Africa. Picture: ISTOCK
Africa. Picture: ISTOCK

The African continent and the mobile platform are a match made in heaven – both are seen as burgeoning growth areas, ripe with potential.

According to the Industrial Development Corp, fixed-line connectivity in SA is in freefall, while mobile data uptake is growing at a solid 8%. This growth makes the African market an enticing – and viable – destination for new start-ups. 

The big takeout: The African continent presents a wealth of opportunities for innovative, mobile-led businesses. However, newcomers need to understand the nuances of the market they’re aiming to enter before they launch, or face a real chance of failure.

However, certain products will land well, while others won’t. There is no “one size fits all” approach, and new entrants must understand each unique market for successful continental expansion.

Entertainment on the move

Local streaming platform iflix has adapted a successful business model. Similar to Netflix, it offers a range of TV series and movies that users can stream for a small fee, or are zero rated on many of the networks (free to the end consumer). Iflix has been expanding rapidly into developing and emerging markets across Asia and Africa, making streaming to mobile devices its core focus.

Banking for all

The financial services sector presents a huge opportunity for mobile brands wanting access to  African markets. Mobile banking makes infinite sense in Africa given the infrastructure shortfalls in many rural areas and the lack of accessible bank branches for rural consumers.

Simply put, the door is wide open for more mobile solutions that offer financial services in Africa. A case in point is Jumo World, a service helping unbanked people to get loans to start new businesses. Instead of relying on previous financial transactions to build a profile – a system traditional banks use to assess the creditworthiness of loan applicants –  it uses behavioural data generated from mobile usage.

Eyes wide open

But though services like iflix and Jumo World have received a resounding reception, other businesses are failing dismally despite the wealth of opportunity in Africa.

Business models that work in Western countries don’t necessary work on the continent. New players often don’t understand the end user, for example, or the different cultural nuances among African countries. Several large corporations that have successful mobile businesses in Europe, the USA and China have in the past pushed aggressively into Africa and failed.

Nevertheless, companies that genuinely understand different African markets can enjoy significant success. While WhatsApp is more popular than BlackBerry Messenger (BBM) in SA, BBM is booming in Nigeria and other African markets. This is because BBM covers the full data cost in many markets to help the end user. In an environment where data costs are very high, this adds to its appeal, and it’s surprising that other business models don’t follow a similar path. 

Businesses hoping to ride the wave of mobile in Africa must carefully target the right audience with the right product and services for that country. Start-ups should aim to keep data costs low. Moreover, newcomers must tread sensitively and work to truly understand the culture, the economic situation and the distribution model in the region, before they can make their launch viable.

* Hodge is managing director of YDigital Media Africa.

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