It is remarkable how different the application and impact of technology varies across the world and also what is common among them. This is to me the most fascinating aspect that occupies a lot of my thinking time.
Take mobile payments- a hot sector right now in Silicon Valley, yet it faces a classic FUD issues (NFC, incubants pushing their own solutions to protect their businesses from disruption etc...). Most importantly consumers don't seem to really give a damn given their credit/debit cards and cash work just fine right now. However- there is a lot that can be rearranged to make things better.
 
Whilst in emerging markets, most notably in Africa- mobile banking is becoming a fundamental enabler to stimulate the economy where one did not exist before by lowering transaction costs and allowing the african masses for the first time to store value safely. There is a well known study that talks about how a countries GDP increases with corresponding increase in mobile phone penetration. But to this day, I have not seen a study that looks at core application of this technology, Mobile banking and its effect on economic development- With M-PESA moving 10-25% of the Kenyan GDP- I think such a study is needed and may yield an even more surprising result.

The point is- it is important to pay attention to technologies's effect on livelihoods around the world when analyzing market opportunities. In the west its often a "disrupting" force, a way to reimagine how things are done and hence unlocking huge amounts of value from chaning from the status quo. Not very often does technology enable whole new sectors in developed markets.
However, in emerging markets its actually a "greenfield" opportunity enabler, and a chance for a totally new kind of company or organization to address a fundamental need. What works in the western world doesn't necessarily work in the emerging market- but the technological basis is often used in both worlds- there is a lot can be unlocked in collaborating and thinking outside the box from both sides.

osted on Mambo Magazine
High up on a distant plateau in the southern highlands of Tanzania, perched beside Lake Malawi in the fertile Mbeya region is Tanzania’s newest national park, the Kitulo plateau. There is almost no information for potential visitors to the park and, fow now, a lot of personal research is necessary to pull off the trip. Most visitors won’t have the time to do the trip planning I did, and some visitors might not be able to put up with lack of travel amenities and typical safari-style luxury on offer.

However, if you want to experience a real African adventure into the unknown, and something different from the usual game parks where you are forced to sit through hours in a 4X4 vehicle in search of elusive animals, this might be for you.

Kitulo is primarily a hikers’ and botanists’ paradise, but the place would appeal to anyone who wants to get away from it all and experience remote mountain life with stunning and varied scenery. Like the green, cool mountain area of Lushoto, it would make a great getaway spot in the summer months for those living on the coast in Dar es Salaam or Zanzibar and wanting to escape the heat in December-February. This also happens to be the best time on Kitulo for the spectacular flower bloom season that earned it the name “Serengeti of Flowers” by researchers or “Bustani Ya Mungu” (‘Garden of God’) by locals.

Day 1: My journey began in Zanzibar just after the Zanzibar International Film Festival. I slept at home in Dar es Salaam overnight, and promptly set off at 5.30am. Yes, 5:30am - pay attention as this is the time you’ll need to get up every day to make the trip happen smoothly. Road trips in Tanzania need maximum daylight time. Driving at night is simply not advisable. Distances travelled on known stretches of road often exceed 400km and lesser-travelled and mapped roads can be almost any distance, therefore the odds of completing each stretch successfully with time to spare and explore increase the earlier you wake up.

By 2pm we reached Iringa, where I met with family friends of the Asas Group, transportation and dairy products producers, who helped us ask around and research how to get to the Kitulo plateau. There is no readily available information (even online) to book a guide or room and board in Kitulo, let alone which road drive on to approach the park. We used our time wisely to source this information - after a few phone calls we were finally put in touch with Solo, a guide at Tanzania National Parks , who told us to take the Chimala turnoff on the Iringa to Mbeya road to reach the plateau - and that was that...

Day 2: At 5am, we set off and about 260 kilometres down the Iringa-Mbeya road we reached the Chimala turnoff, which was also signed for the Kitulo plateau National Park. Iringa is fairy temperate in June (for Tanzanians, read COLD) and so is the rest of the Mbeya region, so expect lots of low lying fog on the road in the morning. At times this creates strikingly beautiful scenery, especially as the sun rises.

Ascending up to the plateau begins the first adventure - the driving conditions are tough to say the least. The road can test even the bravest 4X4 drivers as you climb from 1,100m to over 2,000m (6,000ft) to reach the lowest levels of the plateau. Occasionally, you see overloaded buses full of locals coming the other direction and you can only wonder how often they get stuck. I wouldn’t recommend public transport for tourists. One thing is for sure, you’ll need a very reliable and powerful 4X4 vehicle to get up here safely.

At the top, a further 30 minutes’ drive along a nicer road leads to the busiest town on the plateau, Matamba, where the park headquarters is located. We arrived around noon. I had planned to do a tour of the park and descend onto Matema beach that very day, but was quickly given the information I should have been able to obtain before setting off on the trip:

"No, you can’t do that all in one day, the hike itself takes up to eight hours, and Kitulo Park itself take a few hours to just browse… There are at least seven hiking trails to explore in the park itself..."

It became clear that we would have to stay the night up on the plateau and proceeded to check in at Mama Izengo, the local guesthouse in Matamba (there are no fancy hotels). We paid about TSH5,000 (USD3) for the night, excluding meals. Whilst at the park headquarters, I proceeded to check the guestbook. I counted no more than 100 tourists during all of 2010, about half were German or Swiss. The park officials told me that they had seen dramatic rises in numbers in the past few years! Just to put the 100 visitors in perspective, I was the first visitor in the last two weeks. This is not surprising given the park is barely ten years old and is not on the main tourist circuit.

After hiring a guide and paying park fees, we spent the rest of the afternoon exploring the park itself, which was even higher in altitude at 3,000 metres. The place is incredibly tranquil and resembles something you’d see in the Scottish highlands with meadows and rolling hills full of bright and unique flowers. I had come in the dry season so the flowers were not in full bloom, especially the unique orchids the park is famous for (these had been eaten by locals or had dried out), but despite that there were enough year-round flowers to see.

Other attractions included waterfalls and small caves to explore. As you wonder around the plateau there is evidence of fresh water everywhere as little streams wind their way across the plateau and down the mountains. I was reminded that the plateau is the ultimate source of water of Lake Malawi, Mtera dam and the mighty Ruaha river that winds through huge areas of Tanzania towards the Indian Ocean. Without the plateau these ecosystems, which support a wide range of life, would not exist.

Day 3: The next day was the highlight of the trip – descending from the plateau onto Matema beach on Lake Malawi. Setting off at 5am again, we picked up two guides including one that was a trainee and another who had done the hike regularly.

A quick note on guides: it is strongly advised to hire one as you do not want to get lost out here - I heard stories of visitors who were stubborn and ended up getting lost for days on the plateau. Phone reception is spotty; for those concerned, Vodacom works best, and Airtel kicks in once you start descending through the Livingstone mountains.

The roads were frosty and temperatures hovered between one to three degrees Celsius at dawn. At times the road led to some spectacular scenes down below where you could see the distant Lake Malawi - after 68km by road we reached the town of Bulongwa. On the way we passed through the park again as day broke to reveal some amazing landscape photo opportunities in the dawn light.

From Bulongwa, I said goodbye to the vehicle to meet me later that day at Matema beach. Gaspa, my driver, had to drive down the plateau and rejoin me at the beach, a distance of at least 100 km to circumvent the mountains. Meanwhile, I was some 2,500m above sea level and would descend through the Livingstone Mountains/Kipengere Range onto Lake Malawi at about 500m. Talk about a short cut... this is a full 2,000m descent over about 11km...

As the hike began, I became concerned about the frosty path. Both the guides and myself slipped several times and before long a passer by climbing the path the other way had to cut me a walking stick that I badly needed to help me balance. We walked across knife edge ridges that are not for the faint hearted.

Interestingly I saw more flowers here than I did on the plateau. Some species looked similar but slightly different - further showcasing the amazing biodiversity in the area. The plateau environment quickly gave way to the Livingstone forest - if you have hiked Kilimanjaro one can’t help but be reminded of that hike, especially on the day 2-3 ascent or on the final descent, when the environment is constantly changing as you change altitudes. To me Kilimanjaro is about the sheer rapid ecological zones you transition through quickly.

We saw numerous migratory bird species and at one point spotted a Thomson’s Gazelle that was being shouted at by a group of monkeys protecting their territory – and where there are monkeys and gazelles, there must be leopard! I had to banish the thought and remind myself that leopards mainly hunt at night. I had other things to worry about like navigating the perilous knife edge hiking trail. I was hoping to see the recently discovered and endangered primate species unique to the region, the Kipunji, but no luck this time.



Flowers still present at the top of the Livingstone mountains/Kipengere range

About three hours into the hike, the temperature had risen enough to dry out the frost and make it more safe for hiking. However, unlike many hikes I have been on, the trail did not seem to flatten out - in fact at times it only seemed to be getting steeper. This was alarming for me as my knees and thighs were beginning to give way. In the end the hike was a seven hour continuous downhill at about 15-20% gradient.

The GPS reading later told me I only ascended 300m but descended well over 2,000m. The views give way to even broader spectacular Lake Malawi scenes pretty quickly and then the view of Matema beach, a fishing and tourist town.

The last hour of hiking was the most painful for me as my legs were hurting the most, my pace probably halved and it was incredibly frustrating how steep the trail remained right to the very end. The sun was also strongest at this time overhead and we quickly finished all our water. By around 4pm the sun begun to get weaker and we could hear the sounds of children playing on the lake beach. Some children came up to the lower slopes to collect firewood from the forest.

The hike ends abruptly right in the heart of the village - it is as if you emerged right into the town square or high street and then this gives way right onto the lake. The time it took me was seven hours, whereas the guides had quoted between five to eight hours.

I would estimate that fit hikers who are not afraid of continuous downhill could certainly do it in five hours or less. However, I heard some parties taking up to ten hours - which is alarming given you only have 12 hours of daylight. The guides pointed out to me along the way maybe one or two areas large and flat enough for a camping spot, so that is an alternative to break up the hike but would require bringing your own camping gear and would not be suited for larger or multiple groups at once.

After the hike I stayed at neighbouring Kyela Resort, about 20km from Matema beach, but visitors could choose to spend more time at Matema beach as it has some notable tourist hotels, not to mention the lake and beach. I thoroughly enjoyed the adventure – the limited infrastructure was made worth tolerating by the barely touched trails and biodiversity that is unique on earth, as well as utter peace and quiet.

The people of Kitulo plateau are very friendly and I had lively conversations that grounded me in the realities of life in the rural Southern highlands - many people are totally self sufficient and reliant only on the mountains.

I was left wondering whether mass tourism would ever reach this area - it is unlikely in the near future so long as the road to access the plateau remains such a perilous one. It’s also bound to be a niche destination appealing to hikers and botanists mainly - right now maybe a third of the visitors are researchers.

I plan to return to see the plateau in full bloom during the rainy season, however here lies the dilemma - the road conditions will be much worse yet the plateau will be even more rewarding in terms of floral display.

The other limiting factor is the lack of decent accommodation. There are plans for the Government-owned dairy farm on the plateau to open up a ranch for horse riding, and hopefully this will be matched with decent accommodation. Camping is a real option here if you have your own gear and allows you to bypass the town and experience the park to full effect without driving in and out.

Given most tourists won’t want to visit just Kitulo, I can see this being a great addition after a safari at nearby Ruaha National Park to end with an active or relaxing week. Rather than drive all the way from Dar you can fly into Ruaha via Coastal Aviation or into Mbeya region.

See more of Mbwana's photos from his Kitulo adventure

Just returned from Pivot25 conference in Nairobi, by most measures, the event was a resounding success. Good write-ups and coverage about the event can be seen from Erik Hersman and otherafrinnovator posts.

I wanted this post to focus on putting the Pivot25 event in global context and to address the progress and challenges that face the East Africa ICT Ecosystem – events such as pivot25 are great because they draw out the key players in the industry from journalists, developers, students, investors, Government and multinational corporations. Each of these players have a unique role to play in developing the ICT sector. In addition to who I met at Pivot25, late last year, I got a chance to bring in i/o Ventures Silicon Valley delegation as well as talk with the Kenya ICT board- this time I was back in Kenya to get the real local feel over a few days at the first pitch contest in East Africa.

World Class Event with a Local Focus
There’s a wise management adage “think global, act local”- this best describes the overall event- the conference ranked high in organization and execution amongst some of the best tech pitch events I have seen in Silicon Valley- indeed, many participants from around the world as far as Nicaragua said such an event does not yet exist in their countries. This is a key achievement for the East Africa ICT sector and the Kenyan community in particular. The space at Ole Sereni was ideal, the wifi worked most of the time, journalists were thoughtful and professional and most of all the entrepreneurs pitching rose to the challenge. Investors came as far away as Texas, USA.

The event had a global feel yet also had a local focus- every single mobile application pitched was either solving a real East African need or was a tailored local version  (in stark contrast to startups currently getting funded in Silicon Valley and locking up talent). For example,  I loved the NikoHapa.com location based checkin service- on the surface it looks like a foursquare clone- but actually the tweaks are very relevant to East Africa- for one, feature phone owners can check in using sms (given low smartphone penetration currently) and loyalty schemes with the merchant are built in from the beginning- the demo with Peet’s coffee at the event worked brilliantly- clearly the team were thoughtful about their piloting efforts.

Plenty of Raw & Diverse Talent- lots of Potential

The talent and entrepreneurship thirst is there. To use a metaphor, one familiar with resource rich Africa, it’s like finding a precocious stone in the ground and taking it through its process of refining and polishing to get it to market as a necklace or ring. Whilst many entrepreneurs and students pitching had some notable faults like the lack of a well thought out business model , the raw talent and potential was clearly evident. The more such events are held in East Africa, the more polished the talent will become, this will then allow teams to better connect and communicate their ideas with potential investors and partners to get their ventures of the ground. The highlight for me was as 19 year old female student, Muko Matei, who pitched M-ARV, a mobile HIV/AIDs community app- the raw passion and enthusiasm from her pitch to asking the investor to community to just “pay attention and listen”.

The fact that Muko was able to pitch in the same platform of much older and more experienced entrepreneurs was on the whole a good thing, but also highlights a key need for these sort of events to happen more and more at the University level. At world class tech universities Stanford , Berkeley and MIT – key feeders of the Silicon Valley talent ecosystem, these colleges offer a multitude of events that prepare students for the big leagues such as Pivot25 not only once they graduate, but also whilst they study, how else can the next college dropout such as Bill gates, Mark Zuckerberg or Steve Jobs emerge? Confident young entrepreneurs like Muko can get their ideas to key people faster.

I picked Muko as an example, because she’s also a woman. Whilst the women in ICT panel was fantastic, I don’t think Kenya realizes how far ahead they are in this area compared to other regions including Silicon Valley itself. On Day 2 of the event, half the entrepreneurs pitching were women and a good number of panelists and judges were strong women in the ICT sector, whilst more can be done, the role models were present at Pivot25. How can you not be captivated by Jamila of M-Farm? Silicon Valley should be envious. The diversity in talent was impressive and this is only great for the future innovation pipeline.

The Technology Platforms & Products

Given the focus of the event was mobile, there was good application of technology. It’s unclear whether any of the applications pitched would withstand a scaling challenge to hit millions of users and hence whether the code was efficiently, that remains to be seen. Most of the development was targeted at mobile web or feature phone platform such as  USSD. This reflects the high dependence on Nokia phones and low penetration of smartphones.  Given the success of M-PESA on Safaricom, which is built on a simtoolkit USSD platform, it was no surprise to hear from a panel “We’ll be relying on USSD as a means to distribute applications to masses in East Africa for the next 3 years”.

The other key product area that was noticeable was the application of SMS as a means to distribute information. I find it amusing in Silicon Valley that the application of SMS as a strategy is only now coming to effect – take for example the recent popularity of Twilio which has spanned numerous SMS applications and the hot Group SMS category of startups such as Groupme and Beluga. Innovation in SMS at pivot25 was evident in companies like Bizito, which wants to become an appstore for premium sms, allowing sms publishers to create, market and monetize their content. Or Tanzanian startup Bongolive, an opt in SMS local merchant advertising platform. Some technology platforms I expected were not evident, given the popularity and growth of facebook in Africa, I was surprised there were no facebook integration apps pitched.

I believe the reliance on SMS and USSD platforms given the dominance of basic feature phones was overstated and the emphasis on future platforms such as Android understated. Richer platforms beyond SMS and USSD, maybe paired with the mobile web, make a lot of sense and is a bet on the future. Real innovation on mobile was not unleashed in Silicon Valley and then the rest of the world (bar maybe Japan) until Apple broke the dependence on Telcos via their appstore and ability to update the mobile operating system without depending on telcos- this freed the developer and entreprenuer from the mercy of Telcos  in many ways unleashing a wave of innovation and new industries we are still experiencing and many platforms have been playing catchup ever since.

Once smartphones break the $50 barrier (they just broke the $100 barrier with the Ideos Android phone from Safaricom), I believe we’ll see similar effect in Africa. It was disappointing that Nokia, a sponsor of the event, did not even talk about the importance of Windows Phone and no one asked! If we are to invest in East Africa developer talent, we should be preparing our developers for tomorrow, not just the present. Google’s Android may end up having an upper hand given their more defined and stable mobile platform strategy.

On mobile banking and m-commerce areas, I saw a number of innovations around solving key integration issues, whether it is Craft Silicon building custom m-banking apps for banks in a B2B fashion, or KopoKopo, a mobile money integration across mobile payment platforms across East Africa. Many entrepreneurs took things a step further and have started to apply m-payments into commerce. It’s clear that the leadership position Kenya has established itself with mobile banking thanks to M-PESA, we will continue to hear more global headlines stories in this space.

The loud cry from the head of Equity Bank’s mobile payment division regarding the unfair advantage and lock in Safaricom has on M-PESA was heard – it reminds me of the Microsoft platform wars and the hindrance to competition of innovation the dependence on Windows created – Safaricom with 70% or so share of the market can exert their dominance in the m-payments space for some time to come as long as it generates profit – this challenge is certainly not  new in the technology space globally, it is up to Government regulators to ensure that their policy decisions reward innovations created by Safaricom but don’t hinder future innovations that benefit everyone. Given the Kenyan Governments stake in Safaricom, one has to wonder how quickly they might act to open M-PESA in Kenya.

Financing Misperceptions (Venture Capital and Angels)

If there was one topic that was not adequately addressed for whatever reason, whether structural or by fault of who was invited on the panel by the organizers, it was definitely the VC panel. By any measure, every single startup or entrepreneur that pitched at pivot25 that was seeking financing, no one asked for more than $250,000 to get their venture from prototype to initial business. So it should logically follow that angel investors would be most interested to connect with entrepreneurs at the event. Instead the VC panel consisted mostly of later stage financiers such as Acumen Fund and East Africa Capital Partners.

Whilst Paul Kukobo of the Kenya ICT board made great comments regarding how entrepreneurs needs to beg, steal and borrow from friends, family or bootstrap their venture and do everything that is humanly possible to show progress such as signing early customers and assembling a great team without asking for money- the issue of angel financing was not adequately addressed. Many in the audience who were angel inventors could have better served to be on the panel – in the lobby in conversations after, most investors present said that ideas were good, but for them to be fundable, they had to take 2 main steps1) Expand a bigger vision (e.g. East Africa vs Kenya markets) and 2) Have a better business plan and focus on building a business inc. team.

Indeed, very few entrepreneurs pitching gave enough time focusing on how accomplished their teams were. In the end MedKenya of Shimba Technologies won I think in part because they established early in their pitch just how accomplished their team was. The fact of the matter is that you either have to raise more money by becoming bolder, showing more traction in order to reach the $0.5-1M threshold needed to make it worthwhile for VCs or more Angel investors need to emerge to fill the gap and handhold entrepreneurs to the next stage for VC financing.

Some of the more established entrepreneurs such as Michael Macharia of SevenSeas and Kamal Budhabatti  of Craft Silicon could become notable angel investors, and they seem to indicate they would by their actions to start incubators, but these seem to be more to align themselves under their current ventures vs just being an independent angel investor- one significant question and quote from the audience stands out “What are you doing to invest in the next generation of you?”. The Kenyan Capital Markets Authority task force produced a report that is well aware of this problem across East Africa – I urge everyone interested in the financing challenges of ICT investing in the region  to read it.

Other investors I talked to also agreed that we need accelerator programs beyond incubators that provide the business training and mentoring support needed. The opening of the m:lab below the iHub on the 3rd day seems to be one step in this direction.

Culture needs to be more like Silicon Valley than most realize

“Who cares about silicon valley”- said Richard Bell of East Africa Capital Partners, a quote that was repeated again almost as a triumphant key lesson from the event. I urge folks reading this to take that advise with caution. Not caring about Silicon Valley is like not caring about Wall Street in New York or London if you are in Finance, or not caring about France if you are a wine maker/vineyard. We live in a global world with natural industry clusters – in ICT, where you are matters less and less with talent emerging from everywhere and new clusters of excellence are being established all the time. India rose to become a key player due to their ascendancy in the BPO space- now Indians make up a significant portion of Silicon Valley engineers and management teams and increasingly investors both at the Angel investor and VC level such as The Indus Entrepreneurs (TIE) with legends such as Vinod Khosla.

The winner of the pitch25, gets to pitch at Demo conference in California with the big leagues- this will be a fantastic opportunity for them and is an appropriate prize that helps challenge the best of East Africa. This is what it will take for East Africa’s innovators to be felt at the global level and in turn transform the ICT sector in a country like Kenya to become a main driver of GDP more than Agriculture as Kenya is striving for by 2030.

There are many things that make Kenya different from Silicon Valley, but it is important to remember that Silicon Valley is more an idea than it is a place especially given the diversity of the people who participate in its ecosystem – most founders of successful companies are immigrants to Silicon Valley, who often make their mark and make substantial contribution to their local ecosystem in the form of both capital and mentoring as Angel investors – who will be Kenya’s  Mark Shuttleworth (South Africa)or Vinod Khosla (India) – if anything building a bridge to Silicon Valley is a worthy goal just to ensure Kenya remains competitive in the ICT sector. You can’t afford to be an Island, but you can ensure you play to your strengths- whether it is m-banking or crowdsourcing.

I will end this post with some key cultural lessons I feel there are still universal and key to internalize to take East Africa to the next level:

Sharing of ideas and mentoring need to be pervasive: I didn’t see enough evidence of this at Pivot25, but maybe we are in the early stages – the folks at iHub are doing a great job helping everyone out and they have great intentions, a number of local companies softly announced they planned incubators under their own companies, you have to wonder whether they’ll collaborate. ICT is not zero sum game – one needs to grow the pie and you’ll have a bigger slice for yourself. Google ultimately benefits the more the internet access is spread from PC to mobile even if it generates new competitors.  What if M-PESA’s platform was more open with an API- would the ecommerce innovation unleashed result in even more benefits in the form of profits for Safaricom?

Technology is not often enough: There needs to be increasing focus on companies adopting lean customer development methodologies and spending more time talking to their target customers. The term “Pivot” is widely used in Silicon Valley to describe a change in direction after new insights after putting out a product to market. Many of the East African entrepreneurs pitching didn’t show signs of this, nor did the panels believe enough in teams to adjust, questions like “what are you doing to compete with foursquare?” often ignored the very nature of the team’s willingness to adapt and differentiate- at least that should have been the response of startups asking questions like this. Investors bet on teams and execution, not ideas. One investor even mentioned that ideas alone have a negative Return on Investment (for taking up valuable time of the investor without showing any progress).

Exits for Startups are not there and need to develop: Finally, it’s important to note that there has yet to be a successful liquidity event (acquisition or IPO) for an ICT company, even established companies such as Craft Silicon or SevenSeas have not been acquired or don’t seem confident to reaching an IPO locally. More big companies need to recognize the innovation happening within startups and use their cash to buy innovation to further propel them. The only big company with that seems to even remotely look like they might be capable of this is the  MIH Group under Naspers, the south African media giant with global reach that owns a share of promising startups from Facebook, Twitter, Zynga (through investments in  Russian Digital Sky Technologies), Mail.ru and Tencent across the major emerging tech hubs. Locally they own East African directory Mocality, Ecommerce marketplace Dealfish and Kalahari- they have are also sponsoring the newly launched m:lab mobile incubator.

“Have you heard of the Mpemba effect?”- a director at the Commission for Science and Technology for Tanzania asked me during talks with the world bank in setting up the Dar es Salaam Technology incubator. Chances that you, like me, do not have an idea- it is in fact a physical phenomenon discovered by Tanzania High school student in 1963 during cooking lessons with ice-cream around the mystery of  why hot water freezes faster than cold water.

The Tanzanian tech scene is little known globally or even regionally, just like the Mpemba effect. Whenever you hear about East Africa technology sector, Kenya and Uganda comes to mind- with the success of M-Pesa, Ushahidi and the presence of multiple hubs as well as offices of tech giants such as Google Offices in Nairobi and Kampala. Sometimes one wonders whether Tanzania is even part of the East Africa tech scene. Part of problem is definitely due in part to our marketing, PR and tech reporting- that needs to get better and Tanzania needs to learn to talk about its technology scene- this is what many Kenyans and Uganda comment when the occasional Tanzanian company turns up at technology conference in Nairobi.

Tanzania does have some structural challenges, for instance when it comes to web and software development, there are not enough developers graduating from the universities and the computer sciences classes currently taught don’t support programming projects- as a result most students aspire to work as a network admin at largest mobile operator, Vodacom. The University of Dodoma is set to change all that with a new IT and informatics department and professors hired directly from India. The government is working hard to make SEACOM undersea cables payoff by encouraging the investment of broadband network links into the rural inland areas. In 2009, President Kikwete and his delegation went on a tour of Silicon Valley and met with IBM, Microsoft, Google and Cisco. In August of this year,the President met with a Silicon Valley angel investment firm partner Paul Bragiel of i/o ventures to discuss working on a mentorship model for bridging Silicon Valley with Tanzania and helping create the country’s first incubator in Dar es Salaam 2011. With regard to the startup scene currently operating out of Tanzania- there are some interesting companies that do in fact show that there is indeed a wave of entrepreneurs in Tanzania, some are local others are foreigners choosing Tanzania as their first market foothold in East Africa and showing real potential.



Mobile Banking: addressing a fragmenting market

There are a few theories why mobile banking has not matched the 10+ million users that Kenya has- one of the main reasons is the fact that we have 4 mobile networks creates a fragmented mobile banking market and estimates of around 3+ million users, vs Kenya, where Safaricom’s share dominance has led to better adoption and network effects for mobile banking. Other reasons include the lack of clear marketing (right now M-Pesa is under 2 brands, Vodacom and Vodafone, which is confusing), and also a general legacy weak banking infrastructure that has led to many Tanzanians distrusting banks. Having 4 mobile banks in Tanzania, Vodacom’s (M-PESA),  ZAIN’s (ZAP), Zantel’s (Z-PESA) and Tigo’s (TigoPesa) whilst leading to fragmentation, provides opportunities for mobile banking integration companies such as E-fulusi, as well as powering Zantel’s Z-Pesa are create networking independent mobile wallet. The fact is that much easier to convince a taxi driver to accept M-Pesa in Kenya vs Tanzania- until we get user adopting the services faster, innovation will lag in this area compared to Kenya. Kenya already has numerous websites accepting mobile payment an developing an ecosystem of integrators inc. companies such as Pesapal and Intrepid’s iPay.

Accessible computing
 to the masses

One big challenge for sub-Saharan africa in general is the access to internet capable machines at affordable prices especially vs their mobile phone counterparts. Many PCs come bundled with software that is little direct use to Africans who are more interested in communication and interactions technologies that the internet provides. Payucomputing seeks to provide thin client access terminals at affordable prices (sub $200) linked up to a base station that feeds internet and tailored content- this is all wired up via a mesh network in order to increase geographical reach. Payu computing is currently piloting its solutions in Dar es Salaam and hoping to further work with wifi hotspot services to enable joint seamless solutions to internet access. Payu computing is founded by Adnaan and Amaar Jiwaji brothers, Guy-Richard Kayombya and Raymond Besiga.



Development & NGOs

A huge industry across Africa and other parts of the world is the amount of donation dollars that flows into these countries, much of the donor funds are often mismanaged and most of all, it is hard to track these funds. On the NGO side, it is hard for them to navigate the grant application process and present themselves effectively in a format the donor organizations such Gates Foundation can assess to provide money for programs- Envaya is a platform started by 2 Stanford graduates that have chosen Tanzania to pilot their NGO platform. One of the founders, Josh Stern, was a peace corp volunteer for a number of years in Pemba, Tanzania. Envaya develops and deploys software (web and mobile) that empowers and connects grassroots organizations around the world. They provide tools that allow them to easily create their own websites, and provide larger NGOs tools to support these local efforts. Envaya has a diverse team working on the ground in Tanzania as well as with Silicon Valley and Canadian roots and have signed up over 100 NGOs at last count. Envaya has the potential to be a great place for NGOs and foundations to come together more efficiently on both fund matching and coordination.

Tourism & Travel: taking control of online marketing

Yet another big market is the Travel and Tourism sector, particularly for Tanzania which has sought after destinations inc. Kilimanjaro, Serengeti and Zanzibar. Yellow Masai, a startup headquartered in Arusha and links with Silicon Valley aims to take control of East Africa’s online tourism destiny by empowering small and large hotels and tour operators alike by providing a platform similar to Airbnb that allows anyone to rent out their room- similarly Yellow Masai allows travel sector providers to list their profile and services and take advantage of a centralized marketing and ecommerce platform adapted specifically for the local market- with mobile banking checkout and payment settlement as well as sms alerts- the platform so far signed up 200+ providers prior to launch- this will allow Yellow Masai to create unique packages and listings that tourist and residents want based on the local market that international website such as expedia, travelstart that rely on legacy systems cannot effectively tap. Plans inc. implementing sms and mobile banking payments. Yellow Masai also plans to release a customizable widget that local hotels and tour operators can embed on their website and hence be able to leverage investments and traffic already flowing to their websites. The modern yet local approach should allow more control and effective marketing of Tourism and travel services in East Africa and the regions first online travel agent.

Content and media is another important and growing area in Travel. Mambo Magazine launches before the end of 2010 and aims to be a online destination magazine covering the Zanzibar Archipelago. Zanzibar is one of the most sought after tourist destination in East Africa. Mambo aims to provide engaging content using a team of journalists on the island. Mambo is founded by Rachel Hamada who lives on the island and runs a hotel with her husband.

Energy & Cleantech: social value and sustainability

Considered one of Tanzania’s success stories, D.light Design is funded by Acumen Fund and Omidyar of ebay is out to transform. D.Light founders are a talented duo having incubated the idea at Stanford’s“Design for extreme affordability” that blends Design, Engineering and Business schools for a cross disciplinary learning that allows it’s students to create a company that addresses a real social need but aim to create a sustainable business- D.light has sold 100,000s of its solar power lamps in Tanzania, recently launching a marketing campaigning around safe lighting with popular Tanzania singer and poet Mrisho Mpoto.

Addressing a related need, EGG Energy is often described as the “Netflix” of batteries in Africa. Still in its early stages, EGG is piloting a service to rent out rechargeable batteries to the urbanizing lower income populations of Dar es Salaam who cannot access electricity from the grid at less than $1 a recharge, enough to last a few days before the customer needs to return the tamper proof batteries for a charged replacement.  At the pilot stage, EGG Energy had over 200 subscribers to the service- if the idea is scaled, it can address the expanding market urbanizing lower income populations across East Africa without access to power.

Tanzania seems to be finally getting a wake up call and I have tried to highlight some promising startups to watch and to dispel any myths that there is no tech scene in Tanzania. The leadership will is definitely there especially as the Dar es Salaam incubator gets off the ground and once it has generated some successful companies, it will encourage more tech entrepreneurial activity. A few things the government needs to do is start to match its neighbors, such as the establishment of the grants to support application and content creation to directly benefit the country as the Kenya ICT board has done. This should be followed by the establishment of Venture Capital  “risk equity” to sustain companies that originates from within. This last point applies to all the sub-Saharan countries- given it now takes less capital to start internet based technology company to ship a product and test a business model. And the availability of patient capital from the likes of the Acumen fund who present in East Africa- talent and mentoring will become ever more important for Tanzania and other East African countries and these countries should tap global tech community for assistance from Silicon Valley to India. Tanzania even hosted the 2010  World Economic Forum for Africa recently, which again shows how serious the country is in tapping in opening itself up to the world.

Over the last few days I have been following the twitter chatter and blog posts on the  debate surrounding Kiva’s actual microfinance operations vs what is actually portrayed in their website.
Basically the peer to peer lending that users of the site see is not what actually happens behind the scenes. Less than 5% of kiva loans are disbursed after being posted and funded on the site. The operation is closer to when an organization says “sponsor a child for 1 month of food”, but actually what happens is the money is pooled and efficiently allocated by the organization for the best purpose- the headline becomes purely a slogan for marketing purposes to better emotionally connect and get donors to part with funds. This behaviour led to an explosion of child sponsorship programs in the 1990s and Tim Ogden explains it well  

I want to dive into Kiva here because many believe that microfinance to be the silver bullet in development. I have always been skeptical of solutions or policies that have worked in one contest being used in another totally different one- in this case microfinance is proven in south asia due to the high population densities and hence low cost to serve clients and this has not seen as dramatic an impact in africa due to low population densities in rural areas. In the end- africa needs many things, and microfinance cannot construct ports, roads and create enterprises that create 1000s of jobs and lead to long lasting sustainable financial security for africans- it is merely a stepping stone.


The notion that NGOs sometimes play service to their donors more than the people they are meant to help is an age long issue with the aid industry and it can lead to a focus on fundraising to survive rather than serving clients- Sasha's from Acumen fund explains this in context to Kiva. The business world solves this with the profit motive and a focus on shareholders which brings sustainability- in this model- serving the shareholders and clients most often brings mutual happiness- and the bigger the organizations grow, the happier both sides tend to be- at least, i.e. the model “scales well.

I have had the pleasure of seeing Kiva grow from a 3 person operation ran by the now CEO Matt Flannery and co-founder Jessica Jackley- Jessica was in fact my classmate in Stanford Business School between 2005-2007. What I can tell you then about how Kiva ran as a small startup non profit, and its goals at the time, were to do exactly what the website says now- peer to peer micro lending with a high emotional touch through its website. Money was wired to a Pastor in Uganda after details were posted on the site and the Pastor acted as the loan officer to disburse loans, collect repayments and do any due diligence and effectiveness reporting. There were some challenges related to fraud and Kiva team had to fly down to clean up , but essentially it was simple and naïve to the wider complex microfinance industry.
Kiva reacting fast by posting there actual process, something I think they should have done themselves without being prompted by the blogosphere- in any case, they reacted correctly as I believe waiting for this to hit the mainstream media would have been disastrous for them.

In the consumers need to understand the Kiva, rather than rely on a simplistic model they grew away from no matter how well it helps attract donos- Understanding Kiva means understanding the Microfinance industry<a href=""> (Matt, in response to David Roodman's, post admits that the site oversimplifies the process to consumer</a> ). It is more complex than most users of Kiva realize. Regardless of what people think of Kiva now given this new information about their operation- one thing that in undeniable is the effect Kiva has had in bringing awareness of the microfinance industry to the masses and hence rally the masses to participate resulting in additional capital – this is a net good thing.
There is good info here about how the Microfinance industry works- but essentially you need to understand that around the world- most microfinance services are delivered by microfinance Institutions. These institutions  offer microfinance products including loans, savings and insurance- they are in like traditional financial institutions serving clients with much smaller capital needs.  
Mohammed Unus won the noble prize for his work here and growing Grameen bank into a powerful force. Some of these organizations are non-profits, some are for profit and some are hybrid. The hybrid scenario is one of the key issues here since they can often have conflicting requirements to serve shareholders for profit vs serving their mission, helping the poor- Kiva has the new process of working with them and in the diagram Kiva posted, it refers to them as field partners- probably to reflect the difference in these MFIs.

As Kiva has mentioned, in the early days, the Pastor in Uganda, acted as Kiva’s first partner and effectively a “one man MFI” and for most purposes was a volunteer/employee of Kiva who had a genuine interest in serving the community by providing loans- he also understood he had to wait for funds to come from the USA from the donors before he could make loans as well as he had a duty to send money bank on repayments. This worked well and is pretty challenging given Africa infrastructure, but the kiva peer to peer process was born and it was what made the service appealing and hence led to growth. Now scaling this up 4 years later- Kiva is a global organization serving potentially millions of clients and possibly 100s of MFIs which are themselves big organizations- the chain they deal in more complex and their new updated process reflects this. As with any organization, going from being a startup to growing up into a big player participating in many channels means you cannot operate in the same manner- the  peer to peer model that was born could not scale. The Pastor is replaced by MFIs, many with different operating models (for profit, NGO or a hybrid) and hence different objectives.  A key metric that pertains to Kiva is the cost of collecting and posting the loan transactions onto kiva’s site- this becomes more challenging as you scale and deal with different MFIs It gets tougher to account for microloans-so taking a “net balance”  approach is efficient. Kiva essentially lets MFIs disbuse loans in expectation of the information being posted and actually funded on the site hook up into Kiva’s system- all the action happens before a donor funds an entrepreneur- and the accounting is taken care afterwards, funds may end up with someone else. This helps the MFIs be more responsive and client driven and hence they can co-exist with Kiva as a mobilizer of capital and bringing an emotional (albeit mostly false) face to the microfinance process. This is how Kiva best figured out that it can best slot into the huge complex microfinance industry and best provide additional value and help address some key challenges.  Kiva lets the existing players do this well and supports them with capital and tries to make them more transparent and provide a face to donors. Matt Flannery put it best that they aim to be bring transparency and accountability in the microfinance and aid industry- that is a worthy goal to pursue and I feel is the right thing for Kiva given the structure of the microfinance industry and the problems that need to be solved.

So now, what exactly is Kiva? Kiva  started of initially of more like an “ebay”- with the peer to peer microlending – now they are connecting these consumer donors to a complex chain of MFIs who provide loans as an additional source of capital, with many depending on them for a reliable source of interest free capital. Kiva is not an “Amazon” which controls a big part of the chain and hence be able to perpetuate the peer to peer microlending model on its site, and I think it’s what  consumers were lead to believe. Maybe one day Kiva will be large enough to exert influence to have it’s own microfinance on the ground agents and operate more like an Amazon disrupting MFIs and showing them a better more transparent way to operate- organizations adapt and change so you never know, but consumer donors should.

Looking very candidly on what Kiva does and what has led to their sustainable success and existence I can gleam that their core competence is:
• Connecting ordinary consumers to be able to participate in microfinance through donations and build an emotional connection between donors and loan recipients.
• Provide transparency, accountability and capital support to the microfinance and aid industry by democratizing through the web.

Kiva is not in the business of making loans- they are actually in the charity business- just like any other NGO- the MFIs do the real work- Kiva supports them with source of cheap capital and gives donors an emotional connection with loan recipients.
What off the future of Kiva? I speculate that two things can happen in this part of Microfinance (the consumer donor to MFI fundraising):
- MFIs create their own consumer facing “peer to peer” fundraising sites and hence cut out Kiva as a middle man
- MFIs don’t need additional capital from donors through Kiva due to their own operational and capital raising improvements. In short they become sustainable for profit entities. 

Both won’t happen very soon given the structure and issues in the industry. But this end game is actually one of the key issues that perpetuates the aid industry- once the original mission is fully served, there should be no need for the NGO- success can lead to the demise of the raison d’être of an organization unless they move onto another related mission.

I am sure this will be one of many posts. 
Tanzania embraced socialism under founding president Nyerere begining the end of the 1960s- The communist powers of China and Russia went up against the west to exert influence over Tanzania. China contributed to aid development projects including Dar es Salaam's international airport- ultimately western powers won over and we know what happened- multilateral and bilateral aid organizations kicked in over the decades preaching deregulation, free markets and cut in government spending with a mixed success. 
Meanwhile China grew to a major economic power it is today going head to head with western powers in the development game- I could go on about countless development projects that China has now undertaken in Africa in exhange for resources to meet China's growing demand- but I will touch on some to highlight new challenges and opportunities:

- Take a walk around the kariakoo neighborhood of Dar es Salaam and you will see many chinese residents living in apartments among the lower to middle class communities- in many cases, they are the only middle class in some areas. There seems to be no known estimates of how many Chinese residents there are in the city yet alone the country, but it is safe to assume it is on par or more than tradional westerners working at NGOs and multinational organizations. There are even quite a few tourists arriving recently.  

- They are working at small businesses from car panel beating shops to flooding the market with cheap and often fake Chinese imports and even some higher value work such as contractors in construction and of course big factories too. You don't see any working at any NGOs or religious groups.

- Tanzanians remain welcoming yet growing cautious and suspicious, in some cases fearing them- as I noted they bring in cheap and often fake Chinese manufactured goods flooding the market. It is rumored that many of them are chinese political prisoners sent to Africa on projects. On a lighter note- thugs used to robbing white expats in broad day light have tried it o  with the chinese and have been beaten- they now fear these "Kung-Fu" wielding people.   

-Then there is the impact on wildlife- alarmingly elephant poaching is on the rise to meet a demand for ivory in china and other asian countries- reducing a 1/10th of populations.  Recently seized ivory tusk DNA testing shows the majority originating from Selous Games Reserve in Southern Tanzania. It is thought these poachers are part of sophisticated Chinese and other Asian organized traffickers.

This illustrates that the Chinese are here and here to stay and well intergrated into the formal and informal parts of the economy, not in and normal ex-pat integration of NGO and multinationals we have seen over decades. It will be interesting to see how this affects the economies of African countries such as Tanzania- will we continue to deal with fake goods from mundane cheap electronics to life saving treatment drugs? Will the growing Chinese owned small businesses, provide greater employment opportunities for locals vs just the Chinese? How will Africa work with the Chinese for a sustainable partnership to protect resources, curb poaching and respect human rights? 

-- Post From My iPhone
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Franchise or retail/kiosk heavy operations are an obvious way to reach and deliver services to the masses.  Cell phone top up vouchers are probably more widely available in parts of Africa than mosquito nets or a bottle of water. CFW shops are perhaps one of the most radical franchise/retail kiosk innovations I have come across- turning an inherently centralised service delivery method of hospitals, often crowded and inefficient, to a distributed lean operation empowering local entrepreneurs and distributing health services to rural areas.

These franchise approaches have the potential to innovate in everything from utilities, IT/telecomms and healthcare. Challenges are plenty though- start with the biggest- theft. Employees running any operation are likely to be tempted to steal given how much responsibility is put upon and  especially if the turnover is high- take a popular bar with a large stock of drinks- it is inevitable that employees will sell drinks on the side or retain part of the sales for themselves- this extends even to other services, it is reported that vodacom in Tanzania lost millions of dollars through top of voucher theft until they finally made the distributors buy the full value of the vouchers for resell. Bottom line is it is hard to trust employees at such franchise or distributing operations without thought and some serious controls- some are obvious, but worth spelling out here:

- Make your operation process transparent and easy to account for service or inventory- don't assume employees will be fully trustful. This could be as crude as separating payment (with a manager you trust) from actual service or product delivery, new rank and file employees.
- reduce temptation by not having too much cash or inventory build up at each distributor or service location. Check and monitor operations regularly- show employees that you are detailed orientated to the very last penny.
- Hire the most trustworthy people and pay them enough to not be tempted to steal from you- provide enough incentives for them to stay around through bonuses and equity ownership. Too many businesses in Africa start without thinking about this- how will you grow and be successful if you don't give your employees a meaningful stake in the company and so are less tempted to steal but rather to work and improve sales. 

- Finally, factor in up to 10-20% contingency for theft in business planning- established businesses have contingency for everything such a bad debts to potential lawsuits/legal fees. In an African retail or distributor operations- contigency for theft is just good business.    <br />

Development in Africa is getting a new lease of life- after decades of policies and billions of dollars by the World Bank and IMF with varying success. Efforts by NGOs basically turned parts of sub saharan Africa into a big helpless dependent- foreign aid accounts for up to half or more of some African countries' national budgets. Even though one can point to recent economic growth indicators, fact remains, the benefits have occurred to a few and not a majority of Africans. In many places, such as Tanzania, there are little signs of a growing middle class and a huge informal economy still exists. The main coastal city of Dar es Salaam contributes an estimated 85% of Tanzania’s economic activity yet with about 5M people, barely an 8th of the country’s population.
 
But now a new set of players are getting into the development game bringing a new set of rules with the promise to save Africa. Call it “development 2.0”  we now have microfinance banking institutions lending to small scale entreprenuers and targeting women, new social enterprises, foundations and “philanthrocapitalists” with huge fortunes to spend and a new determination and focus.  With Western countries reeling from a recession, China, India and the middle east are becoming more and more active in African development as they seek partnerships of mutual interest and bring new models and approaches to providing aid and investment to Africa. Even western donors such as the USA are demanding more transparency and accountability before aid is disbursed and in many cases playing favourites with African countries that “behave” and are making efforts in stamping out corruption.

 
 Suddenly the African development landscape looks different- major recessions like the one we are experiencing creates opportunities for things to be shaken up- consider these points:

 

People- Brain Drain to Brain overflow

-       Migrant workers are not only sending less in remittances back to their homeland developing countries due to the recession but may also return home and use the skills and any leftover capital to build real businesses and bring much needed employment opportunities in the private sector. From former London investment bankers joining African banks or raising development funds for small businesses to Silicon valley engineers building the next ISP or working on mobile banking.

-       Talented new graduates from the top schools with less employment opportunities in their countries are turning to emerging markets and considering new career paths- Suddenly a team consisting of Chinese, European and American students in an energy or healthcare startup in Africa is not that far fetched.
I recently met two young American women working in an Tanzania energy startup who are living in the less afluent myananyamara suburb rather than the posh ex-pat heavy areas of Dar es Salaam's oysterbay-  their experience and perspective will be very different if they lived in and brought families to the oysterbay peninsula as is the case with many aid development workers seeking a "cushy utopia" lifestyle and risk becoming out of touch with the people thy are trying to save. 
 
Money new sources

-       Traditional donor countries are slashing development budgets to focus on their economies- recipient countries are now forced to look for new funding sources from bond issues in capital markets to investments from china and the middle east.

-       Private Equity and other investment funds looking for the next growth sectors and markets are now seriously considering investing in Africa.

-       Philanthrocapitalism donations have been increasing to Africa. For instance the Gates foundation is disbursing up to $1B a year thanks to the Buffet contribution that is kicking in this year. All this money is good, but makes ZERO difference if the reciepient countries do not have the capacity to absorb these funds due to widespread corruption and incompetence on the ground.
 
These are just a few areas that will bring both opportunities and challenges to the next phase of African development. While many organizations' marketing and PR outlets will highlight on their successes (they have to in order to raise funds and generate interest), I want to bring balance in the discussion on what is going directly on the ground with development 2.0, I also want this blog to be a discussion resource to anyone new or considering moving to Africa to join this movement- I welcome comments and guest postings. Be warned that this is not the place to just trumpet your successes- I will take a skeptical tone and ask tough questions. So you want to save Africa? There are many reasons why 40+ years of aid has not worked, some of those reasons may form the same obstacles in the next 40 years no matter how novel the approach- the fact is change, especially originating externally, is hard.<br />