Tanzania’s tech sector is rising, but better reporting is needed

This is the first installment in a series of guest articles to be done by Mbwana Alliy, a Tanzanian tech entrepreneur on the state of the Tanzanian tech scene. In this first installment Mbwana takes an overview of several startups currently making waves in Tanzania.

“Have you heard of the Mpemba effect?”- a director at the Commission for Science and Technology for Tanzania asked me during talks with the world bank in setting up the Dar es Salaam Technology incubator. Chances that you, like me, do not have an idea- it is in fact a physical phenomenon discovered by Tanzania High school student in 1963 during cooking lessons with ice-cream around the mystery of why hot water freezes faster than cold water.

The Tanzanian tech scene is little known globally or even regionally, just like the Mpemba effect. Whenever you hear about East Africa technology sector, Kenya and Uganda comes to mind- with the success of M-Pesa, Ushahidi and the presence of multiple hubs as well as offices of tech giants such as Google Offices in Nairobi and Kampala. Sometimes one wonders whether Tanzania is even part of the East Africa tech scene. Part of problem is definitely due in part to our marketing, PR and tech reporting- that needs to get better and Tanzania needs to learn to talk about its technology scene- this is what many Kenyans and Uganda comment when the occasional Tanzanian company turns up at technology conference in Nairobi.

Tanzania does have some structural challenges, for instance when it comes to web and software development, there are not enough developers graduating from the universities and the computer sciences classes currently taught don’t support programming projects- as a result most students aspire to work as a network admin at largest mobile operator, Vodacom. The University of Dodoma is set to change all that with a new IT and informatics department and professors hired directly from India. The government is working hard to make SEACOM undersea cables payoff by encouraging the investment of broadband network links into the rural inland areas. In 2009, President Kikwete and his delegation went on a tour of Silicon Valley and met with IBM, Microsoft, Google and Cisco. In August of this year, the President met with a Silicon Valley angel investment firm partner Paul Bragiel of i/o ventures to discuss working on a mentorship model for bridging Silicon Valley with Tanzania and helping create the country’s first incubator in Dar es Salaam 2011. With regard to the startup scene currently operating out of Tanzania- there are some interesting companies that do in fact show that there is indeed a wave of entrepreneurs in Tanzania, some are local others are foreigners choosing Tanzania as their first market foothold in East Africa and showing real potential.

Mobile Banking: addressing a fragmenting market

There are a few theories why mobile banking has not matched the 10+ million users that Kenya has- one of the main reasons is the fact that we have 4 mobile networks creates a fragmented mobile banking market and estimates of around 3+ million users, vs Kenya, where Safaricom’s share dominance has led to better adoption and network effects for mobile banking. Other reasons include the lack of clear marketing (right now M-Pesa is under 2 brands, Vodacom and Vodafone, which is confusing), and also a general legacy weak banking infrastructure that has led to many Tanzanians distrusting banks. Having 4 mobile banks in Tanzania, Vodacom’s (M-PESA), ZAIN’s (ZAP), Zantel’s (Z-PESA) and Tigo’s (TigoPesa) whilst leading to fragmentation, provides opportunities for mobile banking integration companies such as E-fulusi, as well as powering Zantel’s Z-Pesa are create networking independent mobile wallet. The fact is that much easier to convince a taxi driver to accept M-Pesa in Kenya vs Tanzania- until we get user adopting the services faster, innovation will lag in this area compared to Kenya. Kenya already has numerous websites accepting mobile payment an developing an ecosystem of integrators inc. companies such as Pesapal and Intrepid’s iPay.

Accessible computing
 to the masses

One big challenge for sub-Saharan africa in general is the access to internet capable machines at affordable prices especially vs their mobile phone counterparts. Many PCs come bundled with software that is little direct use to Africans who are more interested in communication and interactions technologies that the internet provides. Payucomputing seeks to provide thin client access terminals at affordable prices (sub $200) linked up to a base station that feeds internet and tailored content- this is all wired up via a mesh network in order to increase geographical reach. Payu computing is currently piloting its solutions in Dar es Salaam and hoping to further work with wifi hotspot services to enable joint seamless solutions to internet access. Payu computing is founded by Adnaan and Amaar Jiwaji brothers, Guy-Richard Kayombya and Raymond Besiga.

Development & NGOs

A huge industry across Africa and other parts of the world is the amount of donation dollars that flows into these countries, much of the donor funds are often mismanaged and most of all, it is hard to track these funds. On the NGO side, it is hard for them to navigate the grant application process and present themselves effectively in a format the donor organizations such Gates Foundation can assess to provide money for programs- Envaya is a platform started by 2 Stanford graduates that have chosen Tanzania to pilot their NGO platform. One of the founders, Josh Stern, was a peace corp volunteer for a number of years in Pemba, Tanzania. Envaya develops and deploys software (web and mobile) that empowers and connects grassroots organizations around the world. They provide tools that allow them to easily create their own websites, and provide larger NGOs tools to support these local efforts. Envaya has a diverse team working on the ground in Tanzania as well as with Silicon Valley and Canadian roots and have signed up over 100 NGOs at last count. Envaya has the potential to be a great place for NGOs and foundations to come together more efficiently on both fund matching and coordination.

Tourism & Travel: taking control of online marketing

Yet another big market is the Travel and Tourism sector, particularly for Tanzania which has sought after destinations inc. Kilimanjaro, Serengeti and Zanzibar. Yellow Masai, a startup headquartered in Arusha and links with Silicon Valley aims to take control of East Africa’s online tourism destiny by empowering small and large hotels and tour operators alike by providing a platform similar to Airbnb that allows anyone to rent out their room- similarly Yellow Masai allows travel sector providers to list their profile and services and take advantage of a centralized marketing and ecommerce platform adapted specifically for the local market- with mobile banking checkout and payment settlement as well as sms alerts- the platform so far signed up 200+ providers prior to launch- this will allow Yellow Masai to create unique packages and listings that tourist and residents want based on the local market that international website such as expedia, travelstart that rely on legacy systems cannot effectively tap. Plans inc. implementing sms and mobile banking payments. Yellow Masai also plans to release a customizable widget that local hotels and tour operators can embed on their website and hence be able to leverage investments and traffic already flowing to their websites. The modern yet local approach should allow more control and effective marketing of Tourism and travel services in East Africa and the regions first online travel agent.

Content and media is another important and growing area in Travel. Mambo Magazine launches before the end of 2010 and aims to be a online destination magazine covering the Zanzibar Archipelago. Zanzibar is one of the most sought after tourist destination in East Africa. Mambo aims to provide engaging content using a team of journalists on the island. Mambo is founded by Rachel Hamada who lives on the island and runs a hotel with her husband.

Energy & Cleantech: social value and sustainability

Considered one of Tanzania’s success stories, D.light Design is funded by Acumen Fund and Omidyar of ebay is out to transform. D.Light founders are a talented duo having incubated the idea at Stanford’s “Design for extreme affordability” that blends Design, Engineering and Business schools for a cross disciplinary learning that allows it’s students to create a company that addresses a real social need but aim to create a sustainable business- D.light has sold 100,000s of its solar power lamps in Tanzania, recently launching a marketing campaigning around safe lighting with popular Tanzania singer and poet Mrisho Mpoto.

Addressing a related need, EGG Energy is often described as the “Netflix” of batteries in Africa. Still in its early stages, EGG is piloting a service to rent out rechargeable batteries to the urbanizing lower income populations of Dar es Salaam who cannot access electricity from the grid at less than $1 a recharge, enough to last a few days before the customer needs to return the tamper proof batteries for a charged replacement. At the pilot stage, EGG Energy had over 200 subscribers to the service- if the idea is scaled, it can address the expanding market urbanizing lower income populations across East Africa without access to power.

Tanzania seems to be finally getting a wake up call and I have tried to highlight some promising startups to watch and to dispel any myths that there is no tech scene in Tanzania. The leadership will is definitely there especially as the Dar es Salaam incubator gets off the ground and once it has generated some successful companies, it will encourage more tech entrepreneurial activity. A few things the government needs to do is start to match its neighbors, such as the establishment of the grants to support application and content creation to directly benefit the country as the Kenya ICT board has done. This should be followed by the establishment of Venture Capital “risk equity” to sustain companies that originates from within. This last point applies to all the sub-Saharan countries- given it now takes less capital to start internet based technology company to ship a product and test a business model. And the availability of patient capital from the likes of the Acumen fund who present in East Africa- talent and mentoring will become ever more important for Tanzania and other East African countries and these countries should tap global tech community for assistance from Silicon Valley to India. Tanzania even hosted the 2010 World Economic Forum for Africa recently, which again shows how serious the country is in tapping in opening itself up to the world.

Mbwana Alliy is Tanzanian entrepreneur having recently founded Yellow Masai, East Africa’s first online travel agency for searching flights, hotels and travel packages. He also assists at i/o ventures a silicon valley based angel investment firm and incubator in San Francisco. Prior to his current activities Mbwana worked at QinetiQ, Europe’s largest technology organization and at Microsoft as a Product Manager for Excel, Access and business intelligence in the Office Group. He holds a a Bachelor of Engineering from Bristol University and an MBA from Stanford Business School.

Posted in: Africa,Internet,Mobile Phones