It’s the last week of the year, and we are surrounded by reflections on 2011 and resolutions for 2012. Here at Invested Development we have both. Our main ambitions for 2012 are to open our third office in India and test some innovative investment structures tailored especially for the techies in Nairobi. While we are excited about the prospects in India, Africa has made the biggest leaps and grabbed the headlines this year, notably from hopeless to hopeful.

  

Wrapping up 2011, The Guardian posted several interactive charts highlighting Africa’s development. In addition to pulling World Bank Indicators, the charts also show which other world economies grew at similar rates to the African countries. For example, South Africa and the United States both experienced GDP growth of about 3%. Ethiopia and China both experienced GDP growth of about 10%. Check it out for projected GDP growth in 2012, economic inequality, stats on the growing middle class, and more.

Local Harvard professor Calestous Juma writes in The Guardian on Africa’s transition from hopeless to hopeful. Professor Juma cites the two most important trends to watch are expanded regional markets and “improved strategies to harness the continent’s diasporas as source of technical expertise and business networks.” Initiatives such as the “Cape-to-Cairo grand free trade area” and heavy investment in infrastructure (particularly new fiber-optic cables) will make the continent stronger. Despite the challenges and large capital requirements for development goals, the diaspora and regional integration has the potential to foster sustainable regional growth in 2012.

Looking back on 2011, Mbwana Alliy offers his predictions for Africa in 2012. Originally from Tanzania and currently working in Silicon Valley, his predictions for 2012 are valid and we hope he’s right. Smartphone adoption, the evolution and maturity of mobile money, and mobile commerce are trends that we have watched closely in 2011 and we are confident in continuing to pursue them in 2012. As we are already seed stage, impact-focused technology investors, we do not doubt that many others will be following this trend. Alliy’s predictions are worth the read as they offer valuable and candid insights not found in The Economist or the Guardian.

This week, we took a look at technology stories that will improve the African lifestyle. 

Well done to Ushahidi on raising a $1.9 million round from Omidyar Network. However, as we know, not every Kenyan techie success story is carried with the same glory and ease demonstrated by M-PESA.  Ushahidi’s experience is a great example of the efforts that go into the technology, the pitch, and the business model, and the repeated revisions and improvements. Afrinnovator offers insights into three lessons Ushahidi learned and how future innovators can learn from them.

Interestingly, there are still some doubts about the effectiveness on mobile money (not everywhere is a “Kenya”). Ignacio Mas on NextBillion clarifies the myths that the unfamiliar may assume about mobile money. Measures are in place to prevent money laundering. It’s easy to learn on a familiar tool. It’s safer than hiding cash under mattress. In short, mobile money is useful in its simplicity and that is what makes it so effective.

“MTN selects Fortis for mobile money service in Nigeria” on Mobile Money Africa

MTN, one of Africa’s largest mobile network operators (MNOs), has signed an MOU with Fortis to provide mobile money services to its customers. Fortis is a leading provider of microfinance in Nigeria. The combination of the extensive agent networks should lead to a successful rollout of mobile money in Nigeria.

“Airtel launches mobile banking service in Ghana” on The Paypers

Airtel Ghana is now providing mobile commerce services. The Airtel Money platform will allow customers to pay bills, transfer money, and withdraw money from ATMs.

“Africa: ICTs Could Fill Agricultural Extension Gap, Says Meeting” by Maina Waruru on AllAfrica

ICT tools such as mobile phones, mobile broadband, and tablets can provide real time information to rural farmers. We’ve seen such agri-mobile application as mFarm, showing that innovation is coming from the bottom up. Now the idea is supported by the Technical  Centre for Agriculture and Rural Cooperation, who is calling for the distribution of ICT tools to rural African farmers. African governments should be spending 3.5 percent of GDP on agricultural extension services, as agriculture generally accounts for 30+% of the continent’s GDP.

This week, headlines on technology and mobile phones in India caught our attention. The innovations and solutions to existing problems in the market continue to inspire us.

This article called a missed call “the poor man’s text message” in India. The missed call is a great example of users in emerging markets taking advantage of the resources available to them. Although it means extremely low average revenue per user (ARPU), every telecom’s nightmare, it presents significant opportunities for innovation from social entrepreneurs.

“The World’s Cheapest Tablet, Finally on Sale” by Margherita Stancati on WSJ India Blog

We first reported on this back in October, and now it is officially on the market. Aakash, the US$35 Android tablet made by DataWind is now available for sale. An upgrade is coming in the New Year, but this tablet should make a significant splash in India. You can order one here.

Mobile phones are integrated into almost every aspect of daily life in India, yet there is still more room for mobile phones to provide valuable services.  For example, mobile banking seems to be playing a critical role in the quest answer for mass financial inclusion. This article in Time of India points to trends that would lead to the mobile phone and mobile wallets being in all facets of business and government.

The Planning Commission Deputy Chairman Montek Singh Ahluwalia is pushing for increased broadband and mobile penetration in India. Ahluwalia believes this will ultimately promote financial inclusion, while lowering the cost of doing so. This will eventually enable all citizens to receive the benefits of financial exchanges.

Thanks to everyone who came out to CleanTechThatMatters on Wednesday! We were delighted with the turnout and excited about all of the projects we heard about. Keep an eye out for the next one! 

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Update: 

The Rich People are only relevant and useful if there are large numbers of "Nerds" that are hacking away at new technologies and scheming how to launch the next big thing. One of the most remarkable things about Kenya is that the term "Nerd" and some of its negative connotations seem to have little or no relevance here.  Rather, to be a techie, to sit and write lines of code is exciting, hip, and a path to generating a stable income.  The university and technical college ecosystem in Nairobi is graduating hundreds if not thousands of Computer Science majors each year.  When you factor in the additional training that can be found at Safaricom Academy, Samsung's newly announced Engineering Academy, the eMobilis Mobile Training Academy, and m:Lab's Trainee Program (amongst others) what you get is the nearly 6,000 members of the iHub who proudly call themselves techies. 

These techies are part of a Kenya that prides itself on innovation, entrepreneurship, and technical acumen.  They are intelligent, tech savvy, and hungry to create Kenya's next great success story.  They earn a better income than many their age simply by shopping themselves out as freelancers while hacking away at their own ventures on the side.  In Nairobi, to be technical is cool and people are getting technical in a hurry.  If you drop by any of the numerous training sessions in Nairobi you are as likely to meet a taxi driver learning to code as you are the hunch backed, introverted stereotype we identify as "Nerds."

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Update: 

NextEnergy Capital is working to raise a fund for renewable energy projects in Africa.  About 80% of the funds will be invested in infrastructure projects; the rest will be invested in early stage technologies with the goal of bringing them to the African market. The fund manager is already working with European Merchant Bank to develop a €18 million 6.5 MW photovoltaic project in South Africa. Check out the article to find out all the details on the investors and other plans for the fund.

There’s no denying that Africa presents a huge opportunity for renewable energy development. The continent is described appropriately as a “blank canvas,” since infrastructure is currently unreliable or nonexistent. Meanwhile, renewable energy is increasingly cheaper, safer, and more efficient. In addition, most Africans are not connected to the grid and rely on diesel generators, costing them $1.00 per kWh, while solar PV power would only cost $0.20 per kWh. The difference in adoption usually comes down to the upfront expenditure cost differentials (PV is more costly upfront, but cheaper on an average cost of energy basis), which is why such solutions should be supported by government subsidies to promote adoption. An interesting article coming from the Wall Street Journal, it offers a great summary of renewable energy in Africa.  

“African nations move closer to EU position at Durban climate change talks” by John Vidal and Fiona Harvey on The Guardian

Climate change talks are very relevant to clean energy development in emerging markets, as developing countries are holding higher stakes and having a greater influence. The UN’s Framework Convention on Climate Change in Durban, South Africa Conference of the Parties (COP17) wraps up this week. Propositions from COP17 include extending the Kyoto Protocol’s carbon reduction targets beyond 2012 and setting up “a new green fund ‘to keep Africa safe’ from climate change.” It’s very important that Africa plays a critical role in international talks as it is the continent that will be most deeply affected by climate change.  The Guardian’s overview offers a great overview of the highlights from the talk so far, and we’re looking forward to seeing the outcomes. (NB. This is only the second time the COP has been held it Africa. It was held in Nairobi, Kenya in 2006).

Econet Solar is a subsidiary of African mobile phone operator Econet Wireless. The subsidiary has launched a first-generation prepaid solar-powered home power station. It allows users to light their homes and charge their phones. Customers will pay for energy in a similar fashion to buying airtime. This is very similar to Simpa Networks’ Progressive Purchase Model, which actually allows users to work towards ownership.  Both solutions overcome the financial barrier of the up-front cost of the system.

The most important kind of Rich Person a startup hub can have is successful technology entrepreneurs that are looking to support new startups.  Often, this is subject to a chicken and egg dilemma. Without support, introductions, and investment from successful industry veterans it is a difficult path for startups to find success.  Kenya, however, seems to be on the verge of graduating its first class of successful technology entrepreneurs.  Organizations like Kenya Data Networks, the Wananchi Group, Seven Seas Technologies, Craft Silicon, Cellulant, and Ushahidi have all been successful and are looking to support younger entrepreneurs.  In various ways, the founders of these companies are looking to invest in entrepreneurs and offer various support structures to help them grow.

Beyond just investment capital, support is offered to the tech community in the form of Njeri Rionge's Business Lounge, Ushahidi's iHub, the Plexus Group, 88mph, the m:Lab, and any of the other half dozen incubators currently in the works.  It is on the back of these support structures that young, creative entrepreneurs will be able to leverage the necessary funds, mentorship, and connections to launch successful tech enterprises.

After last week’s regional focus on Africa, this week we focused our reading on social enterprise and development in Latin America.