Technology Evolution and Revolution in Africa

Chances are you have never heard of the company Huawei.  Founded in 1988, this somewhat secretive Chinese company has become the fourth largest telecoms equipment and service company in the world, just a few billion in revenue behind Nokia.   Huawei, with Chinese handset manufacturer ZTE, have prime access to China’s $59 billion 3G market that continues to grow exponentially.  But, as with other Chinese firms, Huawei’s global aspirations in the 1990’s took them to Africa to build the growing telecom infrastructure.  The industry, led by Bharti Airtel and other innovators determined to tap into the raw market potential of the African consumer, grew in part due to the physical infrastructure built during this period.  Judging from the fierce price wars raging across continent, the investment turned out to be a smart and profitable venture.

Huawei has built up much of the 2G and 3G infrastructure in East, West, and Central Africa, and supplies the hardware for most of the USB modems in Africa.  Now, it has developed a Android smartphone called the IDEOS, which is selling out of stores in Kenya.  At less than $100, including $25 of free airtime, it is the cheapest smartphone on the market.   This is in a country where 40% of the country lives on less than $2 a day, yet the cellphone penetration is now at 63% majority of the money is moved by MPESA, the mobile money service run by Safaricom, the biggest telecom in Africa.

For the last few weeks, I have been working out of shared working space for software developers and entrepreneurs called the iHub.  It is the beating heart of the Nairobi tech scene; a place where young smart developers, engineers, and business development people come together to collaborate and raise the bar.  Last week I had to move from where I was working because the “Open Data Evangelist” from the World Bank came to the iHub to give an impromptu pitch to the Kenyan software developers to develop applications to keep tabs on government spending and corruption.  To tap into the tech scene of Nairobi, people come to the iHub.

In this environment, surrounded by Android developers, it would’t be unreasonable to assume that the IDEOS phone is going to revolutionize Kenya, if not all of Africa.  A Google Android phone with 3G wireless internet that is affordable for the typical African consumer will do more for productivity, communication, information transfer than any other technology innovation on the market today.  And, given the rabid levels of competition within the telecom sector in Africa, the price point of the IDEOS phone is the high mark – it can and will come down as more and more companies enter the fray.

The IDEOS phone has been very successful for several reasons:

The $100 Android phone has likely been a hit in the East African country due to the following factors:

Its affordability made it within reach of Kenyans, giving them the option of having a cost effective phone with premium features. The phone runs on Android 2.2 with a touch screen, has up to 16GB storage and has the ability to be transformed into a 3G Wi-Fi hostpot that can connect up to 8 devices. Currently, Kenyans have access to all these features and more for a hundred dollars or less.

In addition, its strategic partnership with leading Kenyan telecommunications firm, Safaricom as the phone’s main distributor and marketer also likely helped facilitate its fast adoption.

At present, most cellular phone users in Kenya use  feature and low end phones. IDEOS’ fast adoption rate in the country could hopefully boost smart phone adoption rates by making it accessible to Kenyans who had previously been priced out of the market.

These reasons make a lot of sense, as they would in any free and developed market.  But it is important to remember this is Africa.  C.K. Prahalad, the famous management thinker, wrote Fortune at the Bottom of the Pyramid, which discussed the incredible market potential offered by the poor and low-income classes in the developing world.  His book and subsequent work drew attention to the vast opportunities that exist in countries with a low per-capita GDP but a high population levels, particularly when they are concentrated in urban slums, as in Bangladesh, India, Nigeria, or Kenya.  At the time of the book’s release in 2004, mobile penetration in Africa was less than 10%, and a cell phone might cost several hundred dollars, before even buying a plan.  Data was out of the question, of course, as it was for the rest of the world.

But mobile communications took off, and did so in the face of some most credible prognosticators who thought that any cell phone access, much less cheap and ubiquitous continent-wide coverage, was a fantasy.  In fact, Prahalad, the “base of the pyramid” visionary who saw profit potential where others saw a basketcase, had this to say about telecommunications in Africa only two years earlier in an article titled “Serving the World’s Poor Profitably” from the September 2002 edition Harvard Business Review:

It’s true that some services simply cannot be offered at a low-enough cost to be profitable, at least not with traditional technologies or business models.  Most mobile telecommunications providers, for example, cannot yet profitably operate their networks at affordable prices in the developing world.

That article is almost exactly ten years old, written in the wake of the Internet bubble and at a time when Africa countries were recovering from deadly civil wars in Rwanda, Sierra Leone, and Liberia.  If Mr. Prahalad were alive today, I am sure he would appreciate that, only a decade after he expressed doubt about an African telecom sector, a Chinese manufacturer of telecommunications equipment had partnered with a technology giant from Silicon Valley to develop a phone that offers high-speed internet access outside the urban centers at a price point the middle class can afford.

But this is the story of Africa, or, at the very least, Nairobi and the other burgeoning urban centers around the continent.  I am a biologist by academic background (though somehow I ended up across the world as a business analyst for a chain of schools).  Stephen Jay Gould, the legendary evolutionary biologist, developed a theory called “punctuated equilibrium,” which maintains that evolutionary change occurs rapidly, in geologic terms (i.e. a million years is short), followed by long periods of of stasis, or equilibrium.  On a macro-scale, the theory explains why evolution of the organism occurs suddenly (the movement from water to land, for example), as opposed to in a progressive, linear fashion.  Applied in a cultural and social context, the theory might explain something like the technology and mobile revolution in Africa, with the caveat that the period of equilibrium is in the past.

For decades in Africa, communication was slow or non-existent, information was tightly controlled by autocratic dictators, which kept their populations in the dark about the deep corruption and injustice perpetrated on their watch.  Most of the people were poor, making it nearly impossible to provide basic human services, like sanitation and adequate health care, or profitably provide access to financial services.  Remember that C.K. Prahalad’s concept of “fortune at the bottom of the pyramid” was considered to be breakthrough innovative thinking by all but a prescient  multi-nationals and sovereign investors like China.  And that was in 2004! Now, the continent is wired.  Everyone has access to financial services through M-PESA and the other mobile money providers.  Information is accessible through basic mobile phones and the next generation of super-cheap smartphones that are likely to become ubiquitous in the next five or ten years.  A continent that once had a dearth of information transfer will soon have instant access to Google, Wikipedia, Facebook, and Twitter.  The revolutions in Egypt and Tunisia wouldn’t have been possible without mobile phones and the Internet.  Now, Kenya’s government – by most indicators one of the most corrupt in the world – has posted all of its data online for any knowledge-hungry developer to tap into.  E-commerce, mobile commerce, and app development are growing exponentially.  Africa is now home to some of the fastest-growing economies in the world.

It is this biologist’s opinion that Africa is moving from a period of equilibrium toward an evolutionary jump, with technology as the catalyst for systemic change.  The paradigm has shifted, and the deep and broad telecom infrastructure has laid the groundwork for a revolution.  Africa’s technological evolutionary paradigm will be different.  It skipped the land line and went straight to the mobile phone.  It skipped the desktop computer and adopted the laptop wholesale instead.  The community bank became irrelevant with the creation of branchless banking in Kenya and other countries through Africa.  In our modern world where cartography seems about as relevant as sanskrit or alchemy, much of the continent is not even mapped.  Fortunately, Google MapMaker allows residents to map their own communities, effectively crowdsourcing a massive undertaking very simply using technology.   And just two weeks ago, Huawei, the Chinese manufacturer that triggered the smartphone revolution, released the IDEOS tablet PC, only a year after the release of the iPad.  The evolution here moves quickly, as it builds on existing innovations from the developed world and adapts the technology to fit the African context, which is, in many ways, unique.

I bought the Huawei IDEOS phone after a week in Kenya.  I have never owned a smartphone, and wanted to understand how this phone that everyone is talking about is going to change the game.  I went to three stores – it was sold out at the first two – before I could buy one.  It is fast, it easy-to-use, and the law of technology pricing says that the inevitable trajectory points down and down.  Being here feels like being in ground zero at the start of something big, and, insha’allah, I will continue to chronicle the tech-driven transformation that will define Africa for the next decade.

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About Josh

"Josh Weinstein is a visionary. I read his blog every day." - Bono
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