This is the second in the series of posts detailing the trends and common threads that I’ve learnt through interviewing a wide range of businesses operating in East Africa.
The East Africa Business Podcast is the weekly podcast that I’ve been running for the last six months. Right now we’re on episode 31 with more on the way, and so if you’re interested in hearing new episodes and checking out the archive, then hit Subscribe wherever you get your podcasts.
The post this week is looking at digital platforms.
Digital in general
My travels throughout the region have been based from cities, and so I have had a natural bias towards interacting with people comfortable with technology, and with disposable income to spend on it.
Nevertheless, in almost all of my conversations with people here, I have been struck by the ease at which people interact and adopt new technologies. Everyone has their family in the village on Whatsapp, and with all countries having ~50% of the population being under the age of 25, there is an inherent tendency for masses of the population to be craving the hottest new app.
These episodes are from the companies I spoke with that are premised on creating new routes to market using digital platforms.
“Proven business models need an African twist”:
I had a very interesting conversation with Martin from Mdundo in Kenya.
For the past four years he has building a music platform similar to Spotify across the East Africa region.
The natural question was “Why aren’t Spotify here doing this?” which opened up the discussion to how the roots of the region’s music scene meant the market dynamic was different to those in Europe and the US.
Mdundo believes that true sustainability comes from building a pan-African service: it has operations in 3 countries and users throughout the continent listening to the diverse, eclectic, and high quality musicians. You can too, by visiting their website (I’d recommend starting with Sauti Sol).
You can listen to the full episode here:
“Digital means (valuable) data is collected”:
Another business model that seemed like it could be applied in the region was that of booking services, a la ThumbTack, TaskRabbit and RatedPeople.
Adam and Johannes at Lynk explained how the informality of manual, and artisanal labour in the region was a real barrier for skilled workmen to build a reputation.
By capturing and storing the information of work that is done, as well as providing a layer of trust for consumers in an opaque industry, they are bringing value to a large section of the economy through digital means.
You can listen to the full episode here:
“People love to watch videos”:
When I spoke with Victor, who started Tango TV, I drew many parallels to the interview with Mdundo.
He is more or less looking to build Netflix for Africa, and we spoke about the challenges of signing up local content, the constraints of downloading MBs of data, but ultimately it was the fact that people want to be entertained was what came through.
Operating out of Tanzania, and signing up local Swahili shows, Victor was compelled to start the service after realising that no-one else in his family really “got” Game of Thrones.
We covered the media distribution landscape in Tanzania and the region, how the consumer treats MBs as a form of currency, and some of the more popular TV shows in the country.
You can listen to the full episode here:
“Remotely switching off devices increases its access”:
In terms of how new technology can radically change an industry, Angaza are in a prime position.
Whilst they admit that they are not the first to use it, their business is all around giving manufacturers of electronic products the ability to disable it if someone falls behind on repayments. Doing so means that people can use, say, solar lamps before they have the cash to buy it outright, opening up a whole new segment of customers.
The interview covers the trend towards “Pay As You Go” in the region, how connectivity affects their business model, and the general networks by which consumer goods are sold in the region. Like Lynk, it is bringing a digital dimension to a typically non-digital domain.
You can listen to the full episode here:
It also goes hand-in-hand with consumers using mobile money as a medium of currency. To learn more about this, you read this overview of how and why it works in Kenya.
Conclusion
The application of digital products and services is a global trend that is certainly taking root in East Africa.
There are many studies on the proliferation of smartphones in the region which naturally increases the capability of people to interact with digital goods. Most young East Africans I have spoken to have been keen to show off their latest app, and many talk longingly of wanting to build the next big tech company, invariably built as a digital platform.
That said, with technologies such as mobile money working on “feature” phones, sophisticated technology is by no means necessary to make an impact in the digital sphere.
From a wider perspective, national governments are also making efforts to build a digital-friendly environment within which enterprises, and their population can flourish. Rwanda has brought in policies to instill digital skills in the school curriculum, Tanzania is building its nationwide fibre optic “backbone”, and as a result, at a personal level, in all of the countries I’ve found it more reliable for me to make Whatsapp calls on 4G, rather than Wi-Fi.
Whilst there is no doubt a large allure of digital products and services, there are also questions about its timeliness in the region. Many developments are needed in the physical realm and with a lot of digital businesses “only becoming profitable at scale” there is then a need for external funding to bridge the gap to if/ when enough users adopt the technology. With a still-slow investment scene, this can be a challenge.
For now though, it is safe to say that huge potential exists for further digital products to be borne and adopted across the region by an engaged demographic with problems to solve.