1. As part of your recent meeting with the President for a proposed ICT incubator, with I/O ventures you spoke about mentorship of ICT entrepreneurs. What does this entail?
There are plans afoot to create an ICT incubator in Dar es Salaam by middle of 2011 under the supervision of the economic advisor to the president and COSTECH. The incubator has many partners (including InfoDev/world bank and bilateral organizations) who are interested in growing the ICT entrepreneurship culture in Tanzania. Money alone will not make entrepreneurs succeed, in Silicon Valley there is a lot of formal (Venture capitalists and Angels) and informal networking that help drive the industry. The Tanzanian Government is interested in having a direct link with the next generation of internet entrepreneurs from the most successful ICT startups to come directly to Tanzania to mentor companies that are part of the incubator, this massively reduces the risk of these ventures as entrepreneurs won’t make classic mistakes. Examples in areas of mentoring are marketing (does one know how to use Google Ad-words or SEO), Engineering (what do you outsource and what coding language is best to scale and build a site that can handle millions of visitors?), Revenue (what is the best way to generate income for your business?) These are areas that mentorship can help on tremendously and it is what Angels and Venture capitalists provide besides money.
ICT Incubators are special areas that encourage and foster entrepreneurship, they provide one place for community of investors, entrepreneurs, students etc.. can come to participate in a low risk environment – think of them as labs where magic can happen, but under strong supervision and direction for success. Typically incubators are run by the private sector but many also start of in a private-public partnership – for instance the Government can establish low tax-rate incentives for companies in the incubator. The best example of incubators in the region is the iHub in Kenya www.ihub.co.ke and in Uganda appAfrica http://appfricalabs.com/. Tanzania needs one too and this is what the Government is working on with its partners, of which I/O ventures is one.
Graduates of the incubators who have built great technology companies become beacons of hope to encourage people to aspire to do the same and by being part of an incubator you are with like-minded colleagues, who act as a great support network. I have lived in Silicon Valley for 5 years and it is common to walk into a bar or coffee-shop and if you ask someone “what do you do?”, they reply “I am working on a social network.” This kind of regular interaction is not common in many parts of the world, but is incredibly inspiring when you meet people in their 20-30 years of age who have built technology companies and sold them for millions.
In contrast, if you were in Dar es Salaam, and were asked asked the same question and you replied that you were building a technology company, many might look at you very strangely since most people aspire for a steady job at Vodacom or even a bank. This is a serious issue if you want to encourage entrepreneurship. Students at universities in Tanzania will not learn to code and build their own websites vs learning to be a network admin so they can get a job at Vodacom. When you have no programmers, you have no raw talent to build ICT companies. Incubators help by creating an ecosystem where one can always walk in and feel welcomed as an entrepreneur and the support in both mentoring, and funding will increase your odds of success. Students see a path and reward for pursuing entrepreneurship and the cycle feeds on itself as the incubator produces more and more success. Silicon Valley understands this “ecosystem” very well, it is by definition a “giant incubator” and has driven the network of angels and venture capitalists. Even lawyers will help you incorporate you company at no cost in return for a fee down the line (if you become the next youtube, they will greatly benefit with a new client).
Tanzania has a long way to go to reach these levels, many countries are trying to replicate this as it provides an engine of growth for the long-term. Singapore, India and even Chile are on their way to achieving this and have tapped the expertise of angel investors and mentor networks such as I/O ventures. When the incubator is ready, successful ICT entrepreneurs from Silicon Valley will be thrilled to come and mentor entrepreneurs side by side. If things work out, investment and success are more likely.
Whilst you are correct hotels are not in the web 2.0 era – they are surrounded by customers who are. Yellow Masai helps bridge that gap. We make it as easy as facebook to update your pricing, description and services. For example, if you own a hotel and run a snorkeling operation, you can fill in your information (including a google map of exact location), describe your services, include types of rooms and their prices, as well as create a package for diving. Just like using services like facebook you can come back anytime, change and update information. We will go a step further and allow you to do the same via mobile phone and SMS. When a tourist browses and wants to make a booking, they can do so and use their credit card – we will then alert the hotel owner via e-mail and SMS transfer funds to their account, as well as handle deposits and cancellations too. The hotel owner can also see a schedule of upcoming bookings and get reminders via SMS. We have so far signed up over 200 partners including Coastal Aviation within mainland Tanzania, and we are now signing up in Zanzibar – we expect to launch in late November after extensive testing and once we get our partners ready.
4. In what way is Yellow Masai going to entice local tourists for use of your services amd thus boost local tourism?
This question is related to the last somewhat – one thing we are doing is building out a mobile banking infrastructure (working with E-fulusi) that we believe is the future of e-commerce in East Africa. We will allow anyone in East Africa with a mobile banking account such as M-Pesa or ZAP to be able to pay for services with their their mobile phone. We believe this will encourage local tourists and travellers since it provides a convenient method to purchase the service without needing to go and speak and pay a travel agent. We also know that many locals utilize facebook and twitter – we will market and promote our packages there. We will also work with our partners to encourage deals and even introduce a reward point system that fit and incentivize Tanzanians during the low season – it is infact better for a Tanzanian to go to Serengeti when it is not crowded by tourists and pay a local price. This also helps the tourism industry not depend on the cyclical international tourism market.
We strongly believe a local portal that markets to Tanzanians will be important. We will launch a Swahili version of the site that targets Tanzanians specifically, and one day you will be able to book a trip directly using your mobile phone. These efforts as well as smart marketing are the keys to unlock domestic tourism. I believe at this point, the Tanzanian tourism industry has not used channels such as the internet to drive demand effectively where Tanzanians are. We believe the growing usage of the internet and availability of mobile banking will change this. I talked to a technologist at Coastal Aviation who told me that a Kariakoo based chicken/agri-produce seller bought a return flight to Zanzibar using his phone, a transaction worth $120! In the old world, he would have had to find a travel agent, not get ripped off and possibly be able to do this in a timely manner, barriers that are tough to overcome by ordinary Tanzanians. Having a website with transparent pricing for one to compare between Precision-Air, Coastal Aviation available 24/7 with ability to pay using your phone are all great ways to reduce barriers for locals and international travelers alike.
5. Is it wishful thinking to believe Tanzania can be transformed to a digital nation anytime soon?
It can, it must and it will! No one can escape the impact of the digital revolution. You walk around Tanzania and people have GSM phones, many aspire to have Blackberries and the costs keep coming down. 10 years ago it was hard to imagine being able to get a phone for $200 with a color screen let alone one with e-mail capabilities and be able to pay someone using mobile-banking SMS technology. Africa has skipped the “PC” generation and gone straight to the mobile phone. I get better reception to make calls and access the internet in Dar es Salaam than I do with my iPhone in San Francisco! This is just the beginning. I do believe education levels need to improve before we can fully take advantage of the information economy so we must not forget the basics. 2 years ago I knew without under-sea cables we would not be able to enjoy affordable broadband. last year Seacom arrived and the Government is working to create a network of underground fibre cables to connect even the most rural areas. Let us not forget how important ICT is for development and government functions. Being able to google in swahili and get access to content and information relevant and useful to the local language is very important (maybe even decide to buy a ticket on a travel site such as yellow masai to visit a relative!)
Infrastructure, role-models, mentors and the presence of investors will greatly help drive us. Our neighbors Kenya are well on their way to being a digital nation – with over 10M people using M-Pesa and quarter of their GDP flowing through Mobile Banking. The Tanzanian business environment also needs to improve before the acceptance of some of these technologies. But I am very hopeful, digital technologies make life easier and more efficient, why should we not embrace them?
You can follow Mbwana’s work on his page at Venture Capital for Africa. In the mean-time lookout for yellowmasai.com.
- For more information on I/O Ventures please visit them at: www.ventures.io
Thanks @Joji for picking this up, and thanks Mbwana for your time and responses!
I am excited about the recent murmur on ICT development; I think it is important and has unimaginable potential to mobilize youth in social, economic, and as we are seeing today, even political development.
About the fibre optic project led by SEACOM; Do you think that smaller ISPs are dropping costs for their consumers? Rather, are they being given the broadband they were promised when SEACOM began work?
If they are able to indeed drop prices for internet usage and increase speeds to consumers, I think we are heading for a breathe of fresh air in the internet-business industry in Tanzania, especially those spearheaded by youth such as yourself, Mbwana.
If they are not seeing any drop in prices from their supply, and subsequently are providing no change for their consumers, then the SEACOM project is starting on the wrong foot, and could potentially be a waste of resources.
I am confident we can use the fibe optic project to harness the full potential of ISPs in Tanzania and East African as a whole.
Thanks AK- there are indeed exciting developments to come.
Your point about SEACOM is a valid one- but I believe prices have started to come down. The key thing to remember when analyzing this for the long-term is to look at the industry structure and whether there is enough competition. There are 4, maybe 5 mobile operators in Tanzania which all offer 3G internet over phones and connect cards for laptops, and I believe Seacom will not be the only supplier of internet capacity, there are others on their way too.
Given this structure, the abundant supply of bandwidth and number of competitors inc. new ones like Sasatel who focus more on just wireless internet will see prices drop over time (it is hard for this many companies to collude and keep prices high) this will help the companies retain customers as well as attract new ones. There are now 4 mobile banking services because each mobile operator has to compete with Vodacom and offering this service is a natural step to keep and attract customers.
I believe a different problem to focus on is the availability of affordable laptops, they are still expensive when imported and sold at retail- I am hopeful that the coming 3G and WIFI enabled tablets such as the iPad and Android at $500 or less will really drive consumption of the internet beyond the phone- this will really drive the adoption of internet service- for that we will need a good vibrant local mobile application developer marketplace- who in East Africa will write these applications?
What about the capacity for developers to create smartphone applications?
Its a bit off-topic, I was reading an articel on microfinance of Small and Medium size Enterprises (SME), start-ups,…etc.. Someone argued that Microfinance doesnt work! http://www.bidnetwork.org/page/165902/en
The guy does have good points. Its a good read! Go through the comments too.
Wazo la ICT incubators ni zuri. Litaongeza awareness pia. Manake tender kubwa kama za Vodacom and such huwa lazima waende kutafuta ICT consultants nje ya nchi. Ingekuwa vizuri local companies wangepewa hizo tender.
Comments from @AK and @Bata raise good points. Right now there is very little local capacity to generate mobile applications and win tenders.
The reality is that this is a global world and any country should take advantage of talent and skill abroad to develop inform and “mentor” locals. Where will the next M-Pesa come from? Why did I start Yellow Masai in Tanzania? I can tell you Yellow Masai utilizes the global market to source its solutions and has an on the ground team too.
i/o ventures is a mentor based angel investment group that wants to see locals thrive by talent transfer (mwalimu)- one must leverage skills both local and foreign to achieve. If we take the local argument further to its extreme, we might as well shut our borders to foreigners, create our own facebook, our own computers, our own google- look where that got us last time :).
@Mbwana – I hear you. A lot of the big and solid ideas were ideas that were not restricted to one country but had potential benefits for others.
It seems that the focus should be on the type of initiatives (eg: software for phones), not exactly the creation of them. They are already there, but how is Tanzania inovating them?
I’m sure you’ve heard of software hubs opening out of Kenya. Is entry to these hubs accessible for guys in TZ who are hustling their code wherever they find an investor?
AK,
Yes- the idea is that the hub will be accessible- the whole point of creating an incubator/hub in Dar is exactly that and that is what I am trying to do with the help of i/o ventures. I believe I address that in the questions asked in this article. Further down the line one might open their own hub- there is nothing stopping anyone from doing this, and small NGO backed ones do exist, but I don’t believe they are at the scale and attention needed to turn programmers dabbling in code into real companies.