Warding Off Lions With Mobiles Shows African Technology Boom

Jul 30, 2014 8:58 am ET

(Adds Vodacom data revenue in 14th paragraph.)

July 30 (Bloomberg) -- If Emily Parsitau wanted to light her home to ward off lions and intruders, she had to walk for an hour to buy kerosene at the nearest store. Now, she uses a SIM card.

The farmer’s four-roomed home in Kisamis, a rural area on the fringe of Kenya’s Rift Valley, has never had access to the national power grid and she relied on kerosene lamps, when she could fetch the fuel, to light the path toward her cattle, which attracted predators and thieves. That all changed in March when she bought M-Kopa Solar, a sun-powered lighting system that uses mobile-phone technology to track usage and stores energy for when her home and pathway need to be lit up.

“Before we bought the bulbs I was fearful of lions,” the 42-year-old mother of six said in her cramped sitting room under a ceiling stained by kerosene smoke. “They would attack our cattle in the thick of darkness. Nowadays the lions hardly show up because of the lighting.” With the light, her children no longer have to finish their homework in the dark, she said.

Mobile technology is revolutionizing life for many of the more than 1 billion people in Africa for whom services like banking, the Internet and affordable energy were previously considered luxuries, rather than everyday staples. And with wireless operators pioneering their own inexpensive smartphones, the continent with the world’s youngest population will soon have access to 4G networks and apps that will feed a consumer boom that’s driving African economic growth.

‘Extra Importance’

“The impact of mobile has been bigger in much of sub- Saharan Africa because a lot of the infrastructure that people in more developed economies take for granted isn’t there,” said Matthew Reed, principal analyst for the Middle East and Africa at telecommunications-research consultancy Ovum in London. “Mobile has an extra importance because it’s been able to bridge some of those gaps.”

Safaricom Ltd., which is 40 percent owned by Vodafone Group Plc and pioneered the mobile-money transfer service M-Pesa, is part of the reason Parsitau is less fearful when venturing from her home at night. East Africa’s biggest mobile-phone operator is helping to market M-Kopa. Customers agree to pay for the solar panel with regular installments and M-Kopa is then able to monitor payments that are made by M-Pesa. The company is able to deactivate the solar panel via the SIM card if payments are missed. Once the panel is paid for, clients get to keep it.

Affordable Smartphones

The product is just one example of how phone companies in Africa are extending their reach and revenue beyond maturing voice and text-message markets and offering services and devices that require data.

MTN Group Ltd. and Vodacom Group Ltd., South Africa’s largest phone companies with a combined 252 million customers in Africa, have developed smartphone devices priced at less than $100 to boost data revenue. They offer an expanding middle class access to online retailing, social media and content such as music-streaming service Spotify.

“At the moment it’s very hard for people in Africa to buy online,” MTN’s Chief Marketing Officer Pieter Verkade said in an interview. “By linking our mobile money services to online services it becomes a much easier transaction. One of the main payment systems will be mobile money in many of our markets.”

MTN partnered with Luxembourg-based Millicom International Cellular SA and Rocket Internet AG to each own a third of African Internet Holdings, which has helped develop Nigerian online store Jumia. The retailer has won over skeptical shoppers by accepting cash on delivery and offering free returns.

Reducing Cash

“We’re offering our customers more ways to spend mobile money and helping Jumia and other players reduce the amount of cash in their business,” Verkade said at MTN’s headquarters in Johannesburg.

Vodacom will next month start to sell its own low-cost smartphone as it seeks to increase the number of people using data, according to Phil Patel, head of the company’s consumer business unit. The phones will be marketed in underdeveloped urban areas in South Africa, known as townships, which are usually located on the fringes of cities and often lack services such as adequate clean water, electricity and health care.

“In township areas the smartphone penetration is around 27 percent today and our plan is to double that. This is the only way they can access the Internet,” he said in a July 28 interview. “People using Facebook in township areas are actually growing substantially faster than those using Facebook” in richer urban areas as the use of the Internet over mobile devices is one of the only ways they can keep in touch.

Mobile Banking

Vodacom is benefiting from growth of its data and businesses elsewhere in Africa. Vodacom’s data revenue grew 23 percent to 3.58 billion rand ($337 million) and the company now has more than 25 million active data customers, according to a July 24 statement.

Much of that growth is being driven by M-Pesa, which has introduced tens of millions of Africans to banking. The system processes more transactions within Kenya every day that Western Union Co. does globally, according to the International Monetary Fund.

M-Kopa customers use M-Pesa to make payments of as little as 40 shillings (46 cents) a day. The incentives for people to keep paying include a phone-charging USB port and radio, which remove the need to travel to kiosks to pay for their mobile devices to be charged or to buy batteries for their radios.

Since Parsitau bought the system, she no longer has to make the two-hour round-trip to a river lower down in the valley to fill jerry cans with water that were then lugged back to her home by donkey. If the river was dry, she’d have to spend about 200 shillings to travel to Kiserian about 20 kilometers (12 miles) away to fetch water by minibus taxi. Now she uses the cash to buy treated water from a borehole.

“Since we bought these bulbs our life has greatly improved,” she said. “In the past I used to be scared during the night because I could not tell if an intruder or even a snake had entered the house. But today because of the bulbs I can confidently walk around the house.”