By Tawanda Sibanda
Being African can be depressing at times. Every day I read discouraging stories about hyper-inflation in Zimbabwe, piracy in Somalia, and massacres in Congo. Even an eternal optimist cannot help feeling that the continent is cursed. Perhaps we are doomed to countless decades of suffering and underdevelopment; perhaps the dreams of our forefathers will not be realized in our lifetimes. I have good news! The picture is not all gloom. There is a new, unprecedented wave of technology sweeping across the continent that threatens to propel Africa into the economic limelight of the 21st century. 300 million networked devices run from Cape to Cairo connecting people, spreading information, empowering the poor, and bringing in billions of revenue and foreign investment … the PC? No. The laptop? No. The $100 laptop? No. I am talking about the mobile phone.
It is a little known fact that Africa has the largest growth rate of cellular subscribers in the world, nearly twice as fast as Asian markets. In 1998 there were 2 million phones on the continent: today people estimate the number to be around 300 million. Africa’s average cell phone penetration is only 20%, so there is still room for continued growth. More impressive is the range of uses these cell phones have found in Africa. In this blog article I am going to explain some of the new mobile startups that have emerged on the continent. The ideas presented are truly innovative. First, let’s quickly analyze how this mobile revolution began.
The conditions in Africa in the early 90s were perfect for the emergence of the cellular phone. Less than 1% of the continent’s population was connected by landlines controlled by inefficient government-owned monopolies. A few clever entrepreneurs realized that a) erecting base stations for cell phones was considerably cheaper than running cables through Africa to increase landline penetration b) 99% of the continent had no access to phones. And thus the revolution began, first in South Africa, and into East and West Africa. The major players were:
MTN: MTN was first granted a cellular license in 1993 in South Africa and quickly grew a large local customer base using innovative pay-as-you go business models. From 1997-1999 it expanded to Uganda, Rwanda and Swaziland. In 2001, MTN acquired a license to operate in Nigeria in the country’s much-storied GSM spectrum auction. As of December 2007, MTN has 61.4 million subscribers (16.5 million in Nigeria alone).
Vodacom: Vodacom was the first cellular network in South Africa. In its first 6 months of operation, it was the fastest growing network in the world. It now offers service to more than 34 million customers in South Africa, Tanzania, Lesotho, Mozambique and the DRC.
Celtel: Celtel was originally founded by Sudanese-born Mo Ibrahim and began operating in 1998. It was acquired in 2005 by MTC (now Zain) a Kuwaiti operator and spans 15 countries with 20 million subscribers.
Safaricom: Safaricom is Kenya’s leading mobile network operator with over 8 million subscribers. Formed in 1997, it is jointly owned by the UK’s Vodafone, and Telkom Kenya.
These are just four of the pioneers of Africa’s mobile revolution. Other big names include GloMobile, Vodafone Egypt, Cell C, Meditel and Econet Wireless. If you get a chance, read the stories of how these companies were founded. You will definitely be encouraged by the integrity, intelligence, and persistence of the industry legends, including Sudan’s Ibrahim and Zimbabwe’s Masiyiwa.
Presently, Africa has somewhere in the region of 300 million cell phone subscribers, mostly on 2G GSM networks. Companies like Vodacom and MTN are enjoying annual revenues of 5-10 billion dollars. This is BIG business. According to http://eprom.mit.edu adding 10 mobile phones per 100 people boosts a typical developing country’s GDP growth by 0.6 per cent.
Most of this growth comes on the back of innovative companies that have formed around Africa’s cell phone boom. In America, where PC penetration is around 81%, people do not use their phones for much more than calling each other. In fact until recently, text messaging was not very popular in the US. In Africa, PC penetration is only 4%. Cell phones are Africa’s PC. Let’s take a look at some of Africa’s novel cell phone applications. I have categorized the innovations into five groups: innovative pricing, financial transactions, health initiatives, political initiatives, and social networking.
Innovative Pricing: Over 90% of African subscribers use pre-paid services. Within this payment model there are some novel developments:
- Vodacom offers a “reverse” charge service that allows a Vodacom customer to call a contract customer and have the charge billed to the receiver if the caller has no “air time”
- Several carriers offer a “call me” service – free text messages that a caller can send requesting a call back from the receiver.
- Celtel recently established the world’s first cross-nation unified network. A Celtel subscriber can move freely across Celtel’s 15-country network in Africa without worrying about roaming costs!
There has also been some innovation from handset manufacturers. Vodafone and Nokia provide feature-rich phones at ultra-low costs (US$10-45).
Financial Transactions: Around 80% of Africans do not have a bank account. Recent developments in mobile technology may change that. In Kenya, M-Pesa is a service offered by Safaricom that allows customers to conduct financial transactions using a mobile phone. A customer hands cash to a registered M-Pesa agent and receives confirmation via SMS. That person can then pay a 3rd party by simply sending them money via a text message. The recipient cashes the money at an agent by showing the received text message and relevant ID. Customers can withdraw cash from their virtual bank using special M-Pesa ATMs.
WIZZIT a similar South African company has taken this m-banking idea further. WIZZIT customer, in addition to being able to send money to each other using cell phones, receive a debit card that they can use like any other Visa card!
Social Networking: Like their Western counterparts, African young people like to socialize. A South African company, MXit, is capitalizing on this common human desire to “network”. MXit provides free instant messaging software that runs on GPRS GSM phones with Java support. People can send person to person messages for as little as 1 South African cent (compared to 75 South African cents for SMS messages). MXit has 9 million users, 230 million messages sent/received per day. The next Facebook perhaps?
Health Initiatives: Project M in South Africa aims to overcome AIDS stigma by sending messages in 3 languages, English, Zulu, and Sesotho, to millions of South Africans every day. An example message: “HIV+ and being mistreated by your family or friends? For confidential counseling call AIDS helpline”. Each of the messages points to the national AIDS helpline. How do they send millions of messages like this for free? Well, remember those “call me” messages I mentioned earlier? It turns out 30 million of these messages are sent per day! The African providers have agreed to embed Project M’s positive AIDS messages in the free “call me” texts. Sounds like an incredible advertising platform…
Political Initiatives: In recent elections, mobile phones have helped keep African governments honest. Radio stations send correspondents to various polling stations and the correspondents call in the results as soon as they are published at each station. Information spreads rapidly, preventing possible tampering with the results later on.
As you can see, Africa’s mobile explosion is incredible. But this is just the beginning. By 2012, it is estimated that 485 million people in Africa (or 38% of the population) will have cell phones. Furthermore, broadband is coming to Africa in the next 2 to 3 years in the form of enhanced 3G GSM networks, WiFi networks, and even WiMax. So what does the future of mobile technology look like? Here are my big bets:
- E-voting: Wouldn’t it be cool if people could vote privately and confidentially from their phones, without having to wait in some horrible line? Furthermore, wouldn’t it be great if votes in Africa were electronically counted and verified by a secure platform?
- More m-banking: M-banking is a really cool idea. Most of the big banks in Africa require a minimum balance and have exorbitant transaction costs. These new m-banks are light-weight, inexpensive and provide people an easy way to keep their money safe. Imagine how cool it would be in Zimbabwe to be able to pay with your phone, instead of lugging a wheel barrow of cash!
- Advertising: With few TVs, not enough print media, and limited PC penetration, Africa’s biggest advertising platform could well be the mobile phone. Expect to see novel advertising platforms emerge in Africa that operators can use to sell “advertising space” to emerging pan-African organizations.