This week I have been on a Learning Journey with Next Africa in Nairobi, Kenya. And I am back with many facts, impulses and emotions. From a country with 47 million inhabitants, whereof 60% live in so called informal settlements (former: slums). A country that ranks #77 in the global innovation index (Austria ranks 25), where entrepreneurship is not supported by the government, but still keeps its entrepreneurial spirits up!
Digital Africa: You need to solve problems, cash does not solve!
Kenya has many problems to solve, such as...
80% of the people do not have a work contract.
Partly because 70% of the economy is agricultural, but still 40% in the city do not have a job. So Johannes Degn and his CoFounder started their business for providing instant and reliable services such as installation & repair, beauty & wellness and cleaning & care. With Lynk they close the gap of high demand for repair services that is not met by the market and the craftsmen not finding jobs, as vocational training was largely reduced in Kenya. By not only providing a platform, but also digging deeper in the value chain by training craftsmen and guaranteeing for the quality of their services.
People in the villages do not have access to electricity.
M-KOPA Solar is the global leader for “pay-as-you-go” energy services for off-grid customers. Which means easy to install, out-of-the box solar systems to provide a family in the rural areas with light, a fridge or even a TV. The "product" includes the spare parts, the installation, a payment plan and a local dealer who is taking care of the delivery, service and even the reverse-logistics in case of aging-out of the components. For a deposit of approximately 30 USD you use your device for a daily rate of 50 Cents, for 420 days. Energy becomes affordable and decarbonised for 750.000 households.
80% of the people do not have access to the internet, BUT Mobile Services.
So how should they pay for services such as M-KOPA SOLAR? Safaricom introduced Mobile Money (M-PESA) back in 2007, providing the possibility to transfer money from C2B (e.g. pay for M-KOPA SOLAR), B2C and C2C (transfer money from the city back home to the family in the village), without being connected to the internet. Based on USSD codes. Mobile money suddenly connected the rural areas and informal settlements which met a big need, as the impressive marketshare of Safaricom (85 - 90% in revenue) shows.
Back in 2012 Safaricom additionally introduced a feature for short term financing. Solving the problem of working capital, for small businesses. For 2% interests per day and a transaction fee small businesses can easily borrow money. Only 2% of the approximate 100 Mio $ is not paid back. Whereas Safaricom has no banking licence, the interests (more than 50 million USD) are dedicated to CSR projects, which makes Safaricom the largest CSR player in Kenia.
How to send goods back home to the village?
In Kenya there is Copia to send goods back home via mobile commerce instead of finding someone for a private transport, including extra costs. Copia is "the Amazon of Kenya". "We are in the business of building trust.", as Tim Steel, the CEO put it. Integrating the human factor in mobile commerce: more than 6.500 local dealers are the "outlets" of Copia, providing a delivery rate of 96% at costs 6 times lower than Amazon.
The secret sauce? Building trust by the local agent, mobile payment (such as M-PESA) and good prices. Which to my estimation is the non sustainable part of the model: the sourcing office in China.
Only 20% of primary school graduates meet international performance requirements
Eneza is a learning service for children 10+ in order to improve their skills via an SMS learning platform. If questions arise, a "ask the teacher" feature provides the matching teacher in order to answer the open questions. For 3 cents per day, children improve their performance after 9 months by more than 22%, as a field study has proven recently.
Qualified engineers do not find jobs.
Andela offers "Engineering as a service" to the US and Europe. As members of international developer teams, Andela employees work with a 5 hours time overlap (due to different time zones), in contracts of min. 1 year. Which makes it possible to focus on accountability & results and not hours.
The principles of Digital Africa
As mentioned above the strong principles of Digitalisation in Africa are:
- Human connectors as catalysts for digitalisation: whether the local agents at Copia or M-KOPA SOLAR or the teacher pool at Eneza, humans connect to humans, making the digital service a trustful experience.
- Mobile money as entry without barriers: connecting everybody with a mobile phone (which are 90% of the population in Kenya) to the digital commerce.
- "Pay per use": as due to the poverty of the people they live and plan from day to day. See M-PESA, M-KOPA SOLAR and Eneza above.
What we can learn from that? In my opinion all 3 principles would strengthen the eCommerce even in Europe. As we are working hard on Experience Design in order to connect people, why not use existing "human infrastructure" in retail, in order to reconnect our digital businesses. Including people without credit cards or banking accounts could open new chances and markets.
Leading Digital Africa
What we found in each of the visited companies was a clear set of values, present at all touchpoints, such as meeting rooms, screens and even elevators. And a people-oriented leadership style, pointing out the expertise and the effort (!growth mindset) of every employee. CEOs stepping back and letting their team present what they do, I could literally feel the passion and ownership of the employees for their responsibilities.
The values we found are all representatives of a growth mindset: openness, ownership, progress, excellence, passion, integrity, collaboration, honesty, transparency, simplicity, responsibility and trust.
Which is not astonishing, as we experienced the mentality of the Kenyans as highly open-minded and open-hearted! Paired with an entrepreneurial spirit by tackling the problems to solve for their country.
How to scale Entrepreneurship in Digital Africa?
In the middle of Kibera (the largest informal settlement in Nairobi) Tuna Panda is an Institution to digitally include disadvantaged young people by training them in a 3 months program in coding, design & content creation and iterating their business model in an business model canvas by practicing lean startup methods In order to tackle topics like the wate problem in Kibera.
The "growth catalysts" from Growth Africa in the meanwhile leading 15 entrepreneurs a year to their excellence in generating impactful job footprints, by bringing them together (P2P Coaching) in the Growth Africa CoWorking facilities and training them in a 6 months program:
- 5 days "Visioning Bootcamp" in order to be very clear on the problem to solve.
- Followed by the "Gap Labs", identifying gaps in the setup of the business: in customer journey design, value creation, the financial system, people processes and the competitive field.
- Working on measures how to close the gaps in a so called "Actioning Bootcamp".
- To finally end up with a timebound "Growth Plan" to get the business to the ground and scale it to all over Africa.
Needless to say that this process, selecting the 15 business out of 700 applicants and training them so hard, leads to a "death rate" of only 5%. Growth Africa will soon issue an "overgrowth fund", making it possible to provide the upcoming African businesses with funding capital. Which at the moment is the most important impediment for Start Ups. Which leads me to the relationship China and Africa.
Africa and China
The Chinese understand how to provide Africa with money and infrastructure which probably leaves Europe behind. As I have experienced the train that is provided from Nairobi to Mombasa (100 km/h max, not electrified, one lane only..) I see big room for improvement to deliver better services from Europe.
Kenya and Austria?
On Wednesday we participated at a panel discussion on "Flying the plane while building it" about how we might enhance the African-European innovation collaboration, hosted by Next Africa and Advantage Austria. For my opinion, the question stayed unanswered in the official part of the evening.
After that, in individual discussions we came closer to what it is, that might foster innovation for both parties: as Europeans we provide the open-minded and open-hearted Africans with the "technologies" how to get things organised and done with the "logical" part of the human brain, which we used to outbid in the recent decades. And then withstand to share our experiences in making mistakes, so that Africans will have the chance to make systemically the same mistakes again, transforming them in new solutions. CoCreating a new definition of growth for sustainably transforming this planet together!