Carnegie Reporter, Vol. 1, No. 2

Despite a set of obstacles that would try the patience of Job, a trio of African entrepreneurs is proving that there really is a demand for Internet services on the continent—and that you can at least hope to make money satisfying it.

Founded in 1995 by some Kenyan students at the Massachusetts Institute of Technology and Harvard University, Africa Online started as a web site financed with credit cards. Six years later, the Nairobi-based company is Africa’s leading Internet service pro-vider outside of relatively advanced South Africa, with operations in Kenya, Uganda, Tanzania, Zimbabwe, Namibia, Swaziland, the Ivory Coast and Egypt.

From the outset, the company’s youthful founders have focused on bringing the Internet to as many Africans as possible. Africa Online (and yes, you can call them AOL for short) has succeeded thus far by selling low-cost connections in the poorest parts of the world. But despite its rapid growth (the company has annual revenues of $12 million), Africa Online hasn’t had an easy time of it. Africa presents a host of challenges to any business, especially one dependent on technology and the phone system. Thus, Africa Online has had to overcome obstacles ranging from restrictive government regulations (which have made telephones scarce and bandwidth prohibitively expensive) to civil wars and political instability in such countries as Zimbabwe and the Ivory Coast.

Still, the biggest hurdles facing Africa Online have been a scarcity of computers and overall low levels of literacy. Most poor Africans cannot read, and even among the relatively small core of middle- and upper-class urbanites in these countries, computer literacy is scant.

To counter such problems, Africa Online has developed E-touch—a network of Internet terminals in public calling stations that it hopes to expand all over the place. Working on a franchise basis with small businesses and post offices, E-touch has rolled out more than 600 low-cost Internet centers across the continent to give people facilities to send e-mail and browse the World Wide Web at something like the cost of a postage stamp. Africa Online says E-touch already has 60,000 users, in addition to the company’s 50,000 dial-up subscribers.

Working with Barclays, one of Britain’s largest banks, Africa Online also plans to roll out low-cost Internet information centers at Barclays branches in 12 African countries where both companies have a presence. The goal is to pave the way for customers to buy groceries and other services on the Internet without credit cards. (Africa’s paucity of credit cards—hardly anyone there has one—is a major barrier to e-commerce on the continent, even for companies and individuals that manage to surmount the general lack of computers, phones, money and even electricity.)

Africa Online has also made the development of locally relevant content a priority. Since its inception it has made a point of carrying local news and weather on its home pages, and hosting the web pages of various organizations, in particular local newspapers, which gives the growing African diaspora (to say nothing of foreign investors) a better chance to keep up on what’s going on back home. Most recently, Africa Online acquired 3mice Interactive Media Ltd., a leading African web design house, for $520,000. Web design offers higher profit margins than being an ISP, and Africa Online was determined not to leave it to competitors.

Founded two years ago in a kitchenette by 25-year-olds Njoroge and Betty Mwaniki, 3mice is a good example of how some young Africans are pursuing Internet dreams. Who knows? Africa might even manage an Internet bubble of its own; the Nairobi Stock Exchange is expected to open up a second tier market so that start-ups like 3mice can raise funds from the public. Perhaps Africa, where so much has gone bust, can at least enjoy a boom first.