The race to develop mobile payment systems across Africa is spawning a new generation of tech entrepreneurs, searching for innovative ways to reach their customers. From finance and farming to education and healthcare, dozens of apps are being created to help overcome the continent’s infrastructure deficits and help meet the aspirations of an increasingly tech-savvy urbanising population.
“The conventional thing to say about Africa is it’s cursed by a lack of infrastructure,” says Jesse Moore, the chief executive of M-Kopa, a four-year-old Nairobi-based company that uses mobile phone technology to lease off-grid, solar powered lighting and power systems in Kenya, Uganda and Tanzania. On the contrary, Mr Moore argues, the continent’s old infrastructure deficit is spurring innovation, pointing to m-pesa, the mobile money transfer system pioneered by Kenya’s main telecoms company, Safaricom, which is 40 per cent owned by Vodafone of the UK.
M-pesa is now used by 22 million Kenyans — or more than 70 per cent of the adult population. Safaricom is now backing Sendy, a Nairobi-based package delivery start-up offering a marketplace for last-mile package delivery and logistics services, allowing customers to send packages and documents in the Nairobi area using a mobile application that connects them to motorcycle riders and drivers of vans and pickup trucks. Much of this innovation has been borne out of commercial necessity. Across Africa telecoms companies have been forced to look for ways to boost revenues and retain subscribers as competition from rivals has driven airtime prices down.
Monthly m-pesa transactions now total about $150m. While this accounts for a growing proportion of Safaricom’s business, it still only represents 20 per cent of the group’s total sales. The platform earned Safaricom Ks19.4bn ($190m) in the six months to September 2015. But it has inspired dozens of copycats such as South Africa’s SnapScan, a mobile payments system backed by Standard Bank.
Joe Mucheru, who resigned in December as head of Google Kenya to become the country’s technology minister, says that despite myriad problems — from opaque regulatory systems to the shortage of skills — the success stories are likely to continue. “Today we’ve got tens of incubators; there’s a lot of start-ups in place that are coming up with very innovative products,” he said. “But they’re at their infancy. When they get to the seven, eight-year space they hopefully will be larger and be able to absorb a lot more capital. Then we’ll see real growth.”
One of the best-known incubators is iHub in Nairobi, which has spawned 150 companies, including Weza Tele, a financial services tech company that was sold to South Africa’s AFB last year for $1.7m.
The level of ambition among African tech companies is demonstrated by the fact that some are extending their horizons beyond the continent. JourneyApps, a South African company that started in 2009 by designing apps to support local community health workers, last year opened an office in the US in a bid to transfer African technology to the American market.
Conrad Hofmeyr, one of JourneyApps’ co-founders, says the demands in the world’s most developed economy are not always so different from those in Africa. “The kinds of attributes that we had to build into the product, like the fact that it works offline, that it’s very simple to use . . . it turns out that’s actually very useful for the US market as well because now we’ve learnt things not in this theoretical bubble but in this practical real-world challenge of operating in Africa,” he says. “And we can go and take that valuable thing that we’ve built and use it in the US as well.”
But with intra-African trade accounting for only 12% of trade on the continent, those involved in the tech sector are optimistic about the future.