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Friday, 18 January 2013

In focus : the African mobile market

While not attracting as much press in India as the much-touted Chinese market, the mobile scene in Africa has certainly shown remarkable growth. ABI Research reports that as of Q3 2012, there were 821 million connections across the 1.08 billion population and 54 nations that constitute the African continent - a remarkable 76% penetration, growing at a healthy 4% each quarter.

Like India, Africa is dominated by pre-paid subscriptions which constitute upwards of 90% penetration. And like both India and China, mobile has powered internet growth in the continent. 27% of mobile users access 2G services and a healthy 11% are using 3G services. And the number of cheap Android smartphones in the country is growing steadily at 6% per annum, although feature phones still dominate.

Mobile development in Africa has been spurred by the unique challenges that face the continent. Most countries are underserved by banks, offer little access to credit/credit cards and a majority of the population lives in rural areas. People who migrate to urban areas for work need a means to transfer funds back home. Therefore, the system of mobile money was developed and quickly gained traction. 

The poster child for the success of mobile money is Kenya's M-PESA, operated by telco Safaricom. With 15 million users and a claimed 1/3rd value of the nation's GDP passing through the payment gateway, M-PESA is used for peer to peer money transfer, airtime top-ups, salary transfer, bill payment and international money transfer through a partnership with Western Union. Even merchants accept M-PESA payments, with a human intervention - a customer transfers M-PESA to a store assistant, who pays the store in cash! In Zimbabwe, EcoNet Wireless' EcoCash performs a similar role, moving money from urban workers to rural areas. Tie-ups with commercial banks has enabled businesses to accept payments in EcoCash and redeem them at banks - even taxi drivers accept EcoCash, which makes a cashless system feasible for masses who may never own credit cards. 

Newer innovations include companies like Kenya's KopoKopo and mPayer and Nigeria's Paga, which provide a platform for merchants to accept mobile money, both online and offline. Again, despite non-ownership of credit cards, it will be possible to facilitate e-commerce transactions for customers.

What stands out in these examples is the initiative and innovation displayed by mobile entrepreneurs and telcos in adapting technology solutions to consumer's needs. However, the mobile development story in Africa is not all about mobile money. The latest news is that Chinese search giant Baidu is entering the African market, through a tie-up with Orange (France Telecom) to co-brand and pre-load the Baidu browser on Android smartphones sold in 20 countries across  the AMEA region. Of interest is the Baidu user interface - the browser opens on a screen with pre-loaded web apps, which Orange can use to promote their own services. Browser based advertising revenues will be another spin-off from the partnership. 

In a nascent yet fast growing smartphone market, an operator who takes charge of the browser will definitely control the content consumption of the user, and have an edge in selling their own services and products via a readymade platform.

The African mobile market in many ways compares much more closely to the Indian market than China does. It will be interesting to see if mobile entrepreneurs apply similar innovative solutions to the needs of Indian customers.

Sources : BusinessWireTechCrunchBBCTechCrunch