Beyond Coding, Monetizing in Physical Nigeria, Africa

Beyond Coding, Monetizing in Physical Nigeria, Africa

Many years ago, in secondary school, I read a book titled “This is our Chance”. It was authored by James Henshaw. The play was about the battle between tradition and modernity and how to assimilate the best of both African and Western cultures. James set the stage with Kudaro (the Crown Princess), her father (Chief Damba), her mother (Ansa) and others. It was all about balance and hybridization in ways of living.

Today in Nigeria, in the technology world, we are doing relatively well in the software sector. We are making apps which are helping to reduce frictions in the lives of citizens and operations of companies. With 93 million mobile internet subscribers, according to the latest data from the Nigerian Communications Commission (NCC), the trajectory is very promising.

But while we are pushing, making the best efforts in apps and software, our hardware capabilities remain stunted. Unfortunately, most of the opportunities are in the physical domains. There needs to be physical elements which the software must drive to further simplify the lives of people and operations of companies. Without that interface, using the software skills to build hardware solutions for agriculture, energy, transportation, communications, and other sectors, we will not realize the full benefits that cloud, mobile, AI (artificial intelligence) and IoT (internet of things) are enabling.

As African entrepreneurs wait, global technology companies like GE are pushing that boundary of building this interface. GE calls it the Industrial Internet and it sees it as a catalyst to “leapfrog competition and establish the continent as an industrial powerhouse”.

In an increasingly connected industrial ecosystem, a staggering amount of data is being generated every moment. Commonly termed ‘Industrial Internet’, it involves connecting software, industrial applications and intelligent analytics to businesses, enabling unprecedented gains in productivity and innovation from these massive datasets. Leveraged effectively, this paradigm shift in industrial thinking will allow African companies to leapfrog competition and establish the continent as an industrial powerhouse. However, this requires a new generation of talent with a strong technical foundation in big-data analytics, machine learning and web application development, as well as the business acumen to translate technological improvements into business results. (Source: GE Newsletter)

But it is not just GE; Vodacom is building amalgam of solutions especially in the telecommunication sector, deploying IoT systems to support commerce in Nigeria.

With the Internet of Things (IoT) gradually gaining momentum globally, the need for Nigeria to tap into the global technology hub has been stressed. IoT has delivered a big growth opportunity for the telecoms industry due to the volume of connections expected and experts have projected the market will reach $14.6 trillion global market size by 2020. In this regard, Vodacom Business Nigeria, a Tier 2 operator, said it has become highly essential for Nigeria to seize the vast opportunities that this growth presents in transforming businesses in the country.

[…]

Kolade in his presentation, called on telecom operators to adapt to the changing times and source other revenue streams to replace what is being lost in the continuing revolution of communications.

“The Internet of Things offers significant growth potential and the opportunity to take a role in new vertical markets, such as automotive, healthcare and smart cities. As these sectors seek to adopt more IoT services, the opportunities that exist are vast. Whether you are a hardware manufacturer or connectivity reseller, adding IoT solutions to your portfolio will open up new revenue streams from selling hardware, software.

Simply, if Vodacom connects all these elements, physically, it can impose taxes on them, for startups and entrepreneurs to use them. Our capacity to improve healthcare in Nigeria will not end in making good software. We must find ways to create hardware solutions which those caring for patients will use.

The Hardware Paralysis

The global hardware companies in Africa are not wired for startups. That creates problems for entrepreneurs to engage on their platforms. Unlike Google which is training thousands of people, impacting digital skills, none exists at the same scale for hardware makers. Yes, we have GE Garage and Samsung Academy, but those are largely constrained by their respective technologies. What they do is great, but the scale is minimal. It is easier to find opportunities in the web ecosystem than the hardware domains. Of course, it is cheaper in the web because with laptop and Internet connection, you have all the tools required to make things happen. Hardware will require expensive tools which do not necessarily come easily.

Besides, for you to make great hardware products, you must be a good software developer first. That means hardware requires many components beyond coding. Writing device drivers and connecting them to embedded electronics will not happen by trial and error. There is no brute force methodology in hardware: it is either you understand the signal and the pin, or you will run out of luck. It is a challenging endeavor for most entrepreneurs. Unfortunately, that is where the opportunities reside and African entrepreneurs must go for them. Hardware will bring higher level of local differentiation in more competitive ways than any software company can ever enjoy. While Instagram can launch and add features to support Nigeria, an American solar company may not optimally create solar power systems that will efficiently solve customer needs without being local. So, the fact that they cannot solve local needs without being local is an opportunity for local entrepreneurs to make differentiated products for the markets.

But even with that, the foreign firms are moving heavily into local terrians. MasterCard is a payment juggernaut which has expanded beyond the typical software-centricity of web payment into using hardware solutions to further permeate the African market. The implication is that it will become a key foundational architecture upon which African payment solutions will run, offline and online.

  • The Biometric Card: Building on its pioneering work to leverage biometric technology for online payments, this year we unveiled a next generation payment card in South Africa that uses your thumb or fingerprint to authenticate purchases you make in physical retail environments.

  • Commerce for Every Device: The IoT has given every connected device the opportunity to become a payment device. Our payment technology is embedded in, among other things, fitness bands, gas pumps, vending machines, smart mirrors in dressing rooms, cars, shared workspaces such as WeWork and Softbank robots, like Pepper.

All Together

From my experience in Zenvus, my pioneering precision farming technology, one can make real impacts in the lives of the citizens when hardware brings the best in software engineering. Companies like Amazon have noticed that the next phase of growth will come by using the best possible software to connect physical homes, offices and the world. According to PWC, “Amazon has displaced Volkswagen as the world’s biggest corporate investor, according to research by PwC. Its R&D spending rose to $16.1 billion in 2017 from $12.5 billion a year earlier. VW slipped to fifth (not helped by exchange rate effects), behind Alphabet, Intel and Samsung.”  Most of that Amazon investment is going into Alexa, Echo, and other hardware systems it is launching constantly.

Africa is well positioned because we have great computers in our pockets. Yet, we will miss massive opportunities to use these devices as tools to improve healthcare, agriculture, education and other sectors, if all we do stop at software. Yes, we need to extend beyond just making software to actually building physical things, using the software to make them smarter. That is the great opportunity which is arising in Africa today, and it will be monetized, at scale.

Nigeria, China, India, Indonesia and Pakistan are markets that will account for more than 40 per cent of the 1.6 billion new smartphone connections by 2020. This is according to the Global system for Mobile Communications (GSMA). Currently, Nigeria’s smartphone penetration as at 2016 stood at 30 per cent, but there has been more adoption, especially as new and cheaper devices are entering the market, almost on a monthly basis.

As Mr Henshaw noted, the mix of African and Western cultures can co-habit. Our software and hardware startups must find ways to collaborate so that our software can help build physical things which will help seed opportunities and solve real-world problems in African cities. While electricity availability tracking apps could be fun, the real value will be finding how to make hardware solutions that can provide electricity. That could be solar solutions with totally African-engineered design framework in metering, payment and maintenance. The same goes for other sectors. We cannot make such leaps if we just focus on coding for virtual ephemeral experiences without thinking how the codes can move physical atoms in the lives of people and companies they build in Nigeria and Africa.


----REGISTER for my Innovation for Growth Workshop, Lagos, Sept 2018.
---Visit our Store for my books, cases, frameworks and more. Now, enjoy our consolidated subscription for all contents (past, present and future).
-- We offer Advisory Services (tech, strategy & Africa).

Share this post

Leave a Reply