"Africa is, indeed, coming into fashion." - Horace Walpole (1774)

9.28.2009

does africa have an sms crisis?

Joshua Goldstein thinks so:
It would be easy to conclude that Africa is entering the golden age of mobile innovation. In Kenya, mPesa, a Safaricom service, allows users to send money anywhere in the country via mobile phone at very low rates. Next door in Uganda, rural users out of reach of the Internet can use a new SMS-based service from MTN, Grameen Foundation and Google to trade goods, search the Internet and query local reproductive health and agriculture information.

These services, however, represent a trickle of innovation where there should be a downpour. The source of this sluggishness is the structure of African mobile phone networks, which discourage entrepreneurs from quickly and cheaply creating, testing and deploying applications.

Mobile networks are costly in Africa. The price of sending SMS texts is kept high by a combination of high taxes, interconnection fees and network provider choice. And because mobile networks are closed, no one can deploy a new application without the network expressly adding it to a consumer package.

Meanwhile, this week's Economist cover story highlights mobile-based banking for the poor, using Kenya's mPesa as an example.

Tech types, what do you think? Is the innovation Goldstein notes elsewhere (and in Uganda) likely to spread in Africa? Can the barriers to more expansive mobile-based banking be removed? By whom?

3 Comments:

Blogger Adam Hooper said...

The way I see it, we had these same restrictions in the West until the Internet came to our phones. (The iPhone app store still suffers from similar restrictions of much smaller magnitude, actually.) Mobile Internet is available in Africa and as it gets cheaper more people will use it. In the meantime, innovation will have to depend on carrier benevolence.

Monday, September 28, 2009 7:53:00 AM

 
Anonymous Mike said...

I think part of the issue with the lag in mobile-phone development in Africa is that the whole industry just beginning a period of market consolidation - both in terms of providers, as well as handset technology.

For example, Burundi is one of Africa's least-penetrated markets for mobile phones due to landlines that work relatively well, and crippling poverty. Still, there are four service providers. DRC has five. Tanzania has Eight! Most other African markets have between three and five providers.

This is a much larger number of carriers per customer than say the US or European customers, and even outstrips the potential. In Kenya, where the carrier and handset market has matured, we see things like mPesa.

Same is true of handset makers - in Africa there are the usual Nokias and Motorolas, as well as a ton of Chinese knock-offs varying from the respectable to the not-so-respectable. It is clear that a few non-western handset makers have their place, but which, and will they use Java? Flash? How can a carrier guarantee an app will work on user phones.

By the way this blog is by far one of the best resources, and a fun read on the topic:
http://developing-telecoms.blogspot.com/

Tuesday, September 29, 2009 1:57:00 AM

 
Blogger texasinafrica said...

Good points, Mike, and thanks for the link. I'm really curious as to how Burundi has well-functioning landlines!

Adam, I agree with both you and Mike that it's still early and that as the market develops things will probably change.

Tuesday, September 29, 2009 7:47:00 AM

 

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