agent for the credit transaction and guarantees it. In reverse, a member of the African diaspora can order goods for a relative. There remain obstacles but who said new business ideas are easy?

 

- Cyber-marketing tourism opportunities to the independent traveler. The smallest guest house and tour guide can offer their services to the relatively wealthy American or Dutch traveler not interested in package holidays.

 

Africa lacks people who are prepared to think creatively about using technology: they exist but they are too few in number. It needs to find ways of encouraging this next wave of ICT entrepreneurs to make a difference to how business is done and in so doing also begin to change how life is lived on the continent.

 

 

CORRECTIONS

 

NOT YET MADE IN BENIN

 

Your article titled "MADE IN BENIN - PROMOTING PRODUCTS ON THE INTERNET" contains incorrect information about the project. The URL is incorrect, and actually is not registered to anyone. You may want to check and correct this information.

 

Lawrence Anireju. Wilbert

 

Response: Apologies. The story came from the Beninese ICT e-letter Orita (more of which in a forthcoming issue) and it seems that the site may go online in the future but is not as yet operational. We’ll have to wait until the future catches up with the present...

 

INDEX

 

 

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