>From FT web site 22/10/98 and Financial Times (UK not TZ!) Paper page 8
INTERNET: Africa takes its e-mail to the post office
MarkTurner reports on attempts to bring the internet to a continent with
In an industry dominated by American technology and know-how, one small
African internet company has come up with an exciting home-grown strategy.
Over the past two months Africa Online has registered 30,000 e-mail
customers in Ghana, a country which only had 20,000 personal computers at
the last count. Ayisi Makatiani, the company's 32-year-old Kenyan chief
executive, estimates his clientele will triple by the end of the year.
The secret is an exclusive deal with local post offices, through which
Africa Online offers any Ghanaian an e-mail address free of charge.
Customers can then send messages at around 25 cents a go.
"It's wonderful: everyone makes money," enthuses Ayisi Makatiani, who
co-founded Africa Online in 1994 while at the Massachusetts Institute of
"To begin with we help the post offices set up, and split the fees 80:20.
Later on that will go down to 55:45. It's like a post office box, except
ordinary Ghanaians can boast they have an e-mail address."
This kind of innovation recently prompted UK-based African Lakes to
acquire Africa Online from its American parent Prodigy, injecting
much-needed finance after a year of fast growing sales but flagging
Africa Online already operates in Kenya, Tanzania, Ghana, Ctte d'Ivoire
and Zimbabwe, and there are plans for further expansion. Its internet
subscription base has grown from 3,000 to 8,000 in two years, and in 1998
revenues are expected to exceed $6m.
Mr Makatiani is still pinching himself. Africa Online started life
"basically as a mailing list for Africans in the US, which told people
about parties and African news", and later offered similar services to
Kenyans at home.
When Prodigy was taken over by Mexican entrepreneur Carlos Slim's telecom
group last year, Africa Online started looking for alternative finance;
this October, after scarcely two months of talks, African Lakes took the
But if it wants to live up to its dreams, Africa Online still has its work
cut out. Sub-Saharan Africa, excluding South Africa, only had 4,000
internet host computers at the beginning of the year, and one user per
That compares to one per six in the US and Europe.
Poor telecommunications and tough regulations across the continent add to
the frustrations facing a market that, although growing, remains
fundamentally stunted by low incomes and high overheads.
Mr Makatiani admits the past year has been difficult. A lack of finance
has meant Africa Online in Kenya could not buy until now the 512 kb/second
line needed for fast access for its growing clientele.
"A 512kb line costs $100,000 a month," complains Mr Makatiani. "In the US
you get twice that for $1,000 a month This is reflected in prices: a
monthly subscription in Kenya with 20 hours free access costs more than
$80 a month.
Although communications are cheaper in Tanzania, the main problem has been
finding adequate sales and marketing staff, while in Ctte d'Ivoire tough
labour laws can prove "very punishing", according to Mr Makatiani. Good
managers are difficult to find throughout.
Perhaps surprisingly, the one challenge Mr Makatiani has not faced is
finding good technical staff. "The problem is not training people - the
internet is simple," he says. "The real difficulty is keeping them from
being stolen by higher-paying companies."
Despite these pitfalls, Africa Online remains firmly convinced that it is
on to a winner.
Advertising, news services, specialised telecoms services and electronic
commerce are all around the corner, says Mr Makatiani. "When Kenya's
Telecom is privatised, we will be ready."
(c) Copyright the Financial Times Limited 1998
"FT" and "Financial Times" are trademarks of The Financial Times Limited.
African Lakes are at:
47b Welbeck Street
London W1M 7HE
T: +44 171 486 3424
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Steve Song <[log in to unmask]>
Unganisha (Connectivity) Project <http://www.idrc.ca/unganisha>
International Development Research Centre
P.O. Box 8500, Ottawa, Ontario, Canada, K1G 3H9
Tel. +1 613 236 6163 x2268 Fax +1 613 567 7748