Africa’s Balancing Act

My friend Russell Southwood is introduced by Emeka as “a singular authority on coverage of African technology and communications.” He’s certainly the authority I rely on, specifically his brilliant Balancing Act newsletter.

Southwood tells us that he was inspired to start writing about African technology by John Perry Barlow’s article “Everything You Know about Africa is Wrong,” which he characterizes as half crazy, half fascinating. Barlow’s vision was that Africa could move from an agricultural economy, skipping the industrial revolution, and straight to the post-industrial.

Southwood sees a set of “door openers”, which could help create this sort of social and techical change. Studying the movement from fixed line phones to mobile phones, he notes a change in “selling shortage and corruption.” To get a land-line phone in Africa a decade ago, you had to fill out phones in triplicate, get signatures from district officials, and then waiting 2-3 years. Or you could pay a bribe of $10 to $30 and get a phone almost immediately. Now anyone can walk into a phone shop and get access for about $3. There’s no bribery, no corruption – instead of selling a scarce item, phone companies are now selling plenty. Southwood argues that there are other areas of life where this logic could apply.

Mobiles have gone from $1300 when they were introduced to less than $10 – this still isn’t cheap enough. Southwood thinks we’re about 2/3rds of the way through the mobile price curve. In the slums of Kibera, research shows that four people are sharing a phone – this is a market opportunity if people can reduce the cost of phones. Average monthly revenue per user for telecom companies in Africa is $10 to $15 – in India, it’s down to $4 to $7. if African phone companies can get costs lower, people in Kibera will buy phones.

Bandwidth, Southwood argues, is the fuel of the new economy. He points to the fact that a single cable – SAT-3 – connects Africa to the Internet and that the pricing on this cable is distored by monopoly ownership. In most countries, the cost began at $25,000 per megabit per second per month and has fallen to $10 – 15,000. An investigation in Mauritius suggests that the price should be closer to $3000. Activism by African geeks, including Eric Osiakwan has led to four competing proposals for cables in East Africa, each of which are using open access models and each of which are pricing at $500 – $1000 per megabit per second per month.

If bandwidth prices drop, there will be a huge market for African broadband. When Kenya put 650,000 exam results online, 250,000 students accessed this information. But there are market forces – the “stone chippers” threatened by the bronzesmiths – who are resisting this change. Many are the family and friends of the big men, the Wabenzu, who’ve ruled Africa the past few decades. When communications diversity increases, their power decreases and new market actors can make money providing communications. The money is in selling low cost goods in high volumes, not selling Rolls Royces.

What’s emerging in Africa doesn’t look a lot like Africa as we know it – ask Nigerians about Abuja, the new capital, and they’ll tell you “This is not Nigeria, this is America.” But this is a new, modern Africa emerging as Africans create their own businesses, their own media, their own markets and technology.

tedglobal2007