Wednesday, July 30, 2008

Perceptions about Africa

So here we are, working very hard to build knowledge societies,
knowledge economies and bring 'e' into as many areas as possible.

Achieving the highest levels of mobile growth than any other
continent in the world.

Providing the highest returns on any kind of investment into any
sector than any other continent in the world.

But here is how we are percieved:

What can we do about this?

Friday, July 25, 2008

Kenya Venture Capital Association moves one step further towards formation

Following a meeting of the various organisations providing private equity, a task force to bring about the Kenya Venture Capital Association has been convened.

We are looking forward to the realisation of this entity which can engage in advocacy, awareness building and coordination for the Venture Capital industry.

Monday, July 21, 2008

Nairobi Buzz: Flip Video captures Kenya's Jimi Hendrix

The day I picked up the Flip Video camera I had a late dinner/drink with Harry Hare at Rezorus, a restaurant in Westlands. We innocently walked in and took our seats not knowing that that night was slated for a special performance by one of Nairobi's hottest bands.

Within a very short time we realised that this was no ordinary evening as people kept streaming in and the place got fuller. But we cared less as the band kept belting out their own renditions of popular songs, both old as well as new. The hottest was probably "Hotel California" - during which the guitarist played the guitar solo Jimi Hendrix style with his teeth. As he was doing this, Harry punched me and pointed at the Flip - "Go catch that!" he shouted. And here is the result.

Nairobi Tech Innovation begins to catch global attention

To some Nairobi might seem like the last place one would expect to associate with high tech innovation, but as New York Times writer, Gregg Zachary found out during a recent visit, innovation and technology are not strangers to the city in the sun.

In his article in the New York Times, Gregg writes about the few individuals he met who are doing great things with small resources. One of them has even written iPhone applications and he doesn't own or use an iPhone. But his timing is spot on, because Orange is officially bringing the iPhone to Kenya in partnership with Apple.

It is quite remarkable the positive and upbeat tone that vibrates throughout Gregg's article - it is almost like a vote of confidence for Nairobi from a seasoned, respected and experienced globetrotter.

Friday, July 18, 2008

Acumen Fund invests US$ 757,000 in Kenyan Eco-Business

Acumen East Africa fund this month made the disbursement to EcoTact a business led by David Kuria a Kenyan entrepreneur. Ecotact builds high quality, pay-per-use toilet and shower facilities on public land in urban centres. From it's website, Ecotact says:
Ecotact is a Nairobi-based company that aims to improve the urban landscape for low-income communities through environmentally responsible projects in sanitation and housing.
Under the Ikotoilet project, Ecotact builds and operates high-quality, public, pay-per-use toilet and shower facilities on public land in urban centers. Ecotact uses a Build-Operate-Transfer model of public-private partnership, entering into long-term contracts with municipalities to secure use of public lands.
In exchange for use of public land, the company agrees to bear all facility construction costs but relinquishes ultimate ownership of the facilities to the municipalities. The contracts give Ecotact the right to operate the toilet and shower facilities for a certain number of years and charge user feeds. The company hires staff to operate and clean the units after each use, and complements the sanitation offerings with other revenue-generating products such as shoeshine services, soft drink sales and newspaper sales.
It is very impressive to note the steady progress that this fund is making in terms of disbursement of funds to support entrepreneurs who are driving businesses that have a direct impact on the lives and livelihoods of Kenyans.

Friday, July 11, 2008

Cisco and Kenya sign deal to support Rural Entrepreneurs

This week Cisco's Internet Business System Group entered into an MOU
with Kenya's government in a ceremony that was presided over by the
Prime Minister, Hon. Raila Odinga.

The aim is for IBSG to support Kenya's ICT Board in the development of
up to 300 entrepreneur-led "Pasha Centres" across the entire country.
A Pasha centre is an e-enabled, connected community centre that
provides a wide range of Internet-based content and services ranging
from e-government services, basic net access, training,
videconferencong to e-health and telemedicine.

This is a very significant project because it builds on the current,
countrywide optical fiber network which is nearing completion.
Business opportunities will be provided to the entrepreneurs who will
be running the centres.

Tuesday, July 8, 2008

Flip making waves in Kenya

After my earlier post on the Flip camera I circulated the blog entry on some of the local Kenyan mailing lists. The response has been incredible! Not only do people all over want to get their hands on one of these gizmos, but some guy has had one since November and been producing e-learning content using it.

Since I am Chairperson of one of Kenya's largest ICT social action groups - KICTANET - I shared the possiblities with the programme coordinator, Alice and she was like wow! Let's do something.

So, we are in the process of putting together a programme where we aim to get a bunch of these Flip cameras - put them in the hands of various normal, everyday people, who are affiliated with the KICTANET network, teach them how to use them and then see what happens.

In the process of sharing this ideas in the midst of the flurry of emails that ensued, the CEO of one of Kenya's largest wifi/wimax/fibre networks - Kenya Data Networks - jumped in and said that he would offer free upload bandwidth over their wifi/wimax network which covers most of Nairobi. This is incredible as it means that it will be so-o-o-o-o-o easy for people to upload content.

I'm already talking to a number of other people who might be able to help make this experiment more interesting - the Google Africa folk among others.

Let's see what happens!

Monday, July 7, 2008

Flipping over Flip

Yesterday I came across the most amazing piece of technology that I have seen in recent days.

Gregg Zachary was just back in Nairobi enroute to his home in the USA and I managed to catch him for a couple of hours of talk. During this he showed me some videos he had taken in Zambia and Uganda and said that he had used his "Flip camera". I was like, "what? Flip?" and he said "I'll show you."

When I saw the device I almost fell over. Barely the size of a cigarette pack, this modern day wonder allows the recording of up to 1 hour of video, stores in in .avi format (YouTube Ready!) on an internal solid state (Flash) disk and uses simple, everyday AA batteries. Wow! The most amazing part of all was the price. Gregg bought his off-the-shelf in the USA before coming out on this trip for $125 (Kshs. 8,000).

This amazing little piece of technology has a built-in USB-flash dongle, which allows you to hook it up to your computer - and the software for transferring, editing and managing video is right on the stick! Wacha nikuambie!!!! I believe that this gadget and others like it is probably going to have a similar impact on the videocam industry as cellphones had in the telecoms industry.

According to Business Week and the New York Times Pure Digital, the startup company behind the Flip cam was able to achieve 20% market share in the US videocam industry within less than 1 year.

My head has been spinning with ideas on how this kind of device can contribute towards the development of local, African content.

Boy o boy am I excited. I want to try and put several of these into the hands of people all over Kenya and see what happens....

Investment Clubs pick up in Kenya

There are many unique and often laughable things about Kenyans but there is also a very serious and interesting set of attributes. In this post I take a look at a recent interesting phenomenon that reflects the growing awareness that Kenyans have with regards to investing, business and collective power.

The Business Daily recently had a piece about how 'chamas' or small social groups that would come together, make small monthly contributions and then individually borrow from the pool for personal projects have evolved into what can only be described as investment clubs.

One of the most famous is the Trans-Century group which consists of a bunch of 50+ age-group men who started their 'chama' over 20 years ago, formalised it about 10 years ago and now are Kenya's largest private equity fund. Last year they event went as far as institutionalising their operation and hiring a professional team of fund managers and analysts to manage and grow their portfolio.

Another, more recent group, with a much younger set of members (30+ age-group) and a seemingly more ambitious outlook is the Baraka Africa Fund, which was set up about two years ago and raised close to 80 Million shillings (US$ 1.3 Million) in it's first closing. Through regular monthly contributions from it's members, the Fund has continued to grow and was recently the talk of the town with the 570 Million (US$ 9.5 Million) takeover of City Finance Bank.

Besides these larger, better organised groups there are hundreds of small clubs that are investing in everything from shares on the Nairobi Stock Exchange to properties all over the country, transport business, credit and finance and many others.

This is a very exciting time as more Kenyans become aware of the power of capital.

M-Commerce/E-Commerce in Africa - a contrary view

Well it seems that my post the other day generated an interesting bit of dialogue. One person who chose to remain anonymous says the following about Wizzit:

Unfortunately I am not a fan of Wizzit. I support the mission (to bring financial services to rural people), but the methodology is mortally flawed (in my opinion).
Wizzit is only one side of a bank. They hold customer accounts and they give the cards with which to access these accounts. The missing part is that Wizzit does not provide the acceptance infrastructure. This means that Wizzit customers have to use 3rd party ATMs and branches to access Wizzit services. This works well in South Africa where these 3rd party systems are relatively well spread around and, most importantly, all centrally connected. It will not work anywhere else in Africa because they do not have a Bankserv (central switch) and well distributed infrastructure. It also makes their services tend to be expensive because they have to pay "carriage fees" to these 3rd parties. So while the services of Wizzit are very cheap, the net cost to the customer is still pricey.

Wizzit has become the pet of elites who parade it around in order to elevate their own status. I think Brian Richardson is genuinely dedicated to the cause, but has been hijacked by "fame and funding" set.
Joseph Manthi in a separate rejoinder says:
What I see as being an important driving factors towards achieving pure e/m commerce in our neck of the continent is as follows:
  1. A technology agnostic systems that will interface with all the banks, card issuer, business and mom/pop stores. XML/XSL as a technology comes to mind.
  2. First responders - business on the cusp of greatness that are willing to test these systems
  3. The infrastructure, cheaply available, that will support this new paradigm
  4. The practice of e/m commerce
  5. And then the legal framework. English common adage: Occupation is 9/10 of the law. The law will follow the practice.
This is clearly an area that is generating a lot of attention and one whose developments I hope to track.

Technology boom in Kenya exposes shortage of skilled, experienced workers

A recent article in the Business Daily highlighted the fact that there has been an alarmingly high amount of churn within the ICT sector in Kenya.

Largely driven by the burgeoning telecoms sector which sees two new mobile licensees launching into the market over the next couple of months, several senior executives have left cushy jobs with some of the incumbents to join the newcomers. Job areas that seem to have a high demand include technical positions (CTO, tech managers) as well as marketing and legal.

What does this portend for investors who are looking to get into the rapidly growing and high potential ICT sector? Qualified and experienced management are the mainstay of any enterprise and even more critical for startups or new entrants into the market.

Sunday, July 6, 2008

Legislation and Regulation for e-Commerce in Kenya

Herebelow is a brief circulated today by the Kenya Private Sector Foundation. This comes in the face of the simultaneous drafting of various key pieces of legislation that will affect e-commerce and online trading in Kenya in general. These include:
1) Electronic Transactions Bill
2) ICT Bill
3) Freedom of Information Bill

Legislation and Regulation for e-Commerce in Kenya

Kenya ICT Federation (KIF) - Briefing Note # 3 - Report - Public Panel 19 June 2008

Electronic commerce (e-commerce) will add at least one percent point growth to Kenya's overall economic growth within five years. This is contingent upon the adoption of legislation that supports electronic transactions.

Kenya, as an emerging economy and regional leader, lags behind in having a legal framework for e-commerce in place. The current situation is an anachronism hampering national development, placing provincial centres at a disadvantage, and harming global competitiveness. Both external and internal trade require the new framework.The Kenyan private sector strongly supports e-commerce legislation, as well as legislation of the Information and Communication Technology sector that guarantees an open market and promotes innovation.

Why e-commerce law?

Today, legislation supporting electronic transactions represents the single most powerful innovation opportunity in the legal framework of the ICT sector. Legislation is needed to:

  • Legalize e-commerce transactions by recognizing an electronic signature
  • Manage and control e-commerce risks
  • Remove e-commerce barriers

KIF has studied drafts currently circulating in the public domain, the Information and Communications Bill, 2008, and the Electronic Transactions Bill, 2007, respectively, both of which are of the highest technical standards. Public panels and hearings with sectors of the economy (including tourism, agriculture, ICT) have been held on 6th and 27th May, 4th June and 19th June. The Kenyan private sector has expressed overwhelming support for urgent legislation of e-commerce.

Suggested improvements in Bills - The public panels and hearings to date have yielded the following important issues for improvement in the current Bills:

  • Provisions on who can prosecute are missing
  • Liability of Internet Service Providers must be demarcated
  • Clarification on which commercial documents are excluded from proposed legislation
  • Eliminate any ambiguity on admissibility of electronic evidence
  • Need for data protection and privacy provisions
  • The Bills are more lenient on e-commerce fraud than on traditional fraud
  • Remove inconsistencies in determining crimes and punishments
  • Provisions for the inclusion of cyber-crime within the scope of the Extradition Act
  • Creation of an Administrator for e-commerce laws whose functions will be policy implementation and advisory, as a multi-sectoral body with industry associations including KIF, lead regulator Communications Commission of Kenya and co-regulator Central Bank of Kenya

Gains in tourism, agriculture, healthcare

Industry sectors, notably the tourism industry, are expressing their desire to see e-commerce covered by law. In tourism, on-line travel bookings have exceeded 80% in the USA and 50% in Europe. Decline in off-line bookings is in ample evidence. Those destinations that cannot legally support abundant on-line booking, such as Kenya, will loose market share. E-commerce in agriculture will improve small-holder's living standards. Great impact is expected notably in the coffee sector that provides livelihood to at least 5 million Kenyans, as well as in the dairy industry. Healthcare efficiency and affordability will improve by on-line health data management systems. Business operators in rural towns and rural centres have also expressed keen interest, as they see scope to address issues of trade efficiency and security in rural Kenya.

What is e-commerce

E-commerce is a method of trading that replaces paper-based documentation by a mutually binding electronic protocol between buyers and sellers. E-commerce is gaining ground globally and has become an irreversible trend. Many trading partners are already practicing e-commerce, by mutual agreement, also in Kenya. However, e-commerce will reach its full potential when parties that do not know each other are able to trade with full mutual protection under the law. This will benefit large numbers of consumers and businesses, including small-holder farmers, tourism operators, small-scale industry and services providers in almost any business sector.

About KIF

The Kenya Information and Communication Technology Federation (KIF) represents the ICT industry with Government and with private sector bodies e.g. Kenya Association of Manufacturers and Kenya Private Sector Alliance KEPSA. KIF is a legally registered membership based Association, made up of trade associations and professional bodies within the national ICT industry, as well as commercial corporations. KIF has been accepted as the private sector voice of ICT by Government. KIF contributes ideas to key sectors like healthcare, education, agriculture, construction industry, and last but not least supports e-government development. KIF is a membership-driven organisation. Members bring issues on public policy and industry development forward for KIF to take action. Issues include: innovation promotion, education improvement, duties, taxes and levies, rural ICT investment. KIF has a strong and active network, with excellent relationships with all government agencies. KIF membership is open for market segment associations and individual companies. Membership charges are annual and based on company size.

Wednesday, July 2, 2008

Kenya to soon get NASDAQ-like Exchange to promote funding at bottom tier

It's very exciting to see that the Capital Markets Authority is stedfastly progressing towards the opening of another stock exchange to service Over The Counter (OTC) transactions.

The OTC market is expected to primarily serve Small and Medium Enterprises (SMEs) engaged in productive activities such as manufacturing, information technology, finance, land-related investments.

Going by experiences in other countries it is clear what the impact of the introduction of an OTC market in India in 1990 (!) has had on that economy. The OTCEI in India calls itself the exchange for Technology and growth stocks and has supported the capitalisation and growth of enterprises that have become worldwide brands. The Indian OTC market has over 115 listings.

This will definitely be a significant milestone in the development of Kenya's economy as current estimates show at least 22,000 SMEs which serve as potential to list on the OTC.

It is anticipated that the OTC should open by around October later this year.

Youth Enterprise Fund succeeds in leveraging funds for youth

It is almost official, the Youth Enterprise Development Fund has succesfully negotiated deals with several commercial banks where the banks are providing between 5-9 Kshs for every one that the Fund gives to youth. This leverage will result in close to 10 Billion Kenya shillings which will be available to youth across the nation to support the enterpreneurial activities.

Having already reported a 90% success rate in payments against loans advanced to the youth in 2007, the YEDF expects to maintain the good record while boosting the disbursement of funds through the new partnerships.

Also interesting to note is the move this year towards seriously considering how to start using equity instruments to support the youth.

All I can say is more, more, more!

Tuesday, July 1, 2008

Linkages between industry and academia - all talk and no action?

Universities have long served as the traditional seats of innovation
and birthplace to many world changing technologies and businesses.
This has proven to be true in almost any country that can boast across
most 'developed' countries and even in some that are still 'developing'.

This phenomenon, however seems to have no traction in Africa as most
private sector players tend to spend millions on inhouse innovation
and R&D while bright and innovative uni students conceive,
conceptualise and experiment with potentially earth-shaking ideas that
generally tend to get filed away into some archive or stored in dusty
folder in a lecturers heap of unread student projects.

So I take the statements made by the Chair of the Kenya Private Sector
Assocation at this year's annual engineering students conference and
exhibition with a large pinch of salt. By his saying that the Kenya
Association of Manufacturers wants partnerships with colleges I fail
to see how this theme can be moved from talk into action.

The exhibition which is usually organized by the Chair of the regional
chapter of the IEEE, Kevit Desai, has yet to receive the kind of
presence and significance that such events should carry. I think that
besides simply calling for students to come up with new, exciting
ideas that they can demonstrate year after year (this year there were
250) it would be better to add on by having some kind of investment
matchmaking pitch to try and fund some of the more promising projects
and turn them into businesses. There could then be an annual review of
such projects that have received funding and inevitably, success
stories that would inspire students and investors alike to take each
other more seriously.

I think I'll go look for Kevit and share these thoughts with him so
that next years event can have a bit more spice and so that we can
start moving this into less talk and more action.
Sent from my iPhone

E-Commerce/M-commerce - which way for Africa?

As pointed out by White African in his blog, there are lots of ideas flying around regarding payment solutions that can both fit and function according to the needs of the broader African populace. Top amongst these is the opportunity (or should we call it challenge) that mobile telephony offers.

It has been well documented by the ITU that mobile telephony in Africa is growing faster than in any other part of the world. This is supported by World Bank reports that "The African mobile market has been the fastest-growing market of all regions, expanding at twice the rate of the global market." There is therefore every reason to see mobile telephony as an avenue towards delivery of financial services to the largely unbanked population of Africa.

White African very elaborately says that "What we need is a carrier and bank agnostic ecommerce platform for Africa." This is further borne out in his discourse on the benefits of such a platform and the potential risks associated with current models that are tied to a single network operator. A couple of years ago during a period of much reflection on the same subject I came across a company that has implemented such a system in South Africa.

Wizzit - mobile banking in South Africa
Wizzit - is the name of the South African service that provides a cellphone based banking and transaction system. The company deliberately kept a low profile during it's early days to avoid been stonewalled by the larger banks in South Africa and instead developed it's product in partnership with a small bank that had enough flexibility and innovation to support the development of the product. The most significant aspect of Wizzit is that it works across all networks i.e. it is not linked or tied to any of the mobile operators - any subscriber with any network can sign up and use the service by simply purchasing a 'starter pack' for the equivalent of Kshs 60 (US$ 1) at any filling station convenience store or major supermarket.

Employing the Unemployed
Another very cool aspect of Wizzit's intervention is that instead of going the conventional route and hiring a sharp and savvy team of marketers and sales people, they created something called Wizz-Kids and invited unemployed youth; trained them, suited them up in very cool, branded gear and sent them out into the townships, rural areas and nether regions of the country to sign up customers. The initial team of close to 1,000 kids brought in over 10,000 accounts and in excess of 100,000 transactions within the system within the first couple of months. Since it's launch in 2004 Wizzit has provided thousands upon thousands of South African youth with employment.

Banking the Unbanked
Users don't have to have a bank account, but get a Maestro Debit card with the starter pack, which is linked to their Wizzit account which they can load up with money at any of thousands of agents, post offices and bank branches across the country. Once an account is loaded they can make person to person payments or transfer money to any other Wizzit user or merchant, load up airtime and pay for utilities. For those who need cash, a network of 'cash back' outlets at post offices and major supermarkets countrywide is available.

What about the rest of Africa?
Wizzit's innovation has had an incredible impact in South Africa but unfortunately has not been 'exportable', 'transferable' or capable of replication in countries outside of South Africa. In 2005 I made a number of efforts to engage with Wizzit guys and discuss the possibility of bringing the brand and model to Kenya. Unfortunately the fees and percentages that came out of these discussions were unbearable (or to be more precise commercially unviable). And for whatever reason, no one in other countries seems to have been able to put together a similar package of partnerships, agreements, legal loopholes to allow delivery of a similar model (at least none that I know of)

So, what can we do about getting something like this going in other parts?