Lauri Elliott

This is an article I wrote for Brainstorm Magazine of South Africa. It appeared in the December 2009/January 2010 issue.

The penetration of mobile phones and mobile data will serve as catalysts for a growing mobile gaming market in South Africa. The question is how well the industry will navigate these opportunities.

Globally, gaming is a hot market – from console, to PC, to online, to mobile. Pyramid Research’s recent report, Mobile Gaming in Emerging Markets, says that mobile gaming will grow at least 20 percent per year from 2009 to 2014 in the Africa and Middle East regions.

Jan Ten Sythoff, research manager for Pyramid Research, says that mobile phone and mobile data penetration serve as catalysts for this market. While Africa has good mobile phone penetration, there are differences between consumers in mature markets like the United States and those in emerging markets like Africa.

Says Matt Benic, a developer with I-Imagine: “While we have high mobile phone penetration, our potential consumers in South Africa typically have low levels of disposable income (also typical of the rest of Africa).”

This means handsets used by consumers are lower-end devices, and the cost of games needs to be lower than in developed markets. In addition, consumers would not necessarily have previous experience with other gaming platforms like consoles and PCs. Says Danny Day, owner of QCF Design: “The first provider that offers a truly engaging, massively multi-player, micro-transaction-enabled game on phones is going to win big.”

Benic says there is also huge opportunity with sports, like soccer, and SMS-based games in South Africa. A “taxi”-driving game might be an appealing concept in South Africa too. This is tapping into what consumers know and feel comfortable with.

Sythoff says the challenges facing emerging markets include game cost, affordable handsets and piracy.

Benic mentions that the misperception that game development is inexpensive is a challenge in the local industry. Companies that would pay to have games developed for advertising and promotional purposes are often shocked when quoted a price.

Furthermore, according to Benic, the lack of sufficient numbers of skilled developers is slowing down the mobile game development industry. And then there is the ongoing issue of the cost of internet access. There are many free and inexpensive tools online to support mobile game development but the data usage expense can be prohibitive for small firms.

Challenges impact the consumer too, says Day. “Poor visibility, commodity-focused instead of product-focused marketing, shoddy after-sales support and lack of penetration by local mobile developers means…potential players have to wade through sheets and sheets of poorly advertised games.” In addition, the games are not localised to suit consumers.

Challenges notwithstanding, Sythoff shares several business models with the potential to succeed in African markets. First, there is gaming for advertising, or adver-gaming: players are allowed to download games for free, but the games contain advertisements. The vendor and developer generate revenue by selling advertising space.

A second potential business model allows consumers to play games for free until they reach a certain level, after which they must pay. This is a good way of getting consumers hooked on a game, providing motivation for them to pay to continue.

In some instances, a game developer will work with a data provider to provide games. Both share the revenues while keeping the price of games lower. Day says QCF Design is looking into another business model – subscriptions.

No matter which business model is employed though, says Benic, a game has to make it the first month it is released.

Sythoff says there are potential spinoffs in digital content and educational games, while Day says his firm “has had some success with mobile-based learning games”.

Sythoff points out that new mobile game developers need to address several issues. First, they have to find channels to reach potential consumers. This will normally result in partnerships with mobile phone operators or aggregators. Second, developers need to consider how they will bill the end-user.

Third, games should be localised to match language and culture.

Unlike the iPhone Appstore, which shook the US mobile game industry by allowing new and more agile mobile developers to enter the market, local developers find it difficult to enter the market. Day says “commissioned game development is currently more lucrative”.

Up, up and away

As for the future, Day provides several insights. “New studios are applying lessons learned from digital distribution games on consoles and PCs to the mobile space. These are studios and products that will change the mobile gaming sector in South Africa.”

Also, says Day: “Watch content creators that produce content for local consumers, as well as the Indian mobile game development industry… (it) will inform developers here.”

Finally, Day says to track MXIT.

“MXIT is a heavyweight in the industry. It’s one to watch for future growth in the mobile game sector, especially if it acts as an aggregator for quality local content.”

The sector will also be tamed. “New gambling control laws and changes to premium cost services should help reign in the `Wild West’ nature of many mobile businesses,” according to Day. This will reduce exploitation of consumers.

Overall, two possible scenarios will develop in South Africa’s mobile game sector. Mobile games will be overtaken by flash- or browser-based games as phones evolve, if the mobile game industry does not respond on time. Or, the industry will shift from its current business models to more customer-focused models, which focus on alternative revenue streams.

Sythoff says the mobile game sector is complex. Navigating this complexity successfully is a key enabler for firms wanting to enter this space. Success will come to firms like Apple, which are able to deconstruct the complexity and tap into the potential of the sector. With the potential revenue stream and under-tapped market, it’s definitely a sector to consider.

This is an article written by Hilton Tarrant and myself as part of the ICT in business sector series for Brainstorm Magazine in South Africa.

There is no question that the healthcare sector in Africa represents a huge challenge and opportunity. The question is how, and how well, ICT will meet the challenge.

Most African countries have a critical shortage of healthcare workers, and the majority of African healthcare systems are low-ranked internationally, according to the World Health Organisation.

Dr Dirk Koekies, Chief Executive Officer of GeoAxon, states plainly that the challenge is “creating a healthcare system out of nothing, which can deliver quality basic primary healthcare services to those without it”.

While this situation is a critical challenge, it presents a tremendous opportunity for ICT in the health sector. The opportunity is particularly good in the mobile sector (mHealth) due to the penetration of mobile phones on the continent.

The United Nations 2009 report mHealth for Development says: “Mobile phones reach further into developing countries than other technology and health infrastructures.”

One mantra for mHealth is “make available the right information at the right place at the right time and in the correct form,” according to a 2008 Rockefeller Foundation report.

This mantra, when actualised, translates to several benefits, according to Tyson Greer, CEO of Ambient Insights.

First, clinicians and patients can make more informed and intelligent decisions. Second, real-time data is provided for communication, consultation and notification. Third, mHealth increases efficiency and speed of care, and increases productivity of healthcare workers. And finally, it provides on-demand access to information and continual learning for healthcare professionals.

There is a unique opportunity to provide ICT-based products and services to the private healthcare sector.

Firstly, because private sector healthcare already represents a good portion of services provided to Africans compared to public healthcare. And secondly, African governments are using private healthcare providers to augment and enhance public healthcare systems, which are overtaxed.

This creates a sizable opportunity for ICT firms. Specific business opportunities in mHealth, according to the mHealth in Development report, include education and awareness, remote data collection, remote monitoring, communication and training for health care workers, disease and epidemic outbreak tracking, and diagnostic and treatment support. Koekies also says that developing centralised, electronic medical information records is a low-hanging fruit opportunity.

GeoAxon is delving into business opportunities presented in diagnostic and treatment support. Its “Tele-medicine Doctor in a Box” allows a doctor to examine a patient over the internet, using devices the patient interacts with locally. These devices transmit data, which would normally be assessed in a face-to-face consultation with a doctor, remotely to the physician.

While mHealth seems to be gaining momentum, it still has several challenges. mHealth is still in the pioneer stage with many projects in pilot, but little empirical evidence to prove its impact. Koekies indicates that funding for innovative solutions is still difficult to come by. And while the technology may be there, the ecosystem for the mHealth sector is still immature.

Recognising that eHealth*, and mHealth, are still emerging markets in Africa with high potential, ICT firms might want to first look for low-hanging fruit opportunities and those that leverage its strengths.

Big opportunity

The healthcare market is huge. A recent report by research and consulting outfit Markets and Markets says the healthcare IT systems market will be worth $53.8 billion in five years’ time.

One of the major areas of growth in the space is tele-medicine. This is by no means new technology, with policies put in place and applications created over a decade ago.

A new push, by networking giant Cisco, is through a pilot programme demonstrating that tele-medicine is real and it works. The so-called HealthPresence programme saw remote clinics linked up in Aberdeen, Scotland and San Jose, California.

This service provides what Cisco terms “care at-a-distance over the network”. It uses Cisco’s TelePresence teleconferencing technology, with patients and physicians able to see life-sized images of one another. The system also collects physiological data from a variety of linked devices such as a stethoscope, blood pressure cuff, pulse oximeter and other diagnostic equipment.

The Aberdeen trial started in January last year and found that 90 percent of the patients who used the technology were satisfied with the experience, 95 percent said the visit felt confidential and 93 percent said they would recommend it.

“In almost every case, we could accurately identify the degree of urgency and make a diagnosis,” said Dr James Ferguson, national clinical lead for the Scottish Centre for Telehealth.

He added: “Cisco Health- Presence can enable us to deal safely and effectively with 90 percent of the cases we see.”

The Medical Research Council is currently running five separate tele-medicine projects around the country.

Obviously bandwidth constraints mean that the implementation of tele-medicine is difficult in both South Africa and Africa. In addition to bandwidth, the MRC identifies other obstacles such as the lack of easy-to-use, robust diagnostic instruments and no dedicated tele-medicine centre to act as a hub for tele-medicine.

The deployment of terrestrial fibre networks in South and East Africa, as well as the commissioning of Seacom, has helped solve the bandwidth problem, however.

At a recent exhibition, Seacom showcased healthcare teleconferencing applications, and earlier this year at GovTech 2009, Moses

Mtimunye, then acting CEO of Sita, said that in the near future, similar technologies to Cisco’s TelePresence “will make for commercially available tele-medicine projects providing people in rural areas with world-class healthcare services”.

The national Department of Health says its long-term goal is to “make tele-medicine live up to its potential as a valuable tool to improve access to high-quality and cost-effective health care services in South Africa”.

Beyond structured implementation of tele-medicine systems, Cisco believes that HealthPresence could mean a revolution: “Instead of making a dash to an urgent care facility or emergency room, what if you could use your television or other networked device to connect with a medical centre?”

Cisco believes this is not fantasy, it reckons it could become reality within the next three to five years.

*eHealth is the use of ICT for health services and information.

This article is one in a series about ICT in different sectors for Brainstorm Magazine of South Africa.  It was co-authored with Hilton Tarrant.

The mining sector has been slow in its uptake of technology, but the global economic crisis and long-term issues are serving as catalysts for adoption.

The outlook for the mining sector has radically changed due to the global economic crisis. This boom and bust cycle has left many mining companies considering ways to manage operating costs in order to remain economically viable. But this is not the only challenge the sector faces, according to Deloitte’s report, Tackling Trends 2009: The Top 10 Global Mining Issues. In the long run, the sector must find ways to remain sustainable amid the sea of legal, social, economic and environmental issues.

These challenges actually present opportunities for the ICT sector because technology can manage complex systems, streamline processes, reduce costs, and improve efficiency and productivity. Consider enterprise resource planning (ERP) software, which coordinates the entire mining value chain, from locating to divesting minerals. Think of radio-frequency identification (RFID) and global positioning system (GPS) technologies, which track the movement of minerals and equipment.

There are also examples of technology specific to the mining sector. The oil sector is demonstrating the potential of ultra-deep water drilling technology, which drills and extracts oil from greater water depths.

The technology is creating and extending market opportunities to the industry by accessing previously unreachable deposits. For example, new oil operations were recently announced off the coasts of Ghana and Sierre Leone.

Dr Greg Baiden, director of Penguin ASI and a global expert on automation, says: “Automation in the mining industry will follow similar trends to those in the manufacturing industry.”

It starts with a person using an automated machine to handle multiple tasks and eventually evolves to artificially intelligent, autonomous machines. Baiden says the future includes intelligent machines that can heal themselves.

For now though, automation has not reached critical mass in the sector. Large mining companies like Rio Tinto and BHP Billiton are considered early adopters. Teleoperations, or telerobotics, is the operation of a machine at a distance.

Penguin ASI’s wireless technology, which communicates with robotic equipment under water, gives a glimpse of the potential of telerobotics in solving some of the mining sector’s sustainability issues. This wireless technology will enable mining companies to extend the life of their mining operations on land. Imagine flooding mines with water to double their mining depth, and using telerobotics equipment to run the operations.

One natural result of using better technology and innovation is cost reduction in the mining value chain. This will eventually serve the economic development of Africa well. As the cost of mining decreases, it allows smaller mining firms to establish themselves.

The business opportunities for ICT providers in the mining sector can be found in the corporate, technical and value chain systems. Historically, ICT providers focus on mining as a niche. However, as enabling technologies provide broader benefit to the sector and new mining entities arise, there are increased opportunities for the ICT sector.

Mining of Data

Also, the mining sector faces serious challenges to its long-term sustainability. ICT firms, which identify gaps in the value chain and create solutions that close the gaps, leverage the value chain and contribute to sustainability, will carve their own space.

While there is undeniably a lot of technology used in the underground oreextraction part of mining, more focus is currently being put on the processing side of productions.

MD of Softline Accpac, Jeremy Waterman, says that “inherently it’s a reasonably simple business”. With mining, “you’re putting a whole lot of resources in and you’re taking production out”.

But there has traditionally been a disconnect between production and what Waterman terms the “financial side of things”, particularly among smaller miners. This has been a cause of frustration within the industry, and a number of solutions now seek to marry the two elements.

This is a classic implementation of an enterprise resource planning (ERP) system, but up until recently, “marrying the elements” was simply absent.

“In the past it was tended to be done more on a kind of matchbox,” says Waterman. “You had a whole lot of costs and you had a lot of production and you subtracted one from the other and you made a profit.”

Nowadays it’s a lot more complicated. Waterman describes how workflow management systems can be used for control, and to “capture production data that’s coming back” into the system. The real difference is made by the layering business intelligence on top of these systems.

Ugan Maistry, business unit head of Mining & Manufacturing at EOH, agrees: “Over the years, there’s been this maturity in terms of process-control and automation systems to be able to execute. There is now maturity in business systems like ERP.”

But over the past few years, Maistry says there is a newfound maturity around the systems in between the parts. He calls it ‘mining execution systems’, and describes it as very similar to manufacturing execution systems.

He likens many of the processes in mining to inventory management. “Previously, people only knew what they had and what they produced if they actually stopped their operations and took stock.”

“Questions like, ‘Where is the actual material in their value chain?’” adds Maistry.

He says some customers have been spending considerable amounts of money in the last two or three years on exactly this: business intelligence systems, which he likens to “enterprise manufacturing intelligence”.

“But,” says Maistry, “what they haven’t explored is how to extract value out of that information.”

This is the next frontier. Now, “our customers need to mine the data, and I’m talking end-to-end,” says Maistry. “It’s about looking at information in context, not just in terms of volumes and quantities, but in costs as well.” Waterman takes it one step further: “We [South Africa] are trend-setters in mining as a whole.

“There’s been an explosion of midcap miners, and that is where we’re seeing the real growth.”

Aside from ERP and workflow management systems, the back office sees similar ICT trends to those in pretty much every industry. Working costs are being rationalised, with single vendor outsourcing one way of saving money.

Licensing rationalisation is being looked at, says Maistry, and providers like Microsoft and SAP are “coming to the party.”

“The process for seeking capital, or funding, for a business is an ongoing task that entrepreneurs need to understand,” says Patrice Backer.  Mr. Backer is Chief Operating Officer for Advanced Finance and Investment Group (AFIG).  He joined us for our November 4, 2009 segment, “Preparing Your African Venture for Investors.”

We opened the show with an overview of private equity funding options for businesses based on their lifecycle.  There are essentially two phases – start-up and growth/expansion.  During the start-up phase, businesses seek pre-seed, seed or early stage funding.  This start-up phase is connected with what its called venture capital.  Newer firms present higher risks, so there are certain types of investors, venture capitalists, who focus on these types of firms.  Backer noted that venture capital is still not a strong option in Africa.  The exception is South Africa which has a more mature market.

In the growth and expansion phase of an existing firm, there are also three funding cycles – second stage, third stage and bridge funding.  There is also an option of buy-out.  Growth and expansion funding for existing firms is the focus for the majority of private equity firms with an African portfolio.  Backer explains that it provides a good middle ground for investors – they get good performance with lower risk.

Backer says that investors in private equity funds in Africa are development institutions, private sector or a combination.  He says that development institutions, often affiliated with governments, have a higher tolerance for the risk environment in Africa so they are consistent contributors.  When the global economic crisis hit, it was private sector contributors who mostly pulled out of African investments.  However, it’s important to note the predominant reason for withdrawing investments was the need for cash not a lack of performance.  In fact, the only African country that had negative growth during this period is South Africa.

When firms are looking for private equity funding, Backer has three recommendations.  First, the firm should have a solid business plan.  Second, the firm should be organized, demonstrating it can handle all aspects of the business operation from customers to legal requirements.  Third, the owners should not shy away from hiring professional, e.g., financial and legal, to help them with the process.

Backer notes that there challenges which limit the private equity sector in Africa.  First, the legal and institutional frameworks conducive to private equity firms still lag in Africa.  Second, investments come mostly from foreign sources instead of local.  Once more local investments occur, it will shore up the number of foreign investors that come to the table.  One of the recent success stories is SEACOM, the undersea broadband cable provider for Africa.  SEACOM had a strong showing of both local and foreign investors.

To learn more from this insightful discussion, listen to the recorded show.  To learn more about AFIG, go to http://www.afigfunds.com.  To stay in the mix of venture capital and private equity opportunities in Africa, you may want to join one of the online communities like VC4Africa.

For additional resources about doing business or investing in Africa, go to our site – http://www.afribiz.info.

There is a ground swell of interest growing about business and investment in Africa.   Too often that interest wanes because businesses know very little about how to evaluate and enter opportunities in Africa.  This segment, “Practical Insights for Investing in Africa,” started a three-part series on investing in Africa to help those interested take those first steps.

We were joined by Attorney Peter Hansen, who specializes in African Investment Law.  Also, Professor Richard America, who teaches a course on investing in Africa at Georgetown University and specializes in management development in Africa, contributed to the conversation.

Throughout the discussion, we emphasized a critical element for any venture into Africa – a focused strategy.  For investment, the investment plan is your instrument.  Some issues to consider are:

• What are your financial goals?
• How much money do you have to invest?  Have you established a budget?
• What level of risk can you tolerate?  What returns do you want?
• What is your investment timeframe – short-term, mid-term and long-term?
• How much effort will go into managing the investment?
• What are the tax issues with which you will deal?

Peter Hansen said that many investors want to “shoot from the hip” when they invest in foreign markets.  Hansen says that investors will have different plans and legal expectations for African countries, so preparation is essential.

Hansen also emphasized a good mindset for business/investment in Africa for both the investor and Africa is focusing on sustainable business opportunities.  This involves developing open and honest business deals.

For Americans investing in Africa, Hansen shared that there is anti-corruption legislation, the Foreign Corrupt Practices Act (FCPA), to which we must adhere.  He suggests that every investor establish an anti-corruption plan before venturing into international business and investment.

Richard America mentioned that there are investment opportunities in enhancing the value chains in Africa in sectors like timber, minerals.  These sectors have typically focused on exporting raw materials, but building local capabilities is becoming an imperative.  The host, Lauri Elliott, suggested that enhancing the capabilities of workers and managers can be a business strategy to help investors succeed in Africa.  African governments are looking for ways to develop their local workforce, so investors can create goodwill by helping them do so.

America also crystallized the importance of the local partner.  He shared what a critical asset a local partner, who is honest, trustworthy and knowledgeable, can be.

Both America and Hansen mentioned resources for investors and business people.  These are the Overseas Private Investment Corporation (www.opic.gov), African country investment and promotion agencies (http://www.afribiz.info/?p=647) and the World Bank’s Doing Business website (www.doingbusiness.org).

As a final note, America suggests to evaluate which country to enter, check out the countries that have received development funds from the Millenium Challenge Corporation (www.mcc.gov).  Countries go through rigorous analysis for policies promoting economic and political freedom before receiving funds from MCC.  Some African countries that passed the challenge include Benin, Kenya and Morocco.  Several other African countries, e.g., Liberia and Malawi, are eligible to receive funds and are currently going through the approval process.

Attorney Hansen prepared a brief on the issues he raised, which you can download from http://media.afribiz.info/practical-legal-issues-investing-africa-hansen.pdf.   To access the archived show, check out http://www.blogtalkradio.com/afribiz/2009/10/28/Practical-Insights-into-Investing-in-Africa.

To learn more about doing business in Africa, first visit our radio show page at http://www.blogtalkradio.com/afribiz.  Then, visit our information portal at http://www.afribiz.info.

This is a part of the ongoing series I write on ICT across sectors for ITWEB/Brainstorm Magazine South Africa.  This article is on manufacturing.  It was a collaborative piece with Hilton Tarrant who focused on South Africa while I focused on the African continent and global trends.  Enjoy!

Originally posted online at Brainstorm Magazine.

ICT is a key enabler for the manufacturing sector. It’s transforming the global manufacturing arena while opening opportunities in the African market.

Africa lags behind its global counterparts in industrial and manufacturing development. Even when comparing the percentage manufacturing contributes to the gross domestic product (GDP) in African countries to other developing countries, manufacturing contributes about ten percent in African countries and 21 percent in other developing countries.

In Africa, but outside South Africa, there are pockets of manufacturing success stories. The Ethiopian leather industry has made a name for itself in global niche markets. Robert Parker, group VP of research for IDC Manufacturing Insights, says the one significant manufacturing segment in Africa is the remanufacturing of computer and electronics.

However, the picture is getting brighter. Globalisation, innovation and ICT are transforming many sectors to anywhere, anytime platforms. In the manufacturing sector, the mantra is “design anywhere, make anywhere, sell anywhere,” says Parker.

One shift is product manufacturing, separated into tasks and spread across manufacturing facilities. This is seen as a huge opportunity for new, smaller manufacturing entrants in low income countries, including Africa, according to the Industrial Development Report 2009 by the United Nations Industrial Development Organization (UNIDO).

Parker speaks of a similar shift from mass to micro to pod manufacturing. Historically, manufacturers built one facility to serve the world. With pod manufacturing, manufacturers can download designs and methods from anywhere to localised manufacturing equipment to serve the local economy.

Pod manufacturing has reduced cost tremendously and increased flexibility. For example, there is equipment to manufacture wine, starting at $3 500.

Parker also says that local African manufacturers will be able to “bring more diversified and custom products to their local consumers”. For example, Digiskin allows customers to go online to design skins to cover gadgets, including cellphones.  A company can purchase a production machine to provide some of these skins locally to customers.

For a long-term opportunity, Parker says that African governments need to leverage access to their abundant resources and require firms to develop manufacturing and processing facilities locally alongside extraction operations. In some instances, deposits in Africa may account for 80 to 90 percent of global deposits of certain precious minerals or metals. They need to play the leverage game like China. China recently limited the export of rare metals to boost the price. African governments can use the same principle in a different way.

In every aspect, ICT is embedded in the manufacturing value chain from infrastructure to intelligent manufacturing. Without sufficient broadband infrastructure, approaches like pod manufacturing might not be possible.

Parker also sees another opportunity with the pervasive wireless infrastructure in Africa, allowing African firms to tap into and manage the full manufacturing value chain almost anywhere with technology like remote sensing and radio-frequency identification (RFID).

While there may only be pockets of manufacturing on the continent, the global manufacturing shift opens new, even immediate, opportunities for ICT firms looking for new pastures, e.g. industrial clusters in Uganda and Tanzania, as they develop. It will be important for ICT firms to continually scan the environment to take advantage of these emerging opportunities.

Manufacturing convergence

Further south, leveraging information, communication, control and power is helping South African manufacturers innovate and compete.  Manufacturers have two options during the global economic downturn: cut back and try to weather the storm, or take the opportunity to be more innovative and aggressive. However, because South African factories struggle to manufacture products at the same cost as is possible elsewhere in the world, and due to a strong currency, local manufacturing concerns face these two options all the time.

Rockwell Automation believes that even though convergence has become a cliché over the past decade, “today the combination of technology maturity and economic necessity has made manufacturing convergence a manufacturing reality”. Manufacturing convergence sees the merging of functions and systems that have been separate. The theory is that with people, processes and technology working together, manufacturers can perform better.

Convergence within manufacturing leverages information, communication, control and power.  It’s no use simply having systems and machines recording data. Information must be in a manageable form: the new goal is presenting information in context.

Sources of information can be “streamlined to allow configuration, visualisation, maintenance and optimisation of manufacturing processes and plant assets,” Rockwell says.

Immense value is created when IT and manufacturing departments are able to share information seamlessly and securely, while running multiple applications over the same network. An enterprise manufacturing approach that is particularly suited to larger distributed companies envisions the enterprise as a “virtual manufacturing network”.

EOH, during an implementation at Coca-Cola’s greenfields Bloemfontein plant, was able to capitalise on available technologies while the rest of the group used mostly manual or semi-automatic systems. In time, improvements to its other factories will mean that they can join the network across the Coca-Cola SABCO enterprise.

The trend nowadays sees standard, unmodified Ethernet being adopted broadly across the plant and enterprise for data collection and real-time control. Add to this newer functionality such as voice, video and mobility, which are beginning to appear in the plant environment.

However, despite these advances, manufacturing convergence is a complex environment and cannot be delivered by a single supplier. Locally, system integrators like Bytes and EOH implement solutions from companies as varied as Cisco, Microsoft, SAP, Wonderware and Dassault Systems.

Beyond this, original equipment manufacturers are embracing new so-called “smart” service business models enabled through embedded software, wireless connectivity and online services.  This shift has significant implications for manufacturers.

Lifecycles of products are becoming ever shorter as releases will begin to ship in “real-time” with software devices delivered to products over networks when needed. Oracle’s manufacturing VP, Manish Modi, reckons it’s hard to accurately predict what manufacturing operations will look like five years from now, but “factors we experience today are likely to have a residual effect on the supply chains of tomorrow.”

Modi says that many of the top manufacturers will have leading “service-oriented architecture suites in place to enable supply chain evolution as well as needed flexibility to quickly respond to changing markets and inevitable shifts in buying patterns”.

He also suggests that most manufacturing systems will support Web or Enterprise 2.0. “The future adoption of tools like wikis, blogs and mash-ups to create store, and collaborate on information by skilled manufacturing users should not come as a surprise. Touch screens and sophisticated wireless devices should be a common part of leading factory floors.”

But, the biggest problem in converged manufacturing is not the availability or implementation of technology: it’s changing the mindset of the people themselves.

I write a monthly article for Afribiz to help businesses focus on how to strategically and practically get business done in Africa.  This month pose questions for determining which countries might be most conducive to starting new ventures in Africa.

Originally posted at http://www.afribiz.info/?p=1092.

There is no lack of opportunity in Africa. But the road to converting those opportunities to business success is often paved with obstacles. The question becomes not what opportunities exist in Africa, but how to make them work. If we look at opportunities only, we might focus on countries with large populations like Nigeria and Ethiopia.  In doing so, sometimes the best place to successfully start a business in Africa is overlooked.  For instance, in some sectors it might be easier and more impactful to start in Namibia than South Africa even though it has a smaller market.

Identifying an environment that promotes the development of your business can be considered a key strategic decision.  It is more important to establish a successful business model, which can be replicated and expanded when you start a venture in Africa.  While economic opportunities abound everywhere, you need to determine which environments will leverage your strengths to take advantage of those economic opportunities. Consider the following questions, quick facts and resources to inform your decision.

1. Which African countries demonstrate the best overall governance?  Good governance is a boon for business and economic growth through the constraint of corruption.  According to the Ibrahim Index of Good Governance 2009 developed and maintained by African institutions, the top seven governance performers in Africa are Mauritius, Cape Verde, Seychelles, Botswana, South Africa, Namibia and Ghana.  Of special note, Rwanda was recognized by both the World Bank and Transparency International for making significant improvements in the last few years.
2. Which African countries possess the most economic freedom?  While there is no single definition of economic freedom, one of the key components is the ability to enter and compete in markets.  According to the Index of Economic Freedom, the top seven African performers compared globally are Mauritius (18^th), Botswana (34^th), South Africa (61^st), Uganda (63^rd), Namibia (71^st), Madagascar (73^rd) and Cape Verde (77^th).
3. Which African countries have the best environment to facilitate business?  The top seven African nations are Mauritius, South Africa, Botswana, Namibia, Rwanda, Zambia and Ghana, according to the Doing Business Report 2010.
4. Which African countries and regions have the best infrastructure for trade?  Infrastructure includes power, roads, rail, air and telecommunications.  Historically, the Southern Africa region has remained at the top in all categories with South Africa leading the way.  The Maputo trade corridor between South Africa and Mozambique is the most developed corridor on the continent.  In the broadband infrastructure arena, East Africa overtook Southern Africa this year. The East African countries involved include Burundi, Kenya, Rwanda, Tanzania and Uganda.  Currently, there are initiatives underway to link and modernize infrastructure across the continent.  For example, SEACOM is connecting the entire African continent to its international broadband infrastructure.  The company has connected most of their coastal nodes and is moving inland, working from the East coast to the West coast.  Countries like Malawi and the Democratic Republic of Congo will be online within six months.
5.  Which African nations have diversified economies? Diversification means there are broader economic opportunities present, strengthening the ability of the economy to absorb shocks.  The Diversification Index of the African Economic Outlook report says that the top seven most diversified economies in Africa are Tunisia (75%), Morocco (67%), South Africa (45%), Tanzania (30%), Senegal (22%), Kenya (22%) and Madagascar (21%).
6. Which African countries are experiencing the fastest economic growth? The top seven fastest growing economies (GDP%) in Africa this year are Ethiopia (7.5%), Congo Brazzaville (7.4%), Uganda (7.0%), Malawi (5.9%), Rwanda (5.3%), Tanzania (5.0%) and Liberia (4.9%), according to the Regional Economic Outlook for Africa October 2009.  They are also in the top twenty growing economies globally.   These countries are expected to maintain similar growth through 2010.  However, Congo Brazzaville (12.2% GDP) and Liberia (6.3% GDP) are expected to significantly outperform their growth from this year in 2010.

These questions serve to help you navigate doing business or investing in Africa.  However, they assume you have developed a high-level strategy. One of the first principles for doing business in Africa is do it with purpose.  A strategy provides the framework for implementing your business purpose in Africa.

We at Afribiz can help you formulate and implement that strategy. To start, learn from our online seminar, “Setting a Path for Success in Africa:  In Business, Investment and Life.” And visit other resources we have at www.afribiz.info.

We had a great discussion this week about “Entrepreneurship:  The Answer to Economic Uncertainty.”  The picture for our economy doesn’t look good, even though the Dow Jones surpassed 10,000 on Wednesday.   Much of the improved financial status of publicly-traded firms comes from cost-cutting not sales.  Economists still do not expect the unemployment picture to get better any time soon.

But our discussion didn’t focus on the downside, but on the upside!  We shared how entrepreneurs are the key to the economy and economic recovery.  Bo Fishback, Vice President of Entrepreneurship at the Kauffman Foundation, shared how almost all the new job growth in the U.S. comes from companies under five years.  That’s right it is people like you and me – aspiring, emerging, new and serial entrepreneurs – that create jobs, not the government! 

Some other highlights from the radio broadcast are 1) An entrepreneur is more than someone organizing a business venture and assuming the risk.  An entrepreneur is a creator, innovator and problem-solver. 2) Entrepreneurs can gain influence, strength and support by coming together in community.  For example, need capital.  Learn about the concept of peer-to-peer loans by watching a Forbes magazine video.  Also, check out www.prosper.com.  Here you have people and entrepreneurs helping each other.  Learn how entrepreneurs as a part of communities fostered economic development throughout history in “The Entrepreneurial Secret” by Cedric Muhammad.  3) If we become a community, we can also become an economic system in our own right, fostering economic growth in our locally and globally.

But to be in the know, you need to listen to the show!  Listen online or download to your computer, MP3 player, cell phone or I-POD.

And, I just have to add one other point to top off reasons to get moving on that entrepreneurial idea.  Over 50% of the companies listed on the Fortune 500 started in times of recession.  So, this is the time for us to get in gear and make it happen for ourselves, families and communities!  Kauffman launched a great platform to facilitate a unified voice for entrepreneurs called the Entrepreneurs’ Movement.  Join and get others to join! 

There are other ways to stay connected with Kauffman’s work with entrepreneurs.  Check these out:

• Keep updated with real-time conversation on Twitter. ( http://www.twitter.com/strongeramerica)
• Join the Facebook community. ( http://www.facebook.com/buildastrongamerica)
• Participate in Global Entrepreneurship Week, November 16-22. (http://www.unleashingideas.org)

And don’t forget to stay connected with The Art of Making Business Happen community at http://artofbiz.ning.com and http://www.blogtalkradio.com/art-of-biz.  You can even join the community!

This piece was commissioned by ITWeb/Brainstorm of South Africa for August 2009.  It expresses another strategic view of competitiveness, which places Africa, or anyone, as a competitive leader when fighting in their own unique space.  It’s about creating more value through innovation in your unique competitive space.  It reflects the paradigm of the Vision Society in which everyone, including organizations, is designed for a purpose and has a unique space on this earth.  Let it influence your mindset about approaching your own competitive space.

Is Africa ready to compete globally? If you read the Africa Competitiveness Report 2009 by the World Economic Forum, you get the sense that it isn’t. Although progress is being made, we still hear about the need to address the same issues around infrastructure, health, education, etc.

Malik Fal, MD of Endeavor South Africa, says these are “tangible issues but not the real issue”. And competitiveness is more about creating ‘unique’ value than productivity.

The Africa Competitiveness Report suggests that nations compete and evolve along a continuum, moving from basic factors to efficiency to innovation. Dr Paul Romer, Senior Fellow at Stanford Institute for Economic Policy Research, says: “Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable.”

In the end, it is innovation-driven economies that are best able to raise and sustain the living standards of their people.

Says Fal: “Africa’s mistake has been competing on basic factors like natural resources and cheap labour, which promotes poverty instead of prosperity.”

He strongly believes that if African nations, industries and firms compete on their assets in innovative ways, they can compete head to head globally, and regionally. In the book he co-authored, In the River They Swim: Essays from Around the World on Enterprise Solutions to Poverty, there are several examples of industries across the globe – Cuban

Cigars, Rwandan Coffee, Afghan Dried Fruit and Nuts – providing unique value while operating amid political, social and economic upheavals.

Fal states that economies prosper if the focus is on a pragmatic, strategic approach to create more value on the assets inherent in industries and firms. With the Rwandan Coffee industry, the government augmented and filled gaps to help the industry deliver more value by building roads to and from plantations, as well as improving airport infrastructure. One lesson is that focusing on innovation to deliver more value increases economic growth and can simultaneously deal with the tangible issues, if approached correctly.

There is no better example for the ICT sector in Africa than the mobile industry in Africa. Think how it not only opened economic opportunities to the operators but to an entire ecosystem. At the same time, mobile infrastructure development has incrementally pushed overall infrastructure development, according to Ethan Zuckerman, founder of Geekcorps.

At the World Economic Forum on Africa in June 2009, the African mobile market was recognised as one of the fastest growing in the world. The future isn’t written yet, but already there is diversification in mobile applications, e.g. mobile payment systems, agriculture, health, reporting. The social benefits of mobile phones are being experienced by communities that were formerly disconnected.

This is also translating into a larger market for the ICT sector. The benefit is not only to African firms, but also to global firms that are able to gather more real-time data in developing markets because of the proliferation of mobile phones.

Delivering on unique value also results in sustainability. Even during the economic downturn, the ICT sector in Africa continues to grow. Some, like computer manufacturers, have had to change how that value is delivered.

For example, instead of focusing on the laptop market, many firms have grabbed a hold on the netbook market, which is the fastest growing computer equipment segment globally .

Ory Okolloh, executive director of Ushahidi, emphasises that Africans should be creators of the technology for this mobile revolution, not just its consumers. Fortunately, there exists an ecosystem of diverse stakeholders based on innovation and collaboration that supports this idea.

This ecosystem reflects a strong, intangible asset of the African business culture – the social fabric of community interwoven in all aspects of society. How to leverage this asset to increase a firm’s unique value still poses a challenge for many, though. Verna Allee, president of ValueNetworks.com and author of the Future of Knowledge, stresses the increasing importance of leveraging the social dimension in the business context to be more competitive. She adds that, “Intangible assets account for 50 to 70 percent of a business’ (economic) value.”

Both Allee and Fal agree that company and industry competitiveness starts with knowing the full value, tangible and intangible, a company brings. Then, developing the space to deliver and leverage that value. The African mobile industry has demonstrated its unique value in many ways. Business models like pre-paid services, started in Africa, are gaining ground in the United States. The key for the African ICT sector to increase its leadership competitively is to continue in the same vein – concentrating on unique value.

In a bid to help companies realise their full value, Allee developed the value network methodology, which helps to map and leverage both the tangible and intangible assets of organisations.

According to Allee, a value network “is any web of relationships that generates tangible and intangible value through complex dynamic exchanges between two or more individuals, groups, or organisations. Any organisation or group of organisations engaged in both tangible and intangible exchanges can be viewed as a value network, whether private industry, government or public sector.”

A value network is structured by the roles people play. Figure 1 (above) illustrates the rich set of value exchanges within the value network of a technology firm.

In the end, African ICT firms will gain competitiveness due to innovation. While basic factors and efficiency augment innovation, innovation finds ways to trump them on the competitive field. In other words, African companies will remain economically viable and competitive if they are able to deliver on their unique value amid the turbulence of the business environment.

Original publication

Originally posted at www.afribiz.info.

The one-two punch of mobile phones and high-speed bandwidth on the African continent is fueling a boom in the ICT sector.  The  “Information and Communications for Development 2009” report by the World Bank says that voice communications offered through mobile telephony has lead the way for people in developing countries to realize the potential of ICT for economic and social development, and that broadband expansion is “catalytic” in the development of trade and e-government.  Expect the ICT sector to drive how you do business with Africa and open immense opportunities for doing business in Africa over the next five to ten years. 

Availability of high-speed broadband in Africa will increase over 200% in the next few years.  The first of the undersea fiber cable projects, SEACOM, provides high-speed international broadband to East and Southern  Africa .  This is not only important for the Internet market but also for the mobile phone market as consumer experience converges to the mobile platform.  In addition, the African mobile market remains one of the fastest growing markets worldwide.

Another interesting trend in the ICT sector is the rise of East Africa.  South Africa has been the clear leader in ICT sector development in Africa, but the Eastern African Community (EAC), including Rwanda, Burundi, Tanzania, Kenya and Uganda, has prepared itself to serve as a competitive ICT hub to South Africa and other global regions.  The SEACOM project removes one of the few remaining obstacles to this vision.

Many of the trends in the ICT sector are causing the African consumer markets, which were traditionally considered too small and too disconnected for many firms, to become connected and consolidated.  For the first time, African consumer markets are able to tap into real-time data and firms outside the continent receive real-time data from Africa.  For example, local farmers are able to check market data for their produce, empowering them during business deals.

As a business person or investor, the opportunities in the ICT sector are not only in the wave of infrastructure development projects, but also the products and services that can be provided over these “virtual” trade routes.  To give yourself a glimpse into some opportunities in the ICT sector in Africa, review the:

• “SA ICT Rocks!” article
• “Kenya is Calling” article
• “Moving Ahead with Education” article
• “ICT Business Opportunities in the African Consumer Markets” radio broadcast.

 You can also check out brief profiles for the ICT markets in each African country this month by subscribing to our daily BizBits twitter feed.