Inhibitors and catalysts for Successful Mobile Services Growth in Africa: The Case of Kenya

1. The Case of Kenya
Inhibitors and catalysts
for Successful Mobile
Services Growth in Africa
Daejeon univesity korea
harare institute of
technology Zimbabwe
A Study by Tendai M Marengereke
June 2012

2. RESEARCH QUESTION
What are the essential inhibitors and
catalysts for the successful expansion of
mobile services to the population at the
bottom of the pyramid ?

3. MOBILE ICT IN AFRICA.
GSMA, A. K. (2011). African Mobile Observatory.
The mobile industry in Africa is booming. With over 620mil
mobile connections as of September 2011, Africa has
overtaken Latin America to become the second largest
mobile market in the world, after Asia.
source

4. The BOP IN Sub-saharan AFRICA.
Populationinmillions
World Population 5 billion World Population 6 billion World Population 7 billion
1987 1999 2011
POPULATION
UNDER $1/DAY
UNDER $2/DAY
100
300
500
700
900
UN DATA 2011

5. Assumptions
Instead of viewing “the poor” as helpless victims marginal
to the process of globalization, they should be seen as
“resilient entrepreneurs and value conscious consumers”
C. K. Prahalad : Competing for the future, The Fortune at the Bottom of the Pyramidsource
Reality

6. Methodolgy.
Since this paper is a qualitative research on what makes the Kenyan ICT work.
An exploratory case study research methodology was applied, which is a typical approach in qualitative research.
Yin (1984:23) defines a case study as an empirical inquiry that:
(a) investigates a contemporary phenomenon within its real-life context; when
(b) the boundaries between the phenomenon and context are not clearly evident;
and in which
(c) multiple sources of evidence are used
ROBERT K. YIN (1984) : Case Study Research: Design and Methodssource

7. Roles of each entities in the Ecosystem
Role of Government
policy and Private
Sector
Role of
Technology
incubators
and startup
culture
Role of
Mobile
Networks in
the growth of
ICT services.

8. government liberalization of
the mobile communications sector
2008 – introduction of Yu and Orange Kenya to have 4 networks
in addition to Safricom and Zain Kenya.
-
2009 – The licensing framework is designed such that, a holder of
a single license can offer many different services without additional
licenses.
2009 – established policy guidelines on infrastructure sharing in an
effort to ease the investment burden of new entrants into the market
and avoid duplication of resources
2010 – Kenya’s telecommunications regulator slashed the license
fee for third-generation (3G) mobile Internet services by 60 percent
to $10 million
Communications Commission of Kenyasource

9. Role of Government in the ICT ecosystem
GOVERNMENT
Kenyan ICT Board
Mission of making
the country a top 10
global technology centre.
Ministry of ICT
formulate and
implement ICT Policies
Communications
Commission of Kenya
It is an independent
regulatory authority
for the communications
industry in Kenya

10. Investor Detail of African Submarine cables
seacom, http://manypossibilities.net/african-undersea-cables/source
Seacom EASSy
TEAMs WACS
MainOne
GLO1 ACE SAex WASACE BRICS
Cost
(millions of
650 265 130 600 240 800 700 500 ? ?
Length (km) 13,700 10,000 4,500 14,000 7,000 9,500 14,000 9,000 9,000 34,000
Capacity 1.28 Tb/s 4.72 Tb/s 1.28 Tb/s 5.12 Tb/s 1.92 Tb/s 2.5 Tb/s 5.12 Tb/s 12.8 Tb/s 40 Tb/s 12.8 Tb/s
Completion Jul-09 Jul-10 Sep-09 Q3 2011 Q2 2010 Q3 2010 Q2 2012 Q2 2013 2014 2014
USA 25% African TEAMs
(Kenya)
85%
Telkom
France
Telecom et
al
SA 50% Telecom
Etisalaat
(UAE)
15%
Vodacom
See below
for full list
Kenya
25%
Operators
90%
MTN
Tata
(Neotel)
Infraco et
al
Ownership US
Nigeria,
AFDB
? ?

11. Grants and Other Private sector initiatives
Pivot25 App Challenge
Tandaa Digital Content Grant
Pivot25 App Challenge
The grant is offered to Kenyan citizens and companies registered
in Kenya for the development of innovative web or mobile phone
applications.
It is a start-up pitch competition setup to award winning startups
with funding, training and incubation.

12. Role of Incubators and start up culture
Nairobi’s Innovation Hub for the technology community is an
open space for the technologists, investors, tech companies and hackers
in the area. This space is a tech community facility with a focus on young
entrepreneurs, web and mobile phone programmers,
designers and researchers.
m:lab East Africa is a consortium of four organizations aiming to be a
leader in identifying, nurturing and helping to build sustainable enterprises
in the knowledge economy.

13. -
Photo Credit www.pivot25.com
Successful Mobile Services
IMF October 2011,African Economy Outlooksource
M-Pesa now processes more transactions domestically within Kenya than Western Union
does globally, and provides mobile banking facilities to more than 70 per cent of the
country’s adult population
M PESA is a small value electronic payment and store of value system that is accessible from ordinary
mobile phones. It has seen exceptional growth since its introduction by mobile phone operator
Safaricom in Kenya in March 2007: it has already been adopted by 9 million customers (corresponding to
40% of Kenya’s adult population) and processes more transactions domestically than Western Union
does globally. M
Main Uses of M-Pesa
- Paying bills, Recieving/Sending money, Saving money, Buy airtime

14. Adults using a mobile phone for money
transactions in Sub-Saharan Africa:
Country Percentage of total Population
Kenya 68%
Sudan 52%
Gabon 50%
Algeria 44%
Congo 37%
Somalia 34%
Uganda 27%
Angola 26%
World Bank Financial Inclusion Data 2012source
While MOBILE PENETRATION has been soaring an average of around 60% - 70%
BANKING PENETRATION is still below 30 - 40%across sub- saharan Africa.

15. http://www.ibm.com/smarterplanet/global/share/19jan2012/mobile_africa/source

16. Ignacio Mas and Dan Radcliffe, Bill & Melinda Gates Foundationsource
Outlets offering financial services in Kenya

17. www.mfarm.co.kesource

18. Discussion and Implications
Inhibitors Result
Localized
Content Cost
Infrastructure
Stakeholder
CollaborationLow
ARPU
Knowledge
Base/
Incubators
Successful
Startup
and
Growth
Catalysts
GoodRegulation
Eease of use
Relationship between target entities

19. Supportive
Government policy
and Private Sector
Investment
Role of
Technology
incubators
and startup
culture
Role of
Mobile
Networks in
the growth of
ICT services.
the Kenyan mobile ecosystem engine

20. So what is the key to success of the
Kenyan Mobile Services in integrating
“the poor market” ?

21. the traditional technology acceptance model
davis (1989): Perceived Usefulness, Perceived Ease of Use, and User Acceptance of Information Technology
Information Technology
source

22. tam in the african context
Catalysts/
External Factors
Local Content
Perceived Ease of
Use
Successful Startup
and Growth
COST
of
Product

23. african economic growth spurred by mobile
According to the African Development Bank, Africa’s middle class are the people with an average income
between $1,460 and $7,300 a year. These will be the main drivers of African economic growth, as it stands
the middle class accounts for more than one third of the Africa’s population .
Mobile banking as potrayed in the case of M-Pesa can do a lot to assist in bringing the BOP poupulation
into the “middle class ”. M-Banking as a whole enables informal traders to trade with other traders easily
quickly and conviniently.
Other mobile services such as M-Farm help farmers find new markets, learn prices, hence promoting their
revenues and equipping them with better market research.
On the whole the success lies with mainly the governments and the MNOs. If prices aare not affordable
the majority at the BOP will continue to be neglected.
African Development bank (2011): Africa in 50 Years’ Time
Information Technology
source

24. conclusion
Key reason that Kenya is leading in mobile money adoption is
due to regulator letting innovation lead over regulation.
The impetus for growth is mainly due to government regulation, if the laws
are conducive, services will grow and trickle down to all sections of the
population.
While the government should invest a lot in terms of infrastructure, the
private sector is responsible for funding projects such as the iHub that
create jobs and communities where ideas and innovations come from,
thereby benefiting from the intellectual products that are bred from
such incubators.
Innovation is about the movement of an idea from someone's mind
to the market. It's commercialization.

25. conclusion
Key reason that Kenya is leading in mobile money adoption is
due to regulator letting innovation lead over regulation.
The impetus for growth is mainly due to government regulation, if the laws
are conducive, services will grow and trickle down to all sections of the
population.
While the government should invest a lot in terms of infrastructure, the
private sector is responsible for funding projects such as the iHub that
create jobs and communities where ideas and innovations come from,
thereby benefiting from the intellectual products that are bred from
such incubators.
Innovation is about the movement of an idea from someone's mind
to the market. It's commercialization.