Innovators Create a Place for Africa in the Digital Economy
This story is part of a series on IFC’s work to help create markets that give new opportunities to people in developing countries. These innovative approaches have helped solve some of the largest problems in countries or, sometimes, entire regions.
Also available in: French
By Idil Abshir, IFC Communications
In a bright, buzzing office in downtown Nairobi, visitors to Africa’s Talking are greeted by a “Karibu” welcome sign—in the shape of a motherboard. It hints at the mission and focus of the digital-services company where young men and women brainstorm within a maze of desks, discussing data science and the Internet of Things.
Walking briskly through the office, Business Development Manager Wiza Jalakasi gives names to different clusters of people. Some are storytellers. Others are data scientists and developers. Still others are administrative and business-development teams. Together, they have created Africa’s Talking—a firm that is unlocking the potential of mobile-communication networks across Africa by simplifying the process and technologies required to exploit them.
Through an online platform developed by Africa’s Talking, a company launching apps can set up an account and have instant access to multiple countries and their mobile operators and services. They can then promote their businesses in several ways: from text messages to mobile-money services to voice calls. Thanks to this six-year-old business, companies that used to spend months to meet regulatory requirements when launching an app can now do it in less than 15 minutes.
IFC made a $5 million equity investment in Africa’s Talking recently—part of our push to create markets that build up Africa’s digital economy. Africa’s Talking will use the investment to expand its reach across the continent.
“We have built a platform where you only have to connect to us once—and, once integrated, you have access to all our products and operators,” says Samuel Gikandi, co-founder and chief executive officer of Africa’s Talking. “By simplifying things, you speed up the pace of innovation. I see Africa’s Talking as one of the players that’s helping the ecosystem evolve faster.”
Moving Toward Mobile
Gikandi moved back to his native Kenya in 2012, leaving behind a successful finance career in the United States and Hong Kong to start a homegrown business—putting to use his computer science degree from the Massachusetts Institute of Technology. Although he first started to build an e-commerce platform, he made a key adjustment. “We realized that people just aren’t online,” Gikandi says. “No one was paying attention to software developers, and we were one of the first to simplify services for them.”
Changing their focus, Gikandi and his partners built entire software systems from scratch. It meant navigating a relatively complicated and sometimes inflexible telecom industry, meeting a variety of technical and regulatory requirements, and developing sometimes months-long relationships with mobile-network operators before reaching agreements.
These efforts paid off. Since 2012, Africa’s Talking has gone from five people in one country using one mobile operator, to a staff of more than 60 people, over 17,000 developer accounts, and 20 mobile operators across six countries. The company now operates in Kenya, Malawi, Nigeria, Rwanda, Tanzania, and Uganda.
Gikandi’s insight about the market for software developers was spot-on: during the last decade, mobile technology has become the largest platform for Internet access in Africa. Most people use it through their mobile devices, alongside countless services and platforms developed for mobile use. By 2020, the number of people with mobile devices is expected to grow to nearly three-quarters of the population, according to GSMA, an international trade association. Still, many start-ups struggle to access the telecom infrastructure and achieve scale due to their lack of negotiating power and the fragmented nature of the telecom industry.
Shaping a Strategy that Lasts
Africa’s Talking’s services have attracted not only small start-ups but also larger corporations looking for ways to reach customers without having to invest in a specialized team. One such company is CEVA Limited, a fintech services firm that is using the platform to provide micro-insurance to customers in Kenya, Nigeria, and Tanzania.
“They give an entire service layer we need, with the added advantage that they give us the entire bouquet,” says CEVA Managing Director Yatin Mehta, referring to text-messaging, mobile money, and other services. By contrast, he says, other companies “only offer bits and pieces.” The ability to obtain a wide range of services from a single provider reduces CEVA’s costs “drastically.”
In Kenya, CEVA partnered with one of the country’s top insurance companies, CIC Insurance, to provide life insurance via mobile phone. The service is bundled with talk time, so for every $1 spent on airtime, users are awarded $4.20 of life insurance.
Africa’s Talking’s strategy is straightforward: It buys airtime in bulk at a discount price from a distributor, paying 92 cents on the dollar. Africa’s Talking and CEVA sell the airtime at market price and, for six cents, buy insurance from CIC. The leftover two cents are split for profit. The companies don’t expect to make a profit until the insurance is widespread. They have attracted about 10,000 customers in three and a half months—and see a promising future ahead.
Tailoring business strategy to Africa’s reality is key. “How do we build this platform and make Africa look more like one entity and not just a bunch of small markets all over the place?” says Gikandi. “We have to keep evolving. We want to remain the brand that developers go to when they want to effectively communicate and scale across Africa.”
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Published in April 2018