Lessons from Alibaba may be the key for young African entrepreneurs pushing for a bigger slice of the digital pie while readying for a growing African online market.
Most digital entrepreneurs in developed countries don’t even have to think about the power going out as one of their barriers to doing business. But things are different in Africa.
When this happened to Teddy Warria, the Kenyan founder of Africa’s Talking, a platform for African software developers building SMS, voice, payments and airtime applications, they were so committed to keeping the servers on that batteries were the only solution.
“My business partner was industrious and went out and bought batteries. The batteries almost filled the whole table, but the idea was they could keep the servers and computers going without downtime so our product could work,” Mr. Warria told attendees at the fifth UNCTAD eCommerce Week, at the United Nations’ European headquarters in Geneva, Switzerland on 1 April.
Luckily, power outages are something the Kenyan government has now solved, said Mr. Warria, whose company was founded in 2010.
“But at that time, it was a huge problem and I am certain it is still a problem in many African countries,” he recalled.
Indeed, the challenges to doing business on the continent are complex and varied, not to mention the fact that water, shelter, food and education still feel like a greater priority than digital transformation
Yet, many young African entrepreneurs are realizing that if Africa is not in the digital slipstream now it will miss out down the line.
This means they are fighting to be over the starting line when policymakers catch up.
To do so, they are drawing on China’s experience of using digitalization for development purposes.
Open Sesame
Lessons in opening the digital gateway come from Asian success story Alibaba, which was founded in 1999 and is now among the world’s biggest e-commerce, retail, Internet and technology giants.
But for them, the journey started with a single step – and the recognition of both a need and a market, says Alibaba Group vice-president, Brian Wong.
He believes this can be replicated in Africa and his company, together with UNCTAD, is investing in the next generation of entrepreneurs on the continent, and in developing countries across Asia.
The eFounders Initiative is a smart partnership between UNCTAD and the Alibaba Business School, that will see 1,000 young entrepreneurs from developing countries learn what an e-commerce ecosystem is and how this can be built.
“The heroes of the digital era will come from the entrepreneurial community,” said Mr. Wong, at an UNCTAD eCommerce Week session on seeing the African e-commerce landscape through the eyes of digital entrepreneurs.
He recalled the challenges the Alibaba Group faced when they launched.
“When we started Alibaba, we didn’t have a lot of the infrastructure we have in the west. We didn’t have a retail market, credit cards, logistics. Many of these challenges exist today in places like Africa and Asia.”
“The development model which China experienced is relevant to the emerging market needs,” he said.
“What we say at Alibaba, is if you want to learn Kung Fu you go to the Shaolin temple, and if you want to learn e-commerce (for emerging markets) you should come to Hangzhou, China,” said Mr. Wong.
“When we started Alibaba, China had 8.8 million internet users, now we have 820 million users. The per capita income was 800 dollars per person, today it is 8,000 per person. China constituted 0% of the global ecommerce sector, today it constitutes 45% of global ecommerce.”
“We had no digital payments system - the US had PayPal. Today China's mobile payment volume is 100 times the size of America's," he said. "So you can see the potential for growth in emerging markets.”
“We think the development model is a good reference point for entrepreneurs in Africa and other emerging economies. We don’t believe that everything that’s been done in China will be replicable, but it’s a great way to show entrepreneurs what is possible.”
Moving money on the continent
Mobile money is a key for goods and services transactions in Africa, where only 10% of the population is banked. Thus, it is good for e-commerce.
Yet entrepreneurs face a number of challenges, says Cedric Atangana, WeCashUp chief executive, whose journey to ensure Africans can trade and consume online has seen him develop a continent-wide payment solution and some early precursors to policy.
“In Africa, there are over 155 different payment solutions that are running isolated from one another. We have built a tool to aggregate these payment solutions,” said Mr. Atangana.
“Since we are trying to build a pan-African payments gateway, we deal with over 44 central banks across Africa.”
“To operate, we realized that we had to build a pan-African rulebook so when we do a transfer from Kenya to Cameroon, we respect both banks. This didn’t exist before, so we, as entrepreneurs, had to build it.”
Building it does not mean they will come. The African online marketplace is still small.
“African businesses don’t produce what the market wants yet. The bigger merchants have a bigger value to bring, so naturally our consumers want to buy from them,” said Mr. Atangana.
“The question is, what we are going to do as Africans to help our local businesses grow and export products and services,” he asked the eCommerce Week audience, adding that Africans must help each other.
This point was reiterated by UNCTAD secretary-general Mukhisa Kituyi who called on African politicians and billionaires alike to support the growth of the African digital economy.
The fifth edition of eCommerce Week – an annual gathering that draws leading e-commerce figures, start-ups, policymakers and officials from around the world – is taking place in Geneva from 1 to 5 April. The theme of this year’s week, which comprises dozens of sessions, is "From Digitalization to Development".
Last December, UNCTAD organized its first-ever regional edition, Africa eCommerce Week, hosted by Kenya.
