Assessing the Impact of the Mobile Phone on African Consumer Markets

By | April 23, 2014

68% of @Twitter users in #Africa rely on this platform as a primary source of information on national news ~ The Mo Ibrahim Foundation

Lets start with everyone’s favourite topic, the mobile phone of Africa. It used to be a secondhand candybar Nokia but today it could be anything from an iPhone to Samsung’s latest or some lesser known Chinese make full of bells and whistles. This isn’t meant to be the definitive article so much as an exploratory one attempting to capture the various aspects of the mobile platform* influence that will have impact on marketing and market entry strategies for the African consumer market.

The Mobile Platform as a Financial Tool

The phone is your credit card in Africa. Its your identity, your bank account, your bus ticket and your barbershop bill. I don’t need to write a laundry list of initiatives and innovations that are changing the financial services landscape of Africa due to the prevalence and ubiquity of the mobile phone. If you’re reading this with any interest whatsoever, you are probably already aware of this fact.

A tidbit, that serves as an example, is yesterday’s news that Kenya’s Equity Bank will distribute 300,000 Near Field Communication enabled smartphones to merchants in lieu of far more expensive Point of Sale devices for contactless swiping of their newest ATM cards in bid to capture the nascent yet emergent payments processing business currently monopolized by the telco Safaricom and its MPesa platform of products.

Prepaid Mobile Plans for Voice and Data

Africans prefer to pay as they go for their use of mobile phone voice, text and data services. “Prefer” is an understatement as a quick search turns up stats like less than 1% of Kenyan mobile phone users were on a post-paid contract or that the GSMA’s 2013 data shows that across the whole continent, 96% of all mobile phone users were using prepaid services.

This is not a meaningless statistic or one relevant only for telcom or phone related stuff but the visible demonstration of an entire continent’s purchasing patterns and buyer behaviour observed in a variety of different contexts. This will have impact on business models, payment plans, pricing and even marketing communications, for both goods and services, especially in the online world. I’ll stop this paragraph here as this is a topic I’ll come back to in more detail.

Innovation and Development on the Mobile Platform

The hottest thing across the continent is the emergence of the tech startup as a viable career choice for youth. Incubators, accelerators, hubs, demo camps, developer schools, training programs, venture capital, conferences and competitions have all but taken over as teh topic du jour for anyone wondering what young, educated Africans are upto these days. Silicon as a prefix has been applied to a wide variety of geographical features, from the lagoon in Lagos to teh savannah outside of Nairobi.

The point is that the tech savvy are beginning to grab and take ownership of their information and communication future. The impact of their work and their voice on the web, served up through their favourite phones and pads, is as yet unpredictable but will be undeniable, on everything from new product introductions to customer service for any brand wishing to enter these markets. Overlooking home grown solutions to age old marketing challenges would be a grievous mistake.

“Social media may well end up having an outsize impact on Africa, because of the huge penetration of the mobile phone,” says Allan Kamau, head of Portland Nairobi. “Africans have got used to doing everything on their mobiles: sending money, chatting, campaigning, complaining.” ~ #Africa Trending

The Mobile Phone as an Information and Communication Tool

Interestingly, this personal device might end up being the most complicated medium for mass communication in Africa. Again, there is much to be found online on everything from advertising and marketing on mobile to doing market research. What I do want to point out here, however, is what the phone is actually doing is scaling the scope and reach of an existing behaviour, one that can be seen at the most hyper local level in the most rural regions. And that is the sense of connection and community through the ongoing conversation at the corner store, in the market place or the homestead, where information is exchanged, opinions gathered and word of mouth and trusted referrals play a far more critical role than is currently prevalent in the developed world’s markets.

This is the core of the informal market economy, the local ecosystem in which the community thrives and survives, in part, an element of the resilience and survival instinct of the human being. Community as insurance against times of need has been observed as part and parcel of the African mobile experience, one of the critical reasons that sales and adoption of the mobile phone grew so rapidly across the whole continent, regardless of the individual’s economic standing. GSMA’s Mobile Economy report shows the phone’s contribution to African GDPs is as much as 6%.

The phone is the ultimate communication and information tool – both directly from your own social network, as well as indirectly by the way of going online. Its teh portal to every other communication service and social media that marketers are beginning to use everywhere else. But how to use it and when and where will be teh challenge for marketing  because the patterns emerging from the local markets may not be the same as those in the domestic markets of new brands seeking the African consumer opportunity. Metrics and mass production have no place where personal response and trusted communication is the norm. I’ll end this with a screen cap of a tweet I saw today.

* The mobile as a post industrial platform for innovation in emerging markets has been a personal obsession since 2006 so I have be careful not to get carried away in my blather and to remember to stick to the point ;p

4 thoughts on “Assessing the Impact of the Mobile Phone on African Consumer Markets

  1. Michael Kimani

    Brilliant! I read it twice. The post is succinctly brief and manages to capture the whole global conversation around the mobile phone and Africa regardless of the context.

    I will take away this and ponder on it some more, especially as an African on the continent. A bit of personal introspection perhaps and keen observation of my environment.
    "And that is the sense of connection and community through the ongoing conversation at the corner store,. ……….currently prevalent in the developed world's markets."

    I continue to find the concept of prepaid plans fascinating and I know it's a concept that is dear to you. You've compelled me to dig deeper on this salient point as well.

    Local markets need to be observed in their own right and have customized approaches to addressing needs, offering solution and innovations.No more out of the box, shoe fits all solutions.

  2. Niti Bhan

    I will gladly publish anything you write based on observations you make in your local operating environment.

  3. Michael Kimani

    Earlier today (on twitter) we exchanged limited thoughts on 'prepaid'. i'm not an avid fan on the 160 word limit on twitter. I don't find it appropriate for proper exchanges of thoughts; relative to other media channels. I'll attempt to jot my thoughts here.

    From what i gather, the notion of prepaid is based on flexibility of payments (due to the irregular nature of incomes of the BOP) & control of when to make payments. It's widely used in cellular mobile services calls, texts, data etc.

    Where then does Okoa Jahazi fall under? A service, that lets you borrow an amount of cellular units with a strictly set out payment period and an interest rate of 10%. Isn't this basically a credit/loan system?

    Telcos are corporations and profit driven. Is it possible that they've studied the market and are trying to alter behaviour OR profit from the irregular income streams of BOP and phases of no income for a loan opportunity? I've seen first hand the growth of Okoa jahazi in both rural and urban setting.

    My unpolished hypothesis is that this economic system we're in now is greased by credit. While the impact of credit is debatable, I see all groups of people (informal/formal) eventually ending up living under some form of credit and hence, slow behavioral changes occurring. Think okoa jahazi, micro credit, m shwari loans. in fact, i think this is happening now, in Kenya. Banks & Corps are churning out credit and promoting a credit culture. Spend now, pay later.

    PS: I'm not against micro lending or efforts to offer credit to the informal poor. Just pointing out that once informal poor can be credit rated and can receive an advance, there might be reason to abandon old habits (pay as you go).


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