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Friday, 20 February 2015

SOFTWARE IN THE CLOUD FOR AFRICA

In the late 1990s the fastest way I communicated with my family was by waiting in line at my high school’s telephone booth. I always prayed that someone would pick my call on the other end. 


We have come a long way in two decades and a mobile revolution has broken down the barriers that kept us apart. The rapid urbanization we see today is as a result of better communication.  It is estimated that by 2016, 500 million Africans will be living in urban areas and the number of cities with more than a million people will increase to 65.  

In these cities traffic congestion, water and air pollution, cramped and littered living spaces will continue to be a constant reminder of strained resources.
  
While all this is happening a technology revolution is quietly taking shape. 


In 2014, Mozilla announced the intention of developing a $25 smartphone in a consortium with Indian phone-makers, Spice and Intex, and Chinese chipmaker, Spreadtrum Communications. Facebook, through the Internet.org consortium is looking to bring online 5 billion people -who are unconnected- before 2020. Qualcomm, one of the partners in this consortium is investing in OneWeb, which is expected to bring high speed Internet to billions through a low-earth-orbit satellite constellation. 

The money is to be made in content, and the intention for these Over The Top (OTT) providers is to make it from these ‘new’ 5 billion people, who are mostly poor or lack the infrastructure to support connectivity. For OTT providers, Africa is a Greenfield mainly because of the inherent lack of policy and governance controls and also because they are not encumbered by red ocean competition.

The statistics are clear, 50% of Internet users in Africa are consummate users of Facebook and 80% of them connect on mobile devices. 

The innovation lies in reducing costs and increasing efficiencies in infrastructure. It also involves compression of data and making its access more efficient, to ensure that a person in a far flung village in Africa can have a comparable online experience to a person sitting in a café in New York.

On the other hand, there is a growing middle class in Africa that uses 3G and 4G connections offered by telecoms. The problem with these is that their data bundles are deceptively expensive.  For most, in this middle class, a broadband fiber termination to one’s house or business is a more cost efficient solution. 


 

Lets put this in perspective, in Nairobi, Kenya for a monthly $32 one gets a fiber connection with Internet, cable TV and phone. More people are acquiring these bundled offerings because they are perceived as not being elitist, while converging business and home needs.  To frame this market correctly, it is estimated that there are more than 129 million people above the 5K GDP per capita in Africa.

Africa's growing middle class
This middle class through the infrastructure it uses is facilitating the value creation pipeline for localized Internet based services that may allow Africa to leapfrog the challenges it currently faces.   

The ICT Development Index (IDI) gives an indication of where African countries are in order for them to become information societies. And there are three stages in this evolution.


  
ICT readiness is determined by the universal availability of infrastructure and its access in a country. This, combined with the relevant ICT skills, drives the intensity of ICT usage, which then results in outcomes that impact the society. On the African IDI, Mauritius leads and Central African Republic sits at the tail end. Seen in the diagram below.

 

The lack of qualified and skilled ICT professionals available to support organizations is a stumbling block to the advancement of Africa as an information society.

For a long time, multinationals, local blue chip companies and technology service providers hired the few qualified ICT professionals in the continent. And the larger small and medium sized enterprises (SME) market in need of quality cost efficient solutions were forced to settle for less than average solutions, which for the last two decades translated into mediocre adoption of technology, that is miles behind what is found in the western world.This is the primary reason why there is a slow and growing appeal for this SME market to adopt cloud based solutions.

The software market in Africa in the 90s and early 2000s was driven by exorbitantly priced software, as distributors placed high markups in selling software to a small niche market driven by blue chip and multinational organizations.Due to these high costs there was no business model for SMEs and pirated copies of software became commonplace, encouraged by toothless anti-piracy laws.

Post 2010, and cloud computing is slowly and steadily picking pace across Africa. The potential is immense in allowing SMEs utilize optimized up-to-date solutions in the cloud.

For most, an understanding of the immense catalog of cloud solutions available to them is essential to drive their uptake. Most due to inherent infrastructure limitations across Africa will chose to go straight to applications on the cloud, be they productivity-oriented or focused on a business function. 
 
Most SMEs prefer a freemium approach, this allows them to use a base product and increase functionality, as they need it. The eureka moment for them is when they discover that they can test and utilize the solution with little or no support from a third party; mainly due to the simplicity of the solution. Once they come to this realization, and also come to embrace online payment, their willingness to purchase a service or product from Google or Microsoft and a host of other cloud solution providers increases. However, this depends on cloud solution providers having a marketing strategy for Africa.

By and large the cloud solution providers that win in Africa will have to provide SMEs and their employees solutions that still function despite the power cuts in Nigeria, the high cost of bandwidth in Central Africa Republic and the high digital divide across Africa.


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