Although developing countries are catching up in terms of mobile broadband coverage, huge disparities remain between its penetration in the developing world (8 percent) and the developed world (51 percent). There are currently less than 5 mobile-broadband subscriptions per 100 inhabitants in Africa, but the situation is changing quickly as high-speed 4G mobile wireless networks are being installed throughout the continent, making it the world’s fastest growing telecoms market. Credit Suisse spoke to Anat and Dov Bar-Gera, the co-founders of YooMee Africa, a 4G broadband wireless operator active in Cameroon with plans to tap the continent’s vast growth potential.
Dorothée Enskog: How many years behind the rest of the world is Africa with regard to Internet penetration?
Dov Bar-Gera: About 10 years, but the catch up time is very fast.
Anat Bar-Gera: Africa is great at leap frogging. We've seen it in mobile telephony and in mobile payment. We're convinced that this is going to happen now with regards to fixed and mobile broadband usage, and possibly later on with other innovations.
Is this ongoing mobile revolution transforming Africa?
Dov Bar-Gera: Stories about fishermen using their mobile phones to obtain a better offer for their catch are good front page articles. Instead of 5 dollars, they'll obtain 6 dollars, but would spend at least another dollar on sending the SMS.
Anat Bar-Gera: The impact of this types of mobile services is negligible compared with the fantastic PR such stories get. I wish it was true, but I still don't see it transforming the continent.
Dov Bar-Gera: The transformation of Africa will not come through non-governmental organizations. It will come from local entrepreneurs who understand what they can achieve and who push their plans ahead. Many of those small and medium-sized enterprises (SMEs) being created will one day go online. An access to the Internet enables them to obtain information from their suppliers, connect to their clients … The possibility of transmitting information over the Internet is very powerful, particularly in areas where physical infrastructure is poor.
How can the rest of the world help these budding African entrepreneurs?
Anat Bar-Gera: If you want to help Africa, come and do business which is viable there. By being there, there is a real momentum created.
What are the main problems entrepreneurs face in Sub-Saharan Africa and what are the main hurdles they should beware of?
Anat Bar-Gera: The lack of electricity. It is crucial to have a back-up for electricity. If there is no electricity, there is very little you can do about it. In many rural communities there is only one place where you can charge your phone. Mobile operators are present in the most remote places across the continent, but access nevertheless remains very limited. Finding the right talent, the people who can help to build up organizations, is another main hurdle. In many cases you end up training your own management team. The void out there is often underestimated. Distribution channels don't really exist. Other services such as head hunters, call centers, don't exist or have poor quality. Also, the low purchasing power is a hurdle, and we need to figures way to go around it.
How many hours a day do rural areas have access to electricity?
Dov Bar-Gera: Around four hours, compared to about 20 hours per day in the cities. Another issue is that the mobile phones used in the rural areas often are second-hand phones with few functionalities and low battery life. You can hardly offer smart applications on such phones.
How high is the Internet penetration in Cameroon today?
Dov Bar-Gera: There are currently about 50,000 household broadband connections for a population of 20 million. But you have to differentiate between this figure and the African reality. There are probably between 10 to 20 people on average using each residential Internet connection. If you have an Internet connection at home, you can be sure your neighbors, friends and extended family are coming to visit. So in reality there are around 500,000 to 1 million people with Internet access – that is about 5 percent of the population. In addition to these users, there are cyber cafés, though most of them offer a slow speed.
Anat Bar-Gera: Sub-Saharan Africa only uses up around 2 percent of the overall global broadband capacity. This figure is not impressive, but on the other hand there is an extraordinary potential to close the digital divide in order to reach all those who are not yet online. The demand is enormous.
Why did you – who have no apparent links to Africa – launch 4G operations in Cameroon in 2011?
Dov Bar-Gera: We featured in a Financial Times article in 2007, where we mentioned that we were helping a young African entrepreneur. From that moment on our phone didn't stop ringing and we got numerous e-mails from interested parties throughout Africa. The timing was ideal. We had sold our Eastern European wireless broadband Internet operations, Wimax Telecom, a couple of months earlier, and were determined to use the fantastic know-how we had accumulated in these emerging markets.
Anat Bar-Gera: Our team in Eastern Europe offered broadband Internet services, including 4G. Wimax Telecom was among the first companies that offered cross-border 4G services. At the time, we also realized the big potential that broadband Internet had in emerging markets.
Dov Bar-Gera: We ended up in Cameroon by pure coincidence. I met up with a local entrepreneur, with no political exposure, which was a very important criterion for us. It was a perfect match, so we signed a two-page handwritten agreement the same day and have since invested large amounts of money in Cameroon.
Anat Bar-Gera: We started off in 2009, by applying for a 4G license, which turned out to be a lengthy process. Then we had to arrange funding, buy equipment and start the actual deployment. It took more than two years to be operational and start to sell our mobile broadband service. One of our major challenges was to find competent and local talent: technicians, call-center agents, managers…
Is the average Cameroonian citizen able to afford a smartphone and a mobile broadband connection?
Dov Bar-Gera: The vast majority cannot afford the type of smartphones we use in the developed world. But smartphones specifically designed for the region are affordable for more than a quarter of the population. This emerging African middle class is growing and willing to spend its money on Internet access.
Anat Bar-Gera: Africa's demographic situation is unique. About half of the continent's population is below the age of 20. These young people are early adopters of online technologies, eager to try the Internet, and are our ideal clients. On top of it, Africa has an average gross domestic product (GDP) growth of 5 to 6 percent which in turn creates a middle class looking for new services, including reliable and fast Internet access. The amount spent on mobile telephony in proportion to the per capita income is very high in Africa.
Dov Bar-Gera: Our cheapest mobile broadband subscription for residential use starts at 3 euros per month. The price depends on the desired download volume. About a third of the prepaid cards we sell are 15 euro cards. For businesses, the subscriptions range between 60 euros and up to a couple of thousand euros, depending on their needs. We expect prices to remain stable, or even increase slightly, while the amount of volume included in the subscription is likely to increase three-fold if not five-fold in the near future.
How do you distribute your products?
Dov Bar-Gera: We have our own showrooms in Cameroon's largest cities. But our main distribution channels are actually gas stations, computer shops and mobile phone shops. “Umbrella” people who sit at each corner in the cities selling a variety of products including YooMee Africa Africa's prepaid subscription cards are yet another channel. We supply them with red and white umbrellas with our logo on them. Our subscription can also be paid on mobile phones.
YooMee's mission statement is to close the digital divide. How do you achieve this goal?
Anat Bar-Gera: People need Internet access to join the worldwide web and become part of the global village. If they are online, they have access to knowledge, other people and innovations. We are helping closing this digital gap by providing stable, affordable, high quality 4G services.
YooMee Africa has also covered the campus of the University of Douala, offering its students wireless mobile broadband packages for 3 euros per month. This campus didn't have any Internet connections previously, so both students and professors would have to go to Internet cafés. We now provide the university's 70,000 students access to the worldwide web, as well as access to online distance teaching.
Dov Bar-Gera: Distance teaching is still in its infancy. Coursera, an open online university course platform, was launched in April 2012. It already has agreements with more than 60 leading universities around the world. These institutions put some of their courses online, and students can then sit exams on those courses and even obtain transfer credits.
Another initiative we're supporting is in the medical field, where we're looking at supplying low cost tablets to local nurses, so that they can communicate with medical call centers in Europe. Now there are pros and cons. There is limited know how about the most common African tropical diseases in Europe. On the other hand, there are very basic diseases from which people are still dying from in Africa, that could be easily treated.
Any other positive spillover effects?
Anat Bar-Gera: There has been local job creation in various areas, as well as direct technology transfer. Our local Cameroon employees will now transfer the technology they learned to the next African country where we'll be setting up 4G services. These are exactly the type of highly paid jobs Africa craves for - technology oriented, state of the art, high tech, ICT. Exactly what these Sub-Saharan countries need to move forward. There is also an evident spillover effect on the SMEs in our environment – they have been created or are expanding as a result of the activity of YooMee Africa - new call centers, more technicians mounting base stations, web designers getting orders ...
Another important aspect is the amount of money being sent back by these local employees to their families in the villages. With regard to the SMEs that buy our mobile broadband subscriptions, YooMee Africa Africa established the first independent hosting and domain name platform in Cameroon, resulting in hundreds of small enterprises creating their webpages for the first time. This will enable them to expand, buy and sell online, reach out regionally and globally. Well educated unemployed web designers will have their first orders ever, accelerating the creation of local content and in turn support local entrepreneurship. The web sites will hopefully offer e-commerce sites in the long term, following the example of India.
Does Internet access also lead to more democracy?
Dov Bar-Gera: Yes. Five years ago, criticizing autocratic African countries was still taboo. That is not the case any longer. The President of Cameroon uses Twitter and he certainly gets responses that would have been unthinkable few years ago.
Anat Bar-Gera: Internet is changing people's state of minds and triggering more debate in society. Well informed citizens voice their views and force their governments into accountability and transparency.
Do you face stiff competition in Cameroon?
Dov Bar-Gera: Of course. The other operators are, however, mainly targeting (large) businesses, offering fixed Wimax technology which requires that an antenna is mounted on the rooftop. Too costly for residential users.
Anat Bar-Gera: YooMee Africa is the only 4G provider which focuses on residential mobile broadband subscriptions. You buy a modem or plug a USB dongle into your PC, laptop or smartphone, register, pay for your subscription and you are immediately online, with a reliable high speed Internet connection. It is a plug and play experience. Our service has in turn been recommended to small and medium-sized enterprises (SMEs), and this segment has been increasing significantly.
Have these SMEs created jobs?
Dov Bar-Gera: Yes. YooMee Africa created more than 80 local jobs. We have many vendors that have hired additional staff to serve our needs in areas ranging from accounting, customer care, sales, marketing and human resources.
How are your expansion plans looking?
Anat Bar-Gera: We plan to be operational in Ivory Coast in the coming months, and aim to be operational in a third Sub-Saharan country by the end of the year. We have already been granted licenses in other countries like Rwanda. Regulators often demand that you demonstrate that you have the relevant experience and the relevant capacity. They do not want speculators who come in, get the license and then sell it for profit. We can show them our successful Cameroonian operations and they feel comfortable awarding us a license in their countries.
Are you optimistic about Africa's future?
Anat Bar-Gera: I am not only optimistic, but also realistic about Africa's future. There's an annual average GDP growth of 5 to 6 percent in Africa. In some countries it's double digits. You've also got a fantastic demographic dividend there with the young population continuing to grow. The continent's natural resources are enormous and it has huge amounts of arable land. Africa is, as we speak, being connected to the rest of the world through undersea cables, which means that prices for Internet usage will decrease, while speed and capacity will increase. Also prices of hand-held devices prices are going down. The 4G technology will help Africa to overcome the lack of fiber in the ground and leapfrog into mobile wireless broadband connections. That's good news for our business, as more subscribers will be able to afford mobile broadband connections.