About a week ago I embarked on a personal mission to better understand the East African tech and startup scene respectively. My goal was to talk to as many local stakeholders as possible and all in all I got 11 meetings with local startups, developers, expats, investors, initiatives (Internet.org), incubators and coworking spaces throughout the week.
This is the first part of a series of articles about my impression of East Africa.
Emerging countries are solving problems differently
One of my key take aways is the common misperception of the West when it comes to digitally emerging countries. Let's take mobile money & banking as an example.
In Western markets, if you would want to accept cashless payments in your shop you would install a POS terminal or use services like Stripe to accept online payments. You know that your customers use credit cards and have bank accounts, the only question is how to connect these two.
However, having a bank account is an exception for the vast majority in East Africa, but almost everyone has a mobile phone. So why not use this existing infrastructure to handle payments?
This is exactly what Safaricom did with M-PESA and after its initial rollout in 2007, literally every shop in Nairobi – as small or as big it might be – accepts M-PESA payments nowadays. It's incredible to see the strong adoption of this technology in less than 10 years after launch as the numbers below are showing.
M-Pesa processed more than US$28 billion in 2015 via more than 35 million Kenyan users [73% population]. By 2019, analysts expect more than half of total Kenyan GDP to flow through M-Pesa. This has partly been driven by the prevalence of mobile phones: more than half a billion people in Africa subscribe to mobile services, and smartphone connections have nearly doubled over the past two years to reach 226 million.
It's wrong to imply that digitally emerging countries are just like developed countries, but 10+ years behind as I often heard.
In Kenya's case, alternative strategies are deployed to solve problems that are inherently different to Western markets. Africa is leapfrogging technology in many ways and mobile money is just one example. It continues in other important sectors like education, logistics & transport and agriculture.
Smartphones build the fundamental connection between people and services in East Africa
Safaricom is the largest telecom provider in Kenya and as mentioned before initiator of M-PESA. While Safaricom is sometimes being seen as too dominant in the market, the company successfully established a nationwide network of strong connectivity.
I was lucky to spend a day in Nunguni, a small village about 100km east of Nairobi in the mountains of Makueni County with a population of about 4,000. Nunguni is my friend Paul's home village and he agreed to take me with him for a day.
In Kenya's society it's not unusual for the younger generation to move to the country's capital to find work, but still taking care for the family back home in the village. These villages' foundation usually consists of small houses spread around the city center with a few bars and shops.
If the smartphone is the backbone of East Africa's society, then messaging is its blood. Messengers like WhatsApp are playing such an important role in peoples' life in East Africa that it can be considered as the very basic form of mobile communication.
WhatsApp is the #1 messaging app and even in the most remote areas you will see people using the messenger to stay connected with their family across the country and sometimes continent. When in Nunguni, I called a friend over WhatsApp while having a strong and stable 3G connection throughout the entire call.
I was talking to a Kenyan the other day about the importance of WhatsApp:
My mother still lives in my home village, but she doesn't have reliable access to electricity and lives in very basic conditions. However, having a smartphone with WhatsApp installed is a basic need for her to stay connected with her kids.
I exchanged numbers with a few people I met and we kept on messaging on WhatsApp. To my surprise, WhatsApp Status is incredibly popular among its users in East Africa while none of my contacts in Europe uses it at all.
And of course that totally makes sense. Competitors like Snapchat aren't even remotely known here due to Snap's focus on Western markets. WhatsApp however is the go-to app for any kind of mobile communication and with 'Status', another layer was adopted on top of text messaging.
International companies are paying close attention to East Africa
Just a few weeks ago in October, Facebook launched on the first day of ChatbotConf 2017 the Facebook Developer Circle in Vienna. Such developer groups initiated not only by Facebook are increasingly spreading across the continent.
In general, almost every major tech company has some kind of presence in Africa whereas Lagos, the capital of Nigeria in West Africa, and Johannesburg in South Africa are the most popular cities to be based in aside from Nairobi.
This affects local startups and entrepreneurs as well and brings new resources to the country, namely experienced expats teaming up with local founders, investors money and international attention.