As seen on Jason Njoku’s blog
Once upon a time I believed Lagos, Nigeria was the centre of the [Africa] universe. It’s not [obviously], although I believe the most interesting and largest companies will be built here. I found a refreshing new perspective on a recent tour of East Africa. The continent’s largest economy is Nigeria no doubt. But there is a different perspective. I have been to Nairobi twice before but no where else. So I focused on Kigali Rwanda, Dar Es Salaam, Tanzania and Kampala, Uganda. These were super short trips. 36-48hrs per city. But they were primarily fact finding, I am a big fan of boots on ground research and what I found was amazing.
East Africa – 157m population. (Rwanda 12m, Tanzania 50m, Kenya 45m, Uganda 40m Burundi 10m). That’s a lot of economic activity.
As I attempt to build out the Internet TV opportunity across the continent, I am thinking about SSA (Sub-Saharan Africa) in terms of economic regions. West, East, Central and South. I discovered on this trip, most importantly, that the challenges we have in West are not replicable in East Africa. Not even close.
Even though 80% of our African viewers use card to subscribe for iROKOtv, I am very mindful that in Nigeria payment is a problem. Across East Africa? Not so much. Across the adult populace mobile money / Pesa penetration sits at nearly 50%. And they are active. And the official definition of active is someone who has transacted in the last 7days. Everywhere you look there are Wakala outlets who are essentially acting in the capacity of retail banks. In fact, mobile financial services [MFS] are larger in Tanzania than the former retail banking industry. I believe the numbers are 3m (retail banking) vs 12m Pesa (Vodacom, Airtel and TIGO). There are trillions of Tanzanian Shillings TSh (Billions of dollars) in transaction volume and liquidity across this system monthly. This ubiquity enables a frictionless payment experience and essentially facilitates commercial activity. For a Pay TV business such as my own, this makes the region super seductive.
* $1 = 88 Kenya Shillings or 1655 Tanzani Shillings
I saw a unicorn in Tanzania. I came across an unlimited plan in Africa. I literally couldn’t believe it. Data is dirt cheap. Stupidly cheap. Suspiciously cheap. In Nigeria 500Mb is N2,000 [$12]. In Tanzania 35Gb is 20,000TSh [$12]. Don’t take my word for it – here are Airtel Tz, Vodacom Tz andTIGO website numbers. That’s unlimited or 35Gb for $12 [N2000].
Madness! The largest problem for an Internet TV platform is the access to data. In Tanzania at least, that isn’t a problem. The same in Rwanda. In Kenya the prices are more realistic. Yet for Airtel Kenya for ~$13 you get 1750Mb whereas with Safaricom ~$11.3 gives you 1.5Gb. Still both for the same price gives you x3 the data one would expect in Nigeria.
So let me get this right. Payment isn’t an issue in East Africa. Data is significantly cheaper. For Internet TV, these are the basic building blocks required to build a sizeable subscriber base. GOtv went from 2k subscribers in March 2012 to 817k in March 2014. But only after investing some $130m+ in their DTT network. Not to mention the significant operating costs. But I suspect GOtv will be larger than DStv in the next 5 years. Comfortably. So this only makes sense.
When you build a business in Lagos, one sometimes forgets [I am obviously guilty on all accounts] that the challenges and issues are typically abnormal ones. Lack of electricity and poor infrastructure. Kigali, Dar Es Salaam and Kampala were modernised compared to anything I came across in Lagos. Predatory government agencies, lack of security and terrible healthcare? Not the norm. The art of the start-up is, at the very beginning, to narrow your efforts to afford the most likely path to survival. That’s it. Survive or die. It’s that simple. Once you move beyond survival you need to grow. And quickly. Less rambunctious climates are more favoured to this type of SME growth. Building with a Lagosian’s way of life in mind builds you a kinda mutant company.
I have opted to NOT locate iROKOtv East Africa in Nairobi, as I had planned and others would have expected. In order to have a fresh perspective on the East of Africa, iROKOtv will sit in Kigali, Rwanda. I have a deeper post about why but that will be later when I set up and establish the team. Rwanda is located perfectly between Uganda, Kenya, Burundi and Tanzania to enable our executives to serve the region comfortably. Also, the local market is too small to enable us to get lazy and attempt to build for that market alone which forces us to retain a broader, region-wide sense. I am really excited about 2014, as it’s a massively transitional year for the company. We finally have settled on the hard way ahead. [We expect to lose something like 95% of our traffic before the year’s out]. Now we just need to execute.
The migration is over. We are a subscription only service.
Internet TV is about to come to Africa in a big way.