Wednesday, November 2, 2011

Into Africa - by Wired Magazine

If you want to become extremely wealthy over the next five years, and you have a rudimentary grasp of technology, here's a no-brainer: move to Africa. Seriously.

The internet is only now arriving, and - with a billion people on the continent still mostly offline - there exists a once-in-a-lifetime opportunity to build the next Zyngas, eBays and Groupons for a huge untapped local market.

You need only to look at the map of huge broadband fibre-optic cables currently being laid on both east and west coasts, from Djibouti to Dakar, to understand how quickly and ambitiously an entire continent is being connected. It's like being back in 1995 again, and realising there might just be a market for an online bookshop or auction website.

Don't take my word for it: David Cameron is so keen to give British entrepreneurs a foothold that he recently took a delegation of CEOs to Nigeria and South Africa to highlight "one of the greatest economic opportunities on the planet".

The trip - featuring the bosses of firms such as Barclays and the Royal Mint, Vodafone and Virgin Atlantic - was hailed by Downing Street as "an historic visit to a continent with a trillion-dollar economy and the potential, according to the IMF, to grow faster than Brazil over the next five years".

Much of that growth will come from startups that bring the mobile internet to businesses and consumers who have until now been offline. That's why Cameron's team invited along the British founders of red-hot mobile-money business Monitise, a clever text-messaging system called Frontline SMS - and your own Digital Life columnist with his trusty notebook.

It was, admittedly, a surreal four-day schedule, taking in South Sudan, Rwanda, Nigeria and South Africa that, at the last moment, was squeezed to just two days and two countries (well, there was the small matter of a domestic phone-hacking crisis to distract the prime minister's attention).

But it was long enough to get a sense of the extraordinary opportunities - at a time when McKinsey and Ernst & Young are forecasting that £92bn will flow into Africa by 2015, and that consumer spending will reach £863bn by 2020. No wonder Helios Investment Partners could recently raise a £550m fund specifically targeting the continent.

So where could you make your own tech-based millions? A few obvious markets are primed for explosive growth:

Mobile money: Who needs banks if you can use your mobile to send and receive cash? More than a quarter of Kenya's GDP now passes through a phone-to-phone network called M-Pesa and, in Uganda, MTN Mobile Money has almost two million users.

As Cameron put it in a speech to Lagos Business School, "Today, mobile banking systems mean we can cut out the middlemen and make a direct impact on the lives of small farmers who can produce more food, feed their families, sell more food at the market and in turn purchase more seed."

E-commerce: You don't need a smart-phone, let alone a PC, to shop online. The American startup SlimTrader runs a service called MoBiashara, which lets African consumers shop by mobile on basic phones. And there are more than half a billion of those in Africa.

Business directories: The British startup entrepreneur Stefan Magdalinski - formerly of UpMyStreet and - moved to Cape Town a couple of years ago to run a bunch of firms for international media group MIH, including a Kenyan business directory, Mocality, that gave many companies their first online presence. Why? Because he wanted to be where the action was.

Health: Not only do mobile phones turn into blood-pressure monitors and ultrasound devices that can connect rural communities, they can also detect counterfeit medicines: the startup mPedigree works with pharmaceutical companies to let patients text codes on packs of antimalarials to receive confirmation that they're genuine.

Leapfrog tech: If a tiny fraction of, say, Zimbabweans have access to the "big" internet, then why not make the internet accessible via SMS on their 2G phones? That's what Econet Wireless Zimbabwe is offering its five million mobile phone subscribers, turning their mobile handsets into virtual smartphones with technology from ForgetMeNot Africa that turns e-mails and chats into text messages.

Now insert your own big idea here, and book your air ticket. Sure, Africa still faces huge hurdles - in South Africa, eleven million people live below the poverty line, and almost six million have HIV; in Nigeria, 110 million out of a population of 158 million live on less than £1 a day. But when one telco alone, Bharti Airtel, recently announced £8bn in African revenue, you know it's time to abandon our traditional assumptions.

As Cameron said in Lagos, "Which continent has six of the ten fastest growing economies in the world? Africa is transforming in a way no one thought possible 20 years ago... and suddenly a whole new future seems within reach."

And why shouldn't you have a profitable role in that future?

David Rowan is editor of Wired magazine.

African roots create market for SABMiller

Brewer launches low cost cassava-based beer for Mozambican market to capture previously untapped low income earners

WITH the introduction of the first commercially produced cassava-based beer in Mozambique, SABMiller aims to increase its footprint in the relatively untapped home-brew beer market in Africa, which could be four times the size of the traditional market.

Almost half the alcohol made on the continent outside SA was made at a "subsistence" level, CEO Graham Mackay said yesterday at a Johannesburg press conference launching the product. It was a market that paid no tax and had no quality control, he said. "We always looking for new markets and opportunities."

The price of mainstream beer offered by brewers on the continent such as SABMiller and the UK’s Diageo means it is largely inaccessible to a large segment of alcohol consumers and is seen as a luxury purchase.

According to the United Nations, at the end of the 20th century, there were 315-million Africans living on less than $1 a day, which could increase to 404-million in the next four years.

Mainstream beer on the continent costs about $1, while homebrews can cost 85% less.

The informal market had "enormous untapped potential", Simon Hales, analyst at London-based Barclays Capital, said yesterday. "Your usual lager beer in the usual form is still too expensive," he said.

SABMiller will brew its Impala beer in Mozambique with local subsidiary Cervejas de Mocambique. "We hope the Impala brand gets about 10% of the market share eventually," MD of the brewer’s Africa unit Mark Bowman said. "An attractive price is important."

The beer will sell for 75c for a 550ml bottle, compared with the average price in Africa of $1 for an equivalent unit.

The brewer first invested in its Mozambique partner in 1995. Average per capita consumption of beer in the country is around 8l a year, against 60l in SA.

Impala is brewed using 70% cassava — a root vegetable that grows widely on the continent.

SABMiller will make use of the locally grown starch, which will be much cheaper to use than importing alternatives such as maize, Mr Hales said.

"It also enables them (SABMiller) to partner with local farmers and that wins favour with local authorities."

The brewer aims to increase local raw material sourcing in Africa to 50% over the next two years. SABMiller now imports about 80% of its raw materials.

Initially, the Impala brand will be restricted to rural areas — basically where cassava is grown, Mr Bowman said. "We’ll check the commercial success and in five to six months of running this then decide where to expand."

SA, which does grow some cassava, is not one of the markets primed for the product, according to Mr Mackay.

"There’s no discount category beer market in SA."

Source: Business Day