January 28, 2013

The pros and cons of Kenya's role as technology pioneer and East African frontier market

Rural Kenyan schoolhouse, somewhere near Kisii, March 2012
Only two years have passed since the publication of the Emerging Africa series of articles for Dirk Knemeyer's GoInvo blog starting in February 2011. Since then I've had a much closer look at Kenya's current state of the art when it comes to internet diffusion, renewable energy and of course, the mobile platform technology. I spent most of the time from September 2011 to August 2012 in Kenya, immersing myself at the cutting edge of what tomorrow would bring for some of us.

The emerging global middle classes, that the OECD described as being very different from the middle class as understood in Europe, can however be said to be exemplified by the aspiring, ambitious Kenyan. Where everyone seeks to be the next president, and why not, they dream, after all, it was within one of Kenya's grandsons.

Just a quick *ahem* Google search on technology and Kenya brings to light such delicacies as Eric Schmidt, Google's own CEO, proclaiming Nairobi to be the next global tech hub (though I do wonder what it means that the visit is to Kenya after North Korea or are the trips alphabetically planned? ;p) and the groundbreaking ceremony for Konza high tech city on the outskirts of Nairobi. The scent of rain in the air that Will Mutua once sensed as he wrote A Quiet Storm is brewing on Afrinnovator's About pages only 3 or so years ago has become the sounds of a torrential thundershower.

Very quickly, Kenya has become the bellweather of tech innovation for Sub Saharan Africa. Though now I'd like to discuss the challenges acting as market forces upon the East African region.  If we take Kenya as the path where technology will trend towards in 1-2 years time for East Africa, followed by 3 or more for the rest of Sub Sahara, what is the downside of this framework?

The only danger that I can see would be that the other countries in the region do not ape Kenya's model without assessing which aspects and factors fit within their own cultures and which need adaptation for local needs and relevance.

Airtel Africa has already faced this problem after Bharti bought out Zain in 16 or 17 Sub Saharan countries. Not only does the Indian model not port over directly but each country really needs its own market creation strategy.

Segmentation of the vast and undifferentiated "next billion" is critical if we are to refine and improve our business models and market entry strategies. Unlike India and China where their "next billion" markets are in their own backyards, thus not entirely unfamiliar, Sub Saharan Africa's vast emerging middle classes are unique creatures in their own right, but for some similarities in household financial management. After all, its not fluke that 96% of all the mobile subscriptions across the entire continent is pay as you go or prepaid. And where better than Kenya, home of critical mass MPesa, that allows for testing innovation at enterprise and social levels, but with the caveat that results are not really generalizable.

That's the unpredictable aspect for multi-country plans based on just a local sampling here and there, unless they are in a unique situation like mobile phone manufacturers. Even for something as basic to the household as a solar lantern, business models themselves had to adapt to the local operating environment.

Kenya is easily the most competitive market in the region with a legion of savvy, informed and heavily networked afripolitans ready to voice their opinion on the world stage. Erik Hersman once wrote that if it works in Africa, it will work anywhere. The mobile operators of the EU are yet to figure this out but the one that does will create a whole new market.

Intel has taken the decision to launch their first smartphone called Yolo through an alliance with Safaricom while HCL Infosystems has brought in a range of Android tablets in the 10,000 Ksh price band. Will the Yolo do better than the IDEOS? Only time (duration of the battery ;p) will tell.

No comments:

Post a Comment

These comments are moderated for spam and offensive language