Earlier this week, I was at the Orange offices in Paris to attend an event about R&D and Innovation which had a specific session on Africa. As I had to make a short presentation about my views on mobile innovation in Africa, I illustrated the major points of our approach with our project in Ghana.
The overall idea and concept came from two observations:
- The history of the Web, IT companies, and the dotcom explosion show that most innovative ideas and the most disruptive services are, in most cases, coming from small actors (individual entrepreneurs or very small companies) and not from well-established big players.
- One of the specificities of African societies, and of developing countries in general, is the importance and the number of individual entrepreneurs. While this is probably due to a lack of traditional employment opportunities, it is a characteristic that is now well understood by the international community, and this is clearly a potential vector of development.
The goal of our project is to see how to make mobile services a target of opportunities for individual entrepreneurs.
Based on our past research and experience (see e.g. the Mobile Web for Social Development Roadmap, or the first field assessment we did in June 2010 in Accra), we have defined an approach articulated around four major points:
- Capacity Building
- Access to capital
Demystification is probably a strong word, but it is a critical point. The mobile phone is still considered as a closed platform, driven by mobile network operators. There are very few people (students, entrepreneurs, etc.) who understand the openness of that platform, and the ability for anybody, from a purely technical point of view, to develop and run services on their own. This applies for almost all technologies including SMS, Voice-based applications, mobile Web content, Java applications, etc. (but there are exceptions such as USSD).
For me, understanding this openness is the first critical element to open the mind of potential service providers. Our approach to providing this understanding is to develop and run what we call a ‘roadshow’, at events, universities, etc. to show this openness. See for instance the last blog post from Max who went recently to Ghana to run the first instance.
Capacity building is obviously a critical part too. There are two parts to consider: the technical aspect and the business aspect. The technical part is relatively easy: identifying appropriate technologies, and teaching them to people. The real issue is defining those appropriate technologies. While everybody uses the same term, everybody has also a different definition. The point of this post is not to detail our approach for the technology selection, but we have indeed spent a lot of time finding the right balance between the length of the training session, the key technologies that are relevant to the local market and to the profile of potential users, and the need to present as many options as possible and not to limit ourselves to a too small set of technologies. The teaching should also give an overview on less technical aspects such as user experience and user interactions.
The business part is another obvious critical part. Here again, if one looks at other relatively similar initiatives (eg. MIT AITI) , there is always a business part. However, our approach is slightly different. We believe that a successful initiative must integrate people with different backgrounds. For instance, I don’t think that a student with a technical background can become a business expert in a few hours. Similarly, a business person can’t become a mobile service developer after a few hours of training. Therefore, our approach is for the technical training to be designed for people who already have a minimal proficiency on software development, and for the business training to be designed for people with a business background: people who know how to start a company, what the legal requirements are, how to make a sales pitch, how to build a business plan, etc. Thus, the training can focus specifically on mobile services: the costs of setting up, maintaining and scaling up a specific service using a specific technology, how to outreach to potential customers, how to collect money from customers, etc. This is really about the specificities of mobile business, its potential customers, their requirements, etc.
Incubation is another overloaded word. I define it as the process that starts after the training phase and that runs until the startup phase, where a company has started to deliver a service to customers. The aim phase to support and help entrepreneurs to reach the deployment phase. Here, there are two different aspects: the direct support to entrepreneurs and the work with other players, such as operators, to ensure that the context is appropriate.
The direct support to entrepreneurs integrates various dimensions:
- Technical support for developers. This includes access to development and test environments. It is essential that developers can test in their application “in real life”, as well as design a real-life demo for funders and other potential partners. Such a development and test environment should be available for all technologies including SMS, voice, mobile Web etc.
- Business Mentoring for the business aspects.
- Business intelligence and market research: it is essential for an entrepreneur to understand how specific technological choices impact their potential customer base, and their business plan. For instance, if he plans to deliver services to farmers in a country where most are illiterate, the use of text-based technology is going to be a problem. In the same way, if one develops an android application in a market where only 0.1% of the mobile customers have an android phone, this might also be problem.
- Contact with focus groups: some entrepreneurs have incredible new ideas coming out of their head. This is great, but it concerns a small number of people. Instead, most people will have ideas coming out of discussions with potential customers, giving them an understanding of the issues that, for instance, farmers or teachers encounter, and leading to the design of specific service to address those issues. It is therefore very important to link entrepreneurs with customers: farmer associations, cooperatives, teachers and so on.
Apart from this direct support, one other key dimension for entrepreneurs is linking with operators. While, on a technical level, operators are not mandatory partners to design a service, they are essential to the business side of mobile services, and their deployment in particular (see a document we wrote on operators’ enablers for entrepreneurs). However, operators rarely have the right processes and abilities to deal with individual entrepreneurs. It is therefore essential to bridge this gap, and enable entrepreneurs to access operators. This makes it part of our role to discuss with operators, and define a generic framework for enabling entrepreneurs.
Access to capital
I wish to single out access to capital from the incubation process because it is a very specific barrier. Indeed, some specific facts are found in most countries in Africa:
- Local “business angels” and venture capitalists are not present or not interested in funding IT companies.
- Traditional bank loans are rarely available, and if they are, high interest rates (usually between 30% and 60% per annum) keep them out of reach. The direct consequence of such rates is that an unsuccessful attempt to start a mobile business can have disastrous impact on the entrepreneur.
Nevertheless, the amount of money necessary for an entrepreneur to move from the inception stage to the service stage is actually relatively small. Our different discussions in different countries let us think that an amount between 10K to 15K USD is needed to cover the costs and salary of a startup for 12 to 18 months, the estimated duration needed to demonstrate the viability of a concept. That amount is generally equivalent across many countries. It is in fact a very small amount, relatively easy to find for those who have the ability to contact and interact with international organizations that have supporting programs for entrepreneurs. Unfortunately, the number of entrepreneurs that have the skills to discuss with such organizations is very limited. Therefore, it is critical to have an organization that can bridge this gap, and connect entrepreneurs and the organizations that can provide that amount of seed funding. This is the role we are planning to play. Through the process of training and incubation, I’m convinced that the selection mechanism will enable the identification of very promising entrepreneurs. Therefore, our approach in the near future is to identify organizations that are providing seed funding and that will be interested to work with us because they are also convinced that the process we are setting up is appropriate to identify candidates for their funding.
Obviously, this four step approach is only a quick summary, but I believe it presents the major points of our approach.
It is important to note that this strategy largely depends on the local context. As I mentioned earlier, we defined it after our field assessment in Ghana. However, our preliminary work in Kenya has shown that the demystification part is not needed there, as most universities already teach mobile technologies as part of their curriculum. Yet, the capacity building activities on technical aspects needs further investigation as most curricula integrate subjects like SMS, but other technologies such as Voice are not included. So, at first sight, the focus will be more on the mobile business training, and on the third and fourth points. This shows that a detailed local analysis is critical to adapt our approach to the specific context.
The second important point to note is that this is mostly a theoretical approach for now. We are just starting on the first point in Ghana, and will soon reach the second point both in Ghana and Kenya. So I believe we will really be able to evaluate it in the next 12 months or so. That said, the interest expressed by the people we have talked to, and the attendance at the events we have organized in Ghana is encouraging.
But the really central idea developed here is the need for an organization that can play a central role between operators, entrepreneurs, universities, tech community, funders, etc. What I tried to explain is the different roles of this organization, and the barriers it will lower. On the longer term, it is not the role of the Web Foundation to be that organization. We are currently bootstrapping the process and testing the concept, and if it works then it must become a community-run initiative. For that reason, we helped setting up a non-profit organization, Mobile Web Ghana, that will be the organization operating the concept in Accra. While we are investing human and funding resources now, the organization should be self-sustainable in the next 12 to 18 months. Similarly, mlab in Nairobi will have about the same role (not directly set up by us, but as part of the World Bank funding) .