Using Facebook's Audience Insights to Estimate East Africa's Digital Market Size

Global social media giant Facebook has over 1Billion monthly active users. The immense popularity of Facebook reflects easily in internet usage patterns among people in East Africa. Back in 2010, a research by Synovate indicated that 79% of internet users in Kenya had Facebook accounts. The Communications Authority of Kenya( CA) - formerly CCK places the number of internet users in Kenya at 21 million as at December 2013.

I am skeptical about the CA's estimation formula for estimating number of internet users in Kenya. However if the trend highlighted by Synovate in 2010 remained, and CA's number was close to accurate, there would be about 16 million Facebook accounts belonging to Kenyans. That said many people having a Facebook account reflects how many people became aware of it and signed up, not necessarily those who use it actively (eg. at least once a month). The 16million estimate on Facebook users would therefore not be a reliable benchmark for market estimation among start ups or corporate marketers.

Of Facebook's Audience Insights

Shortly after the PIVOT East conference in June, I had a chat with Matthew Papakipos - Facebook's Engineering Director that was an eye opener. Matthew took me through Facebook's new audience insights tool that helps to reveal not only Facebook user demographics (anonymised) but also inferences about the general internet market place. The tool which was launched for US markets early May, and is now available in other markets will change how regional digital entrepreneurs estimate their market sizes.

To feed my never ending curiosity about mobile devices used in the East African market place, I used the tool to quickly generate a table comparing some key numbers. The tabulation below begins to tell how East Africa, though with much potential falls behind Egypt, Nigeria and South Africa on active internet use.



Country

Population (million)²
Facebook Monthly Active People¹
TotalOwn Mobile DevicesOwn Android Devices
1Kenya 43.184m-4.5m3m-3.5m1m-1.5m
2Uganda36.351m-1.5m1m-1.5m250K-300K
3Tanzania47.781.5m-2m1.5m-2m600K-700K
4Rwanda11.46350K-400K300K-350K100K-150K
5Burundi9.85100K-150K70K-80K20K-25K

East Africa³148.627m-8m6m-7m2m-2.5m

Ethiopia91.731.5m-2m1.5m-2m500K-600K

South Africa51.1910m-15m9m-10m2.5m-3m

Nigeria168.810m-15m10m-15m3m-3.5m

Egypt80.7215m-20m10m-15m7m-8m

¹ Facebook Audience Insights as at 4th July 2014

² World Bank 2012 Country Statistics

³ Aggregate numbers for 5 East African countries

A further glance at the audience insights roughly hints at the popularity of feature phones across East Africa at about 50%. From the insights, about a third of mobile devices owned by Facebook's monthly active users run on android - by far leading other smart phone operating systems such as Windows and Apple IoS. Popularity of android in Egypt stands out, estimated at about 70% of mobile devices (using the lower limit data points).

A promising market place for digital entrepreneurs 

A closer look at the figures above indicates much potential for East Africa as a common market place among digital entrepreneurs. The region's close to 150 million residents compares only with Nigeria's population of 170 million. East Africa's 150 million people coupled with the prospects of integrating the traditional East African economy with Ethiopia (92million people) portends even much more for regional digital entrepreneurs.

Assuming that  East Africa's people will rapidly embrace internet and mobile technologies, the next few 3-5 years may deliver a digital revolution to the economies involved. This is especially if the regional economies persist at increasing coverage of 3G and 4G across the countries. The promise of this increased mobile network coverage is quite evident in Ethiopia and Rwanda.

Why Team Composition in Tech Startups Matters Much

Since 2011, the m:lab has organised PIVOT East - an annual competition for mobile startups in East Africa. Much has evolved about the competition since the inaugural edition was held as PIVOT 25. Some of the evolutions were aptly captured by Nicholas Friederici, a World Bank consultant then documenting the Tech ecosystem in East Africa in this article.

MedAfrica (MedKenya) winning team of PIVOT 25 in 2011

Incremental Improvements

One incremental improvement that PIVOT East continues to emphasize on is for participants to regard the competition as a platform for organizational development and business model refinement. Inasmuch as few participants may still see it as one of the many competitions where they could “earn” prize money, there’s many that are getting the geist of the matter and are taking their businesses more seriously with competitions.

In the 2013 edition of PIVOT East, market traction was emphasized in the criteria for all selection stages. This helped to minimize the so called “compe-preneur” effect. Market traction included earning or growing revenue, increased active user base, and other growth metrics. Selection criteria in the competition will continue to emphasize market traction. Team composition has been another criteria item emphasized in the 2012 and 2013 competitions. In 2014, strength of individual skills among team members, the complementarity of team skills sets, and members' long term commitment to the teams will matter even more.

The Team vs the Idea


Many investors will tell you that a bad idea can be improved or killed altogether to take up another better idea. Ideas are cheap and generally worth nothing, unless they are executed into revenue-earning and growing businesses. Often times, especially among “Compe-preneurs”, the execution teams' skills are shallow as focus is more on the idea and the all well elaborated planned business plan. For a startup, the “coolness” of the idea and sticking to the initial elaborate plan A will not necessarily bring revenue and growth.The team has to speedily iterate from the plan A to a plan that works. As Ash Maurya would advise, 66% of successful companies reported drastic changes in their original plans along the way.


To execute a great idea into a viable high growth business, calibre of the team is important. If an investor invests in a bad team, they are trapped in a suboptimal investment, difficult to get out of without upsetting the founding team set up. A badly set up team is a hindrance to the kind of efficient, focused execution that a startup requires in the search for a repeatable and scalable business model.


Skills Depth and Experience - for execution


Skills sets and experience of designated team members for key roles in a startup matter much. Many a times startups designate key roles to team members that are not fit for the tasks. Founders should strive to co-found with the best talent in the market that brings on board certain key skills to the startup. These could be technical developer skills, design or UI/UX skills or business development. This is because good talent can be rare and expensive to hire later on in the startup. Founders should avoid co-opting each other into a startup without vetting each others’ skills and the experience each brings on board. More importantly though, founders should be honest enough with themselves to recognize a skills gap arising as a going concern to fill it with the right talent while offering strong incentives such as stocks, an interesting culture and or a noble mission. The later it is in the life of startup this gap is recognized the less likely it would be for stocks, culture and mission to beat instant cash remuneration as the motivation for new talent.


Complementarity of Skills


The product of a Tech startup is not merely the technical solution. Its the overall business model which in the lean canvas representation includes 8 other components. To build a product that customers pay for, a startup requires collective team ability to understand and deal with customer segments and their pains, acquisition channels, revenue and cost structures among other key business model components besides “coding” the solution.


Dream Team of The Hacker, Hustler and the  Hipster?


Many Tech startup teams over-emphasise the role of the Tech co-founder, so much so that they simply constitute as, say three developers (hackers) assigning each other roles such as CMO, COO, CFO and CTO. The same happens where business founder (hustler) underestimates the need for a Tech co-founder. In such cases the “hustler” ends up with arrangements where the hacker is a consultant or a temporary employee - often engaged only to build the first prototype. In PIVOT East we have seen comic cases such as the loosely engaged developer disappearing with the code for a prototype that calls urgently for iteration.


Besides having a hacker and a hustler in the mix of skills sets, importance of the user experience (UX) designer (the hipster) is often underestimated by startups. This currently occurs among startups in East Africa and is partially attributed to the general scarcity of such skills in the Tech community. For many consumer driven internet solutions, user experience is a big differentiator. Attracting the best talent among user experience designers (often converts from graphics design) to be a co-founder may be the clever-most decision in a startup.


illustration of popular Hacker, Hustler, Hipster dream formation


Domain expertise in specialised fields


For startups seeking to disrupt or impact specialised domains such as health, education, agriculture and engineering, the importance of a domain expert in the founding team is very important. Recently I asked Jamila Abass - CEO of Mfarm what was one thing she would do differently if we rewound the clock by two-three years. Quite profoundly, her answer was something like “I would co-opt people with agriculture domain expertise in the team the earliest possible”.

The importance of domain expertise in the founding team is demonstrated by some domain specific startups in East Africa such as Eneza Education. The startup has a founder, Toni Maraviglia who is a career teacher by profession. Having deep understanding of market setups, domain technical skills and other domain specific intricacies helps startups to speedily navigate around challenges and opportunities in the domain. The emerging success story of Eneza education is partly if not significantly attributed to the domain knowledge infused by Toni in the startup.

As an experiment, we have set Inclusion of a domain expert in startups in specialised domains of the new mobile impact ventures program at m:lab East Africa a requirement. We anticipate good results especially with respect to appreciation of customer insights.

Passion, commitment and motivation

Apart from having super skills deployed for required areas of expertise and having complementary teams, inherent interests among team members matters. Commitment level for a super talented team member engaged as a temporary consultant is not as inspiring as a super talented team member who is a co-founder with significant stock allocation in the startup. To investors, business partners and even customers, there’s more confidence in the future of the product when key team members have demonstrable long term commitment.

It may be that consultants and employees on contract may be the most practical way to deploy certain high caliber skills required. In fact its the default scenario for most mature corporate organizations. For a startup which mostly has constrained resources, it appears wise to sell the vision to key talented members that remain in the team with stock incentives rather than paying fat consultancy-like paychecks on a on occasional basis.

A challenge may arise for founders in convincing the right talented people with the right attitude to join the startup - besides having to convince them to take small paychecks in the “short term”. In this case its worth considering founder / employee recruitment as an investor pitching exercise. Besides investing time and skills to the startup among other opportunity costs, the new team member has to invest psychological commitment to the startup’s vision. That way the team collectively builds the right culture, attitude and agility towards achieving the startup’s mission.

Entrenching vested interest

Vesting agreements help founders and investors to secure commitment from key personnel (especially founders) to the mission and course of the startup for the long term - usually four years. A typical founder vesting schedule is incorporated in a founders agreement or the shareholders agreement. If you search hard for lawyers around tech hubs in East Africa you will find lawyers that could help structure one. This is not to say that startup lawyers are easy to find in the region.

The vesting agreement is very much like founders giving back their shares so that they can earn them over the time the company stabilises towards its vision actualisation. For instance, a typical challenge appears when 9 months down the line after the startup is founded, one co-founder wants to leave. It could be for “good” reasons such as “business co-founder gets a green card to canada or another country”. The prospect of moving to a land of “milk and honey” with a stable n-figure salaried job can be too compelling to ignore. The question then would be; Do they relinquish stock worth 9 months of extraordinarily hard work or do they move over to Canada with their entire stock allocated to them even though they haven’t quite worked for its entirety?

A typical founder vesting agreement reads as follows :-
  • Until and through [FIRST VESTING DATE], neither Founder’s shares will vest
  • On and not before [FIRST VESTING DATE]– [25% ] of each Founder’s shares will vest
  • On and not before the 1st of every month thereafter, [1/36TH] of the remaining [75%]will vest 
  • Thus, on [END DATE] (the "Full Vesting Date"), each Founder will be 100% vested.
Very often when investors suggest to introduce or re-set vesting schedules for key talent (especially founders) in a startup, its demonised as one of  “vulture capitalists” way of short changing founders. It may be different if understood from the perspective of a vision sold by the founders that only they can pursue to fruition. However, whether revising vesting schedules based on an investment deal is fair to startups or not is irrelevant in this post.


Vesting agreements seem to be an important instrument to demonstrate long term commitment among founders and even among employees that have stocks or options. Startups in East Africa should be encouraged to embrace vesting agreements among founders and employees. This is because securing talent in a region where entrepreneurship and startups are a second option is JUST HARD - considering the prospect of better paying jobs coming up is always hanging over the heads of key personnel.


With good vesting agreements among startup teams, it should be easy for startups to demonstrate their mission commitment to investors. This is an aspect that PIVOT East organizers in 2014 will be watching out for.

mAgric Innovations - Do they matter anyway?


Over the last decade, contribution of Kenya's agriculture sector to the nation's Gross Domestic Product (GDP) has been below 30% but above 25%. Across East African countries, contribution of Agriculture has been similar to that of Kenya or declining altogether. The chart below shows the trend since 2001 in Kenya, Tanzania, Rwanda and Uganda.

Contribution of Agriculture to national GDP remains significant but sub-optimal
Weight of the matters

Perhaps there's no need to worry about this trend if it can be seen as a deliberate outcome of economic diversification strategies among individual countries. However agriculture continues to be the mainstay of most East African economies. Agriculture accounts for 61% of total employment in Kenya for instance. Contribution to national employment statistics by agriculture seems even higher among other East African countries as indicated in the chart below.



Agriculture contributes to the majority of employment opportunities

With such significance of Agriculture in employment creation, a question of proportions begs. That is the question of why the many jobs attributable to agriculture do not result in a commensurate contribution to national GDP growth by the sector in East Africa.

Necessary Mind Shift?

Everyone is capable of a radical mind shift at some point in their short lives. Health IT, eHealth and mHealth have been my favorite ICT4D areas for over half a decade. In 2013, I found myself shifting interests away from health towards agriculture. For avoidance of doubt, health is a great field to achieve results at a personal level, institutional level or otherwise. I wrote much about eHealth or related topic here in the "yester-years".

In East Africa, the health sector has employed many brilliant minds especially in NGOs and government - from health care workers to health systems practitioners. Opportunities for innovation, entrepreneurship and even job careers in health continue to knock at doors of the region's talented workforce. However this article in the East African based on a report titled  "Investments to End Poverty" by Development Initiative's (DI) does much to present an alternative view which is validating my shifting focus.

According to DI's report, "East Africa received nearly $9 billion of aid in 2011, with the biggest chunk channeled to the health sector".  This according to the report is disproportionate to the real needs expressed by people in developing countries. The report suggests, “On the other hand, there are few political champions for those issues that top the list of citizens’ priorities in sub-Saharan Africa or Latin America, such as jobs/income, security or infrastructure.” Furthermore, a World Bank Development Report in 2008 indicated that among developing countries, 1 percent GDP growth originating in agriculture potentially reduces poverty by at least 2.5 times as much as the same GDP growth originating in the rest of the economy. 


An all season water mass in a Kenyan rural under-utilized for Agriculture
Job creation and income generation for poverty eradication are the reasons I am betting big on mobiles for agriculture (mAgric) in 2014. It could be either mAgri or mAgric am referring to, or both. To me they both refer to the application of mobile technologies to help increase efficiency and productivity in agricultural value chains.There is the mAgri program of the GSM Association (GSMA) that makes generic use of the term mAgri difficult. To avoid confusing the GSMA program and the emerging discipline around mobiles for agriculture, I shall stick to mAgric as my reference abbreviation. 

Needless to say, mobile phones have become ubiquitous computers and communication devices in most developing countries. Mobile technology therefore appears top on the list before any other technology for fostering development in East Africa. This is already demonstrated in the area of financial inclusion. I have had my own observations, rants and raves on this in previous articles here. Ostensibly then, not much effort should be spent explaining the narrowing act of embracing mobile technology in development and not all information and communication technology in general. 

Agriculture is complex; Why mAgric anyway?

It should not be easy to convince everyone that advancements in mAgric innovation will single handedly solve the matter of sub-optimal productivity in East Africa's agricultural sector. I shall argue though, that innovations and entrepreneurship in mAgric can play a big role in revitalizing and optimizing activities in agricultural value chains.


In his book "The New Harvest - Agricultural Innovation in Africa", Calestous Juma, a renown professor of innovation and sustainable development argues that "Agriculture needs to be viewed as a knowledge-based entrepreneurial activity". It is access to information and transactional efficiencies for value chain actors possible through mobile applications that I would bet on in mAgric. Such applications are bound to enhance the knowledge-based entrepreneurial activities that Prof. Juma refers to. 

growing array of mAgric innovations by local entrepreneurs
  Arguably, for developing nations serious about uplifting agricultural productivity, the role of mAgric in revitalizing agricultural practice is big. This is validated by the notion that for national economies to grow sustainably, deliberate premium has to be placed on a learning culture and improved problem solving skills in the productive population. These can be fostered through promotion and use of appropriate mobile applications in the case of agriculture.

Is mAgric stalling?

Many mAgric applications including Mfarm, iCow, eSoko, and M-shamba have been introduced to East Africa's agriculture actors over the last three years. Although it would seem obvious that uptake of such innovations will be rapid in East Africa, that has not been the case. m:lab East Africa has since 2012 organized a series of focus group discussions dubbed "Wireless Wednesday" that have highlighted issues bedeviling mAgric and the opportunities in the region. A recap of one such meet-up held in October 2013 highlights many issues including awareness and ease of use. Observations made in April 2012, are similar to those made in the more recent meet-ups and this beg the question of whether progress is being made. 

A video clip taken of Qureish Noordin (pardon the quality) from AGRA elaborating concerns from enablers' perspective below may help to demonstrate the complexity of issues affecting uptake of mAgric innovations in East Africa.




More efforts continue to be made to attract more innovations in the ICT for agriculture (ICT4ag)space. This is exemplified in CTA's ICT4ag competition in 2013 among other similarly themed contests targeting innovators in developing nations. The emerging concern among actors and enablers in the mAgric space is therefore whether any of the new or existing innovations can amass significant uptake for meaningful impact in the agricultural sector to be realized while achieving sustainability. 

Adjusted blogging interest ..

2013 had its own highlights and disappointments. One major highlight for me was a win against procrastination, whereby I got to register for long overdue doctoral studies. It is the apparent slow uptake, and sustainability challenges of mAgric applications that I shall be investigating in my PhD thesis throughout 2013 and beyond. That may explain the increased analysis and "opinionation" about mAgric applications, and the promise for agricultural prosperity throughout East Africa in this blog as 2013 comes along.

For now I shall leave you with another video clip (pardon the quality) taken of Safaricom's Peter Gichangi sharing his thoughts with developers at a Wireless Wednesday meet-up addressing the challenges for uptake of mAgric applications.