Archive for the ‘South Africa’ Category

Samsung took its commitment to the African market very seriously

This article in the Financial Times caught my attention first for it’s mention of Samsung’s seemingly innovative adaptation to the harsh operating environment prevalent across the African continent. It reminded me of the very first exploratory user research programme I had been part of, for Samsung, back in early 2008. That was a seminal trip for me, 3 weeks by Landy through the bleakest parts of rural South Africa, in search of how people lived, worked, and played with their mobile phones.

Mobile phone repairman, Elizabeth, Eastern Cape, South Africa, January 2008 (Photo: Niti Bhan)

We discovered what I would now look back and recognize as a whole new world. This fieldtrip was the turning point in my career, and the prepaid economy project was the outcome of questioning many of the assumptions around what were then called “Bottom of the Pyramid” markets, which had been shattered, in my eyes, by this journey’s end.

Life is hard” became my mantra for the next couple of years, as I illustrated the vast chasm between the mainstream consumer market’s mindset of credit driven consumerism, and the cash intensive hitherto ignored reality of the townships and informal settlements. The article I wrote on the mindset and values of Africans in their guise as customers for consumer goods – who had not been conditioned by generations of advertising messaging since the poor (the BoP, the bottom of the pyramid)- went on to be cited by the late CK Prahalad himself in the revised 2010 Introduction to his seminal The Fortune at the Bottom of the Pyramid.

Next came the development of a holistic strategy to reach these untapped opportunities, with a semblance of a value system rather than be driven by the pure profit motive alone.

The core values, then and now, for a consumer appliance, device, or hardware, any durable really, was the following:

Simple
Easy
Endurance
Survivor/al
Commitment

If Samsung is established in its foothold in Africa today, and their appliances are designed to survive the environment and meet the needs of their African customers, then I am very pleased to read it.

That first photograph is of the slider that Samsung models being sold at that time had. And in Africa, as the repair guru holding the part was showing us – and two of Samsung’s own mobile design team members – was the weakest point of failure in their phones. Grit would get in and jam the part, and most such phones came in for repair within a few months of their purchase date.

Later, in London, where the Samsung Design Europe office was located, we walked into one of their phone shops – somewhere near Harrods, if I recall correctly, and asked about the longevity of their slider phones. The salesman gave us a long song and dance about how these parts had been tested to “slide” a thousand times before each model went on sale. Yes, I mused to myself, it had. In the dustfree laboratory conditions of their engineering unit, or the less harsh environment of London or Seoul. What about upcountry South Africa? Or Senegal or Kenya or even, India?

The 2009 models introduced for emerging market opportunities, such as those on the African continent almost a decade ago, were all candybars.

As for me, I’ve never stopped using a good oldfashioned “dumb” Nokia that stolid Finnish engineering and product development ensured would survive and endure anything – even being run over by a truck.

Mobile Money in South Africa: The nature of the beast by Flo Mosoane

pexels-photo-3The 2015 State Of The Industry Report (SOTIR) for Mobile Money published by GSMA, reveals a picture of a service that continues to change the landscape of financial inclusion in developing and poor countries across the globe. In December of 2015, the industry processed transactions in excess of a billion, most of which were in Sub Sahara Africa.

It seems however, that the continued success of Mobile Money eludes South Africa. What with the untimely death of Vodacom Mpesa after millions of Rands of reinvestment. Only 4 months after which MTN South Africa also announced that they are ceasing new registrations, marking the end of (Mobile Network Operator) MNO-lead Mobile Money deployments here.

Despite the large bang that MTN Mobile Money launched with, managing to sign over 2 million subscribers; at the end, Vodacom Mpesa only had just over 75 000 users, and MTN Mobile Money only about 140 000 or so users. A performance that neither of these well-established, successful, multinational MNO’s can be proud of.

We lament the apparent failure of Mobile Money in South Africa. It is well established that it has made a significant contribution to financial inclusion for underserved populations, and still presents significant opportunity to serve unbanked and underbanked communities.

This is a very special contribution by Flo Mosoane, writing from first hand experience on the ground on this subject. Do read the whole article.

Read On…

5 examples of the breadth of African led human-centered design and thinking and planning

The other day I was searching for news on design from the African continent and noted on Twitter that it seemed as though only the South Africans were consistently talking about their various creative outputs. Having long been part of the crowd that believed in the indigenous creativity and innovation in the less visible parts of the world, I went digging to see if maybe it wasn’t the words that were important but the intent of the action.

Was there, in fact, evidence of people centred thinking and planning, and solution crafting, that was innovative or transformative? This is what I’ve found with just a couple of days of desk research, I expect there’s much more out there and this is only the tip of the iceberg.

South Africa: What was designed to exclude can be redesigned to include

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Papwa Sewgolum Golf Course © Johnny Miller / Millefoto

During apartheid, barriers were both constructed and modified to segregate urban spaces—roads, rivers, and large stretches of open land separating rich neighborhoods from the poor. Twenty-two years later these barriers still exist, large homes with lush lawns just a few yards away from tightly-packed communities organized with dirt roads rather than tree-lined streets. Photographer Johnny Miller wanted to capture the dramatic divide from a new perspective, and decided to shoot many areas in South Africa from several hundred feet in the air for a series titled “Unequal Scenes.”

Miller’s photographs went viral as evidence of the inequality inherently embedded in the design of the landscape. Now, the City of Johannesburg is talking about redesigning apartheid’s spatial design:

The city is trying to achieve this through its spatial development strategy dubbed the ‘Corridors of Freedom’ to eliminate sprawling low-density areas without practical public transport networks.

The City of Johannesburg’s executive director for development and planning, Yondela Silimela, says suburban living is not efficient, as leisure amenities are shared by few people. The proposal by the city is urban mixed-use areas that promote shared public spaces such as swimming pools and tennis courts between the rich and poor, to close the widening inequality gap.

 

Government of Rwanda’s political will to enhance citizen-centered governance

In Rwanda, however, the people centric policy design has entered the realm of the intangible – pushing the envelope of design thinking as far as any Nordic city. Taxation policy is to be reconsidered after a User Perception Survey, and an ambitious plan for leadership commitment has been launched by the president for people-centered development. We have hopes of a design policy lab being pioneered in Kigali.

 

Namibian invention disrupts mobile technology

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Petrus Simon with his invention

More pragmatically, a young Namibian figured out how to make mobile phone calls without the need for a SIM card. Luckily, this achievement of his captured the media’s imagination, catapulting him into the limelight and garnering him a scholarship in technology at any university of his choice from the local telco. If every young African inventor received the same, the landscape of STEM would change across the continent.

Ekandjo revealed that the company does not usually fund learners from grade 12, but MTC  is proud to make an exception.

Last year Petrus won a gold medal at the NamPower national schools’ competition, after he invented a machine that serves as a seed drier and cooler.

 

Kenyan Andrew Kio saw the unmet need for African sizes in clothing

 “There are no standard sizes for Africans like the way people walk into shops abroad and you are asked whether you are a size 12 or 14 and such like things.”

Kio did basic market research to help him carve out a niche for himself in the market given that most people then still had a preference for imported jeans, despite the fact that they did not fit properly. He learnt that women have the most problems. He had found his entry point. Kio then went and bought some pairs of women’s jeans, ripped them apart and studied their designs carefully.

Blacjack now has six full-time employees and Kio has recently bought new machines to keep up with demand. Blacjack dresses KFC and Kengeles staff and recently signed a deal with French retailer Carrefour, which has debuted in Kenya. He also imports Woodin designer African prints from Ghana for uniquely African jeans. Source

 

Which segues nicely into the recently launched initiative by the AfDB called Fashionomics – complete with a B2B platform for pan African SMEs. We keep our fingers crossed that creative entrepreneurs like Andrew see the fruits of all this hard work.

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Dignity drives purchasing decisions for South African low income consumers

graph-1There is so much I was going to say when I came across this snippet in the news about South African consumer habits among the lower income folk for yesterday’s post. I am not convinced by the framing of the interpretation of the qualitative data but that’s an embedded SA problem with qualitative research in townships. So for now, I’ll just stop with the following quote:

Melzer says spending on clothing in South Africa is phenomenal. Talking to people about their spending patterns, the word “dignity” comes up again and again, she says.

Moreover, customers aren’t necessary buying what businesses think they are selling. A clothing retailer might think it is selling clothes, when in actual fact it is selling dignity or status.

Africa’s Middle Class: Development economics and marketing demographics conflating the holy grail

The most developed nation on the African continent, south of the Sahara desert, is considered to be South Africa with its financial and transportation infrastructure and systems, a legacy from history. In the first decade of the 21st century, the black middle class – known as Black Diamonds in marketer jargon – came into prominence on the back of numerous economic initiatives after the fall of apartheid.

img-south-africa-consumer-goods-02The rise of the Black Diamonds was meant to be the signal of a changing rainbow nation, one whose peoples would finally be included in the social and economic advancements long enjoyed by a privileged minority. This emerging middle class was also among the first to be noticed as African consumers in their own right, and their discovery pioneered the subsequent search for the now mythical African middle class. Even then, their total number was under scrutiny for its aspirational inclusivity versus actual households fitting the conventional definition of a middle class. From The Economist writing in 2007:

The University of Cape Town’s Unilever Institute of Strategic Marketing says there are now 2.6m “black diamonds”, as it calls the black middle class, a 30% increase in less than two years. Included in the definition are working professionals; those who own things such as cars, homes or microwave ovens; university students; and those who merely have the potential to enter these categories. The survey estimates that these black diamonds represent 12% of South Africa’s black adults, and make 180 billion rand a year ($26.2 billion), or 28% of the country’s (and more than half of all black South African) buying power.

For some, such as Lawrence Schlemmer, a sociologist in Cape Town, this definition is far too broad to be meaningful. He agrees that numbers are rising fast but argues that they are still tiny. Last year, he says, only 322,000 black South Africans (less than 1% of the black population of 38m) could be deemed “core” middle class, a far cry from 2.6m black diamonds.

Still, whatever their size, the buppies are affecting the economy and the political landscape.

This week, a comprehensive new survey by the South African government shows the on the ground reality in 2016. The National Income Dynamics Study (NIDS)‚ launched by the Department of Planning‚ Monitoring and Evaluation (DPME) in Pretoria surveyed 28‚000 people who were tracked every two years from 2008 to 2015. Very similar in fact to the recent household panel survey completed in India. Even their conclusions resemble each other:

According to the study‚ those in the middle class have a tendency to drop in and out of poverty.

And the size has not actually changed much since 1993 – the year before the fall of apartheid and the election of Nelson Mandela.

The study also shows that the South African middle class is much smaller than estimated‚ sitting at around 14.5% of the total population in 2014. Women are more affected by poverty, and even those who manage to climb the ladder may slip down again.

“…It has not grown much since 1993 — growing its share by only two percentage points in the past 23 years…”

20151024_mac237And, perhaps, the real challenge we face with the ongoing search for Africa’s middle classes is the conflation that took place back then between a consumer marketing segmentation and a socio-political demographic.  By allowing the aspirational reach of the consumer marketing driven research to inflate the size of the segment classified as middle class, it has given rise to an ongoing and complex muddle across teh entire continent. As the AfDB’s former president Donald Kaberuka said last year:

“I think we are wasting too much time on the definition of the middle class and the cut off point, it is a sterile debate.

“A dynamic middle class that rises with the sea increases domestic demand, the diversity of the economy, [its] resilience, and they also stabilise the politics of a country as well, since they have a stake in the system.”

He has a point. But perhaps not the one he intended to make. Instead, if we consider disentangling consumption and demand for consumer products from the increase in political voice and “stake in the system”, we may in fact discover that there is indeed a sizeable bourgeoisie emerging even though they may not possess all the qualifying criteria traditionally attributed to a middle class per se. (Previous posts on this topic have been tagged informal bourgeoisie)

There’s the demographic segment which is the middle, and then, there’s the conceptual body of solid citizens invested in the democratic stability and economic growth and development of their countries. As Jacques Enaudeau wrote in 2013:

But fixated on wealth, the discussion on middle classes in Africa misses out on the other two pillars of social stratification: social status and political power.

As soon as those two are factored in, discussing the “African middle class” as a homogenous entity seems absurd, and so it should. Thinking that what separates the senior civil servant from the street hawker or the country head of a multinational from the shop owner is a matter of daily expenditure amounts to looking at their reality through the wrong end of the telescope: the bigger picture is that they live in different worlds.

In the developing world, the formal sector with its white collar jobs populated by university graduates may jostle cheek by jowl with the informal economy’s life lived on the street but that proximity might be on the only thing they have in common.

For here lies the rub: the material culture that the notion of “middle class” posits as shared consciousness is articulated to a strong sense of individualism, which is borderline contradictory with the idea of class. All the more reasons for the analysis to consider the representations which members have of themselves as a group and the historical context in which such groups are being shaped.

This, however, is not the post to unpack those complexities of self image and collective consciousness. It’s one which pauses to ponder the newest set of findings on the dynamic nature of poverty and wealth in the more uncertain and volatile operating environments of the still developing world. And considers the South African example introduced today:

There has, however, been considerable demographic transformation within that band of the middle class, with Africans now outnumbering whites by about two to one, the report said.  Factors driving the surge include greater access to credit, improved education levels, BEE and improved economic growth until recently.

Transformation of societies is underway, just as the Indian researchers concluded in their analysis. This might be a much larger global trend underway, whose weak signals we’re just beginning to pick up now. I’ll be following up with these musings on the blog. The people with the real problem on their hands are the consumer companies looking to justify entering the African markets, and perhaps that’s a topic to take up in the next article.

Future scenarios for sub Saharan Africa’s opportunity and market

teamfinland SSAWhen you look at selected sub Saharan African markets from the perspective of being a micro-SME up here in Finland, you discover just attractive they can be. This is Team Finland’s futures based report on four most promising (defined by size, growth and ease of doing business) countries: Kenya, Nigeria, South Africa and Tanzania.

scenario oneUsing present facts and information, combined with future insights, signals, and scenarios, the report suggests possible futures and the related implications for SMEs interested in doing business in sub-Saharan Africa. Sectors in focus are: ICT, mobile & digitalization, education, health & wellbeing, energy & environment.

Unlike the majority of introductory reports to the African opportunities, Team Finland’s focus on scenario development and opportunity directions in unique, and very interesting to peruse further. They recommend reading it before drilling down deeper  into specific country level data. So do I.

When would you buy life insurance for a week? New products for the informal market

A South African company has figured out the back-end technology required to provide easily accessible prepaid or pay-as-you-go insurance products that can be serviced via your smartphone. Their solutions are designed for the unbanked, informal trader, typically living on an average household income of US$8 a day.

At first glance, I wondered who on earth would want to purchase health insurance or life insurance for just a day or week, or, even a month. The article just leaves it at “in case that’s all you can afford” – which doesn’t make sense from the informal trader’s perspective. Intermittent insurance is a form of gambling.

On the other hand, what’s left unsaid, is that South Africa’s informal traders face unpredictable violence whenever a bout of xenophobia shakes the community. That’s an unmistakeable period of insecurity and the risk is obvious, since most of those targetted in these riots are the informal traders themselves. If you can quickly purchase health and/or life insurance, through your phone, for a short duration of time, you’ve covered your responsibilities to your family in case of an accident.

The duo realised that while low-income consumers were willing to insure themselves against risk, these products needed to cater to their specific social and economic circumstances. They came up with a voucher system, where insurance could be purchased in more affordable packages to cover shorter timeframes. For example, life or medical insurance could be bought to cover just one day, a week, or a month – perhaps while a consumer makes a risky trip to visit family…

While their use cases mention funerals, I have a suggestion for a product meant specifically for small businesses like informal trading, particularly on irregular incomes. Can they design a insurance product that falls in between health and life categories? One that’s not quite disability, although it might include this.

Mitigating the random effects of uncertainty is what insurance is about. The challenge for many in the lower income segments, such as these traders, is that there will be times when their income will be affected by factors out of their control – an illness, when they’re the sole head of household/single parent; or drought, as is happening in SA right now. Or even, a known season of low income – informal manufacturing has a low season over the Christmas holidays unlike retail – such an insurance product could be purchased a few months in advance and money put away towards a payout at the start of the New Year.

These are just ideas based on what I’ve seen during my fieldwork over the past 8 years. There are probably more such opportunities available that can be fleshed out with a bit of research. The point is, that if you’ve worked out the technical aspects of how to make “Insurance on Demand” work, why stop at conventional categories from the formal economy like health or life?

Africa’s world trade: Informal economies and globalization from below by Margaret C. Lee

Margaret-C-Lee-Africas-World-Trade1The entire text of Professor Margeret C. Lee’s work is made available under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) Licence. Clicking on the cover will take you directly to the PDF.

Chapter 3 takes the reader through a journey to different countries of Africa, including Uganda, Tanzania, Ghana, Zambia, South Africa, Namibia, Angola, and Cameroon. The reader is introduced to African traders in the markets in several African countries that trade in Chinese goods. Some of the traders actually go to China to buy goods for their shops, some import them from surrounding countries, and others buy them wholesale directly from the Chinese in their respective countries. What is perhaps most fascinating about many of these traders is the networks they have for the distribution of their goods – these traders serve as suppliers of Chinese goods to traders who come from surrounding countries to buy in bulk to sell in their respective shops.

We learn a great deal in this chapter about Africa’s world trade regimes and how globalization from below operates in this part of the world. Again, African traders, through their stories, humanize these regimes for us

Uncertainty and The Prepaid Economy: Time and Money

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Uncertainty characterizes the entire global Prepaid Economy and is the underlying driver for decision making.

Systems are unreliable

Inadequate infrastructure, variability in basic services (will we have electricity this morning?), obsolete or incomplete systems; all of these, and more, are part and parcel of life in the emerging regions of the world. Will we wake up to find the capital city grinding to a halt because riots have erupted over the price of onions? None can say.

All of these elements act together to create a far more volatile operating environment which adds up to an uncertainty around timing. Will an accident along the main artery cause hours long grid lock familiar to anyone from Lagos to Lahore?

Cash flow is irregular

For the vast majority employed in the informal sector, regular predictable paychecks are not the norm.  Irregular unpredictable income streams from a variety of sources are the norm, and daily wage workers are not guaranteed that work will be available the following morning.

Even the farmer faces uncertainty, though her fields might be fruitful and ready for harvest. Seasonal ebbs and flows in cash flow are part of the rhythm of daily life outside of the formal economy’s calender year with its predictable regularity.

Smaller businesses too may feel less secure in cash intensive markets, dependent as they are on ensuring that incoming revenues must cover outgoing expenses.

Uncertainty is the only certainty

No one, however is immune from the larger uncertainties of their environment. Strikes, riots, power cuts or floods – these can bring entire cities grinding to a halt.

And the lower down the income stream you are, the greater the impact of this uncertainty. Without float, planning becomes a challenge and community is your insurance in times of need. Juggling to minimize the volatility between income and expense is an ongoing exercise in trade-offs.

Empowering oneself through control of time and money

In the prepaid economy, the greater the span of control you have over timing of a payment – its frequency and periodicity, and the amount to be spent, the greater your ability to plan and manage your finances. From chaos and disorder, one can find ways to negotiate and be flexible, whilst striving to keep one’s head above water.

This characteristic manifests itself in a wide variety of forms – purchasing patterns; choice of cooking fuel; social and flexible weights and measures; a wee bit of wriggle room to negotiate in case of the unexpected.

This is the second article in The Prepaid Economy Series. Here is a link to the IntroductionThe next one will take a closer look at the importance of flexibility and negotiability – that wee bit of wriggle room, left for the unexpected.

How social networks can share the cost of technology – An innovative payment plan

The original Prepaid Economy project grant from the iBoP Asia Project required me to design a payment plan for a shared community asset based on the exploratory user research on households managed their finances on irregular and unpredictable incomes. For the first time since I started looking into this space back in 2008 I’ve come across the use of this conceptual business model in the wild.

A successful South African entrepreneur who made his millions by selling computers in townships came up with an innovative variation of such as business model. Here are the details:

He soon realised the power of Stokvels, an informal savings pool or syndicate, in which money is contributed in lump sums on a rotational basis for family needs. Luvuyo clustered the teachers in groups of six where they contributed $35 every month. Within six months of starting the scheme, each teacher had their own computer.
[…]
He says you need to understand your business’s unique challenges to become a successful entrepreneur.

“We’re trading in Khayelitsha, where the employment rate is 60% and there’s no money. You need to be very smart in terms of how we get money and get people to pay. Some of the people coming for our services are dependent on social grants from government. They save that money for themselves to get a computer and better employment,” he says.