Since the original penning of my post below in October 2015 I have had time to reflect on what startups and technologies from emerging markets look like in a real sense. Over the last year I have looked further into the advances that had been made by some tech companies in emerging markets, particularly in Africa, the continent that I call home. I have found some excellent examples of companies that are created, funded and used in Africa, and work to solve problems unique to the markets in which they were born into. These companies showcase the ingenuity that is coming out of the emerging markets, and also showcase how the people on the ground creating these solutions have a deep understanding of the space that they operate in.As I originally mentioned, mobile banking and mobile phone usage in general is very prevalent in many African countries. Although not all mobile phones in circulation are smartphones, access to the GSM network through the cellphones has proliferated the use of services such as mobile banking. The issue is that although there are mobile solutions in all these different countries, all of them are disparate and supplied by a variety of different service providers, each with their own underlying GSM network.
Africa’s Talking is a mobile technology company that seeks to resolve these issues by providing an API layer of abstraction over the top of the local telecoms and mobile banking systems. This allows for developers, SME’s and many other entities to easily and affordably leverage the power of the mobile communications networks, through services such as mobile banking, text messaging and calling. Not only does it abstract out the issues of integrating with different mobile service providers in multiple countries, it also offers a layer of analytics that can be used to get a better grasp of the users and what outcomes are successful.
In addition to mobile banking there has been a recent surge in e-commerce in Africa. Although well established in more developed markets, e-commerce is a field that is rapidly expanding in Africa and other similar markets because of the ease with which the customers now have access to the internet. Services such as Konga, which is Nigeria’s largest e-commerce site, bring modern retail approaches to the masses in Nigeria during a time when internet access is becoming cheaper and more attainable. They are now a prime driving force in the e-commerce industry of Nigeria. In addition they are also a company of innovation that was showcased by Google for its implementation of their website as a Progressive Web App in an attempt to cut down the bandwidth used by their platform. They were able to showcase modern technologies on their platform that better suited the use case of limited bandwidth within the context of Nigeria.
It has been amazing for me to see the advancements that have been made by companies and startups in Africa in such a short amount of time. It continues to support the hypothesis that there is a growth market for technology these regions. Not just technology that has social impact and benefits people, but also financially lucrative technologies. Most of all, what we are beginning to see are that the stories of these companies are truly unique. In the examples that I have shared, each company tells a uniquely African story, that diverts away strongly from the established tech cliche’s that are found in the developed nations. Africa and other such emergng markets will continue growing in their influence in the global market, but also in their influence of their own respective nations and economies. We should all be alert and ready because there is about to be even more amazing innovation coming in the near future.
Editor's note: This blog post below was originally posted by Simba in October 2015 and has been updated with Simba' perspective above on how the technology startup landscape has evolved in emerging markets in the last year.
The advancement and usage of new and innovative technologies have almost always been led by established markets such as the United States or Japan. As a result, the rest of the world has generally overlooked emerging markets and the technological developments that have come out of these markets.
The term emerging markets refers to countries where the economy or market is on the rise but is not at the level of currently well-established markets. For a long time, the idea of technological investments in emerging markets being infeasible and unsustainable was accurate.
In many places, like my home country of Zimbabwe, computers and new technology devices were not readily available to most of the population. Because of the inaccessibility, the demand for the technology was seemingly very low. Also, until recently, Internet access was very sparse. Even for those who could access the Internet, it was slow and expensive. It may seem that there isn't consumer demand for technology or the solutions that technology could provide because most technology has been beyond the financial reach of the average consumer in emerging markets. That being said, technology and the various costs that are associated with it are dropping radically in price annually. As a result, it has become easier for people globally to access different types of new technologies, particularly in emerging markets.
I believe that there will be a paradigm shift in technological innovations that will come out of emerging markets as the Internet becomes more ubiquitous...
Since technology prices have decreased, the barrier to entry for both consumers and developers/service providers alike has dropped tremendously. I believe that there will be a paradigm shift in technological innovations that will come out of emerging markets as the Internet becomes more ubiquitous in these markets. With easier access to information and cheaper hardware, developers and startup companies are quickly going to be coming up with new and intriguing solutions to the problems that are present in their home markets and quite often that are common problems across similarly emerging markets. With the proliferation of the Internet, the opportunity for consumer growth is massive, and this presents a significant opportunity for innovative services that will allow consumers to leverage the power of the Internet.
It’s foolish to believe that the financial opportunity in emerging markets is small. Even Facebook knows this market presents a significant opportunity.
There is a hurdle in establishing startups and tech companies in emerging markets. One main reason being the common belief that there is little to no financial gain with starting a business in markets where the per capita GDP in orders of magnitude is less than those of more established nations. If an investor is looking to build technology that mirrors pre-existing patterns in developed tech markets, then there will be little to no financial feasibility to growing or investing in tech in an emerging market. However, if investors and startups look at these places as wholly untouched new user bases then the opportunities begin to look a lot more promising.
This opportunity was the basis that led Facebook to make its $22 billion acquisition of WhatsApp. To most in developed nations and markets, WhatsApp seems to be another superfluous messaging application that is in a world of many other messaging applications. However, to the 800 million+ users of the service, WhatsApp was a cheap and versatile messaging platform that allowed users to circumvent exorbitant carrier charges for sending and receiving messages, especially international messages. It was this enormous and diverse user base of people, many of them residing in emerging markets, that led Facebook to willingly give up almost 10 percent of its value in order to acquire WhatsApp.
By having a foothold in these markets, prior to the boom in investments, may prove to be pivotal for companies competing for global market share. Even Google is fighting for its market share by leveraging the AOSP (Android Open Source Project) and creating partnerships with manufacturers through the Android One program. Google is also investing in places like India and the Philippines, where mobile usage is growing exponentially and the demand for low-cost smartphones is high.
Thanks for the help but I think we’ve got it from here….
While it is exciting that companies like Facebook and Google are investing in emerging markets, don't be fooled into believing that the innovative products and services in these markets will only be created by major companies based in developed markets. The reality is that the most innovative products will be born out of necessity. It will be born out of the upheaval and demand for technology solutions in emerging markets. Locals, and those who have an intimate understanding of the local market mechanics, will create many of these new companies. What’s more, the problems that are found in the emerging markets most often require the insight that only locals are privy to. Often these solutions are novel, but we can even find them being implemented in developed markets because of how effective they are. For example, a couple of Americans that came to visit Victoria Falls in Zimbabwe a few years ago were impressed by how this emerging market came up with an ingenious solution to their transportation problem. While visiting, the Americans had an interesting experience with some very rudimentary forms of ridesharing that was common in the country. During their excursion, they noted how well the ridesharing system worked to optimize resources amongst the local people. One of the visiting Americans was Logan Green, who went on to become the founder of a ride-sharing service based on the model he had seen in Zimbabwe. The service, backed by Enterprise Rent-A-Car, is called Zimride. Logan Green is also a co-founder of another ride-sharing service that began as a sub-service of Zimride - Lyft. This is just one of many examples of how a solution that originated in an emerging market was implemented in a developed country like the U.S.A.
Another country that serves as a better example of ideas leveraging technology in emerging markets is Kenya. In Kenya, mobile banking has become the primary form of banking. M-Pesa is the main form of banking used across Kenya and it even outstrips the traditional form of banking in the area. This all was accomplished through a combination of local knowledge and also an implementation that made it far easier for almost anyone with any type of cellphone to be able to store money on their mobile account. This helped solve a problem that has long been an issue in developing nations by offering a form of financial security that was not cash, but that was so widely accepted that it worked as well as cash. M-Pesa brought all of the benefits of banking to the people of Kenya, even those who never had enough money to open a traditional bank account. Subsequently, many countries across Africa have started following this mobile banking trend. This trend has allowed for some truly unique use cases of mobile banking and has made financial transactions, thanks to technology investments in Africa, much simpler.
Emerging for you, emerging for me, emerging for the whole wide world.
The role that consumers, developers, entrepreneurs, and others from developing nations will play in the world market is going to be pivotal. We are living in a time when innovation is just as likely to come from a small African country as it is from the behemoths of innovation, like a G8 nation. What will be even more important is just how central some of these developments will be for significantly improving the quality of life for the people using these technologies.Whether it be new forms of banking for those in lower socioeconomic levels, or less expensive forms of communication, or even crowdsourced community development services, these solutions will improve the human experience for millions of people around the world.
We are living in a time when innovation is just as likely to come from a small African country as it is from the behemoths of innovation, like a G8 nation.
In the world we live in, we are truly becoming a better place by the advancement of technology from emerging markets. These technologies are not just some esoteric communication layer that speeds up requests; they are changing and improving lives. I believe we are on the cusp of a new age of innovation that will be ushered in because of technology from emerging markets.
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