Why e-ventures from South Africa and Nigeria are leaving everyone else in Africa trailing

Entrepreneurs reveal how the are ahead of the pack in making digital business on the continent pay.

OVER the last 10 years Africa has spawned a number of successful tech and e-commerce ventures. From older, established brands like Kalahari to the newer ones that include Jumia and Wooothemes Kong, it’s evident that many entrepreneurs are taking their business minds online in the hope of turning in a profit.

The proliferation of mobile technology and greater internet penetration rates due to the arrival of under-sea fibre cables have made it possible for many urban Africans to access broadband.

So how have electronic-based ventures trying to capitalise on this internet growth and mobile technology fared? Not evenly—whenever lists of the most successful tech and e-commerce entrepreneurs are published, they are noticeably dominated by South African and Nigerian entrepreneurs, with the occasional smattering of one or two Kenyans.

Names like Jason Njoku, Tunde Kehinde and Rebecca Enonchong dominate these lists along with upcoming ones like Clarisse Iribagiza of Rwanda.

The same bias is consistent in listings of successful African tech and e-commerce companies. 

So what explains this trend? Are South Africans and Nigerians just better masters at the digital business game?

According to memeburn.com founder Michelle Atagana, their gains has more to do with the countries’ digital infrastructure and access.

“Africa has a growing middle class with disposable income but most South African online entrepreneurs figured out online payment solutions quickly.”

She also thinks that the success of e-commerce giants like Woolworths and Kalahari is also down to the fact that many middle-class South Africans are already used to making online transactions with cards, something that is not as easy in Kenya and Nigeria where online payments are still regarded with suspicion.

Some luck
“It could easily have to do with a culture of buying online. Africa is still getting used to trusting that if you purchase something online it will arrive,” Atagana says.

However, as with every other business whether online-based or not, success may also depend a bit on luck.

“There is a lot of luck that goes into getting the business of technology right. Africa is slowly figuring its way through this, there is a lot of innovation and amazing technologies coming out of the continent, execution stills need work but that is the nature of starting a business,” she says.

According to Lakunle Ogungbamila, the chief executive officer at Nigerian gaming company Kuluya, online payments are one of the biggest challenges the company has faced in its bid to become profitable.

While Nigeria’s central bank is driving a cashless economy initiative to promote and encourage the use of electronic payments systems in the country, uptake has been steady but slow.

For instance, the Electronic Payment Providers’ Association of Nigeria (E-PPAN) last year said that the number of Point of Sales terminals in the west African country numbered about 200,000. While the country’s Interbank Settlement System (NIBSS) e-payment transaction data in the same year also showed increased growth, many Nigerians still prefer cash and cheque payments.

“At the moment, collecting money, either for buying the game or in-app purchases within the games, is not a smooth process. Once we have more people embracing digital payments for goods and services, either through mobile money or card payments, we believe gaming startups in Africa would be very profitable,” Lakunle says.

Original content
He however attributes their success so far to their original content. Kuluya has more than 55 African-themed games on its website while it’s most successful on mobile, Keke, has slightly more than 400,000 downloads.

“We set out to develop games that have majorly African themes and people seem to appreciate that,” he adds.

Lakunle says they have close to one million downloads across their mobile games deployed on Windows phones and on Google Play stores.

Being a skill-based venture, the company has also struggled to get the right people. 

“Another challenge we have faced is in getting employees with the required skillset. Most people in the Kuluya team had to learn on the job.”

This is a challenge that Kenyan techie Michael Muthiga Fatboy Animations understands all too well. His animated ads for fibre optic provider Jamii Telkom (JTL) have made him a household name in the east African country.

He has however previously stated in local interviews that he was self-taught and had to study the Autodesk Maya software for a year as he could not find local training in local higher learning institutions.

With free online tutorials and lots of practice, the illustrator has managed to turn Fatboy Animations into a success, and has even done television ads for regional telecoms giant Safaricom.

In an past interview with Kenya’s Business Daily, he cited the lack of animation training facilities as a major stumbling block in the development of animated films as most techies have to rely on online tutorials to learn the basics.

So other than a little bit of luck, skill and adoption of e-payment systems, what does a techie need to succeed with online business?

Lakunle, whose company was last year valued at $2 million, thinks the key is to start early, and that it’s not too late for Africa to catch up.

“It’s not going to be more of a marathon than a 100 metre dash, but in the end it would be worth it.

“Gaming is a multibillion dollar industry all over the world and it’s time Africa starts participating,” he adds.

Atagana’s advice to young African entrepreneurs hoping to reproduce the success of ventures like Woothemes and Jumia?

“Research, ask lots of questions and just do it.”

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