Why $19Billion for WhatsApp could be a bargain for Facebook and what does it mean for Africa?

Facebook, the world's largest online social network acquired WhatsApp the world largest mobile messaging service for $19 billion. WhatsApp’s price tag is by far the company's largest acquisition, bigger than any that Google, Microsoft or Apple have ever done. It puts WhatsApp's capitalization (founded five years ago in 2009) higher than that of for example SONY founded in 1947.

It is this high price tag that has been the subject of most media published in the last days. The consensus seems to be that it is a brilliant move by Facebook but some called it "pricey" or some called it "over priced" like that journalist on French TV news who said that we are going back into a new dot.com bubble! 

I join the minority of people who think that $19 billion could be a bargain!

In this posting I would like to explain why and what the potential impact could be for Africa.

I can understand that for traditional economists such a high valuation does not make sense for a company that was barely making any money (they had $8.257 million on their bank account in mid 2013), that was in business for less than 5 years, had only 55 employees and never spent 1 dollar in marketing! Robert Reich, former United States Secretary of Labor declares that WhatsApp is everything wrong with the U.S. economy!

To explain that valuation we need to understand how new technologies are disrupting traditional business as we move into the Personal Data Economy. (Explaining this new economy does not mean any endorsement on my side, see this interesting blog post: "The Cost of Identity in The Personal Data Economy"). 

The Personal Data Economy and its supporting innovations

 
Businesses are dependent on marketing (since the mid-1950s) to find the right products for their customers, ideally for each customer individually: one-to-one marketing. For long time the notion of one-to-one marketing has been largely a myth and the holy grail for marketers particularly in consumer packaged goods industry. One-to-one marketing is almost here and this change is driven mainly by three new technology based innovations that emerged less than 10 years ago: online social networks, mobile Internet devices and Big Data.

Indeed the leading online social network organizations like Facebook, Twitter, LinkedIn, etc. did not exist 10 years ago. I remember people' sarcasm wondering why would anyone want to publicly tell their friends how they feel, what they do, what they think, what they like or not, share personal pictures or videos, etc. Well 10 years later, Facebook has 1.23 billion users (more than 17% of world's population)  who are active on their website every month doing exactly that.

Clearly, the incredibly large number (more than a billion!) of Facebook users is exceeding anything we have seen in this industry before.

One reason for the large number of online social network users is the fast emergence of mobile Internet devices like smart phones and tablets. Global unit shipment of smart phones and tablets started to exceed PCs since end of 2010.

In developing countries in particular, more people use mobile devices to access Internet than PC.  In India that inflection point happened in mid-2012. 

                                                  Source: StatCounter Global Stats, 11/12

It is clear that in the future the majority of people will use mobile devices to access Internet, even more so in developed countries due to the lower cost of those devices. And because online social network's appeal is based on the capability to share thoughts, events as they happen, mobile devices that you carry with you are becoming the access interface of choice.

Online social media collect trillions of diverse data from billions of users every day. Here are some numbers: YouTube: 100 hours of video every minute of every day, Twitter: 100 million tweets per day, Instagram: 40 million pictures per day, SMS: 100,000 SMS/sec, Facebook: 30 billion pieces of content per month. That is Big Data! And all this content is recorded and stored by these social network companies.

The real value of those online social networks is not in the service they deliver, but it is in the data they collect, reason why they offer the service for free. As Andrew Lewis said in a community weblog: "If you are not paying for something, you are not the customer, you are the product being sold!". The information contained in the social networks is a real treasure for marketers. It contains a myriad of information about each individual user making it possible to profile them into categories that can then be targeted by customized advertising: close to one-to-one marketing. 

New technology can analyze billions of pictures and automatically classify them (and thus the people represented on the picture) in relevant categories that can then be sold to marketers for content monetization. For example, they can be categorized as People (e.g. infant), Interests (e.g. golf), Travel (e.g. beach), Sports (e.g. basketball), Landmarks (e.g. Eiffel tower), Entertainment (e.g. Rock'n Roll), Activities (e.g. wedding) and more. The following people will likely receive offers for newly weds in their mail or on their Facebook page.

Those technologies can be quite accurate and capable of distinguishing very similar but yet different pictures. Here is an example of automated categorization of skying vs. figure skating pictures.

The market of techniques and technologies to analyze and transform complex unstructured data into actionable information is booming. Sentiment analysis technique can detect favorable or unfavorable opinions toward specific subjects such as organizations and their products from analyzing large number of documents or social media data. An enterprise can then combine this unstructured data analysis with its traditional data analysis and utilizes both types of information to discover significant business insights that could not otherwise have been obtained. For example, trends in the numeric data can reveal a slowdown in sales in a particular region during a certain time period. Analysis of the related documents, using sentiment analysis can discover customer complaints and product reviews, can help determine the cause of the slowdown. 

In summary, affordable mobile Internet devices have accelerated the use of online social networks allowing people to share information about themselves or things of interest to them at a pace never achieved before. New Big Data analytic technologies allow to extract insights from this large volume of data that can be leveraged by businesses to make better decisions and deliver one-to-one advertisement to their customers,  dramatically changing the way business is done is many industries.

Big Data  is the next frontier for innovation, competition, and productivity that puts the one-to-one holy grail of marketers within reach. It is in this context that we must analyze WhatsApp's acquisition by Facebook.

 

What has been driving WhatsApp' success?

 

WhatsApp is a different social network than Facebook and it brings another profile of users. How can we explain its success?

Mobile phone saw the fastest growth ever for a technology and in particular in Africa. But phone calls were still expensive for the poorest and telecom companies started offering SMS (Short Messaging Service) for a cost of typically less than one hundredth of a one minute voice call. So SMS became most popular with poor populations.

But the cost of a SMS was still very high, it was actually a rip-off! If you consider that a one minute phone call represents about 500,000 bytes of information depending on the codec you are using, an average SMS of 20 characters only uses 20 bytes, i.e. 25,000 times less, yet the telco company would charge you only 100 times less!
 

WhatsApp became popular because it allows their users to send text, multimedia, voice messages for free, by using the Internet to send data instead of the cellular network. They do it using a "chat app" build for the mobile phone. It allows free unlimited texting (although the cost is 99 cents per year after the first year of service), anywhere, without advertising. It also lets users communicate with people overseas without incurring charges for pricey international texts and phone calls.

Examples of other chat apps vendors are GroupMe, Line, WeChat, Kakao Tech. Almost 19 billion messages were sent per day using chat apps in 2012, compared to only 17.6 billion SMS messages. Users of chat apps were found to be about six times more sociable than texters using SMS, sending around 32 messages on average every day, compared with just five SMS texts.

In addition to its free messaging service, WhatsApp lets users chat with their phone contacts, both one-on-one and in groups. The service allows people to send texts, photos, videos and voice recordings over the Internet. They have just announced that they will add voice calls.  So while WhatsApp offers similar services than Facebook, a major difference is expressed by a WhatsApp user: "Facebook has become a junkyard of updates from people I don't really know. WhatsApp allows me to chat with my friends only when I want, saving me from logging on to Facebook and being inundated by its news feed and it's always on". 

The success of WhatsApp is also due to the availability of low cost feature phones that incorporate access to Internet (3G/EDGE or WiFI when available, non-HTTP/non-web socket data channels) and are capable of supporting third-party software like WhatsApp through platforms such as Java J2ME. This led to fast penetration of WhatsApp in emerging markets like India, Africa or Latin America. A recent survey found that 55% of mobile messaging users in India use WhasApp. Last year Nokia announced a low cost ($72) mobile phone with a WhatsApp button to access the free texting service. The cost of those feature phones is easily offset by WhatsApp free texting services replacing the "high" cost of SMS.

At the time of its acquisition by Facebook, WhatsApp had 450 million users and was adding users at a rate of 1 million a day! Their users are extremely active, sending more than 600 million photos a day -- more photos than Facebook users upload. A whopping 70% of WhatsApp users are active every day. By way of comparison, 62% of Facebook users are active daily. People around the world send 19 billion WhatsApp messages per day, including 200 million voice messages and 100 million videos.

Why did Facebook acquire WhatsApp?

 

In business, the biggest challenge is to find customers willing to buy your products or services. There is a cost (market research, marketing, promotion, sales force, etc.) associated with that challenge: it is the Cost to Acquire Customers (CAC). That cost then needs to be put in balance with the ability to monetize those customers, i.e. how much money can that acquired customer potentially spend with you over his/her lifetime: the Lifetime Value of a Customer (LTV). Many businesses fail because their CAC exceeds their LTV. CAC obviously varies across industries and could vary from few dollars to thousands of dollars per customer.

The price of $19 billion to acquire information of 450 million WhatsApp users is a CAC of about $42 per customer. That is a bargain in many industries, particularly compared to some of its competitors. LinkedIn's share price values that professional social network at $153 per user. Twitter trades at $140 per user, and Facebook itself is at $123. But the cost is actually lower than $42 because WhatsApp can provide Facebook with more than 450 million phone numbers as they have access to the phone numbers in the address books for those 450 million people. Here is an excerpt of WhatsApp agreement you sign before using it: "... you acknowledge and agree that you will have to provide WhatsApp with your mobile phone number... You expressly acknowledge and agree that in order to provide the Service, WhatsApp may periodically access your contact list and/or address book on your mobile device.."

More importantly WhatsApp market penetration has been significantly faster than that of Facebook in its 4 first years of existence.

The fast growth rate of Whatsapp was a major threat for Facebook and the acquisition cost was growing accordingly. So there was not much of a choice and others before like Google tried to acquire WhatsApp but the synergy was probably best with Facebook as we will see. Facebook can now merge the list of their customers with those of WhatsApp and combine the information collected about their users in Facebook with WhatsApp's information making their data even more valuable. 

But there are more reasons for that acquisition. 

First we have seen that the future is the use of Mobile Internet Devices for access to Internet. This is why the mobile advertisement market is growing at 40+%. WhatsApp users are exclusively using mobile devices providing Facebook with access to that market. 

Second we have seen than WhatsApp market penetration is particularly high in emerging markets where Facebook is lagging even if they are growing. WhatsApp acquisition extends Facebook's market leadership to emerging markets.

Third, the growth projection for WhatsApp is that they could reach 5 billion users within the next years. Their pricing strategy of 1 dollar per year which should be easily accessible even to the poorest people makes this a potential $5 billion revenue per year, probably an illustration of the "Fortune at the Bottom of the Pyramid" book by Prahalad.

 

What could be the impact of this acquisition in Africa? 

 

As WhatsApp becomes popular in Africa, it means that it will become more than extensions of people's social lives. In this High Tech business, constant innovation is required to keep ahead. WhatsApp needs to constantly create new value for its users in Africa. For example, combining social network-style services with existing mobile money systems. It has to go beyond replacing SMS to provide a range of connected services like games, virtual content, video/voice calling, e-commerce and more.

It should not ignore the local advertising culture and invest in raising awareness with a traditional media campaigns (billboards, media ads, etc.) which are still efficient in Africa. That is how Line a messaging company in Thailand was able to take over market leadership from WhatsApp.

Africa is the next frontier for many businesses. The "Fortune at the Bottom of the Pyramid" and the fast economic growth rate of the past decade has put Africa in the center of attention of many global companies looking for new growth markets to compensate for the anemic Western world market. However, the lack of data in the continent is a challenge. Shanta Devarajan, the World Bank’s chief economist for Africa, struck a dramatic tone in his address to a conference organized by Statistics South Africa, calling the state of data collection on the continent “Africa’s statistical tragedy.”

WhatsApp may soon become the largest private data data collector in Africa. While they have a "no advertisement" policy, Facebook doesn't. Consumer goods companies can't wait for it.
But WhatsApp can also become a cheap and efficient tool for data collection, I mean a tool to reach people and ask for information. Several companies entered that business in Africa: Open Data Kit, Camfed, EpiSurveyor, TextIt. However for it to work WhatsApp will need to open their system (through an API) which is not the case today, probably to protect itself from spammers. 

Another potential mover is the recent announcement by IBM to make its Watson cognitive system that famously won the contest against Jeopardy champions,  available in its research lab in Nairobi. So more data collection capabilities combined with access to advanced Big Data technology may break the data-analysis chicken and egg problem in Africa.

Communication is required for any economic development to take place. There is strong evidence that big data can play a significant economic role to the benefit of not only private commerce but also of national economies and their citizen. WhasApp can deliver both improved and affordable communication and data collection to the benefit of Africa if used appropriately.

Seeya later alligator...

How African Ingeniosity Can Sometimes Beat the Best Engineering School in the World

Dr. Ernst Friedrich "Fritz" Schumacher in his influential book "Small is Beautiful" speaks about sustainable development and appropriate technology. Appropriate technology is generally recognized as encompassing technological choice and application that is small-scale, decentralized, labor-intensive, energy-efficient, environmentally sound, and locally controlled. 

I'd like to share such an appropriate technology that I recently found in a school in Kigali.

In my posting "OLPC: from MIT lab to the reality on the ground" I explained why the OLPC laptop was inappropriate for Africa. In particular, the OLPC short battery lifetime of 2.5 hours created a logistic nightmare in that school who had just received 907 OLPC laptops for their students. With only a few power plugs in the school, how could they possibly reload these laptops (907 of them!) every night? I was desperate but did not want to share my feeling with the school as I really think that these laptops could make a difference for these kids even if they may not be the best solution.

A few months later, at the OLPC booth at a conference in Kigali, I saw the OLPC solution to the problem developed by their MIT experts. They built a multi-battery charger capable of recharging 15 OLPC batteries at once. I was excited by that solution until they told me the price for it. I don't recall exactly how much it was, but I remember it was in the thousands of US dollars. I was not able to get an answer to my email to OLPC org to know the current price.

I found that charger at the National Library in Kigali. Here is a picture of it and how it works.

                                       OLPC multi-battery charger (capacity: 15 batteries)

                                First you need to remove the battery from the OLPC laptop

                                    Then you insert the battery in the multi-battery charger

When charged, you need to reinstall the battery back into the laptop.

Recently I went back to the same school I left desperate 18 months earlier. I was helping journalists from a french TV station working on a documentary about ICT in Rwanda. I invited them to come film young kids working with the OLPC laptops in that school. I was a bit apprehensive, hoping that they found a problem to the battery problem.

And here is the solution they designed: a cabinet that can host 60 OLPC laptops for recharging.

There is no need to remove the battery from the laptop. Instead you insert the laptop with its recharging cable in the shelve inside the cabinet where there is one power plug per shelve to connect the small charger.

This charging cabinet hasn't been tested yet, this is the first "prototype". But at first it offers some significant advantages.

Here is how the school had to handle the 907 laptops. After each class, they had to bring the laptops back into a secured storage room to prevent theft. As air can be very dusty during dry season, the laptops were stored into boxes to protect them from the dust. The chargers were stored separately. The transport from the storage room to the classroom and back was happening every day. Because of the battery charging logistic problem, the laptops' batteries were not recharged. Instead the school was using home made multi-power plugs and each laptop was connected to power for use by the students in the class. Just that installation of 50+ laptops to be connected before being used took 45 min when we visited the school last week.

The Rwandan made charging cabinet is designed for one classroom. In Rwanda you can have from 50 to 60 students per classroom. In the final design it will be secured with locks on the doors addressing the security problem. By storing the laptops into a closed cabinet, it will address the dust problem. The cabinet being in the class room, it will spare the transport of the laptops to the secured storage room, freeing that room for other purposes. The laptops will be stored in the charging cabinet at the end of the class, connected to the power plug in the cabinet and recharged over night, ready to be used again the next day. So there will be no need to install power for all laptops (45 min). Instead the students will just take the laptop from the cabinet in the classroom, without the power plug that will be left in the cabinet, and they will use the laptops from the recharged battery.

Last but not least the cost of one charging cabinet for 60 laptops in $147!!! and it provides work to a local artisan!

There could be few problems still to be solved, but these are not difficult to address. One could be the heat from the chargers in the cabinet. Small fans could be installed (local cost is around $10). Another one is that if the charger stay connected after the battery is fully recharged, it will still consume a little bit of electricity. One could use a power plug with a timer (estimated cost: $15) for the cabinet cutting of the power after the time needed for the recharge. This is an appropriate solution and all material required can be found in Rwanda and it can be build locally, meaning it can be repaired locally if needed.

When visiting the National Library to take pictures of the OLPC multi-battery charger, I was wondering why it was stored in a corner. They told me that they were missing a piece of equipment and that is was therefore not working for several months as they can't find that piece.

So make your choice: four OLPC multi-chargers (for 60 batteries) built by the best engineering school in the world in the US (to be shipped to Rwanda) for thousands of dollars or the locally made charging cabinet for $147?

If you choose the first solution, beware that its main material is aluminum a limited earth resource, its carbon footprint will be high as you will need to ship the equipment from the US to Rwanda in the middle of Africa, that it will cost you probably 10 times more, and that all that money will go back to a company in the US to pay a few people operating a production chain.

If you choose the second solution, its main material is wood a renewable earth resource, its carbon footprint will be minimal as it is locally produced, its cost will be affordable and it will generate a large number of jobs for its manual labor based production and that money stays in Rwanda and will impact hundreds of people's life through the workers salary supporting their families.

Rwanda currently has at least 210,000 OLPCs so there is a need for 3,500 of these charging cabinets. This can generate jobs for years.

That is what I call a sustainable and appropriate solution for Africa which I have been advocating for years in this blog.

Seeya later alligator...

The Very Profitable "Non-Profit" ETS Business and its Impact in Africa (ETS is the organization managing educational tests like GRE, SAT, TOEFL)

Educational Testing Services (ETS), founded in 1947 and headquartered in Lawrence Township, New Jersey USA, is the world's largest private nonprofit educational testing and assessment organization. It delivers educational testing services like GRE (Graduate Record Examinations), SAT (Scholastic Aptitude Test), TOEFL (Test Of English as a Foreign Language), any many more.
These tests are required by the majority of universities worldwide for students applying to their education programs. We at Carnegie Mellon University in Rwanda require students applying for our Master of Science in IT to take the GRE and TOEFL tests like we do on our main campus in Pittsburgh.

ETS has made "fundamental contributions to the progress of education worldwide through educational research and analysis, fair and valid assessments, innovative product development and informative policy studies." While ETS is a US organization, the world education system is benefiting from their services and ETS "develops, administers and scores more than 50 million tests annually in more than 180 countries, at 9,000+ locations worldwide." In Rwanda, ETS' tests are delivered by the College of Business and Economics (ex School of Finance and Banking) of the University of Rwanda.

So what is the problem? The problem lies in the high cost of those tests that make them unaffordable for the majority of African students.

The official fee for the GRE test is $185 "worldwide". This is the cost for the computer based online test. But to offer an online testing facility, ETS ( or rather its subsidiary Prometric) requires the installation of robust test centers and rightfully so as they want to guarantee the integrity of the system. The problem is that this investment can only be justified in countries with a large number of students taking the test each year. That is not the case of Rwanda and as a consequence they can only offer a paper based test. That is further penalizing Rwandan students as they are paying an additional cost of $50 for the paper test (probably because its grading can not be easily automated) and a cost of mailing the test back to the US. The the total cost of GRE for Rwandan students (and probably in many other African countries in a similar situation) is $266. Similarly the TOEFL test cost is $251 compared to the official fee of  $170. That represents a premium of 45%! I guess this is another negative example of the concept of a poverty premium that was first outlined in a 2002 HBR article by C.K. Prahalad and Allen Hammond: "Serving the World's Poor, Profitably".

When adding the cost of GRE and TOEFL, Rwandan students need to disburse $517 for both tests. They may have to pay an additional cost for the use of a credit card for the registration as payment is due by credit card which they obviously don't have making their online registration even more difficult. The neighboring country of Uganda is offering online testing at a lower cost, but Kampala is 12 hours away from Kigali by bus and we heard stories of students who had to take the tests after a sleepless night in a bus, not the best conditions!

More importantly the sum of $517 is equal to 80% of Rwanda's GDP/capita of $644. To put this in perceptive this would be like asking US students to pay $41,360 (80% the US GDP/capita).

To address this problem at CMU-Rwanda we divided the admission process in several selection steps, pushing the requirements for the GRE and TOEFL scores at the end of the process instead of requesting these before students can submit their application for our master program. During the first selection steps, we evaluate applicants based on their transcripts, statement of purpose, recommendations, interest, etc and we eliminate students who are not qualified. In doing so, we only send pre-qualified students to take the GRE and TOEFL tests avoiding the cost of it for those who are not preselected. But we still require the GRE and TOEFL scores to make the final admission decision.

As the chair of our admission committee I have been investigating if ETS would be willing to lower the fees for these tests in Africa. While ETS offers test fee reduction programs, they are only available for U.S. citizen or resident alien. My request to representatives of ETS and their Prometric subsidiary was met with a negative answer. I don't know if I was talking to the right people, but I found absolutely no compassion for the situation that their fees was creating in Rwanda and Africa in general.

Therefore I wanted to understand if perhaps their financial situation did not allow them to offer that reduction. As ETS is a private non-profit organization, they are tax-exempt and there is very little transparency to their cost structure has they are not obliged to publish their annual report. From Google and from ETS' own website, I was able to find the following facts:
In 2011 ETS had 731.4 million USD in assets and an income of 1,056 billion USD. One wonder what these assets are and we don't know the answer but this is a significant number. ETS claims 2,500 employees on their website, which translates their income into $435K/employee, not bad at all but this is a non-profit organization remember... I know that comparing this with my former company is not very relevant but I can't resist: IBM made $100 billion with 435K employees in 2011, i.e. a revenue per employee of $230K employee. I should have worked for ETS!

How does that translate into salaries at ETS? I was able to find that information in ETS' 990 form.  Form 990 is an annual reporting return that certain federally tax-exempt organizations must file with the IRS. In that form dated 2011, I found the following facts:
- ETS's president salary (reportable compensation from the organization) was $1,254,023 plus $80,374 of estimated amount of other compensation from the organization and related organization. That makes a total of $1,334,397 in 2011.

- ETS has declared 36 Senior VPs, vice-presidents, Chief of something in 2011. These executives made an average salary of $399,496. The average total compensation (including the "other compensation mentioned above) was $411,655. As a reference, the US top executive median pay in the US in 2012 was $101,650 per year (from the United States Department of Labor). At IBM VPs would make an average salary of $160-200K, with an additional bonus of 40% if they deliver good results (IBM is a for profit organization). The salary of the vice president of the United States is currently $231,900.
- ETS has declared 19 trustees paid an average of $54,166 for 6 hours of work per month.

I don't think that I need to say more, and I can only hope that this level of salary will not desensitize them from the African situation. It seems to me that there is room in this non-profit organization to offer African students test fee reduction proportionate to their living standards just like some global companies (e.g. Coca Cola, Microsoft, Samsung) do in their market.

Seeya later alligator....

I'm not the brain behind IBM's Watson cognitive system recently announced in Africa

My intellectual integrity pushes me to respond to some false statements that appeared in the media and social media recently about my contribution to Watson, the IBM Cognitive System that was recently announced in Africa.
After 25 years of career at IBM, I still consider myself an IBMer in my heart. So when my friends at the IBM Research lab in Nairobi told me about the Watson announcement for Africa, I was really excited as a professor at Carnegie Mellon University in Rwanda and proud as an ex-IBMer. As they asked me if I would agree to speak with the media about the importance of that announcement, I gladly agreed to do so. As a result I have been quoted in the official IBM press release.
I was then interviewed by several journalists and I have further been quoted in more media. I have the greatest respect for the journalist job, and I know for having worked with them the pressure and stress they have to deliver information in time, or even before time as it is the rule of the media game. And as a result it happens that they may misquote you sometimes, and it happened with one of them for the Watson announcement. Again I have no quarrel with the jounalist but I need to put the record straight.
During that particular interview (which happened late at night), the journalist asked me what I knew about Watson. I told him that the Watson project started at the same time I was working at IBM Research and that I knew about it because at that time I participated in some information and discussion meetings about it, but that was my only "contribution" to it.
When translated in the published paper, it became "Michel Bézy, a Rwanda-based technology professor who helped develop the Watson system." That is a misrepresentation of what I said, as my contribution was insignificant, I was just one of many who discussed about the project at the very beginning of it.
But then, social media take over, and now someone tweeted that " Prof Bezy from CMU-Rwanda is the brain behind the IBM's new flagship system for African markets". This is totally innacurate and is why I post this correction.
First I have not contributed to Watson while I was in IBM and I am not the brain behind it. Second if any contribution it would have been during my work at IBM, not as a professor at CMU-Rwanda.
Again I have no grievance against any of the authors of these statements, I just needed to put the records straight.

Seeya later alligator...

The Unbearable Lightness of ICT4Development

As I have done before in this blog, when I find an interesting article or post, I share it with you.

In April 2012 I published a post "Is ICT4D going to change Africa? or is it ICT4B" where I shared my concern about the ICT4D approach to problems in Africa. ICT4D is mainly AID oriented and sometimes contributes to Africa problems more than it is solving them as brilliantly explained by Dambisa Moyo in her book "Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa".

Ideas conceived by people of good will in the West often don't work when implemented in Africa, as an example see my postings about OLPC problems in Africa. 

One of the main reason is the lack of understanding of the culture and problems from this continent of Africa by the people conceiving those projects. 

This paper "The Unbearable Lightness of ICT4Development" published in Smart Monkey TV is addressing exactly that problem and provides good advice on how to measure success of ICT4D projects. I just want to quote one example from the paper that made me laugh as it shows how people sometimes don't understand the situation in Africa.

"There are still too many people developing ICT4D applications whose primary skills are technical. Relatively few organisations have a deep and rooted understanding of their core audiences and not many conduct real tests on their user interfaces and make changes to them.
They tend to assume that if there is a rational, efficiency based case for a service, people will see it as a “no brainer” and use it. Far from it as behavior often only changes slowly and has other perverse incentives. One education SMS app we looked at had the facility to let head teachers know when teacher’s wages were in the bank. Thus it was argued that this would prevent long and unnecessary journeys to the nearest town to discover this in person. Nobody actually thought that the head teachers might actually enjoy these breaking up their routine with these jaunts. See video interview with Mark Kamau, UXB Lab: www.youtube.com/watch?v=c8RH9Dohpvo"

Seeya later alligator...