Perhaps Africa’s most exciting technological development in the last ten years is the seismic growth of the mobile phone industry. The ubiquity of the mobile phone has fundamentally changed the way people communicate, share information, purchase goods and use their money. There are over 700 million mobiles in use on the continent today. By 2015, it is expected that this number will grow to 906 million subscribers.
Furthermore, the mobile revolution has a measurable impact on economic development. In 2011, the mobile industry spend in Africa was a staggering $56 billion. In addition, it has been shown that a 10% increase in mobile penetration is likely to increase the long term GDP growth rate of a developing country by 1.2%.
But perhaps most astonishing of all, is the economic context in which this revolution is taking place. Over 50% of Africans live on less than a $2 a day and only 30% of Africans have access to electricity, facts which are, perhaps, testament to the power and the potential of the mobile.
Mobile solutions born on African soil – such as MTN and M-Pesa – are redefining the purpose of the mobile phone by adapting it to the needs of the African consumer. One example of this is the proliferation of prepayment services, driven by appropriate design, innovation, and technology. 96% of mobile subscriptions on the continent are prepaid. There is also a growing diversity of innovative prepaid services on offer: insurance, electricity, water, apps and entertainment content can all be bought prepaid using a mobile phone. To deliver these services there are over one hundred mobile commerce platforms across Africa, and that number is set to grow.
Beyond telecommunications provision and mobile banking, mobile also provides a platform for community services not traditionally associated with technology. For example, the RLabs project uses MXit as a forum, allowing participants to engage in debt counselling, drug rehabilitation and discussions to counter gangsterism. Projects like the RLabs initiative show that mobile technology with appropriate design can be utilised flexibly and adapted for a multitude of purposes.
Clearly, the flexibility of mobile technology naturally lends itself to innovation. One pioneering new company, Nomanini, focuses on distribution enabled by appropriate design. Nomanini provides opportunities for the underserved, emerging market trader and improves access for the consumer. By improving the efficiency and depth of the supply chain, Nomanini enables mobile services to reach more people, more conveniently.
Nomanini is a start up with its headquarters in Cape Town. Nomanini focuses on the distribution of prepaid vouchers. Simply put, Nomanini’s model capitalises on the entrepreneurship of the unbanked masses to deliver prepaid vouchers anytime, anywhere. Nomanini agents are non-exclusive – they are independent traders who work on commission selling a wide array of prepaid vouchers. The formula is simple – the more they sell, the more they earn. To sell, Nomanini agents use a simple device known as the Lula (pictured below), to print and sell prepaid vouchers. This ‘business in a box’ is a portable, light yet robust, user-friendly prepaid distribution device.
Nomanini’s model recognises that Africa presents a worthwhile opportunity for a service provider that can facilitate widespread, low cost distribution for customers at the Base Of the Pyramid (BOP). Nomanini’s CEO, Vahid Monadjem, who hails from Swaziland, explains why he chose to pilot the Lula in partnership with taxi drivers in Soweto. “Historical lack of service provision to the masses has resulted in a largely unregulated, but essential, informal economy for the provision of basic serivces such as public transport” he says.
“The opportunities presented by this industry are rarely appreciated” he argues. There are 150,000 share-taxis transporting 20 million people in South Africa alone. Millions of Africans across the continent use share-taxis daily, providing an opportunity for taxi entrepreneurs to sell prepaid services to customers travelling to and from work.
At present, most service providers rely on formal distributors and directly employed ‘foot soliders’ to trawl the streets selling SIM cards. While these agents may be paid on commission or as salaried employees, there are few incentives to build a repeat customer base.
Nomanini’s solution to this is to capitalise on the experience of local entrepreneurs in the informal economy, such as share-taxi owners, looking for a way to supplement their income. In fact, Nomanini originated from Monadjem’s appreciation of these traders. “From the very beginning I wanted to work with informal entrepreneurs, who, in making a living in a challenging environment, are clearly resilient, resourceful and persistent.” These informal traders have already demonstrated context specific, entrepreneurial proficiency – in establishing an informal retail outlet, or owning their own taxi – and thus know how to run a business in the second economy.
Placing local entrepreneurs at the heart of its service delivery sets Nomanini apart. In so doing, Nomanini challenges indirect distribution methods that leave minimal profit in the hands of the traders. Nomanini’s model ensures that every rand that doesn’t disappear from local communities circulates within them, multiple times. Distributing prepaid directly to local traders, promoting entrepreneurship and keeping profit in the local economy reflect Nomanini’s socially conscious business philosophy.
Clearly, Nomanini’s model has great potential to be adapted to similar consumer contexts. Given the ubiquity of the mobile, the proliferation of informal traders, the increase in pre-paid services and the challenges inherent in the current distribution system, African countries offer the most obvious economic and social opportunity. Once the product has been absorbed into the South African market, Nomanini will begin expansion in neighbouring countries in Southern Africa. Discussions are already afoot for expansion in Mozambique.
As any manager of a start up will tell you, fighting to stay afloat is the dominant objective during the pre-profit phase. During its first 18 months of life, Nomanini has managed to stay afloat and produce rapid results. Nomanini delivered its first product to market within 8 months and has generated a repeat user base in under a year.
Monadjem has also assembled a highly skilled team, comprised of software developers, engineers and designers. Monadjem attributes Nomanini’s rapid growth to the team’s ability to listen and respond to users, a cycle which creates a loop of deliberate improvement – “We believe in failing quickly, learning quickly and trying again” he jokes. This unique operation model originated in the early stages of the company’s formation: “Very early on” Monadjem says, “we developed a real proof of concept which enabled us to get real feedback from potential users and focus our development effort.”
However, it would be untrue to suggest that building Nomanini has been easy. And, further challenges remain. Nomanini continues to refine their hardware, their software and their value proposition to users and distribution channel. Adding more staff to the team is also a key priority; additions which would allow Monadjem, who describes himself as the office dogsbody – “everything from chief strategist to chief bottle-washer” – to be the CEO the company needs.
Moreover, financial constraints pose a serious challenge, especially in South Africa, where early stage capital markets are much thinner than elsewhere. The business landscape is dominated by parastatals and large corporations and unfortunately, this means that incentivizing people to act in an agile, fast way is rare. Nomanini has had to move fast and demonstrate flexibility.
Previously, Monadjem was Global Fellow for Product Development in Emerging Markets at McKinsey and Company which recently published a report entitled ‘The changing face of the African Consumer’. In creating a dynamic distribution model, Nomanini responds directly to the emerging African consumer class. Unleashing the entrepreneurial skills of those in the second economy with the fastest growing industry on the continent, Nomanini brings informal economies and the mobile revolution together. It starts in South Africa.
For more information please visit www.nomanini.com
Article commissioned by Design With Africa and written by Rosalind Gater.