Greater information technology share and investment through regional and South-South relationships is ushering the growth of an information technology revolution in Africa. This burgeoning African information technology revolution is not just limited to cyber cafes, media and online university level courses, but it is also allowing Africans to leap frog in the application and use of mobile phones. While energy and infrastructure constraints provide challenges to the growth of this industry, approximately 70 percent of Africans have a mobile phone. Mobile phones are being used to overcome challenges greater than the basic day-to-day needs. They have been crucial in allowing an increase of media access, medical doctors to see patients from a distance (particularly in remote villages), and mobile banking. I spoke about these opportunities and some creative ways of using mobile banking technology with Beamit CEO Matt Oppenheimer.
Beamit Mobile, founded in May 2011 by CEO Matt Oppenheimer, provides a mobile banking platform that allows convenient international money transfers from USA mobile phones to mobile phones abroad. This Seattle-based start-up has already secured $2.4 million dollars in seed capital from the Founder’s Coop and $750,000 in angel financing. According to the World Bank, approximately $374 billion dollars is transferred in remittances globally with 80 percent of those transactions occurring outside of a traditional banking system. With the average wire transfer being about $300, there is an average cost of 9.3 percent for each transaction. Oppenheimer has found a way to enable cheaper, safer, and faster money transfer with quality customer service. Oppenheimer became aware of this niche opportunity during his time at Barclays Bank in Nairobi, Kenya as the head of mobile and internet banking initiatives. Having secured financing, Beamit Mobile is now looking for partnerships with experts in the African mobile industry to build out its mobile wallet and banking platform.
Oppenheimer first visited Kenya in 2001 for community service work, and was excited by Kenya’s warm people, culture, and growth potential. Once he graduated from Harvard Business School, Oppenheimer wanted to work abroad on Internet banking and, having a special affinity to Africa, sought out opportunities to rotate from Barclay’s London office to Nairobi. In this role, he noticed that many Kenyans did not have bank accounts and received money in an expensive and antiquated way. Some Kenyans sent money on matatus (public vans) to villages, or transferred international currency through money systems such as Western Union. The M-PESA system (“M” – mobile, and “Pesa” – Swahili for money) is a joint venture between mobile phone giant Vodafone and Kenya’s Safaricom that allows mobile banking in East Africa. Although M-PSEA makes up approximately 10 percent of the mobile banking market, mobile banking is growing into a financial services system that requires more transparency, regulations, insurance, interest-bearing capability, and protection against fraud and outages than M-PESA can guarantee.
Oppenheimer desired to improve the lives of customers by leveraging mobile phone technology. He did this by having the core values of costumer centricity, transparency, establishing local trust, and getting to know the local culture. Oppenheimer was also attracted to Kenya’s favorable private sector regulatory environment and growth potential in creating a new digital portal for mobile banking and mobile wallets. Furthermore, Kenya, with Nairobi growing as Africa’s Silicon Valley, already has a culture of domestic remittances from urban cities to rural villages. Despite being the site for research and development, Beamit Mobile has decided to launch first in the Philippines. Oppenheimer credits market size as the primary reason to launch in the Philippines, which has an average of $7 billion transferred annually through remittances from the USA, and Kenya only has a market of approximately $100 million.
What are Oppenheimer’s suggestions for those budding tech-social entrepreneurs or investors who are interested in doing business in Africa and developing markets? Africa is not a homogenous market, and “mobile money has really taken off in some countries and not in others,” he said in an interview. Elements that enable mobile technology to grow in certain markets include favorable regulatory environments; openness of people; ability to build trust with local partners; and culture. It is important to know what you don’t know about the market and the target community. Find trustworthy local partners that will allow you to share in the culture and solving local problems. Oppenheimer also advises entrepreneurs to work hard, ask many questions, and get honest feedback early on.
Many Americans fail to realize that in most of the world, electric sockets have on/off switches. And in many developing countries, electricity is inconsistent. Africa must continue to make investments in sustainable energy. Africans have found ways around electricity shortages to charge phones at local shops in villages. There needs to be a stronger business model in Africa for successful sustainable information technology. This business model should cater to different African consumers, from the remotely pre-paid village-based to the growing luxury class of Nigerians that use phones as status symbols. African governments would also benefit from encouraging women in technology. Some governments have even moved to nationalize telecommunications as a national asset. There are opportunities in increasing the broadband from coastal and capital cities to rural areas and land-locked countries. African governments are acknowledging the growing role of ICT in economic growth (GDP) and human connectivity. Now it is time to rethink long term contracts where Africans do no gain knowledge transfer on engineering, servicing, or maintaining the technology.
African countries through partnerships with the private sector must work to scale ICT in location, bandwidth, infrastructure, application and investments in research and development. There are creative solutions for African problems. The next article in this series Out of Africa: Trade, Technology and Knowledge focuses on the importance of the protection of intellectual property rights to African economic growth.