What if Africa were the future of the Internet? Chasing Black Unicorns
Internet in Africa? Come on! I almost hear you thinking to yourself. And yet, I’d like to make you change your mind about this. And I found the right man to help me with this task. A few weeks ago, while everybody was caught in lockdown in Europe, I had a chat with Marek Zmyslowski*. Marek is a renowned Polish entrepreneur who, amongst other ventures, co-founded the famous Internet African travel portal Jumia. Yet, not many people in Europe, let alone across the pond, have heard about these African Black Unicorns as Mareks calls them. So he wrote a book, a great one, and a big one (close to a 1,000 pages). As Lee de Cola has it on Amazon, it’s a three-in one book in fact.
What if Africa were the future of the Internet?
Chasing Black Internet Unicorns in Africa with Marek Zmyslowski
“But it is actually three books in one:
• a memoir of life in Nigeria
• rambling analysis of building an internet business
• a brief recount of the suspense suggested in the title”
Or maybe four-in one if you include Marek’s early life memories in Poland.
When I organised our call, Marek was stuck in Barcelona due to Covid-19. Rather than ask Marek to talk about the book itself, I decided to focus on the future of the Internet in Africa. A topic which is dear to my heart yet not much covered or at least insufficiently. Here is the transcript of this interview, whic you can find in extenso in the embedded podcast.
Visionary Marketing Marek, you are the founder of Jumia, the famous African Internet portal. You’re originally from Poland but you spent a lot of time working in Africa, and now you are in Barcelona.
Marek Zmyslowski Yes, I am Polish-born, spent the last eight years of my life working in Sub Saharan Africa. It’s just an accident that I’m spending the lockdown here in Barcelona because that’s where it caught me. I’m one of the early co-founders of the conglomerate, which is now called Jumia. Because when we started, the name wasn’t even there at all. I don’t want to call myself the father of the whole project, but I was one of the co-founders.
VM You’re also the author of the book entitled “Chasing Black Unicorns”, and this is exactly what I would like to talk about with you, the rise of the Internet in Africa because this is not something that many people discuss. So, there is Internet usage in Africa, isn’t it?
MZ Yes, and it is tremendous. Africa is a continent of over a billion people and is growing very fast, with Internet penetration being somewhere around 25 per cent. Obviously, there’s still the big problem of poverty and there are a lot of people who are poor and don’t have access to the Internet, and even if they do, they won’t have the money to spend.
The problem with the western world is that the image of the poor Africa is the only image we know about. But, the discrepancies in terms of how wealthy people are in this society appear everywhere, whether it’s the United States or Asia or Europe.
What is kind of lost in the translation is that besides some obvious regions, especially the rural ones, where there’s no infrastructure but poverty and everything else, there is growing economy and thriving technology. We’re talking about places like Cairo in Egypt or Lagos in Nigeria, where you have 20 million people living in a city where the Internet is faster than in London, and where the middle class is actually growing fast.
It’s hard to talk about Africa as a whole
I have lived in Lagos for a couple of years and we got 4G almost as soon as any big city in the world. Also, the infrastructure is getting better and better for online businesses to grow. I actually see a huge opportunity for Africa to win on the technology front, simply because it’s too hard for it to compete with other regions of the world on other grounds.
Maybe Africa is already a little too late in some sectors. But the fact that Africa was such an underdeveloped region and again, it’s so hard to talk about Africa as a whole because it’s such a vast continent with fifty four countries and hundreds of tribes and languages and so on.
But if we were to generalize, then the fact that Africa was underdeveloped when it comes to banking systems or Internet connections, now gives it a head start. Let me give you an example. Banking systems right now in Nigeria and Kenya are way more advanced than the ones in Germany or the U.K., because the former started from scratch with the latest available technology.
It’s so hard to talk about Africa as a whole because it’s such a vast continent with fifty four countries and hundreds of tribes and languages and so on.
They didn’t have to spend time and energy to kick out the status quo, which was held by old, existing technology. This is why mobile banking apps in South Africa or Kenya are much better. I have a bunch of them, as I’m using banks from different places of the world. Then, when it comes to Internet connections in Africa, obviously there was never a time to put in place underground cables or fiber everywhere.
So the technology is already there, we have 4G and now 5G is coming in. We can immediately opt for this technology and leapfrog all others which have become outdated, one can simply jump right there. I’ll give you an example from Poland because Poland in the early 2000s was also an underdeveloped country in terms of technology adoption.
We have 4G and now 5G is coming in. We can immediately opt for this technology and leapfrog all others which have become outdated!
If you now take a bank cheque book in Poland and show it to anyone there, no one would even know what it is, because Poland went straight to electronic transfers and credit cards. Just like in Nigeria, where no one really knows what a credit card is, they go directly into their mobile wallets and pay through phone.
VM That’s a very important point. Actually, you talked about this in a TEDx video which is available on your website (and further down in this piece). The usage of mobile in Africa is just humongous.
MZ Yes, absolutely. For people from the so-called first world, mobile Internet and mobile devices came after we had the TV already in the house, we had radio before that, then we had our stationary computers, and then laptops.
We now have iPods and smart-watches. For a typical African, having a phone is one of the most important things to have in his life, because this is his only window to the world. It’s not like how we have in other parts of the world, where people use a laptop in the office and a cell phone while commuting to work.
Internet, Africa and the mobile phone miracle
The mobile phone is formidable for an African, as he has to have it in order to be anyone in the marketMarket definition in B2B and B2C - The very notion of "market" is at the heart of any marketing approach. A market can be defined... – a seller, a buyerThe B2B purchasing process is the result of a long life cycle often linked to a contract as there are many people to convince., someone who wishes to apply for a job, to watch his favorite show, and what not. Everything is done on the phone; thus we see the smartphone adoption going through the roof. It’s already like 30 percent of all the phones are smartphones, and in Africa, there are brands which we don’t know about in the UK or in Europe.
There are Chinese brands which give you a phone which has almost the same tech specs as an iPhone 6 and you pay for it a hundred dollars or the equivalent of it, i.e., a very low price point. The other problem is how many people can afford to buy anything and how many people are educated enough to be able to buy anything, although this issue is being solved slowly as well. But definitely everyone is connected, and that’s a huge advantage when you look at the potential of the market in the long term.
VM You mentioned in your video about a business which is actually doing offshore development in Nigeria. I think they have had some investment from Mark Zuckerberg and other people like that. So it’s also an area where you have more educated people who are able to develop applications for the rest of the world.
MZ Yes. I think that’s a software house I talked about. Essentially, though, the hypothesis is that you can find talented people all over the world, but opportunities are not distributed evenly.
There may be geniuses who could become great developers, like in this particular case, and never have a chance to work in Silicon Valley because of where they were born. With the progression of coding languages in software, it’s much easier to build a software today than it was 20 years ago. The education of a junior web developer has become much easier, which basically allows people from the street to join the domain. I’m saying this almost literally, as anyone who is good at math and has some potential skills and a good brain, can quickly catch up and become a great web developer.
You can actually set up remote teams in Nigeria that can build a great piece of software for a Fortune 500 company
With, everyone being connected, you can have people working for you from anywhere around the world. You can actually set up remote teams in Nigeria that can build a great piece of software for a Fortune 500 company, just like you have a call center in India providing all those customer services for other companies. Maybe Nigeria was already too late to build a huge infrastructure of their own and provide call center services to the world, just like India or Philippines did.
But now there’s a second chance of software development as it is a skill that is really needed, given the demand for it is much bigger than the supply. Even when you look at it from a global perspective, there is inequality and imbalance between the demand and the supply.
VM You were talking about the variety of countries in Africa. Fifty four, if I remember well. Is there a difference between the countries, between those that are actually going to be the winners and those that are not going to be the winners? It’s not just about South Africa. There are many countries which are developing quickly.
MZ Yes. I would even say that South Africa is not the one developing the fastest, because they’re dealing with their own problems right now. When you look at African countries in the context of startups, technology companies and online businesses, you really have the big four, which are Egypt, Nigeria, Kenya, and South Africa. Each country is different in its own way.
Recently, Egypt has really taken off, and the most amount of money invested in online businesses in Africa last year was for Egypt – if I remember well – which is already a pretty advanced region, but still has a lot of potential to grow. It seems like Egypt already has the infrastructure in place for online businesses to grow.
Then you have Nigeria, which is hands down the biggest potential market ever, with 200 million people, and it’s probably going to double in the next couple of decades. But there are some challenges as well, for example, there are still a lot of poor people there. So they won’t become your clients anytime soon unless the middle class becomes stronger. Then on the other side you have South Africa, which is a country with a history of apartheid, and obviously a lot of nasty things have happened there.
But one of the “good things” that came out of apartheid was that the infrastructure was built there much faster. So you have working Internet, working justice system, highways and so many other facilities such as logistics which allow online businesses like e-commerce to grow faster.
Then you have Kenya, which is somewhere halfway between Nigeria and South Africa in terms of potential and an already existing and working infrastructure in the country as a system. So these four countries really allow you to grow, and have some taste of Africa, because Egypt represents the North Africa with a lot of Arab influence, then Kenya, Nigeria and South Africa represent the sub-Saharan Africa – everything south of the Sahara Desert – Nigeria being a great representative of the western Africa region, Kenya of the east, and South Africa representing the southern region. Interestingly, each of them is very different, and it’s like going down the rabbit hole, the deeper you get, the more differences you see in how a business is run.
VM Apart from Jumia, do you have a few examples of Internet ventures that were launched in Africa, which we should look at?
MZ There are so many. Jumia is really an example of a big bet that was made by big investors many years ago. This is why I ended up in Nigeria in 2012, because those big investment funds like Goldman Sachs and Rocket Internet decided that capitalism and democracy will win everywhere in the world. Maybe eight years ago it was more obvious than now, and as long as democracy and capitalism win everywhere, the customer behavior will also become unified. Hence, whatever business models are successful in the States or in Europe, will also be successful in Africa. I wouldn’t say that this was the best bet because maybe we should look more into what’s happening in the east, in India and China. But that’s a separate example. So basically, Jumia consists of business models like e-commerce, marketplace, online travel, and classifieds for delivery. But then you have businesses coming straight out of Africa which are really growing globally now, for example the Nigerian AI company Migo, which creates credit scoring for banks, and based on this credit scoring the bank tells what type of loan it can give. It’s not based on one’s salaries, because everything is so informal in Africa, but based on one’s interaction with his mobile phone. Like, how many phone calls one is making? How regularly is he popping up and so on and so forth. They have now expanded into Brazil and are becoming very successful. There is another fintech solution company called Jumo from South Africa, which has expanded into China and India, if I am correct. A lot of start-ups leveraging the blockchain technology are becoming very successful in Africa. But because the banking systems were, for a large part of the development history, non-existent there, it’s easier for blockchain companies to do something as they don’t have to compete with those old systems like in Europe. So there is a higher chance of faster adoption of blockchain technology-powered solutions in Africa.
VM Do you think there’s a chance in future where we in Europe are going to be using Internet services developed in Africa?
MZ We use them many times, we just don’t know about it because oftentimes there is some service or solution, even IT that is built in Africa, but the brand selling it is American or European. I am Polish, so I always look for similarities between the development of Poland and Nigeria, for example, where I spent a lot of my time, Kenya or South Africa. A lot of things are built in Poland. I’m talking about physical things like windows, snowboards, parts of cars and other things. But then you would never see that the manufacturer is Polish, because the Polish big factories were just a third party subcontractor for a big German or French brand. That was always the problem with Polish manufacturers, but when the technology revolution came, Polish IT companies and software houses kind of learned from that lesson. They decided that they won’t just be a subcontractor, and need to build their own piece of technology and their own brand and go global. We already have a lot of global brands in the online space from Poland, like booksee, RTBhouse, Livechat and many others.
There are already examples of businesses as well as services, like software being built in Africa.
If we have a look at the tech space in Africa right now, there are already examples of businesses as well as services, like software being built in Africa. But they do it as a third-party subcontractor, because unfortunately Nigeria as a country which builds software isn’t very reliable for a client. Since Nigeria doesn’t have the best PR with which it can reach out to the world, people don’t recognize it as a country where great software is being built. So, until the PR of these countries improves, you will not see too many products or services coming from there. Even if there are built there, the owner brands won’t take the risk to link themselves with the country of origin. To give an example, let’s take Poland where there are some excellent shoe manufacturers which make amazing leather shoes. They will come up with a name which sounds Italian, and would market it as “Made in Italy”, because they just want to associate their products with the perceived quality linked with their place of origin in people’s minds. To sum up, yes, there actually are probably many cases like that, and I have come across so many. So, you just won’t know it publicly because there is this problem with the country of origin and our emotional association with it.
The African economy: a case of bad PR
VM But this may change in the future.
MZ Yes, and the whole point is to change it. That’s what all of my book is about; and my TEDx speeches mention that the PR of Africa has been built in the last 40 years really around aid and crisis and NGOs. It’s kind of a self-fulfilling prophecy because if you say it’s bad, you are only going to attract people who want to help. You’re scaring off investors with it, but it works in favor of big NGOs because it allows them to keep raising more and more money. What I am trying to do is to focus on the positive news. I am not saying there’s only positive news about Africa, I am just saying there’s not enough attention given to the positive news, as the self-fulfilling prophecy also works the other way around. If you focus on the good news and bring that positive attention from investors and clients to the region, you will actually make it better by mentioning the brighter side of it, because as money flows in, customers start coming. Thus, it actually becomes better by talking about it.
VM Absolutely. So just to conclude with this interview, what are your plans for the future? Are you going to stay in Poland or are you going to launch a new venture in Africa?
MZ 100 percent of my professional life has been focused for the last eight years on Africa, and I am still there. I am associated with two companies which I have launched together with my business partners. They are both in e-commerce in sub-Saharan Africa regions, mainly Nigeria, Kenya and South Africa. I recently invested in a renewable startup from Sweden which has to do with solar power, and a big part of its operations will be in Western Europe and North America. However, we are also expanding into Africa because of the immense growth potential there. So I guess I want to focus on Africa now, but not only in the e-commerce domain, which was a big part of my professional life. But if you are asking me where my heart is, it’s in this continent.
*Important notice: Marek’s name is actually spelt Zmysłowski (the Polish”l” with a stroke is pronounced like a “w” in English. Here I’ve simplified the spelling of his name and I hope he won’t mind too much)
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