How phones transformed Africa

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When you think of phones, you probably think of a sleek touch screen and the latest iOS update.

You probably have an iPhone, Samsung Galaxy, or Google Pixel.

But in Africa, these phones reign supreme. Meet: The Feature Phone

When they came onto the scene, they changed the whole continent.

And today, Africa is a world leader in how it has embedded phones into everyday life.

They’re a bridge for communication, money, and services - to the point that phones are now the ‘engine’ of Africa.

But before we got here, Africa had to 'leapfrog’ over the landline..

Leapfrogging the Landline

Before cell phones blew up in Africa, the continent was disconnected.

Do you remember these things? The Landline.

Landlines only work if your area has ‘fixed line penetration’ - or phone lines.

In 2000, Africa’s fixed line penetration sat at only 3%.

They hardly reached remote or rural areas - where the bulk of Africa’s population lived.

To put this into perspective, in 2000, Manhattan had more telephone lines than all of Sub-Saharan Africa.

Now, imagine you don’t have access to a fixed phone line (and, therefore, one of these phones).

How do you get your information?

People had to personally travel from point A to point B to receive information and send or receive money.

Communication, transactions, and decisions could take hours, days, and weeks.

When cell phones came onto the scene, that all changed.

Blowing Up the Phone 📲

But it took a bit of time to warm up.

The first phone in Africa was launched in 1993 but was just too expensive for locals - debuting for about $2,500 per phone.

When we hone in on Kenya - the first seven years of phones only had 20,000 subscriptions.

But that started to change when cell providers - like Safaricom and MTN - started acquiring licenses and setting up masts in rural areas around the continent.

Cheap phone manufacturers had touched down in Africa - players like Nokia and Techno - which dramatically brought the prices of phones down.

And while phone adoption started slow.. it sped up. Quickly.

In 2001, there were 17 million cellphone connections on the continent.

By 2004, it was 53 million.

And by 2010, there were 552 million cell phones connected - with no signs of uptake slowing down.

It was a rapid growth curve and a turning point for the continent.

Now, countries are connected by cellular signals. You could talk to just about anyone, everywhere.

With countries finally being connected by phone, there were all sorts of new possibilities.

Non-profits were using cell phones to deliver information on aid and emergency services.

Entrepreneurs riding the cellphone boom were building news and entertainment services for mobile phones - and taking off.

One company that made the most of this boom was the former ringtone company, Cellulant.

They got the moniker ‘Lord of the Ringtones’ before pivoting into building a payment processor for mobile money payments.

And they nailed the timing. Today they process billions of dollars each year.

And it wasn't just ringtones that blew up.

An entrepreneur, Geoffrey Murage, started an SMS dating company. It was targeted at busy professionals to create profiles, find potential partners, and start conversations via SMS.

Phones became a point for information and connection.

Previously disconnected populations could now communicate. NGOs could now coordinate. Busy professionals could now date.

And the next step change in Africa came when these devices turned into bank accounts.

Enter, Mobile Money

When M-pesa launched in 2007, mobile phones unlocked a new level of utility.

A few months ago, I called M-Pesa - the company that changed Kenya forever.

What started as a small test - a loan service for Kenyans to borrow money and pay it back from their phones - was actually fintech penicillin.

The idea was simple and revolutionary. Providing banking through a sim card and using texts to send money in a cheap and easy way.

With just a few touches, mobile phone users could effortlessly bridge vast distances, enabling seamless money transfers and instant access to loans.

Through its innovation, M-pesa transformed these little communication gadgets into banks.

And no smartphone? No problem. All you needed to use mobile money was a mobile number - and with that, you now have a bank.

For its time, no fintech came close to MPesa’s level of inclusivity.

And Kenyans have rewarded them MASSIVELY for this.

16 years and 50 million active customers later, Mpesa single-handedly enables 50% of Kenya’s GDP.

And M-Pesa also has given back - lifting 2% of households above the poverty line by letting families (particularly women) move from subsistence farming to business and retail.

It wasn't just in Kenya.

In Uganda, MTN Money (Momo Pay) lets users send money and process business transactions.

MoMo Pay is powered by MTN group and currently has 10.9 million subscribers. Best part? The service is accessible using basic feature phones.

A year after launching in Nigeria in 2022, they already have 3.2 million users.

Around the same time, mobile money was on the rise, and smartphones were defying the gravity of costs.

Phone brands like Tecno and Samsung were grabbing market share by bringing their prices lower for the average African.

Today, a ‘low-end’ smartphone can cost as little as $30 USD - a huge improvement on $2,500.

But Feature Phones are here to stay

A report by the Communication Authority of Kenya shows that until June 2022, 59.7 million mobile phones were connected to mobile networks.

Out of these, smartphones accounted for 26.8 million, while feature phones outpaced them at 32.9 million phones.

Despite the affordability of low-end smartphones, feature phones are still a tool of choice for doing real business. Why?

Africa is the world’s least electrified continent.

The continent actually regressed during COVID to reach 77% of the population without access to electricity.

Across Africa, load-shedding looms large - scheduled times when the power is disconnected.

If your phone is your lifeline to businesses and communication, you want something reliable that’s not going to go flat on you.

With a strong build and battery life that could outlast an apocalypse, it’s the perfect tool for open, chaotic markets - where you need reliability and durability.

And it’s not just informal markets.

When I met my teammate in Lagos, I was surprised to see he had a second phone - a Nokia 105 - with him. When my iPhone ran out of charge that night, I understood why…

A feature phone gives you all the functionality we talked about earlier - and they are more reliable.

And while the smartphone userbase is growing, a 100% smartphone-enabled Africa is not in the near future unless smartphones:

1. Smartphones have become significantly cheaper, hence their uptake increases.

2. Electricity becomes reliable in Africa.

3. Smartphones have become so durable you hurt yourself trying to break them.

Until then, feature phones are here to stay.

And products and services that apply a mix of features and smart have a higher chance of winning.

In a future edition, we will dive into the ‘Hierarchy of Phones’ and the opportunity to build in and around feature phones.

If you know a company I should dive into, share it my way.

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👋🏾 Caleb