- The Challenge of Sustaining App Entrepreneurs
While on one of the earliest trips I made in my role as the managing director of the Mobile for Development Department within GSMA, I found myself in a busy market on the outskirts of Nairobi, weaving my way through a maze of stalls to the buildings beyond. I was honing in on those painted “Safaricom green”—not a hard task, as it sometimes seems as if every other building in rural Kenya is painted this color—and was enjoying spending the day talking to users and agents of mobile money services.1
Nestled amidst the market stalls I found a pharmacy painted the ubiquitous Safaricom green, so I went in to meet the owner and rattle off my usual list of questions. The pharmacy was as expected—rows of medicines, an assistant in a reassuring white lab coat. However, perched at the edge of the counter was a huge ledger used to record M-PESA transactions, and on the walls a smattering of posters advertised M-PESA services, explaining the charges and noting the MPESA agent’s number. I questioned the pharmacist: How long had he been running an M-PESA agency within his shop? About a year. Was he happy with it? Yes, very happy. Was it providing a good side income to his pharmacy? Yes, but more than that. What did he mean? He earned more from being an M-PESA agent than he did from the pharmacy. Really? How long did it take for this to happen? About three months.
Three months! Within three months the revenue from being an M-PESA agent had outstripped that of running the pharmacy, which probably had taken the man years to train for and to build up a business. What this man now was running was, effectively, a phone-enabled bank in the same building as his less profitable pharmaceutical [End Page 21] business. I asked him how the M-PESA business had become so successful so fast, and he gestured outside. I turned to look, and saw again the market stalls I had picked my way through. Most of the traders likely were his customers, people who used him as a kind of small-business bank to manage float, pay suppliers, deposit earnings, etc. The pharmacy was a secure building built to protect the valuable medicines kept within it, but it now also protected the earnings of the market stall traders outside. It was convenient to use the building as an ersatz bank: drop a phone in the secure building, place a ledger on the desk, register as an MPESA agent, and bingo—you’ve just become a small bank.
Africa: The World’s Fastest Growing Mobile Market
Apart from allowing me to indulge in some travel writing, there’s a specific reason I’m leading off with this anecdote. What that pharmacy in Nairobi represents to me is something that I think is a specific trope of mobile entrepreneurship in developing countries—the synergistic business, or the business within a business, where the use of an existing host business or service allows a new form of digital business to emerge and become sustainable. I think we need to understand how this particular model works if we are to fully understand how sustainability is to be achieved in developing markets.
We talk of Africa in particular as a technological tabula rasa, a geography devoid of infrastructure that, while posing a tragic problem in itself, offers the opportunity for innovative solutions. Much has been made of the leapfrog characteristic of the development of mobile telephony in Africa; how, unencumbered by a physical landline infrastructure, the continent has been allowed to move directly into a 21st-century wireless network culture. This is true, and I think we should be quite optimistic about it.
The rate of mobile telephony development in Africa is phenomenal. In 2011, the GSMA published its African Mobile Observatory, which indicated growth of 30 percent each year, with connections in the region expected to reach 735 million by the end of 2012.2 This makes it the fastest growing region in the world in terms of mobile...