By Lai Kok Fung, BuzzCity CEO
In my hometown of Singapore, Africa barely makes the news and when it does the headlines are invariably bad: war, genocide, natural disasters, poverty and AIDS. But this past week, during a visit to Johannesburg, I saw a different Africa – a place of opportunity, an upwardly mobile Africa where cell phones are making a very real positive impact on people’s lives.
TRANSFORMING A CONTINENT
“I don’t like your program, actually I love it,” Tebzozo, a South African myGamma user, wrote us recently. “We don’t have the computers but now since you guys come along, we all have computers.”
Across the continent, African farmers and entrepreneurs are using mobile phones to tap new markets and save time.
Jack Ewing writes an excellent article about this trend in a recent edition of BusinessWeek. He tells the stories of people like Grace Wachira and Ezeresi Serukeera. Wachira used to have to walk several hours to the nearest town in a highlands area of Kenya to buy materials and speak with clients. Today, she can order yarn for her homemade cardigan sweaters and talk to buyers by phone. Serukeera meanwhile provides a sort of wire transfer service for Ugandan workers who want to send money to their families. Just transfer airtime credits to Serukeera. She pays the equivalent in cash to the intended recipient (minus a small commission), then resells the mobile minutes.
FASTEST UPTAKE OF MOBILE IN THE WORLD
Twelve months ago, Africa wasn’t on our radar.
However around the beginning of this year, we noticed an increasing number of users from South Africa clicking on WAP links that we had placed across the mobile internet. These figures in turn attracted the attention of companies – from banks to the makers of consumer products – who want their ads to reach this audience.
Today, South Africa is one of our most important markets.
In February, BuzzCity served some 35 million ads in South Africa. Last month, we served almost 200 million. Three types of companies are placing these advertisements:
1. Local businesses. Financial service providers like Standard Bank, Fast Moving Consumer Goods (FMCG) like cosmetics and airtime sellers are all increasing the percentage of their ad spend on mobile channels. This is fostering the growth of boutique ad agencies specialising in mobile media.
2. Local mobile content providers. These companies find WAP channels to be the most cost effective way to convert eyeballs into purchases and subscriptions.
3. International mobile internet sites. These ad-supported sites, which are largely funded by US venture capital companies, are eager to boost their visitor numbers by advertising to South African surfers.
Rapid growth in the South African market is due in part to low data costs. South Africa has some of the cheapest data costs in the world. Prices start from just 2 rand per MB (about US$0.28) and can drop to less than 0.3 rand/MB for bundled accounts. There’s healthy competition among mobile carriers, who are even giving fixed line ADSL providers a run for their money as consumers opt for wireless over LAN connections for their PCs.
Unfortunately these low rates are not enjoyed throughout the continent. In some areas, mobile charges are higher than in Europe and the US. Prepaid card holders in the Democratic Republic of Congo pay 26 cents per minute to make peak hour calls, compared with 10 cents per minute in the US and 7 cents in Germany. The higher prices are apparently due to the extra costs associated with building (and protecting) infrastructure in areas without electricity or good roads. Some companies post armed guards at cell towers to prevent the theft of generators and fuel.
Paid mobile content is also not seeing the same sort of growth as mobile advertising. Paid content is actually stagnating or even in the process of declining. This could be due to the prevalence of free alternatives (free ring tones, for example, are readily available, though not necessarily legal) or a lack of sufficient disposable income.
Africa still has the lowest cell-phone penetration in the world (just 28%) but the continent also boasts the fastest sales growth. Take Nigeria, African’s most populated country. The mobile phone market there has grown from just 30,000 subscribers in 2000 to more than 32 million now. Another million subscribers are being added every month.
THE INFRASTRUCTURE CAN'T KEEP UP
With such rapid growth, though, there are problems. The infrastructure has not kept pace with consumer demand. There are frequent network blackouts, users often need to dial a number several times before a call connects and even then the sound quality can be patchy.
These glitches affect our business. On a good day, we see 400,000 page views on myGamma alone. But erratic network service means that on other days, we serve just 20,000 ads across our entire Nigerian network.
To its credit, Nigeria is trying to address the problem. Earlier this month, a government regulator fined a carrier 5 million naira (about US$40,000) for carrying out marketing activities without first addressing quality of service issues.
Africa is now on BuzzCity’s radar for the long term. A number of people I met with this past week told me that BuzzCity offers the widest, biggest and most cost-effective WAP marketing inventory for South Africa, a class above our closest competitor. I also receive a lot of positive feedback on our customer support for advertisers.
In addition to South Africa and Nigeria, we are seeing good numbers from Kenya, Tanzania, Egypt, Tunisia and even Sudan – but I’ll save those stories for another day.
Note: Photo by Jack Ewing, BusinessWeek