Last month, The Cipher Brief explored the rise of mobile technology in Africa. To continue the conversation, TCB spoke with Tomi Ahonen, a leading consultant in mobile and former Nokia executive, to discuss his impressions of the African mobile industry.
The Cipher Brief: How would you assess the growth of the African mobile technology industry? What has allowed for this rapid growth (government policies, economic conditions, demographic factors, etc)?
Tomi Ahonen: The African mobile industry has in some ways benefitted from the lack of alternative solutions, whether in news media (newspapers, radio, and TV ownership) or in entertainment options and definitely in payment systems (cash machines/ATMs, banks, credit card penetration rates, and point-of-purchase stations). Once mobile became mature enough as a technology to enable basic entertainment (music downloads) and news delivery and payment (both via SMS text messaging), the uptake has been enormous simply because of the hunger for content and payment options that then fuelled a rapid and profitable ecosystem. When I compare the African innovation level in mobile to say that in Europe or the USA, it is far stronger in Africa.
In the most advanced markets, the problem is one of abundance. So much bandwidth and storage ability in the cloud are available almost for free, and processing power of computers, tablets, and smartphones is of huge capability, that developing solutions are often done in clumsy and inefficient ways simply because the 'cost' is not really felt. But in Africa, where access to the Internet is expensive and where electricity itself is not reliable, the needs of any digital services and solutions have to be built to run very efficiently, reliably, and on basic technology. The beauty of this all is, if it works in Africa, it will work anywhere else, whether rural India or mid-town Manhattan.
We often say of this industry that mobile is a young person's technology, and here Africa's demographics certainly have helped. A computer programmer fresh out of university will of course be doing software for smartphones or mobile networks, rather than some Linux coding for a mainframe computer in some big bank, or some apps for Windows PCs. Similarly, the needs of youth have driven many innovations, from mobile education solutions to first time mothers to pop music and movies.
TCB: Where do you see the mobile tech industry in Africa headed? Are there any threats to future growth?
TA: The futurist and mobile forecaster Chetan Sharma said last year that the golden age for mobile is only starting now. This, even though the mobile industry globally has been the fastest-growing giant industry the planet has ever seen, going from zero to one trillion dollars in annual revenues in only 29 years. We will soon cross the two trillion dollar annual revenues level, and this industry will go on to pass four trillion dollars in the next decade. So the big growth stage is still coming—the past has only been the trial-and- error part of the early years.
I like to point to my forecast from year 2010. If we took the most advanced smartphones of that year—the iPhone 4, or similar phones like the Nokia N8 or Samsung's first Galaxy or the Blackberry Bold—those smartphones cost about 600 US dollars (before local taxes) when sold without a contract. When we apply what is called 'Moore's Law,' which says that the cost of computing will decrease by half every 18 months for the same computing power, replicating the capability of the 2010 'superphone’ will only cost 10 US dollars by 2020 (including distribution costs and profit for the manufacturer). I do not mean to imply that Apple will sell its iPhone 9 that year for 10 dollars. But we will very likely be able to replicate the full technical ability of the iPhone 4—a 3G smartphone, with WiFi, 4 inch touch-screen, 8 megapixel camera and flash—and this amazing 'pocket computer' will only cost 10 US dollars, delivered to any African country (before local taxes), and running probably Android.
This means every single African who can afford to buy a phone today, by year 2020 will be able to buy a smartphone, with a very powerful camera, with a full touch-screen, with WiFi and 3G. It will change Africa even more than what basic Nokia phones with downloadable ringtones, SMS, and a very rudimentary camera did in the past years.
Some of the needs of Africa may propel new innovation and create potentially big export opportunities. One is electricity. I like to say that modern human needs are connectivity and electricity. As Africa is the continent where the need to get electricity is the biggest, it’s likely that the best solutions will arise from here. That will have a profound effect, not just on other countries with unreliable power grids from Pakistan to Bolivia, but also as energy saving and conservation innovations for the advanced 'Western' world.
Another area is collaboration and sharing. We have seen the early stages of the full power of 'communities' when they are digitally connected, such as with the Arab Spring. There are plenty of local examples also in sub-Saharan Africa, such as in election-watching and various disaster alerts. I think the maturing of the digital-social media 'generation' in how they collect, analyze, disseminate, and collaborate with information, from news to games, will only grow faster. And here again, Africa has a major leading role.
Eventually all growth will reach its limit, but I don't think there are clear signs of what might derail this industry in the near future. Where one area may reach its limit, so many others are still emerging and growing.
TCB: Are there opportunities for Western businesses in the African mobile tech industry looking forward? Where do these opportunities lie (m-banking, m-health, m-commerce, etc.), and which types of companies are best situated to expand into this market?
TA: First, you cannot succeed in Africa if you're not there. It is such a dynamic area in the most dynamic industry of the economic history of mankind. If you're not there, you will miss opportunities. Secondly, a Western business should not think for one moment that it can come and 'teach' the Africans anything about mobile or digital. It is the other way around. The worst mistake is to go find a recent start-up struggling in Silicon Valley, and bring it to Africa to show how it is done the 'American way.' That is a sure road to ruin.
Where are the opportunities in terms of service areas? I have not found any industry where mobile cannot help, so it would be pretty pointless to just list m-Healthcare or m-Education or m-Government or m-Banking or m-Retail. The problem for Western companies is, very likely, that when you arrive in Africa with the 'great idea,' you'll find several companies have already launched your idea locally.
TCB: What challenges may Western businesses face when trying to enter this market? What recommendations would you give to these businesses for achieving success in African markets?
TA: There are plenty of 'generic' African risks that any Western company would face that vary by country and region, anything from government corruption to local vandalism to wars or war-like conditions.
There are huge differences in local cultures, local languages. While French, English and Arabic will often get to a majority of the population, at least the educated part of it, illiteracy and extreme poverty are issues that need to be considered. I certainly feel that often a trusted local partner is a big help, and if that trust comes from previous collaboration, even better. There are also plenty of middlemen and companies, some which may seem good but actually are a form of corruption, others that are truly great and above-board. But be very careful. If the Western business can afford it, send a small team to a target country and set up offices there. Get involved, if possible, with the local universities related to your field, which often gives you access to competent, recently-graduated or about-to-graduate highly trained staff, who can help give that local knowledge.
