Wired News reports from Africa:
In Africa, there is a huge demand for simple technologies that can be used by people who lack access to banks, phone lines, credit cards and computers that Westerners take for granted. Living in the only country on this continent that has a modern infrastructure — even while most of its citizens remain firmly entrenched in poverty — South African entrepreneurs are in a unique position to develop and deliver these products to Africa’s poor, says Raven Naidoo, a founder of Radian, a small technology-consulting firm.
“South Africa is a testing ground but also a huge market,” he says. “Typically in South Africa people have targeted the high end of the market, but it’s a small high end. At the lower level the return might be lower, but there’s a volume gain.”
“That market out there is two-thirds of the world’s population,” says Alan Levin, Naidoo’s business partner. “No one else is capable of seeing it the way we do, or putting solutions together the way we do.”
Whereas only 2 million Africans used cell phones in 1997, that number has exploded to 34.6 million users today, making Africa the world’s fastest-growing market for mobile communications, according to the International Telecommunications Union.
After adopting technologies to make cell phones widely affordable to South Africans, MTN and Vodacom, South Africa’s two largest cellular providers, have been rolling out networks in Nigeria, Tanzania, Uganda, Swaziland, Rwanda and elsewhere. These networks are lifelines in places where communications technology of any kind has been scarce, and cellular providers are finding these markets unexpectedly profitable.
In South Africa, a system of prepaid calling introduced in 1996 made cell phones available to the masses, allowing low-income subscribers without bank accounts and credit histories (about half the population) to pay for air time as needed. As a result, there are now 14.4 million subscribers in South Africa out of a population of 43 million, and 80 percent of them are on this prepaid system. Providers predict that upward of 90 percent of new subscribers on the continent will go with the prepaid model.
In the Democratic Republic of Congo — a massive, war-ravaged country with almost no infrastructure and an estimated 1.6 phone lines per 1,000 people — Vodacom has installed a network of base stations powered by electric generators, and a system that connects calls via satellite.
Given the infrastructure hurdles facing much of Africa, and the mobility of the country’s populace, wireless is increasingly seen as the preferred option, says Ronald Maina, a sub-Saharan regional enterprise manager for Microsoft. Cell phones have rapidly outstripped the number of land lines on the continent, and are now increasingly becoming the platform of choice for Internet access, banking and other transactions.
Farmers use SMS to keep tabs on market prices. Taxi drivers in Mozambique keep in contact by cell phone to avoid police roadblocks. Runners in Kenya compare times via SMS, while South Africans check their bank balances the same way.
One company, Fundamo, developed a system allowing people to make payments from their mobile phones. The company first tried to sell its technology in the developed world but, given the pervasiveness of credit cards, potential clients saw little point. Instead, the system has taken off in Zambia, where the demand for a cellular banking platform is high.
Here’s how it works: To make a payment, a shopper enters information on the vendor and the transaction into a cell phone, and confirms the sale with a PIN. The system then checks that funds are available in the shopper’s bank or prepaid account, and sends a confirmation to both parties.
Levin, of Radian, says the success of Fundamo in Zambia illustrates the changing mind-set among South African tech entrepreneurs, who in the past have struggled to sell their products in saturated Western markets instead of looking to their own backyards.
“These new technologies are taking on very quickly in the developing world, and allowing for a kind of leapfrog effect,” he says. “While the First World countries are still in the credit card phase, this turns cell phone companies into banks.”