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The Battle For The Ear Of East Africa

In East Africa, the telecom market is crowded and tough. One newcomer stands at the center of it all.

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Manoj Kohli

Forget oil and gold, there is new treasure in Africa—mobile phone subscribers. By the end of 2011, Africa will have surpassed the half a billion mark in mobile phone subscribers and the number is rising. In 2008, there were 246 million and three years later, this number has nearly doubled.

Manoj Kohli is at the heart of this growing business as the CEO (international) and joint managing director of Bharti Airtel. It launched in November 2010, after acquiring Kuwait-based mobile telecommunications company Zain for $8.3billion. The company inherited operations in 15 countries, cementing its position as the world’s largest single country mobile operator.

As of March 31, 2011 the operator had 220 million customers around the world and $5.9 billion in revenue. At the time of this interview, Airtel had hit 50 million paying customers in Africa; its target is 100 million customers by 2013.

“The Bharti Airtel business is doing well and we are satisfied with our first year in Africa. We are making good progress on all fronts, in terms of financial performance, market growth, market share growth, cultural aspects, government relationships and brand equity. We are happy that the first year has gone very well,” says Kohli on the seventh floor of Parkside Towers, the Bharti Africa headquarters in Nairobi, Kenya.

Bharti, the number one player in India, landed in Africa knowing that it was going to have to fight it out with established players like Britain’s Vodafone, South Africa’s MTN, France Telecom (Orange) and Luxembourg’s Millicom.

“India has a population of 1.2 billion and Africa has about one billion. India is very diverse; Africa is more diverse not only because it is large geographically, but it also has different communities, different countries and therefore different governments and regulations—whereas India is one nation, with one language, one government, one currency, one time zone, and one cricket. Therefore, in that aspect India is less diverse than Africa. Both have scale in terms of population and opportunity, but because Africa is more diverse, it makes it more complex. India has 13 to 14 competitors, which is not viable for any market. Africa has anywhere between three to five major competitors but the quality of competition is good,” says Kohli.

The Airtel brand made its presence felt by slashing call rates, sparking a price war in major markets. In Kenya, for example, where Airtel is number two—with 3.6 million subscribers by June 2011—there was a major decline in average tariff for on-net calls from KSh3.92 ($0.04) per minute to KSh2.67 ($0.03) per minute, according to the industry quarterly statistics in May from the country’s industry regulator, the Communications Commission of Kenya. Bob Collymore, Safaricom’s CEO, was quoted as saying that the price cut was “morally reprehensible”. Safaricom is Vodafone’s brand in Kenya. As the new kid on the block, Airtel was not letting up and Safaricom followed suit.

As Kohli looks back at Bharti’s performance in the last year, he says the company has established its brand. This, Airtel has successfully done by associating itself with the youth and the two big passions in Africa—music and football. In 2010, the operator brought together American R&B musician R Kelly and eight African music superstars—2Face, Amani, 4×4, Movaizhalene, JK, Alikiba, Fally Ipupa, and Navio.

In football, Airtel has partnered with Manchester United in launching the Airtel Rising Stars program for under-17 boys and girls in 15 African countries.

The second major milestone, says Kohli, has been replicating Bharti’s Indian business model in Africa.

“It is still a work in progress, but all the initiatives of bringing in our global strategic partners like IBM, Ericsson, Nokia and Huawei have kicked off, which is a huge transformation for Africa. For example, IT education, training and employment will go up because IBM has come along with us to various countries in Africa.”

Bharti has entered into a 10-year agreement with IBM where the latter will install and manage the operator’s information technology infrastructure and applications in line with its objective of ensuring affordable and innovative mobile services in Africa.

In the coming years, Bharti has several strategies. One is taking networks deep into Africa’s small towns and villages not currently covered by mobile networks. The second is a wide distribution.

As Africa opens up, thanks to fiber optic cables, Bharti is keen on enhancing the internet culture in Africa through 3G data. Already, the operator has 3G licences in 12 African countries. In November 2011, Airtel was awarded licences to operate 2G and 3G GSM services in Rwanda.

Although Bharti is betting on 2G and 3G services to increase penetration, the telecom brand is also eyeing a mobile money service, already  a major cash-cow for Safaricom—to date, $1.8 billion has been transferred through its money transfer service M-Pesa, which was launched in 2007.

Kohli admits mobile money has been a small aspect in the business because in India, the business has had to comply with strict restrictions by the Central Bank. “Our M-commerce product will be a great differentiator for us in the long-term,” he says.

According to Jupiter Research, the number of active users of mobile money services will exceed 200 million by 2013. Nearly 40% of active users by 2015 are expected to be in Africa and the Middle East.

Looking into the crystal ball, 2012 will be about supremacy and transformation of wireless broadband. “There are many countries that are already mature on the voice side, but on the broadband, they would like to have more capacity and better experience. In Africa, where the average subscriber age is 18 years old, there is a propensity for youth to need voice (2G) and internet (3G),” says Kohli.

As far as mobile use in Africa goes, the only way is up; 2012 is likely to see massive investment aimed at increasing internet penetration through wireless internet.

The other growth will be driven by penetration into Africa’s smaller towns, not covered by wireless. This expansion will see the further growth of M-commerce as more of the unbanked population log on.

For new technology, Kohli says his company will test 4G in India first.

“Regulators in Africa will have to make licences for that and it could take anywhere between two to three years.”

Bharti Airtel will invest nearly $1.5 billion in its 2011/12 financial year. Also in 2012, there will be HSPA+ (an evolved high-speed packet access) to Africa. This will see internet speeds of up to 21 megabytes per second.

So does Kohli see more investors coming to Africa in 2012?

“I believe that in small countries, the viability of operators beyond the third is not likely. In small markets, I don’t think you will have more than three players. In larger markets, it could be four; I think that is the right level of viable competitive intensity for Africa, primarily because huge investments are required for Africa and it is very important that the operators are financially healthy for them to make all those investments in the coming five years.”

As a first-time investor in Africa, Bharti is grappling with poor infrastructure and power shortages. For a company that has to run its networks round-the-clock, it has forced the operator to turn to diesel generators which is obviously pushing up operating costs.

“That is why we are converting many of these sites to be run by solar and wind energy because the diesel cost is high and we want to avoid polluting the environment.”

The other hurdle for Bharti has been a high cost structure. The operator is benchmarking with its Indian operations, where costs are significantly lower. To deal with this, the operator is exploring economies of scale and sharing. “We are currently engaging regulators and competitors to support sharing of passive towers, networks and fiber optic. In some countries we have already had positive responses.”

In an earlier interview, Kohli told telecomasia.com that Bharti was talking with Etisalat, MTN, France Telecom, Millicom and Vodafone.

Bharti also has to handle the problem of weak telecom skills in Africa. “Ideally, we would like 100% of employees in each country to come from the country itself. However, this is not possible today because many skills are not available locally. Therefore, we have to bring skills from other countries in Africa, as well as from India. But we are determined that in the next two to three years, we will invest a lot in building these skills in each country and grow young African leaders to lead our operations in their home countries,” he says.

Kohli adds that, despite the challenges, Africa is still a great place to do business because of the available opportunities of growth and a growing population that is embracing technology. “In India, infrastructure only improved in the last 10 years. The cost structure is lower because India has a local manufacturing and service sector whereas in Africa, the manufacturing and service sector is not as big. India has gone through that improvement period in the last decade and I am confident that Africa will go through a similar improvement period in this decade.”

With unemployment plaguing the continent, Bharti wants to contribute towards job creation by involving young entrepreneurs in its business operations.

“We are developing young entrepreneurs who like technology and would like to sell technology as distributors of our various services and products. There is tremendous scope. Silicon Valley and India have many entrepreneurs doing outstanding work for value-added services, content creation, new applications. I am confident that in the next two to three years, young talent from Africa will also work towards development of new value-added services and applications.”

Kohli believes telecom can be the growth engine for the continent.

“Because the infrastructure in Africa is weak—roads, rail and air connectivity—it makes telecom an integrator that can bring speed, efficiency and productivity to Africa. With internet wireless broadband coming, I think the contribution of telecoms will be far greater in the next three to five years in building Africa into a strong economy, with growth going up from 4-5% and maybe 8-9% in the coming five years.

“India went through the same curve. We had a 4% rate of growth and because of IT and telecom, we have gone up to 8-9%.”

Entrepreneurs

31% Of Small Businesses Have Stopped Operating Amid Coronavirus: Sheryl Sandberg Shares How Facebook’s Latest Product Aims To Help

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The coronavirus pandemic has continued to take a catastrophic toll on America’s small businesses. According to Facebook’s State of Small Business report, 31% of small businesses and 52% of personal businesses have stopped operating as a result of the crisis. 

“What we know today is pretty sobering,” says Facebook COO Sheryl Sandberg. “We’re in a really hard economic situation that is hitting all businesses, but particularly, small businesses really hard. We also know how critical small businesses are for jobs—long before coronavirus,” she says. “Two thirds of new jobs in this country happen because of small businesses and so that means what’s happening with small businesses has always been important, but it’s more important than ever.”

Especially concerning is that only 45% of business owners and managers plan to rehire the same number of workers when their businesses reopen. That number is just 32% for personal businesses. 

“If these businesses are letting people go, it’s not that they don’t want to rehire them,” Sandberg says. “It’s because they don’t think they’re going to be able to. That’s a pretty serious thing for us to be facing.”

Businesses that have been able to maintain operations still face significant hurdles, namely access to capital and customers. Some 28% of businesses surveyed say their biggest challenge over the next few months will be cash flow, while 20% say it will be lack of demand. 

The report, conducted in partnership with the Small Business Roundtable, was based on a survey of 86,000 owners, managers and workers at U.S. companies with fewer than 500 employees. It is also a part of the company’s broader data collection initiative with the World Bank and the Organization for Economic Cooperation and Development on the Future of Business.

“We were already in the process of developing this report before the coronavirus pandemic hit,” Sandberg says. “We expected it to be a pretty rosy tale back then of low unemployment, flourishing entrepreneurship, and jobs growing all over the world. Fast forward to today and we’re in a very different position.”

An example of Facebook’s new Shops feature, which creates digital “storefronts” for businesses.
 
FACEBOOK

Now, the company is launching Facebook Shops, an ecommerce product that allows businesses to set up online “storefronts” on Facebook and Instagram. Businesses can customize their digital shops, using cover images to showcase their brands and catalogs to highlight their products. And just as customers can ask for help when shopping in physical stores, they can message business owners directly via WhatsApp, Messenger or Instagram Direct to ask questions, track deliveries and more. “Our goal is to make shopping seamless and empower anyone from a small business owner to a global brand to use our apps to connect with customers,” wrote Facebook cofounder and CEO Mark Zuckerberg in a post announcing the new product. As was the case with the survey, the rollout was planned prior to the pandemic, but was accelerated as businesses have turned to online tools to adapt in the face of the ongoing crisis. According to the survey, 51% of small business owners have  increased their online interactions with customers, and 36% of operational businesses are now conducting all sales online. 

“One of the things I find so amazing is how much of the activity has migrated online and that we’re doing things we never thought were possible,” says Sandberg. “If I had asked you or you had asked me, could I work entirely from home? Can my whole company go home? I would have said ‘No way.’ But we did it. Small businesses have even more entrepreneurial spirit.”

There are more than 30 million small businesses in the U.S., many of which are struggling to stay afloat amid forced closures and are still hoping to receive financial relief from the government. According to a recent survey by Goldman Sachs, 71% of Paycheck Protection Program applicants are still waiting for loans and 64% don’t have enough cash to survive the next three months. As of April 19, more than 175,000 businesses have shut down—temporarily or permanently—with closure rates rising 200% or more in hard-hit metropolitan cities like Los Angeles, New York, and Chicago, according to Yelp’s Q1 Economic Average report.

Employees of these businesses are disproportionately affected, with 74% and 70% reporting not having access to paid sick leave and paid time off, according to Facebook’s survey. For hotel, cafe and restaurant employees, those figures are over 90%.

Facebook, which relies heavily on small businesses for advertising revenue, was among the first major tech companies to provide much-needed aid. On March 17, the company announced $100 million in grants for small businesses, the majority of which will be distributed in cash, with some ad credits for business services. Of those funds, $40 million will be distributed across 34 American cities, with 50% being reserved for women, minority and veteran-owned businesses. The other $60 million will be distributed to small business owners throughout the world. In addition to financial assistance, the company also rolled out various product offerings including digital gift cardsfundraisers and easier ways for businesses to communicate service changes to their customers. 

Small businesses are resilient, even during times of crisis. According to the report, 57% of businesses are optimistic or extremely optimistic about the future, with only 11% of operating businesses expecting to fail in the next three months, should current conditions persist. 

“The report raises awareness about the struggles small businesses face from the Covid-19 pandemic,” says Rhett Buttle, founder of Public Private Strategies and co-executive director of the Small Business Roundtable. “But small businesses have brought us out of previous economic downturns and they will do so again.”

Maneet Ahuja, Forbes Staff, Entrepreneurs

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Birds Of A Feather: The Stepchickens Cult On TikTok Is The Next Evolution Of The Influencer Business

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Like any self-respecting cult, the Stepchickens follow a strict code of conduct as dictated by their absolute leader, Mother Hen, a comedian named Melissa who posts on TikTok as @chunkysdead. Mother Hen has widely preached a message of peace, telling her 1.7 million TikTok followers: “We do not rule by being cruel, we shine by being kind.” Further, she has asked all Stepchickens to make themselves easily identifiable and make her photo their TikTok profile picture.

Mother Hen has created TikTok’s first “cult.” (Her word.) Boiled down, she is a social media influencer, and the Stepchickens are her fans, just as more famous TikTok influencers—Charli D’Amelio, Addison Rae and the like—all have their fanbases. But Mother Hen’s presence and style is quite singular, particularly in the way she communicates with her followers, what she asks them to do and how the Stepchickens respond to her. After all, not every member of the Charli hive use her image as their profile pictures.

“These influencers are looking for a way to build community and figure out how to monetize their community. That’s the No. 1 most important thing for a creator or an influencer,” says Tiffany Zhong, cofounder of ZebraIQ, a community and trends platform. “It’s become a positive for Gen Z, where you’re proud to be part of this cult—part of this community. They are dying to be part of a community. So it’s easy to get sucked in.”

Mother Hen, who didn’t return a request to comment for this story, already had a popular comedy vlog-style TikTok account on May 6 when she asked her followers to send suggestions for what they could name their cult. From the ideas offered up, she chose Stepchickens, and in the 19 days since, her following has more than doubled. (It was around 700,000 back at the beginning of this month.) She has posted videos about taking ediblesher celebrity lookalikes and her relationship status (“all this cult power, still no boyfriend”). And perhaps in violation of her first-do-no-harm credo, Mother Hen has implored her followers to embark on “battles” and “raids,” where Stepchickens comment bomb other influencers’ videos, posting messages en masse. She has become the mother of millions: TikTok videos with #stepchickens have generated 102 million views on the app, and her own videos have received 54.6 million likes.

Mother Hen is now concentrating on feathering her nest. She has launched a large range of merch: smartphone cases ($24), hoodies ($44), t-shirts ($28) and beanies ($28). Corporate sponsorships seem within reach, too. TikTok accounts for the Houston Rockets, Tampa Bay Rays and one for the Chicago Bulls mascot, Benny, all changed their profile picture to the image distributed by Mother Hen. The Rays sent her a box of swag, addressing the package to “Mother Hen,” of course. She dressed up in the gear (two hats, a fanny pack, a tank top) and recorded herself wearing it in a TikTok, a common move by influencers to express gratitude and signal that they’re open to business sponsorship opportunities. Mother Hen has launched a YouTube channel, too, where she’ll earn ad revenue based on the views that her 43,000 subscribers generate by watching her content.

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Then there is the Stepchickens app available on Apple devices. This digital roost is a thriving message feed—it resembles a Slack channel or a Discord server—where Stepchickens congregate, chat and coordinate their raids. They can also use it to create videos, ones “to glorify mother hen,” the app’s instructions read.

The app launched last Monday and has already attracted more than 100,000 users, a benchmark that most apps do not ever see and the best reach within months of starting. Since its debut, it has ranked as high as the ninth most popular social media app in the world on the download charts and in the Top 75 most downloaded across all types of apps. The Stepchickens have traded 135,000 messages, and the app’s most devoted users are spending as long as 10 hours a day on it, says Sam Mueller, the cofounder and CEO of Blink Labs who built the Stepchickens app.

“There’s this emergence of a more active—a more dedicated—fan base and following. A lot of the influencers on TikTok are kind of dancing around, doing some very broadcast-y type content. Their followers might not mobilize nearly as much as” the Stepchickens, says Mueller. Mother Hen’s flock, by contrast, “feel like they’re part of something, feel like they’re connected. They can have fun and be together for something bigger than what they’re doing right now, which is kind of being at home bored and lonely. There’s untapped value here.”

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Op-Ed: How Nigerians Can Unlock Their Potential In The Digital Age

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By Uzoma Dozie, Chief Sparkler

Nigerians are some of the world’s most creative, energetic, and entrepreneurial people. We are rich with talent, enthusiasm, and passion.

Nigerians are a global force bursting with potential and an enviable track-record of success. But in a more complex and fast-paced world than ever before, many of us struggle to find the time or have the ability to fulfil their potential.

Ultimately, this comes down to the lack of effective solutions in the market to support the lifestyle and finances of Nigerians and our businesses. For too long, we have been underserved by the traditional physical retail environment, which is limited by bricks and mortar infrastructure and legacy technology – the weaknesses of which have been laid bare by the Covid-19 global pandemic.

Unlocking Nigeria’s digital economy

While Nigerians are being underserved by current circumstances, there is also an exciting opportunity to start filling a gap in the market.

Nigeria’s digital economy is thriving, but it remains informal. Nigeria has a population of 198 million people – 172 million have a mobile phone and 112 million have internet access.

Many of us access social media platforms such as Facebook and Instagram through our phones and use them as valuable sales tools, especially female entrepreneurs. Data and digital applications have the potential to revolutionize the daily lives of millions of Nigerians.

Therefore, new digital-only solutions are required. These should not just focus on finances though – they have to be intrinsically linked with everyday lifestyles, rather than thinking about linear processes and transactional outcomes.

Let us take one example. Chatbots powered by artificial intelligence have long been used to provide financial advice. But these chatbots could do so much more and evolve to provide support for more sophisticated usage, such as a personal adviser or lifestyle concierge.

Furthermore, these solutions should not just support Nigerians at home, but the ever-growing diaspora across the world.

Introducing Sparkle

The opportunity to play an integral role in transforming Nigeria’s digital economy and lead the charge in growing the digital economy across Africa inspired the creation of Sparkle.

Sparkle was founded with five core values – freedom, trust, simplicity, inclusivity, and personalization. We are adopting these values and embedding them in everything we do.

We will be leveraging technology and data to create and apply new digital-only solutions which bring more Nigerians into the formal economy thereby benefitting Government, businesses, and individuals.

Starting with the launch of a current account, we will co-create with our customers and collaborate with our partners to improve our services and increase our user base. We embrace collaboration and we are

working with some of the world’s biggest companies, including Google, Microsoft, Visa, and PwC Nigeria, to achieve our vision.

In addition, we want to create a more inclusive economy and break down barriers by accelerating the role and influence of female entrepreneurs, many of whom already operate in the informal economy with the help of Instagram and other social media apps.

At present, we are facing a global crisis in the shape of the COVID-19 pandemic. COVID-19 has shown us that we need a strong digital infrastructure to ensure the economy continues to function. It will likely completely change the way we operate and conduct business in the future.

COVID-19 has only reinforced our belief that new digital solutions like Sparkle are required now more than ever before to serve Nigerians, boost the formal economy, and unlock potential in the digital age.

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