Low-Cost Android Phones are becoming more available across Africa. I’ve seen phones for as low as $40 in Tanzania and Zambia. These are generally subsidized by MNOs, and customers are even given incentives to buy with cheap credit options. Digitization is spreading across Africa, and the MNOs are all rushing to capture of much of the business opportunity as possible.
It’s evident that the business opportunity lies on two ends of the spectrum. African markets exhibit a barbell market, with a wealthy, stagnant upper class and a rapidly growing lower income population. Both ends of the barbell need digital services, and mobile is the driver behind their adoption. The needs of both sides are also similar. People want streaming services, digital financial services, and communication tools. The differentiator is how these services are delivered and consumed. If you have more money, you’re more willing to pay for high definition video services, whereas if you don’t have cash to spend on data, downloading and keeping the content cached on your phone is far more appealing. Wealthier consumers want full banking services provided via apps, while poorer consumers need a few services like payments and remittances provided quickly and cheaply. These segments will likely remain distinct for the next 10 years. I think the companies that serve the massively growing low income segment will capture more of the value in Africa’s markets. There’s more data, more opportunity, and more growth there. Amazing it all starts at the phone.