The Ghanaian Bill Gates and His African Colleagues
Herman Chinery-Hesse, known as the African Bill Gates, at the computer in his office.
The Ghanaian Bill Gates and His African Colleagues
Silicon Valley solves problems that don’t exist yet. But in Africa, innovation means using new technology to solve old problems. These are some examples. This is the first article of a series “technoguru” Francis Pisani is writing for El País giving a digital tour of the planet.
By Francis Pisani, November 13, 2011
To innovate is to solve an old problem with new technology. Each of the Africans I asked to define “innovation” gave me this same answer in his own terms.
This conception is rather far from the one you’d find in Silicon Valley, where, in general, innovation is associated with the creation of new commercial products or better and more efficient processes. The paradox of this dominant model is that even the most acclaimed, most popular innovations it fosters solve problems that don’t exist yet and create needs that we didn’t have before.
It’s very tempting to venture that, because they deal with problems in other latitudes, African innovations don’t concern us and should be ignored. This is a grave error: firstly, because they exist; secondly, because they are associated with a market of over a billion people (and the most rapidly growing one); finally, because African innovations can be extremely useful in other parts of the world.
Take the common credit card. It has barely changed since the 1950s! If the executives of Visa, MasterCard, American Express, and other companies wanted to make our lives easier, it would behoove them to take a trip to Africa.
Any of these economic titans would be surprised by M-Pesa in Kenya: a platform that opens new horizons for the circulation of money. It would inspire them. It is not, as I believed, a mobile banking system, but rather a technology that permits the transfer of money between telephones. The difference is radical: it does not require a bank account.
It was precisely the shortage of credit instruments that gave rise to the Kenyan innovators. “Four years ago, when we launched M-Pesa (pesa means “money” in Swahili, and M-Pesa “mobile money”), only a small fraction of the population had a bank account, and opening one was expensive,” Waceke Mbugua, who is responsible for marketing for Safaricom.co.ke, the first operator of mobile phones in Kenya and a promoter of the project, said to me.
“A large number of citizens live in large cities and send money each week to their families who are settled in the interior. Since they don’t have access to the banking system, they had to bring the money themselves or add it to a wad of bills bus drivers would carry by hand to give to parents when they passed through towns.”
Launched as a pilot project in March 2007 (thanks to an investment by Vodafone and the aid of the Danish government), the service already has 15 million users, 80% of them among the user base of Safaricom, which has 75% of the cell phone market in the country. Even more impressively, “the funds circulating through M-Pesa now are the equivalent of 25% of our GDP,” says Sitoyo Lopokoiyit, an economist for the company. The majority of these are transactions of half an American dollar or less. He adds that “so far, our service has transferred 11.5 billion dollars. We don’t charge interest or lend money, and the transactions are made instantaneously. The money disposed rarely stays put for more than a week.”
Today, Kenyans use M-Pesa to pay their bills for electricity, water, cable television, and school fees, and they can even be used for purchases in various stores, including very small ones. They pay or deposit money thanks to a network of more than 2000 distribution points throughout the country where they can buy scratch cards giving them a code to make transactions.
“M-Pesa facilitates the lives of the people and spares them trips to give money,” Waceke Mbugua states.
Safaricom now equips ATMs capable of giving money to a person with instructions sent by mobile phone. Not long ago, it launched a debit card that can be charged by telephone, unattached to banks but usable outside the country.
I have bank accounts (none of them substantial) and credit cards, unlike the majority of Kenyans, but the truth is that when a user arrived to recharge his mobile at one of M-Pesa’s stands in Nairobi and explained to me that he bought greens and paid for electricity with the device, I became certain that the more modern of the two of us was not the person I’d thought it was.
What’s more dazzling, obviously, is when innovation come from African themselves. Small initiatives are proliferating on that front, many based on the use of SMS to supply services that normally are provided by the web – see the article The Unsuspected Uses of SMS on the following page.
But there are some even more ambitious initiatives launched by individuals with continental profiles.
Herman Chinery-Hesse was presented to me as “The Bill Gates of Africa”. He doesn’t have even a shadow of the wealth or power of the founder of Microsoft. But 20 years ago, he created a great software company for the PME in Ghana. In reality, he is a much better person than the bad comparison to Gates would suggest: open, warm, owner of a clear vision of what he aspires to do for his country and continent.
After graduating from a university in the United States with a degree in engineering, Chinery-Hesse returned to his homeland in 1990 to found SoftTribe.com, which sells software to companies. This software facilitates the administration of their points of sale, their relationships with clients, or procedures for ticket reservation (in the case of transportation companies). Today it makes “millions of dollars”, its founder says without going into much detail.
His business’s success, however, reached a point where it was not viable to grow any more. Why? 70% of his country’s economy is under the control of the government, and the multinational corporations have the means to pressure others to serve them at knifepoint, including even ambassadors if necessary. The traditional model of annual contracts and large technical teams made things worse. “That is what confronted us when we wanted to construct a Ghanaian Microsoft,” he explained to me.
In order to avoid these inconveniences, he lifted SoftTribe to the cloud. Its software is available on the web, and his clients need only a small amount of bandwidth to download the models they need.
In place of an annual contract, SoftTribe solicits a modest quota (50 dollars) and/or a pay-as-you-go agreement. A bus company, for example, needs pay only a 1% premium per ticket. This is less onerous for the client, and the small margins from each transaction generate a considerable sum of money. “To change Africa, we have to change the mentality of the majority of Africans and direct them toward the base of the pyramid.” The pyramid that interests him is that of businesses.
Not satisfied with his success, Herman Chinery-Hesse is launching an even more ambitious project. It is ShopAfrica53.com, a kind of online commercial center whose objective is “to serve as an intermediary to small African businesses,” he told me on his veranda.
The system is based on three pillars. The first, a website for the country, permits dealers to advertise their products and clients to order them. All the transactions are made by SMS.
The second is a credit system christened the African Liberty Card (africanlibertycard.com). These scratch cards can be acquired at different vendors to transfer money between mobile phones, pay bills, and acquire funds to spend at ShopAfrica53.
The third is another extraordinarily shrewd idea by Chinery-Hesse. All the logistics are handled by traditional mail carriers (DHL or Fedex) trained to find a product on a mountain and dispatch as far as Zaragoza, Toulouse, or Miami. Everything in this rubric is accomplished by SMS. ShopAfrica53 only has to put the money at the disposal of providers at the end of each month. When I inquired about the cost of these operations, Chinery-Hesse responded with a smile from ear to ear: “the difference between salaries in Africa and in Europe or the United States leaves us a respectable margin, and we’re taking advantage of that.”
He recognizes that it will take some time for his project to take root: “perhaps five years,” but it will be enormously important. More effective than any foreign aid that will be provided during that time. “I don’t know of any country that developed thanks to foreign aid. It’s a smoke screen. We do it better ourselves, and what’s more, with dignity,” he roundly affirms.
The word “dignity”, released in the middle of his pleasant conversation, reveals the social and political conscience present in all my interlocutors. It truly seems like in today’s Africa you cannot be an entrepreneur without being a social entrepreneur and in many cases an activist.
If Steve Jobs had been African…
Bright Simmons, a Ghanaian entrepreneur 29 years of age, gave me the keys to understanding the ever-growing convergence between activists and businessmen.
With Mpedigree.net, Bright is innovating in a way that could save thousands of lives: detecting false medicine thanks to SMS sent directly from buyers to a database rigorously maintained daily. He estimates that in his country, 60% of the medicines for sale are placebos or poison, a very common phenomenon in Africa. Mpedigree is still in its start-up phase, but it’s estimated that by the end of this year it will cover 8% of the medicine on the market.
This is a company without a profit motive based on a simple economic model: take samples of between 0.5% and 1% of each box of medicine. Laboratories are more than willing to participate in a system that fights falsification.
Launching a project this natural in Africa takes too much time. Indeed, adds Simmons, “we still need to create an ecosystem that will level the field so innovation can flourish.” In his case, for example, he had to fight to obtain the one and only access code for all the operators in Ghana and the rest of the continent. The pharmaceutical laboratories have agreed to revise their medicine boxes to add a code hidden under the label which, when scratched, reveals a code the consumer can send by SMS to verify whether the product is falsified.
Most of the time, infrastructure and capital are insufficient. This limitation explains why Africa requires social entrepreneurs to innovate. “The people behind Mpedigree have been activists. It’s part of the DNA of our company,” he explains. He adds: “if Steve Jobs had been African, he would have been a social entrepreneur.”
The Unsuspected Uses of SMS
This first trip through Africa showed me a great truth: new technology counts less than the problems it resolves. All my African interlocutors coincided in this respect.
The most impactful example is, without a doubt, the systematic and extremely ingenious use of SMS, short text messages which almost every telephone in the world can send and receive.
The general idea consists of putting advanced services, those which are usually found on the web, in the hands of those who cannot buy a smart phone. This idea is becoming a fountain of inspiration in developed countries as well.
I have here three cases from Senegal, Ghana, and Kenya, countries where the market penetration of the mobile phone is still far from 100%, but the number of smart phones is only in the thousands or tens of thousands.
In Senegal, Manobi offers geolocalization services to producers of cacao, hydraulic infrastructure, and everything in between. “It’s almost impossible to access the Internet in rural areas,” explains Emmanuel Bocquet, technical director of the business, “but SMSes arrive everywhere.” They’re enough to secure an interface between telephones and databases. Once configured, these systems permit the exchange of information. “If a water pump donated by UNICEF breaks, someone can send an SMS to the database in Manobi, and it will immediately inform a specialist,” explains Bocquet.
The technology of NandiMobile, a Ghanaian company, helps businesses to know the opinions of their clients and communicate with them. “It relates questions asked by users to answers written or recorded beforehand. Little by little, it is learning how to respond by itself,” says Edward Tagoe, director of business and development. This faculty permits companies to stay attentive to the comments of their clients, just like their American and European equivalents. NandiMobile received the Best Business Prize at the Launch conference in San Francisco this year.
In Nairobi, m-farm helps farmers to know the prevailing prices for their products in both their own markets and those in other parts of the country. “A farmer sends an SMS with the code 3535 which includes the name of the product and the location of interest, and in less than 10 seconds he receives the price, which helps him decide where to sell,” Linda Kwamboka, co-founder of mfarm, explained to me.
An SMS which says: “price, cabbage, Embu” obtains the price of a typical sack of cabbage (126 kg) in Embu. If one then types “price, cabbage, Nairobi”, one will know where it would be better to go to the capital. The other two models permit one to “buy together” or “sell together”, all by SMS.
This system is not exclusive to Africa.
The company Dotgo.com has just filled the same gap…in the United States. If a user sends an SMS to the New York Times, he can receive the headlines in a section of his interest. It can also be used to learn the schedule for the next trains from New Jersey. And it seems to be the best way to register on Foursquare when one arrives somewhere. Thanks to SMS, the proprietors of a smart phone obtain answers more rapidly, and others gain the possibility to interact without the cost of sophisticated apparatuses and their expensive plans.
A beautiful example of how technology used in Africa can solve our own problems.
Tags: african entrepreneurs, african liberty card, bright simmons, herman chinery-hesse, m-farm, m-pesa, manobi, mpedigree.org, nandimobile, shopafrica53, sms, sms business, social entrepreneurship, softtribeYou can comment below, or link to this permanent URL from your own site.