This has been an interesting year for me. I have been fortunate to travel to various countries on the African continent. I have had time to reflect on this and here are my thoughts.
My expectation on the continent was to discover very little technology. This is not true. I was astounded to see that in some countries the speed and diversity of access to internet and array of smart technology was excellent. The technology is available but the access of the technology to the general population is limited.
If you have the opportunity to visit a country such as Angola the harsh realities of living there sink in. There are currently more than 176 land mine fields. This is a legacy of their civil war that only ended just over a decade ago. The effect of this is inability of the agriculture sector to produce large scale commercial farms. Almost all of the food is imported. In addition, the country has an array of natural resources, mainly diamonds and oil. The result is the emergence of a super-rich class who have made money from the oil industry. This is however only a fraction of the population. When you move around Luanda, the capital of Angola, there are more than a million people living in one of the largest squatter camps in the world. This is by itself anomalous. Luanda is the most expensive city in the world. I did not believe it until I was there. It is definitely more expensive than New York or London. There are suburbs in the city (such as Talatona), modern and well appointed, surrounded by squalor. The average Luandan struggles to survive and even many of those who have employment live in shacks. A rental income for a 2 bedroom apartment is in excess of USD7,500 per month. A single tomato costs USD2.50.
The impact of this is that buying smart technology is not really an option for the mass population. Possibly a small group of people can afford this, so having the technology available is to a large degree pointless.
The basis of living changes from country to country as the economies are different, but the story is the same. Malawi is struggling with massive corruption and interest rates above 30%. Small businesses struggle to flourish and economic growth is difficult. People are employed, but the day to day living of the average Malawian excludes luxury purchases. Smartphones are simply out of the reach of Joe average in Malawi.
Cell-phones are however pervasive across the continent; these are predominantly functional phones. Smartphone penetration in the market is limited and I think this reflects the recent sales reports from the major manufacturers that show that they are not meeting sales targets. Smartphone penetration is approaching a point where growth in sales will probably reflect growth in economic value terms, linked to GDP.
I keep wondering if this is unlikely to change. I would think that at the moment there are really only 2 ways for this to improve. Rapid economic growth or a rapid reduction in smart technology prices.
I personally do not think rapid economic growth is likely in the next 5 years. My rationale for this is the skill level of many Africans. In essence those that are educated are employed. When you look at the availability of education in the African countries it is extremely limited and is really only available for those who can currently afford it. This means that unless there is a shift in government policies not enough Africans will get educated to transform the economic landscape. Economies will remain driven by minerals, resources and agriculture. The exception is the banking sector with the banks entering the markets and I believe influencing the development of the economies on a large scale.
Simply put, there are not enough tertiary training institutes of quality to create skills that are competitive on an international scale. There are not enough engineers, IT professionals, accounting professionals and professionals who work in government to bring about social services for the populations they service.
This then leaves a reduction in prices. Will prices come down? Maybe a simpler device with less features and longer battery life? Looking at the manufacturers who produce devices, this seems unlikely, but maybe I am not seeing something. What do you think?
This may seem like a strange hypothetical headline of the future. Maybe it will be.
It is conceivable that the manufacture (RIM) of Blackberry smartphones is saved by the African market. Why?
Here is my take on it.
I think it is safe to say that Apple, Nokia and Samsung (and possibly others) may have a better device with more services than Blackberry. (I can hear the howls from the Blackberry execs already – hey this is my opinion.) But there is a big difference between Blackberry and the other smartphones. Let me lay it out. The Blackberry proposition to the customer is that you pay a fixed fee every month. For this you get the usual cellular services, calls and SMSing. But you also get internet browsing and instant messaging with BBM. This cost is defined and you can do everything you need to; Facebook, Tweet watch YouTube and so on. The cost is fixed. The other devices offer the same service but for these services you need to purchase a data bundle which is not necessarily fixed. So the value in the offering from the other providers has potentially a larger cost to the consumer.
This is definitive – the consumer. The African consumer has less purchasing power than any other consumer in the world. Cellular services compete with the little pleasures of life like cold drinks (Coke and Pepsi) and luxuries like beer and cigarettes. I don’t mean compete in the Western sense of competing. We choose how we manage our budget with thoughts like “I will buy less beer and get more data”. Often the choice to the African consumer is I have 2USD – “I buy beer or airtime – I dont have a choice to cut back”. For the African consumer this is an either or choice and they have to give up lots just to be connected to the world, an experience many of us don’t comprehend.
So enter the Blackberry proposition – a fixed cost with unlimited chat, no SMSing required, less phone calls and still connected to social hubs. The value in the Blackberry proposition to the consumer is there.
I started out by stating that maybe this is a hypothetical headline of the future. For RIM, I hope it is reality, but the problem facing RIM and the Blackberry offer is that the device will still have to improve as will the accessibility to the apps. They have time to still do this. But Africa is moving; living standards are improving and more importantly, there is a massive telecommunications roll-out. Costs are starting to come down. If the costs get as low as they are in say India, then the cost of bandwidth may not be an issue for the African consumer.
Getting back to my point. Africa may save them but they had better move fast. Improve the apps and build a proper development community, improve the device and innovate. Do it or we may never see the future of Blackberry anywhere!
Mike Backeberg – April 2012
When Getrude, gathers water and firewood to prepare her meagre family meal, she lives in a world of technology isolation. She has no idea of how her life can change and she has no way of improving her life. Gertrude is an imaginary person who lives rural Africa. She has multiple children and she struggles to feed them, every day is just survival for her. Her children attend a poor school with limited resources and she lives in a country with few opportunities for her family. The government is struggling to deliver services to her and the community in which she lives. Constrained by funding and infrastructure, the government has very limited means to change this in a traditional model of development. She has no access to business opportunities or access to commercial services like banking. Can this change?
There are 2 technologies which may be game changers for Africa – businesses and governments. Cloud computing can shift infrastructure, data and business critical applications to stable environments allowing African companies to compete on a global scale. Social media and the platforms that support these – i.e. tablets and smart-phones can deliver business-to-business solutions, business-to-employee enablement and business-to-consumer solutions.
Implementing these solutions, delivering content via a mobile phone and using the limited skills available in country, a limited budget and by sweating the cloud can provide opportunities to make in-roads in these rural communities. A focused approach to building niche skills in some centres as areas of technology focus can transform the way technology is used. A technology industry can be started without necessarily requiring thousands of skills.
The benefit is if one country gets it right, the service can be sold to their neighbours and progressively a regional IT hub can be developed. To focus and build cloud and mobility channels is the way for under-developed states to catch up and even get ahead. Technical resources earn less, real-estate is affordable and the technology can be quickly deployed. Watch out Asia, Africa may be on the rise.
Mike Backeberg – April 2012