Tech firms look to expand sales in Africa

When Microsoft Corp. announced recently that it was starting a big push to grow its market in Africa, it cited the continent’s big growth opportunities, calling Africa a “game changer in the global economy.”

Similarly, IBM Corp., Google Inc., Intel Corp., Hewlett-Packard Co. and other tech companies in recent years also have expanded their presence in Africa.

As the growth of tech hardware, software or services flattens or declines in mature markets such as the U.S. and Western Europe, and markets in China, India and Russia grow increasingly competitive, many of the largest tech companies are looking to Africa.

“The U.S. and Europe are stagnant. China is growing but plateauing, as is India,” said Roz Roseboro, principal Middle East and Africa analyst at research and consulting firm Analysys Mason.

“You’ve got these big multinational companies looking at Africa and saying: ‘You’ve got growth here.’”

Microsoft launched its 4Afrika initiative last month — an effort that has the company spending an additional $75 million in the next three years over what it’s currently investing there.

The initiative includes working with the Kenyan government and a Kenyan Internet service provider to deliver low-cost, high-speed wireless access; getting millions of smart devices into the hands of African youths; bringing a million small and medium-size businesses online; providing skills training; and creating an “online hub” through which businesses can gain access to free products and services from Microsoft and others.

It also includes a partnership with Chinese phone manufacturer Huawei to introduce a Windows Phone, called Huawei 4Afrika, with features and apps specifically designed for the Africa market.

Getting a foothold in the mobile market is especially important in Africa, where, for many, a PC is too expensive and a feature phone or a smartphone is the first and possibly only computing device. Indeed, mobile payments — using a phone to make payments or do banking — are common in Africa.

Though situations vary from country to country, some factors have coalesced to make the continent attractive to major tech firms. The political situation in many countries has become more stable, with governments open to cooperating and forming joint projects with foreign, multinational corporations.

More tech infrastructure is being built, including undersea fiber-optic cable systems bringing faster broadband connections to Africa’s coasts and terrestrial cables to extend the networks inland.

China’s government and some of its companies have invested in African infrastructure, such as electricity grids, in return for natural resources.

There is a growing middle class and rapid urbanization. And the population of the continent, as a whole, is young — with an average age under 20 in some countries, Roseboro said.

“They’re the ones who want this [tech] stuff and the most willing to pay for it,” she said. “And they’re the ones evangelizing — it’s going to be the 16-year-old student who shows his mom how to use it.”

But before all that can happen, there are challenges to overcome.

More education and more skilled labor are needed to help build the economy and the tech ecosystem, to say nothing of the consumer and business markets.

Basic infrastructure is lacking. While strides have been made in increasing broadband access, most people in Africa still don’t have online access. For those who do, the connection can be slow or costly.

“For Microsoft to sell software, for Google to sell ads, you have to get people online,” Roseboro said.

In other words, to have a market to sell to, the tech companies must first invest in building the market.

Toward that end, many of the strategies launched by tech companies expanding their footprint in Africa also include investments in infrastructure as well as increasing Internet access, developing people’s skills and education, and establishing research and technology hubs.

Microsoft has been in Africa since 1992 and now has about 750 employees and 11,000 channel partners there. The company’s investment has grown steadily, with a particular focus in the education sector, as well as financial services and oil and gas businesses, said Fernando de Sousa, general manager of Microsoft Africa Initiatives.

But now the company realizes “we need to accelerate adoption of technology, accelerate coverage across the population of Africa,” De Sousa said.

Intel launched its first Intel-based smartphone in Africa — the Yolo — earlier this year. It’s also working to expand the software-development community by investing in mobile apps development and university training.

Google is improving Internet access, including offering technical assistance to Internet providers; granting money to organizations working to expand engineering expertise to universities; and offering a fixed amount of free Internet bandwidth for up to three years to certain universities.

“As more Africans get online, we’re continuing our work to create an accessible and relevant Internet,” said Julie Taylor, a spokeswoman for Google Sub-Saharan Africa.

Tu writes for the Seattle Times / McClatchy.