Business | Technology
Broadband breeds Kenyan entrepreneurs
New cables have dramatically reduced costs, exciting business people about the possibility of selling products online
- By Barney Jopson, Financial Times
- Published: 00:00 November 7, 2009
Nairobi: Having just lost his job as an advertising salesman due to the downturn, it was a Safaricom advertisement in a Kenyan newspaper that caught Michael Wanganga's eye.
The country's biggest telecoms provider was promoting a seminar for cyber café owners in July at which it promised important news on its internet services.
In spite of his lack of cyber credentials Wanganga went along and was ushered into a new era: where the internet does not send your blood pressure soaring.
Backwater
For years, east Africa had been stuck in an internet backwater as the only part of the world not connected to the global broadband network.
Consumers had no choice but to pay sky-high fees for ultra-slow satellite links, but this year's arrival of two submarine cables has turned the dearth of bandwidth into a glut.
Wanganga has become one of the first to take advantage.
Inspired by the low-cost packages Safaricom offered, he set up his own cyber café in Kilometre Moja, a commercial enclave of concrete-cube stores and listing wooden kiosks, separated by bare earth and smouldering piles of rubbish.
Kilometre Moja is a peripheral place that serves the students of Kenyatta University north of Nairobi, reached by turning off the Thika Road on to a dirt track, crossing a railway line, and skirting round a pack of grazing goats.
However, it is also a reminder that there are smart young people in all corners of Kenya with entrepreneurial get-up-and-go.
Many executives from businesses much bigger than Wanganga's six-computer outlet say the arrival of the two cables — called Seacom and Teams — is the most important development in Kenyan infrastructure in decades.
The $600 million (Dh2.2 billion) Seacom cable, which was the first to get connected in July, is wholly owned by private investors and connects several points on the east African coast with India and, in due course, Europe.
The $110 million Teams cable is a Kenyan initiative part-owned by the government and telecoms companies — including affiliates of Vodafone and France Telecom — and connects Mombasa with the UAE where etisalat also has a stake.
The cables have reduced prices from about $3,000 per megabit per month to as little as $200.
In common with many of its rivals, Access Kenya, one of the biggest providers, says it has passed the savings on to customers by giving them twice as much bandwidth for the same price. But the arrival of broadband has not been without controversy. Bitange Ndemo, a senior official at the ministry of communication, has accused some internet service providers of acting like a "cartel" by not passing on a more generous chunk of savings.
The ISPs respond that their own costs have not yet fallen because they have to see out their existing satellite contracts.
Call centres
Corporate users can now do things that were barely possible before such as using voice over internet protocol (VoIP) services and linking in to the real-time transaction reporting systems of overseas head offices. Kenya's nascent call centre industry should be a big beneficiary.
Kenyan business people are excited about selling their products online — it used to be a non-starter — and are picking up on the late 1990s vocabulary of "B2B" (business-to-business) and "B2C" (business-to-consumer) transactions.
One of the only internet retailers is OnlineDuka, which sells everything from moisturising cream to hub caps.
It had roughly 20,000 visitors a day before the cables but now the figure has jumped to 50,000, says Joel Amenya, its co-founder.
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