Inside the rise of mobile penetration, startups in Africa

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In Africa, where roads are often impassible and conflict has put whole swaths of territory off-limits, the Internet is playing a pivotal role in bringing people together.

With over 550 million mobile subscribers, Africa is more connected — by phone anyway — than Europe.

There’s a good reason why mobile phones have become so popular in Africa — they’re virtually the only game in town: people simply don’t have the wherewithal to buy computers or tablets.

Getting more people on the continent connected will require “a kick in the butt to make sure it moves a bit faster.” Those are the words of billionaire entrepreneur Mo Ibrahim. He’s ready to give that kick. He’s something of an authority on the subject, having founded a telecommunications company himself.

Mobile phones are already making daily life easier for many Africans. More financial transactions are being done by phone than in physical banks, Ibrahim points out — and no wonder; relatively few people have checking accounts.

Currently, two-thirds of households in sub-Saharan Africa have at least one mobile phone. But sales continue to soar — especially in countries where you’d least expect it. In Zimbabwe — nobody’s idea of an advanced country (with ruinous inflation and an autocratic president) — mobile penetration stood at 26 percent in 2008. Five years later it was up to 80 percent. Overall use on the continent is registering a 65 percent increase every year.

African entrepreneur Mo Ibrahim
African entrepreneur Mo Ibrahim

Sales of smartphones are predicted to outstrip mobile phones as early as next year. But there’s a downside: if you look at who’s manufacturing most of these smartphones it’s Samsung and Techno, a Korean and Chinese firm respectively.

So if the mobile business is so big, why aren’t African companies making the phones? Where for that matter are the African innovators that will pull the continent’s 54 nations into the global economy? Admittedly, Africa is still playing catch-up; while it has yet to form its own Silicon Valley it’s not because of a lack of interest or ideas or enthusiasm. “Increasingly, innovation began to ease mobility,” Ibrahim told the World Policy Journal, “Suddenly, it created a major social space to connect and do things.”

Many African start-ups are developing the kinds of platforms and services that are already taken for granted in the West but are new to Africa, as a small sampling shows — a pay-as-you-go cloud computing company (Angani); a mobile phone payment app (Snapscan); a self-powered mobile WiFi device (BRCK); an Uber-like service (ZapaCab), a shopping platform (M-DUKA) and a social gaming platform (ChopUp).

Asked to explain what’s holding African countries back, Ibrahim points to the lack of infrastructure. Companies aren’t going to be in a rush to invest in Africa if governments can’t keep the lights on because power generation is inadequate. And why ship products to countries when there’s no guarantee that they’ll ever get out of the ports because of red tape and corruption?

What would speed the integration of Africa’s 1.1 billion people into the global economy is a single market like the European Union. Most countries on the continent are very small. Why would a foreign company go through all the necessary hoops to do business in Burkina Faso and then have to repeat the process in Guinea where it has to comply with different regulations? (To be fair, West Africa has made a stab in that direction with the Economic Community of West African States — ECOWAS — which has a central bank and issues is own passports.)

But the fundamental requirement for any regional trade group is mobility. That means the free flow of capital, labor and goods across borders — a tall order on a continent riven by distrust, conflict and xenophobia. Even South Africa, one of Africa’s most prosperous countries, isn’t immune: in recent years, Zimbabwean migrants have been attacked by mobs fearful that their neighbors across the border were taking their jobs.

Mobile phones might not be able to extract goods out of the ports, but putting the Internet within reach of millions of Africans can go far to spur economic development. Economic growth alone, however, isn’t enough.

While countries like Ethiopia and Uganda have grown their economies and met most of the basic needs of their citizens like health care and education they’ve failed to “open a political space for the middle class,” Ibrahim told guests at a recent conference in New York. “They don’t know how to manage reform.” That’s to say, they can’t accommodate the legitimate demands of the people they educate nor provide enough jobs for them.

African kids being taught to use a computer
African kids being taught to use a computer

Although young Ethiopians aren’t crossing the Mediterranean in rickety boats seeking better opportunities in Europe, they aren’t staying home, either; instead, they’re heading to Saudi Arabia in search of work. “Half the population of Africa is below age of 19; it’s a young continent,” Ibrahim says, pointing out that 15 to 20 million young people enter the job market every year.

While young people can revitalize an economy by injecting new energy into it, they will give up hope and find other outlets for their energy if there aren’t any jobs waiting for them. “You end up going to fight for Boko Haram,” Ibrahim says, referring to the notorious Nigerian terrorist group.

No question that Africa has come a long way from when Ibrahim was growing up and radio stations and newspapers were under the control of the government. (He was born in 1946.) “If you wanted to buy a photocopier, you needed to get permission from the police. It was like a weapon of mass destruction… Why? Because information is dangerous, and the government thinks it must control it.” And now it can’t.

Arab Spring might not have been possible without mobile phones and social media. In Africa, Ibrahim says, many countries had already had their ‘Springs’ even if they didn’t receive much coverage abroad. “It did not come like a tsunami, rather it was more a succession of waves. We can see a lot of truly democratic elections in Africa in at least 30 countries — really peaceful transitions of power taking place now.”

When people who in the past were not able to communicate with each other are suddenly given a voice, they can exercise tremendous influence over public opinion. “And that public opinion can give rise, then, to action. And then suddenly, people go into Tahrir Square (in Cairo) or in Tunis, and it becomes a real democracy.” “Suddenly everything is being questioned.” Authorities who used to operate in the dark now find that their actions are being recorded by cell phone cameras. “You know you have to be careful what you do, because people can have your picture anytime. We’re all naked now in the light of this new social media. It forces people to behave better.”

During recent elections in Zimbabwe, for example, people used mobile phones to photograph results in each polling station so that they were able to compile their own tallies, making it almost impossible for the government to falsify the results. “Now with mobile technologies, everybody walking in the street is a radio station and a TV station and a studio. People take photographs and shoot videos, sending it on the web, sending magazines to their friend. Suddenly, there is nothing to hide anymore.” That’s certainly an exaggeration; governments still try to hide a great deal, it’s just that social media and mobile phones have made it much harder to escape accountability.

Good governance is a subject very close to Ibrahim’s heart. In an unprecedented attempt to quantify exactly how much progress the 54 African nations are making in terms of human rights, rule of law, economic opportunity and human development (health, education, etc.), he created the Ibrahim Index of African Governance (IIAG) in 2001.

Ibrahim calls it a “harvest of governance.” Regrettably, the harvest in this year’s basket is not quite as bountiful as he’d hoped. The countries in Southern Africa are among top performing countries and West African nations are not doing badly. But the state of governance in other regions leaves a lot to be desired. With the exception of Tunisia, much of North Africa has been engulfed by chaos in the aftermath of Arab Spring. With failed states like South Sudan and Somalia and Kenya mired in corruption, East Africa has little to boast of. Way in the back of the pack is Central Africa where a recent civil war in the Central African Republic, quashed only with international help, took the lives of hundreds of civilians and displaced over 200,000.

Greater democratization is being hobbled by strongmen like Mugabe in Zimbabwe, Museveni in Uganda, and Nkurunziza in Burundi, who insist on clinging to power by rigging elections or abolishing them altogether. To encourage leaders to adhere to democratic values, hold free elections and give up power voluntarily, Ibrahim offers a prize of $5 million every year. But often years go by when he can’t find any qualified leader to give the money to. (The last recipient was the president of Namibia in 2014.)

Mobile phones can make it possible to do banking or find out when the next bus is coming or plan where to have a good meal; with growth expected to be 4-4.5 percent this year — better than either the U.S. or Europe — they’re clearly improving the lives of Africans. More importantly, though, they’re giving them the ability to have their say — and their governments are beginning to pay attention. It’s not like they have a choice.

This story originally appeared in Digital Journal, by Les Horvitz. Copyright 2015. 

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