Facebook for Every Phone and its impact on the developing world

Image representing Facebook as depicted in Cru...

Image via CrunchBase

The mobile revolution in Africa is well documented, however mobile statistics are specifically impressive in the BRIC Nations — Brazil, Russia, India and China – as well as the likes of Indonesia, Mexico and the Philippines. Many emerging markets have skipped the ‘desktop generation’ and are already mobile-first economies where mobile devices are more ubiquitous than either land-line telephones, PCs, or fixed Internet connections. Although research suggests that global smartphone shipments have overtaken those of feature phones recently, it is still the basic feature phone that dominates in emerging markets. Facebook has been quietly working on a project over the last 2 years to expand its user base of 1.1 billion and enable Facebook access on simple, feature phones.

The scheme is called ‘Facebook for Every Phone‘ and has reached 100m users. The stripped-down, minimum capacity version of Facebook is accessed through over 3,000 types of feature phone, some costing less than 20 dollars. Working with mobile operators, Facebook has encouraged them to allow users free or cheap access to this basic version of their product.

Why is Facebook doing this?

Although markets such as India, Indonesia, Brazil, India, Mexico and Vietnam are not currently lucrative advertising markets for the internet giant, they are some of the fastest growing markets for internet access and social networking, and Facebook is clearly eyeing up its next generation of customers and the potential ad revenue these markets will bring.

As Facebook subscription in the likes of the US reaches saturation point, many people see the next generation of customers from the developing world as Facebook’s greatest opportunity to increase its global market share. Although Facebook’s success in the mobile advertising market has been well documented, it is still like many struggling with the seismic shift in internet access from the PC to mobile devices. As the economies of emerging markets grow and its consumer class demands access to the same products and services as the developing world, they represent a lucrative market for the likes of Facebook. Indeed, research suggests that users who access the product through a feature phone are the most engaged users, representing another opportunity for advertisers. As the middle class in the developing world grows, so do their purse strings and Facebook is fully aware of this.

Snaptu

Facebook purchased an Israeli company called Snaptu, that had begun to produce basic versions of applications to allow users to access them on feature phones. Facebook, having originally discounted mobile Facebook access as simply a way to update a status as opposed to the full service, saw a massive opportunity here. The Snaptu team began to re-engineer Facebook’s software to reduce its capacity and allow it to run off minimal data requirements. Facebook for Every Phone includes all the phones most popular features, including News Feed, Messenger and Photos, and is optimized to use less data than other Java apps and mobile sites.

Despite the obvious benefits access to Facebook brings many people in the developing world, there is a danger that users see Facebook as the entire internet, instead of just a small part of it. As powerful internet giants such as Facebook, Microsoft and Google continue to see emerging markets as a priority, there should be a limit to their influence allowing home-grown developers and mobile applications to launch and thrive in the developing world.

Google’s influence on Mobile Africa

Image representing Google as depicted in Crunc...

Image via CrunchBase

Google has for some time now espoused universal Web access and is currently employing various technologies and holding discussions with regulators from Kenya to South Africa to try and open up access to the mobile Web. Africa contains some of the fastest growing economies in the world and the exponential uptake in mobile devices across the continent and access to the Internet are seen as key in lifting economies up the value chain and helping to eradicate poverty through financial, social and political inclusion. Africa however has suffered from a lack of technological infrastructure and Google is now trying to change this.

The Internet giant is planning on building high speed wireless networks in sub-Saharan Africa using high-altitude balloons which are able to transmit signals across thousands of kilometres. One of its first projects on the continent is a wireless broadband network in Cape Town using several masts in Stellenbosch university to transmit signals to 10 local schools. Google is also currently in discussions with telecoms firms and looking at establishing partnerships to open up Internet access to people in rural areas. There is no clear solution however on a continent with a severe lack of infrastructure and nobody is certain as to how the future will look. What is certain however is that Google wants to be at the forefront of developments.

Large Internet players like Facebook, Microsoft and Google often talk about the next billion people to access the Internet, and how the majority of them will come from the developing world and will access it through mobile devices. There is also likely to be a flood of cheap smartphones in Africa over the coming years and Google wants to be at the forefront of this through the production of cheap Nexus phones and tablets. Google’s dominance of the smartphone market is not itself a moneymaker. It gives away its open-sourced software on Android for free so as to increase the reach of its information-gathering system. Making Android free to developers has never been simply about opening up the Mobile Web. It is a way of ensuring that Google’s apps and services are used on smartphones harnessing as much data, information and add revenue as possible. Google now wishes to break into the African and Asian markets by reducing the cost of smartphones. It is doing this to exert is monopoly position in these, in Internet terms, virgin territories.

So, it is easy to understand why Google is helping to bring mobile Internet access to parts of Africa. Google’s continued growth depends on reaching new people in the developing world, who will be the next generation of its customers. Its intentions clearly aren’t completely philanthropic, but that doesn’t mean it isn’t enormously beneficial to developing economies whose people are accessing the Internet for the first time.

Why does Africa lead the way in mobile money?

Satellite image of Africa, showing the ecologi...

Satellite image of Africa, showing the ecological break that defines the sub-Saharan area (Photo credit: Wikipedia)

Mobile payments,  mobile wallet and NFC are seen as the next big things in the UK mobile advertising landscape. The opportunity around the use of mobile data such as GPS and payment history to allow advertisers to target potential customers dependent on where they are and what they’ve bought is much hyped. It is seen as such an opportunity that former enemies Vodafone, EE and O2 have combined forces to form WEVE, a joint venture allowing advertisers to run targeted campaigns across the 3 giant UK telecoms operators networks. Mobile payment is seen as the future. However, while systems such as NFC limp along in the UK, Africa is at the forefront of mobile payments and it is the African continent that is most likely to teach the rest of the world valuable lessons.

It is important to separate mobile banking and mobile payments. In the UK, mobile banking often refers to an extension of the services of a traditional bank ‘s services and is widely used by consumers. In Africa, mobile money has been driven by the mobile operators and allows people to transfer money, pay bills, and purchase goods and services using a mobile device, all without accessing a traditional bank account. Mobile money, often associated with Kenya’s M-PESA, is aimed at serving the unbanked, the under-banked and the under-served. Mobile payment is an extension of mobile money and involves the use of the device itself to pay for goods, and Africa is likely to see a surge in this over the next few years.

Why is Africa so far ahead of the UK in terms of mobile money and payments?

A lack of entrenched payments systems in Africa

Africa is a continent that is rich in technological innovation and some of this can be attributed to an open-mindedness, a determination, and no fixed way of doing things. There are no preconceived ideas around debit cards and credit cards being used for payment. Mobile payments have therefore seen an early adoption on the continent. Whereas there are countless ways of paying for goods and services in many parts of the world, this hasn’t been the case in Africa, making mobile money a straightforward choice for many.

A tool of necessity for the unbanked

Many Africans fall into the unbanked category and don’t have access to traditional financial services that are taken for granted in the developed world. Mobile money is therefore a ‘must have’ service for many people. It is not a question of being ahead of the curve,  it is a necessity.

Minimal fees associated with mobile money

Fees charged by services such as Safaricom‘s M-PESA  are minimal compared to traditional banks so mobile money is tempting for many cash-strapped Africans. Despite an increase in the fees charged by mobile money agents in Kenya over the last few months, the total value of Kenya’s Mobile Money market hit $5bn dollars in the first quarter of this year.

Geographical distances and city workers

M-PESA was originally designed as a system to pay back microfinance-loans which reduced the transaction costs, allowing for lower interest rates. However, in a country like Kenya where lots of people work in cities like Nairobi and Mombasa and transfer money back to families in rural areas, the M-PESA service became increasingly used as a mobile transfer system. The distance that often separates the main bread earners and dependants in Africa is often vast. This has contributed to the exponential increase in mobile money usage in Kenya.

The integral role of mobile in Africa. Mobile money is simply an extension

Mobile is often an essential part of people’s lives, from agriculture, health care, to education, so it’s use for payments is a natural step for many people to take. If you’re an expectant mother receiving regular SMS updates that offer pregnancy and childbirth advice, why wouldn’t you use your mobile for payments?

Lack of regulation and restrictions

Safaricom’s M-PESA system was launched with very little resistance and it was allowed to flourish without the sort of restrictions we would see in the UK. It began in an experimental way with very little marketing around it and has benefited because of the lack of bureaucratic red tape as well as Safaricom’s dominance of the Kenyan market. This dominance has also meant a simple solution, whereas in other countries the launch of mobile money products has been ineffective due to too many players in the market.

Technology seen as critical in Africa, mobile much the same

The African continent is currently undergoing a technological boom, with mobile at the center, and this entrepreneurial spirit lends itself well to mobile money adoption.

We cannot mimic all of Africa’s success with mobile money, however many areas can be ‘copied’. Indeed, M-PESA is starting to do well in other countries, including Afghanistan, and it recently launched in India. In the future, mobile payments will extend to areas over and above the transfer of money, and devices will continually be used to pay for goods and services. This is happening now and will be even more prevalent  in Africa as sub $100 smartphones begin to flood the market. For this next stage to really take off, there needs to be a one system-fits-all approach across devices and network operators. There also needs to be a clear benefit for consumers to pay for goods using their mobile device such as loyalty schemes, offers and location based incentives. The future in mobile money and payment systems is likely to be driven by Africa.

Kenya’s Mobile Money Transfer hits $5billion in Q1. But doesn’t tell the whole story

English: Mombasa ferry, Kenya Русский: Паром в...

English: Mombasa ferry, Kenya Русский: Паром в Момбасе, Кения (Photo credit: Wikipedia)

A Central Bank of Kenya report has shown that mobile phone based transactions across all networks reached $5bn in the first 3 months of 2013. This was an increase of $0.76bn on the same period last year. The CBK said Kenyans made the most transactions in January, when transactions were worth $1.69 billion. In February, the value dropped marginally to $1.68 billion. This fell again at the end of the quarter to $1.6 billion in March. This month on month drop does not reflect what happened in the same period last year, when the value increased month on month significantly.

This drop in value is a slight concern and coincided with M-PESA‘s increase in charges because of the government’s introduction of a tax on mobile money transfer.

What is mobile banking?

Safaricom launched the mobile banking M-PESA service in 2007 and its simple premise is to allow people to transfer money and pay bills who don’t have access to traditional financial institutions. Its success and uptake has been revolutionary in Kenya and the M-PESA service has since launched in other parts of Africa and India. Many Kenyans live and work in big cities like Mombasa or Nairobi and send money home through their mobile devices to families living in rural areas. The system is quick and easy and, crucially, M-PESA has gained the trust of millions of Kenyans with an estimated 17 million Kenyans using mobile banking in what is currently the world’s hotbed for mobile money. As one of many unexpected consequences of the service, mobile money was also credited for easing tensions in Kenya after the post-election violence in 2008 by allowing people to receive money when trapped hiding out in slums.

With mobile banking there is no need for a smartphone or an updated handset which is essential on a continent where the basic feature phone is still very much the phone of choice. Customers hand cash over to a mobile money agent, their mobile account is then credited, and can then send mobile money to a recipient who then cashes it in at another agent through a secret code. Commission is then paid to the agent. However this fee compares favourably to bank fees. The reduced costs coupled with the exponential uptake of mobile devices in Africa and the ease with which you can begin begin mobile banking have been the major reasons for its success.

However does the increase in mobile banking in Kenya tell the whole story? What should we take from the fact that the overall value of transactions fell month on month in the first quarter? What else needs to be done to improve access for the unbanked?

According to a new report from the International Telecomms Union (ITU) the number of mobile phone subscriptions is expected to pass seven billion by early 2013, surpassing the world’s population of 7.1 billion soon after. In Africa, despite the exponential uptake of mobile phones over the last decade, the continent still lags behind in terms of number of subscriptions per head. The poor and those in rural areas are often the ones lacking mobile devices and subsequently excluded from the mobile banking system. Governments need to do more to encourage the uptake of mobile devices or subsidise contracts for the poor to ensure everyone benefits.

Questions around trust in using a mobile device for the transfer of money still remain. Just as in the UK there probably needs to be a UK-wide advertising campaign to persuade people of the security around mobile payments and NFC, so do African governments need to reassure the population around the security of mobile transfers.

People also need to be persuaded of the benefits of mobile banking. What can mobile banking bring to a market trader in rural Kenya who has been using cash all her life?

Despite the success of Kenya’s M-PESA, more needs to be done to ensure the poor are not left behind and the gap between rich and poor is not widened. The premise of mobile banking is to reach those who had previously been unreachable, particularly those in rural areas, and its uptake needs to be stimulated by governments, NGOs and mobile operators.

Lagos vies with Nairobi to become region’s tech hub

Lagos Island and part of Lagos Harbour, taken ...

Lagos Island and part of Lagos Harbour, taken from close to Victoria Island, looking north-west (NB this is not Ikoyi Bay as wrongly labelled elsewhere) (Photo credit: Wikipedia)

The bustling, metropolitan city of Lagos in Nigeria has an ever growing population of some 8m people and is the country’s economic powerhouse making a significant contribution to its overall GDP. The port city is a city of islands connected by ferries and highways and is the capital of Lagos State. The standard of living is relatively high compared to many cities in Africa and, despite problems such as pollution and gridlocked city traffic, people flock to Lagos from far and wide in Africa with an estimated 30,000 people arriving everyday.

Lagos aspires to be, alongside Accra, Cape Town and Nairobi one of the continent’s tech powerhouses. Indeed, May’s three day Mobile Web West Africa event sold out its Lagos conference, bringing together companies, startups, inspiring investors and developers. The three-day event was the background to the emerging economic and inspired power of the region, and is a statement of intent to be at the centre of mobile innovation.

There are countless examples of centres of innovation cropping up in Lagos. Co Creation Hub is a collaborative work space for young entrepreneurs and is dedicated to accelerating the application of technology for economic prosperity. Individuals converge in one space to share ideas. They even have the chance to meet VCs and angels looking for promising investments. However, such meetup hubs compete with others around the continent. Nairobi has the iHub, a similar space, supported by companies like Google, Intel and Samsung. Nairobi has also recently begun construction of the much discussed Konza City, or ‘Silicon Savannah’ as it is often called. This is a project to build Africa’s most modern city with technology and innovation at the centre and will potentially be a blueprint for further African cities.

In Nigeria, mobile is also being used to reach the poorest and help economic and social prosperity. A mobile SMS educational tool has recently launched aimed at providing primary school teachers with regular updates on educational content to assist with classroom teaching. Launched by UNESCO, the technology will be available to anyone in Nigeria and will send teachers messages with educational information and advice once a day. The project should reach thousands of teachers across the country, who were previously out of reach and simply lacked the resources to teach effectively. Mobile SMS is a step in the right direction.

In Nigeria, and many of the major cities in Africa, there is a sense that anything is possible and the continent is ripe for investment and full of opportunity. A lack of traditional infrastructure is helping drive entrepreneurship, in mobile especially, and suggest that Africa will be the continent of the 21st century.

Future Mobile Trends in Africa

Satellite image of Africa, showing the ecologi...

Satellite image of Africa, showing the ecological break that defines the sub-Saharan area (Photo credit: Wikipedia)

Mobile access has democratised technology and allows people to communicate across geographical borders as well as acting as a social glue from a personal point of view as well as a broader societal perspective. Nowhere is this point more prevalent than in Africa.

Below are several key points derived from a recent report entitled ‘Mobile Trends 2020 Africa’ which was put together by various industry experts, as well as my response to each point.

The African market will see a flood of cheap smartphones allowing access to online information and social networks which could have an impact on the democracy of a country

We all saw the impact of  social networking, particularly Twitter, during the Arab Spring. The mobile device and is use as a mass communication tool also had an impact on the recent elections in Kenya, previously marred by mass violence, by means of monitoring results and diffusing ethnic tensions. Finally, mobile technology can also be used by politicians to communicate with its electorate and open up information on policies.

Smartphones will replace the need for physical banks, as mobile makes banking a far easier process

The success of Kenya ‘s M-PESA has been well documented and has opened up banking services to large numbers of people in parts of Africa and Asia. Africa is the hotbed of Mobile money activity, and the continent counts 15 of the top 20 countries by mobile money usage. It’s success has been such that it will also soon be launching in India.

Concerns are rightfully being raised around security, however the potential benefits to millions of’ unbanked’ people surely outweigh the risks, and opening up mobile money access acts as a tool of empowerment allowing people and businesses to prosper.

In addition, mobile devices are being used to prevent corruption, in places like Ivory Coast and Afghanistan, as mobile money payments ensure that workers get their full pay and the m-transfer prevents management from taking ‘tips’.

Mobile and associated technologies will ensure Africa acts as a hub of innovation

There are countless examples of this, the most prominent one being Kenya’s Silicon Savannah which will provide employment and act as a centre of innovation for the region, this follows on from Kenyan technological breakthroughs such as M-PESA and Ushahidi. In addition, projects like the iHub in Kenya offer an alternative picture of a bright future for the continent with a focus on technological innovation.