Africa Insights

5 sectors where mobile is dominating Africa

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As the penetration rate approaches levels close to saturation in developed markets, mobile growth is increasingly focused on the developing world: by 2020, 80% of all smartphones will be located in emerging markets. Mobile technology plays a leading role across those regions, tackling a range of socio-economic challenges that the western world is not facing right now. For developed countries, mobile is the natural evolution of technology. For Africa, mobile technology means digital inclusion and access to information that creates a real globalization.

With more than 40% of Africans earning less than US$1.25, the scenario of owning a PC has always been truly cost prohibitive for them, thus paving the way for mobile tech to grow. More and more competitors are jumping on the opportunity to sell mobile devices on the continent, causing a significant drop of the average selling price of smartphones. Nowadays, most smartphones cost no more than US$100, which can still be way too expensive in places like Malawi, where people earn an average of US$21 per month1.

Many companies and organizations are stepping into the African market with more aggressive pricing strategies: in March 2015, Orange announced a partnership with Alcatel and Firefox to launch a sub-US$40 smartphone in Africa, in June 2015, Chinese-based vendor Xinwei Telecom launched mobile phones in the sub-US$20 range in Malawi and, since then, many global vendors like Google showed their intention to lower the price of their devices to meet the market’s reality.

Truth be told, the biggest remaining challenge for new customers in Africa is not the price of the devices themselves but the lack of access to affordable data plans.

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According to the World Bank, a country's capacity to absorb and benefit from new technologies depends on the availability of more basic forms of infrastructure. The majority of unconnected people in Africa live in rural and geographically remote areas and, for mobile operators, the cost of rolling out and maintaining network infrastructure is clearly higher than the potential revenue coming from those low-income populations. However, those customers are the ones who would benefit the most from the digital inclusion that internet provides, such as: greater economic opportunities, that generate a reduction in poverty and hunger, improved access to healthcare and education services, increased empowerment and opportunities for women, stronger connections to the rest of the world, and much more. This is all supported by studies that suggest that a 10% increase in broadband penetration, in developing countries, can generate as much as a 1.35% increase in GDP.2

African countries are looking for new ways to improve the affordability of mobile services and extending network coverage: network sharing, government support, national broadband planning and alternative technologies are some of the possible solutions proposed to eliminate this coverage gap.

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By the end of 2015, 4.1 billion people had no access to internet. By 2020, over 3 billion people will still remain offline, nearly all in developing countries. 3Achieving universal connectivity is thus a global challenge that will require the collaboration of many stakeholders through innovation and investment.

Despite all the limitations, African entrepreneurs are not simply sitting and waiting for the connectivity scenario to change in their countries. They have been able to leverage the best technologies and knowledge to solve global problems that the rest of the world is not even aware of.

1. m-Health

M-Health, defined as the use of mobile and wireless technologies for health, has become a popular means to fulfil the needs of the population, particularly among underserved regions.

The World Bank reported that there were more than 500 active m-Health projects in 2011 alone. Worldwide, the use of mobile devices for health may soon account for as much as US$60 billion a year in goods and services, according to estimates by McKinsey & Company and PricewaterhouseCoopers.

Companies like mPedigree are now running m-Health solutions that are changing the lives of millions of Africans.

According to the World Health Organization, about only 50% of Africans have access to essential medicines and the situation is worsened by the weak regulatory capacity of African governments, such that about 30% of all pharmaceuticals now in circulation are either counterfeit or poor quality ones..4

In 2005, in an attempt to help African farmers who grow organic food, Bright Simons led a team of PhD students to implement a solution for that market using mobile technology. While facing some challenges with it, he understood that the same technology could tackle the problem of counterfeit medicine. That’s how mPedigree was born, a system that empowers consumers to instantly verify, with a free text message, whether their medicines are safe and not counterfeit. mPedigree is now expanding in several countries such as Ghana, Nigeria, Kenya and India, while its technology ensures that critical products reach consumers in the right conditions, protected from counterfeiting, diversion and tampering.

Medic Mobile uses text messages to provide cost-effective support to community health workers in rural areas. In a recent pilot in Malawi, 75 workers using the system were able to save 2,048 hours in labor and US$2,750 in transportation costs, doubling the capacity of tuberculosis treatment programs in as little as six months.

South African startup Vula Mobile was born from an idea of Dr William Mapham while working at the Vula Emehlo Eye Clinic in rural Swaziland. He experienced first-hand the difficulties faced by rural health workers when they need advice from a specialist. Vula started only with ophthalmology referrals but the team soon realized that many more specialities were needed. The platform now also counts with specialists in cardiology, orthopaedics and burns, connecting general health workers in remote areas with other health professionals in hospitals via a mobile app.

2. Fintech

Mobile money is delivering financial inclusion to the population, particularly in Sub-Saharan Africa, where 19 markets have now more mobile money accounts than bank accounts, and the number of adults with a mobile money account grew by 10 percentage points, reaching 34% in 2015.5

The World Bank Global Findex data reveals that in 13 countries, all in Sub-Saharan Africa, at least 10% of adults are using mobile money, with Kenya showing the highest level of penetration, at 58%. Nowadays, one in three mobile connections in Africa are linked to a mobile money account, and there are two particular regions showing impressive results: East Africa has the highest level of penetration, 55%, while West Africa achieved the most impressive growth as the percentage of mobile connections linked to mobile money accounts there increased 6%, to reach 19.6%.

Zoona is the perfect example of how African entrepreneurs saw an opportunity to create value in the mobile market. As Mike Quinn, CEO at Zoona, states: “Zoona was born from an idea in a text message”. Created in 2009, Zoona is an African mobile money platform that allows unbanked consumers to have access to money transfers, bill payments and other financial services. A couple of weeks ago, Zoona reached US$1bn in transactions and, despite their initial focus on Zambia, they already managed to expanded successfully into Malawi. “As an African business that came up with an African solution to an African problem – we’re thrilled to reach this milestone”, says Lelemba Phiri, Zoona’s CCO.

Born in 2002, Cellulant is another mobile money transfer company succeeding in Africa. It all started with “US$3,000, a credit card and a business plan drawn on the back of a serviette”, according to Ken Njoroge, co-founder of Cellulant. The company now operates across 10 African countries and aims to expand to another 13 in the short run, already connecting 40 banks, 200 merchants and 44 mobile network operators.
One more taking the African mobile market by storm is Paga. The startup was founded in early 2009, on the simple belief that the ubiquity of mobile phones can be leveraged to bring financial services to all Africans. The mobile payments service closed a US$13 Million series B funding round just last year and has now a partnership with Uber, following their goal of making payments accessible for all Nigerians.

3. Agriculture

Agriculture is the largest economic sector in most African countries and remains the greatest opportunity for economic growth and poverty mitigation in the whole continent, creating employment and contributing about 17% to the Gross Domestic Product (GDP) and 40% to exports. Despite this, the sector has been in decline for over 40 years now and Africa is currently the only region where food production has been dropping steadily, something that affects tremendously the 26% of Africans who are underfed. African startups, like iCow and Modisar, are keeping in mind the conclusions of The World Bank regarding the relevance of agriculture for the continent’s development: GDP growth generated by agriculture is up to four times more effective in reducing poverty than growth generated by other sectors. 6

Created by a Kenyan farmer, iCow is an SMS and voice mobile app, providing a variety of products under a subscription service to help farmers enhance productivity. iCow’s objective is to increase farms’ productivity through access to knowledge and experts and to encourage the development of a younger generation of farmers.

Seedstars World Gaborone 2015 Winner, Modisar, is also helping farmers by providing a new way for them to manage their farms. Farmers in Botswana have a livestock management application where they are able to track their farm records, cattle herds, farm costs and sales.

In one year, WeFarm, a Kenyan sharing platform for small-scale farmers in rural communities, has managed to get more than 8.5 million interactions on the platform and announced its expansion plans to Tanzania and the Ivory Coast. Launched first in Kenya and then Uganda, the platform allows farmers to ask questions via SMS shortcodes and receive answers from other registered users.

4. Employment

There are over 1.5 billion people in vulnerable employment, representing nearly half the global workforce. For the International Labour Organization, the situation is significantly worrying in Sub-Saharan Africa, where over 70% of workers are in vulnerable employment, against the global average of 46.3%. 7 Most people in the region work on low-skilled jobs, in unsafe working conditions, earning low wages and facing a lack of training opportunities, as well as long working hours.

Duma Works was created by two US entrepreneurs after a short stay in Kenya, where they saw many young people struggling to find jobs. Duma Works is a job matching phone platform, accessible for basic phones via SMS, in which employers gain access to the most appropriate candidates and avoid spending time with applications from unqualified or unsuitable candidates. This company proves not all stories of entrepreneurship in Africa begin with locals.

In countries like South Africa, people also face the ghost of the high unemployment rate. The country's unemployed has increased to 26.7% in the first quarter of 2016, the highest it's been since 2008.

That is the reason why Shafin and Anish decided to make use of the power of mobile to create an app and a service that helps people find jobs, thus decreasing unemployment in South Africa. Giraffe is a mobile application that, on one hand, enables businesses to hire medium skilled staff faster and cheaper than any other recruitment network and, on the other hand, connects job seekers to these opportunities through their cell phones.

5. Solar

Africa’s power sector is significantly underdeveloped. In 2010, only Algeria and Mauritius had an electrification rate of over 75% and, in countries like Uganda and Malawi, it hasn’t even surpassed 9% yet. McKinsey&Company forecast that electrification levels will only reach 70 to 80% by 2040, given the challenges associated with getting the power to where it needs to go – it takes on average 25 years to progress from a 20% electrification rate to an 80% electrification rate. 8If people don’t have access to electricity, where are they going to charge their phones?

Juabar produces solar-powered kiosks in Tanzania that can charge people’s cell phones and other small electronic devices. These kiosks are instant businesses for entrepreneurs who open up a pop-up solar shop in their community and they create a clean energy charging location closer to home, which also serves as an access point to other types of clean energy products.

M-KOPA Solar, another company operating in this market, has already connected more than 330,000 homes in Kenya, Tanzania and Uganda to solar power, having raised an impressive US$31.45 million in funding last year. Each 8W battery powered-system they sell comes with three light bulbs, mobile phone charging capabilities and a solar-powered radio. M-KOPA Solar estimates that, in Uganda alone, there are 5.5 million homes off-grid, with most of these still relying on kerosene for lighting.

African entrepreneurs are creating cutting-edge mobile technology

In regions like Africa, mobile phones are leapfrogging an entire generation of technology (and their infrastructural shortcomings), giving the users access to faster and more efficient solutions. According to the World Bank, 68% of Kenyans have no access to grid power, while around 95% are mobile phone users. It’s the confirmation that more and more people in Africa are carrying out their daily tasks using mobile phones. It is also the proof that success does not always come from disruptive technology, but from the way we tap consumer habits.

 

 

References:

  1. GNI per capita, Atlas method (current US$), World Bank
  2. Colin Scott (2012): Does broadband Internet access actually spur economic growth?
  3. State of Connectivity 2015, internet.org by facebook
  4. The Africa Health Transformation Programme 2015-2020, World Health Organization
  5. Availability of mobile money services, GMSA
  6. eTransform Africa: Agriculture Sector Study, The World Bank
  7. World Employment and Social Outlook: Trends 2016
  8. Powering Africa, McKinsey&Company

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About the author

Ana Almeida

Ana Almeida

Web researcher of both serious and odd things. Diving into Entrepreneurship and fascinated by the dynamic startup ecosystem.