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The intensifying battle for Africa’s burgeoning tech landscape

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Monique Maddy

Contributor

Monique Maddy has spent her career as a technology entrepreneur working in emerging markets, including Africa, Asia and Latin America. She is currently founder and CEO of Ezuza, a mobile payments company located in Mexico.

Long gone are the days when Africa was disparagingly regarded as the White Man’s Burden. Today, Africa is the continent with the youngest demographic in the world, on the brink of a technical renaissance — yet the world’s tech titans are floundering to understand and gain a foothold in this market.

The scale and complexity of Africa’s technical landscape sits at the heart of the problem, and connectivity issues are particularly prevalent. Internet users in Africa represent only 10 percent of the total users in the world, despite representing 16 percent of the world population, according to Internet World Stats. And only 31 percent of the total population has access to the internet, which represents a penetration that is well below the rest of the world at 52 percent.

Africa’s technical future depends on widespread connectivity. As a result, both Eastern and Western businesses are eager to get Africa online. But for every proposed solution, myriad challenges spring up that are unique to the region.

For example, when Facebook’s co-founder and chairman Mark Zuckerberg announced plans to connect 100 million people in Africa through the now infamous Internet.org initiative, the proverbial can of worms opened.

Naysayers were quick to point out a lack of infrastructure, technical knowledge and disposable income to fund smartphones and data packages (not to mention the need to meet the continent’s diverse linguistic needs) would all hamper his ambitious goal. And there are concerns that the Internet.org initiative is a cover for Facebook-backed digital colonialism.

But Facebook is all too aware of these issues, which were highlighted in the recent Facebook-commissioned Inclusive Internet Index report.

The Free Basics app (aka Internet.org) is giving African users free access to a limited number of websites, WhatsApp and Facebook itself — without charging data costs. It works through partnerships with mobile operators (which are left to cover those data costs) and is now available in 63 countries, 27 of which are in Africa. Facebook’s partnership with the Airtel Africa mobile carrier in 2015 has certainly boosted its dominance in Africa.

While Facebook’s popularity in the region is growing, Google isn’t going down without a fight. It is focusing on improving Africa’s infrastructure and, in particular, its last-mile connectivity.

Through its Project Link initiative, Google is building links between undersea cables, ISPs and mobile networks. Its first metro fiber network rolled out in the Ugandan city of Kampala in 2015 and has expanded into Ghana, where it plans to build more than 1,000 kilometers of fiber in Accra, Tema and Kumasi. Project Link has subsequently evolved in the independent CSquared business and recently committed an additional $100 million to further its expansion in the African region. And that’s just one of a handful of initiatives Google announced in 2015 to bring the internet to a further seven billion people.

 

Facebook and Google are also fighting for connectivity over African skies. While Google announced plans for balloon-powered connectivity through Project Loon, Facebook’s plans to bring connectivity to Africa using satellite systems were left in tatters in 2016 after the SpaceX rocket carrying its payload exploded.

Such ambitious plans are laudable, but let’s hope they do not suffer the same fate as the Iridium satellite venture. The company filed for bankruptcy in 1999 after having spent $5 billion to build and launch its satellites and provide a worldwide wireless phone service.

The Iridium service was hit with several setbacks. It was viewed as too expensive for users, and mobile phone adoption was beginning to gain traction in the emerging markets. Also, the service would not have given users complete coverage and would not have worked inside moving vehicles, buildings and many urban areas.

This highlights a dangerous assumption that many Western companies tend to make when providing Africa with new technologies: that a watered-down service is better than no service at all.

Another oversight from Facebook and Google is that the same business models will work in Africa and Western nations. A prime example is the revenue models for both tech giants, which rely predominantly on online advertising. However, an ad-supported internet is unlikely to thrive in Africa due to a range of factors, including a lack of digital footprint for many consumers who still carry out most of their transactions offline in cash (with a few notable exceptions such as the widespread use of M-Pesa in Kenya, for example) and low disposable incomes.

While Facebook and Google do earn enough in the developed world to subsidize the growth of their user base in these emerging markets, this does not seem to be a sustainable business model.

So, we are left with a conundrum: How and when will the Western tech giants ever get a return on the investments they are currently making in Africa?

Eastern promise

On the other side of the world, China has become Africa’s most important economic partner over the last two decades. With the exception of Chinese telecommunications giants Huawei Technologies and ZTE (who have helped deploy the continent’s mobile networks infrastructure for almost 20 years), China is taking a more cautious approach to entering Africa’s technology scene. However, it could still beat Western technical businesses on two important fronts: cost and innovation.

For example, Tecno is a smartphone maker under the Hong Kong parent company Transsion Holdings. It supplies handsets geared toward African markets, with longer battery life, dust-resistant screens and handsets costing between $50 and $100. Tecno has grown fast, and according to Transsion Holdings’ website, its collective brands in Africa have a more than 40 percent market share in Sub-Saharan Africa. According to CNBC Africa, Tecno itself has a 25 percent share of Africa’s total smartphone market.

We’re also seeing Eastern businesses squaring up to Western rivals with Tencent’s dominant WeChat app, for example, now available in Africa as a direct rival to the Facebook-owned WhatsApp service.

However, I believe tech giants (whether from Western or Eastern locales) need to work closely with African businesses to gain a thorough understanding of the unique challenges and opportunities the continent presents. It’s not enough to land in Africa with a flashy launch and a product that’s completely unsuitable (and unaffordable) to the continent’s population.

We’re already seeing signs of increased collaboration from both sides of the globe. For example, China’s biggest e-commerce group Alibaba recently hit the headlines in Africa as its founder and executive chairman, Jack Ma, used his first visit to the continent to announce the creation of a $10 million African Young Entrepreneurs Fund. Under the scheme, the company will help 200 budding African entrepreneurs and fly them to China to learn “hands-on” from Alibaba.

 

This may seem like a drop in the ocean compared to the established education and training programs run by Western tech companies in the region. For example, Microsoft launched its $75 million 4Afrika initiative four years ago, Google runs its Digify program in partnership with Livity Africa offering a free three-month full-time course on digital skills, IBM funded a $60 million computer skills program and Salesforce.com is also a strong philanthropic force in the region.

However, Alibaba (along with China’s other internet giants Tencent and Baidu) is only just starting to extend its reach beyond China and, as it does so, it will be a force to be reckoned with. Its decision to dip its toe into African waters through an educational initiative is a shrewd move, compared to the heralded and somewhat elaborate projects some of its Western counterparts are trying to introduce to Africa.

Money matters

To use a clichéd phrase used all too often in the context of traditional aid given by Western countries to populations perceived as desperate and helpless in Asia and Africa, and for many years considered the White Man’s Burden: “If you give a man a fish, he will eat for one day. If you teach him to fish, he will never be hungry again.” In the 21st century, perhaps this concept deserves a digital makeover. While the context in which the saying has traditionally been used is quite patronizing, there is, after all, an element of truth in it, which applies universally, not just to emerging markets.

This is the lesson both Western and Eastern tech companies need to take into account when working in Africa. Innovation through collaboration is the best and only way to succeed in Africa’s technical landscape.

It’s also a premise that we’ve seen played out by Africa’s mobile payment platforms such as M-Pesa, M-Shwari and M-KOPA. These three are Kenyan success stories, where innovation is being fostered through incubator spaces such as iHub and supported by companies like GoogleIBM and Intel.

The secret to success in Africa is not just to hand someone a smartphone and hope they use it. We need a scattergun approach where technical and socio-economic constraints are addressed under one umbrella. There is more than one way to fish.

This may be more difficult for Western businesses than their Easter counterparts, as Africa, being an emerging region itself, tends to relate more to those coming from other emerging markets (like China) that understand the challenges the continent faces now and in the years ahead because of their own more recent and relatable journey toward economic development.

Africa is at a technical tipping point. To survive and thrive in this diverse and highly complex marketplace, we need businesses that are flexible and capable of adapting both their products and their business models, which can most effectively work with local companies and talent to develop and promote local content and digital solutions while leveraging the power of the smartphone and widespread connectivity.

As is the case in other emerging markets, the key to enduring success in Africa is education and innovation through collaboration. Not Manifest Destiny.

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