Africa contains some of the poorest parts of the world. But that only makes some of the continent’s e-commerce accomplishments all the more impressive—and worth studying by business owners everywhere.
African office workers and other entrepreneurs have managed to take relatively simple mobile-phone technologies and use them to build remarkably robust commercial systems.
The typical skilled tradesman in a big city like Lagos or Nairobi is likely to have an Internet presence as useful as any in a major metropolitan area in Europe or the United States.
The difference is that business owners in Africa don’t have complex Web pages, but rely instead on a highly evolved system of text messages. The graphics might not be as fancy, but the job gets done just the same.
“It’s all very straightforward. It’s just ‘Click here if you want to make an appointment,’ ” says Craig Holmes, a client director for IBM’s Middle East and African operations. “The systems they have developed have simplified commerce in a very basic way.”
Others working with African mobile business owners say those entrepreneurs’ innovations should be closely heeded by companies trying to do business there.
In the United States or many European nations, “simple channels are often too quickly thrown away for ‘the next big thing.’ In Africa, it’s in the unsexy technology spaces that you find most of the successful entrepreneurs,” says Erik Hersman, cofounder of Ushahidi, the mobile crisis and event-mapping platform and a developer of iHub, an organization that brings together mobile entrepreneurs and investors in Nairobi.
Whereas cellular service is well established in populous regions of Africa, Wi-Fi in homes, offices, or coffee shops is rarely found, even in big cities.
“I find it interesting how quickly people in the West write off SMS,” Hersman adds. “Sure, it’s much more expensive per byte than its data counterpart, but it’s what people have, and use, on a daily basis in Africa. We very well might see SMS services decline over the next two to three years, but if you’re building a service in Africa, ignore SMS at your peril.”
Mobile apps that use simple technologies to solve everyday problems—like making payments—usually do very well, Hersman said. This is particularly true in Kenya, where more than 14 million people use a service called M-Pesa to make transactions using mobile phones.
Holmes, who is based in Johannesburg, South Africa, is helping provide back-end services for Bharti Airtel, the Indian mobile operator that, along with several other big multinational carriers, is jostling for a position in the booming African mobile-phone market.
The job gives Holmes a perspective on how mobile commerce is evolving in Africa, where a less-is-more engineering aesthetic can be found everywhere. For example, farmers and fisherman use SMS to check on market prices in different villages.
And in Tanzania, IBM engineers designed a pharmaceutical supply-chain management system entirely using text messaging. The system keeps track of drug inventory levels in rural clinics, and allows health-care planners to get medicine into the field when it’s needed, with less opportunity for pilferage or other losses.
Since low-end mobile phones are quite inexpensive, many Africans have two or three of them, each powered by a different carrier. They’ll reach for the one with the cheapest service for whatever call they happen to be making, be it local, mobile, or long-distance.
Another variation on that theme involves phones that contain two or three of the Subscriber Identity Module chips that link a handset with a mobile service operator. These “multi-SIM” phones allow users to switch carriers without having to own more than one phone.
While low-end handsets make up most of the African market today, “smart phones,” especially those using the Android operating system, are growing in popularity, especially with the recent introduction of lower-cost models like the Ideos, from the Chinese maker Huawei, which was recently selling in Kenya for $80.
Nigeria already has smart-phone adoption rates closing in on 20 percent, and the figure is expected to reach 50 percent in a few years, Holmes says. This guarantees that more sophisticated mobile commercial applications will appear alongside the widespread SMS-based systems.
Other parts of the African telecommunications scene are also impressive, such as the widespread use of mobile phones for simple person-to-person money transfers, something that has yet to take off in the United States.
“Some people seem to think that Africa doesn’t want to innovate, but all I have seen is a great spirit and a tremendous desire to experiment and build an ecosystem that will benefit everyone,” Holmes says. “Africa has very specific characteristics, and one of the most important is a passion to get things done with what they have in hand.”