Sunday, March 30, 2014

Africa is in need of an African App and Content Store, and can bitcoin help?

In the last 5 years, Africa has seen a fast growing number of innovation hubs, labs, coworking spaces across the continent.


Here in Kigali, the kLab has become a central meeting point for young (and older!) people passionate about ICT and working on developing mobile apps to address and solve needs in the region.

The challenge for many of these entrepreneurs is to get their solutions to the market. While they usually have good technical skills (or rather the community of them offers an incredible combined pool of skills) they are usually lacking commercial/marketing and financial skills making it difficult to sell and monetize their innovation. They need to devote a significant part of their efforts in creating their own company for that purpose.

There could be a solution to that problem: making it easy for them to publish and sell their mobile applications or content in "app stores". The app store would then automatically take care of the publishing, sales and distribution of their apps or content. There are two major "app stores" in the world today: the Apple AppStore/iTunes, and the Google/Android Play Store.

The problem is that none of these stores are appropriate for young African innovators and the African market.

First these stores offer large numbers of apps of which the majority are irrelevant to or can't be used in the African market. They are in a language (English) that most Africans don't understand, they require infrastructure not existing in most of Africa yet, and they address different needs than those existing in Africa.
Apple App Store recently hit 1 million apps, Google has 800,000. Unless these stores provide a dedicated space for African apps (which is unlikely), apps from African innovators would be lost in these huge stores. If good, they could make it to the top of rankings and be more visible, but for that to happen, their target users (from Africa) should be able to find them easily.

But here comes the next problem: to buy these apps, they will need a credit card, and that is a show stopper for most Africans.

So how can we solve this problem?

This is where I advocate for Africa to create its own African App Store platform. If such an appstore would exist, it would allow African innovators to publish their apps and have them easily accessible by African users. This will be an easy way for them to monetize their efforts and allow them to focus on more innovation instead of creating their own company.

What are the requirements for such an App Store to be successful?

Many of those requirements will be similar to those required by the Apple or Google Store. First is to put in place strict technical and quality criteria for apps to be published in the store. Quality should also imply ease of use to compensate for the low ICT awareness in the region.

Another requirement is to provide an appropriate payment mechanism. In Africa, people don't use/have credit cards. They use mobile money like mPesa in Kenya. The app store should support mobile money payments. The problem is that each telecom company in Africa has their own mobile money and that they are incompatible. For example, if you have a Tigo mobile phone, you cannot send Tigo mobile money to an MTN phone. In addition, you cannot send money outside of the country as the currency is different. The appstore platform should support all mobile money in all coutries, which is probably impossible because telecom companies are not willing to open up their mobile money system to other companies. Unless an independent organization like Swift in the banking word organizes a cross platform payment system, I can't see a solution to this problem.

This is where I'm proposing to investigate the possible use of bitcoin.

Bitcoins are a so-called 'cryptocurrency' which exist only digitally and function without the involvement of conventional financial institutions. Launched in 2008, they form a kind of virtual currency that can be transferred between users in what can best be described as a peer-to-peer electronic cash system. Bitcoins are purchased using ‘real’ currencies and then stored in ‘e-wallets’ from which payments can be made. They are universal and can be used in any country.

Not being a technical person I propose the following idea for my readers who have more technical expertise than I to comment.

An appstore is mainly about micro-payments. Typically content like songs sell for $0.99 or apps for a few dollars. Using bitcoins would make it easy to pay in any country independently of the local currency. The challenge is: how can African users buy bitcoins? Most Africans today have access to mobile money. They exchange cash for mobile money on their mobile phone which they can then use to pay for things they buy or to send to other phones through a mobile call/sms. In each country, there is an existing network of telecom representatives or counters where people can exchange cash for mobile money.

If we could find a system to transform mobile money to bitcoin, they could use bitcoins to buy mobile apps or content in the African App Store from any country in Africa.

One of the problems of bitcoin is the volatility of its exchange value. This is mainly because its use it not very spread yet and most bitcoin buy and sell activities are speculative in nature. As the use of  bitcoin extends, volatility should diminish.

But bitcoin volatility should not impact appstore transactions for the following reasons:
1) Appstore transactions are micro-transactions. Volatility is a concern for people investing significant amount of money in bitcoins, not if you spend a few dollars or less.
2) Appstore transactions are short term transactions. When the user decides to buy a song for $0.99, he or she buys bitcoins with his/her mobile money and send those bitcoins to the appsstore to execute the buy. The appstore then does the same operation in reverse (if so desired by the owner of the song) transforming bitcoins back into mobile money for the content owner. This should take a few minutes, the value of bitcoin is not going to change much during that time. The value of bitcoin here is mainly to serve as an exchange currency allowing you to get payments across country borders and currencies without the cost of international transfer usually charged by banks. In addition, banks would not allow transfer of such small amounts, and if they do the transfer cost would be prohibitive relative to the amount transferred.

So the question is: can someone develop a mobile application that can instantly transform mobile money into bitcoin and vice versa bitcoin into mobile money? I found two such applications: Kipochi and Bitpesa. However these seem to be specific to mPesa, the Vodaphone mobile money used in Kenya. Is it possible to develop bitcoin-mobile money exchange apps that can work for any mobile money in any country? Or does each country need to develop such an app specific for that country's mobile moneys?

Looking forward hearing back from you and your suggestions.

If we can solve this problem, we can implement an African Appstore and open the gates to Africans innovations with an easy solution for the monetization of their mobile apps, games or content. This could change Africa's mobile apps market and launch a new industry in Africa.

Seeya later alligator...


Tabatha sima said...

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Maria Jennifer said...

Almost in every countries, people and so the government are putting emphasize on ICT and technical issues because the development of a country is now dependent on it. how much a country is advanced in technology.

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