May 19, 2020

What brands must know about Africa's growing digital services

mobile phones
Digital
Internet
Opinion
Kostas Kastanis
5 min
What brands must know about Africa's growing digital services

Africa is experiencing the biggest increase in internet mobile data use in the world, with three-quarters of all mobile connections expected to be on 3G or 4G by 2020. With this in mind, it will come as little surprise that in recent research commissioned by Upstream, internet access was perceived as a basic human right amongst a majority of consumers in Nigeria, Egypt and South Africa, three of the leading internet usage countries in the continent.

The key difference between Western and African consumers is that the single most used mode of communication and consumption of digital services by those in Africa is a mobile device. According to the Internet Society, internet penetration levels in the continent are 20 percent and rising. Mobile subscriptions are just under 70 percent, and mobile broadband access is responsible for more than 90 percent of internet subscriptions. For brands, this affects how innovative digital providers can engage with consumers for whom digital content has only recently become accessible. Naturally, their hunger for digital services, from entertainment to education to financial services is now growing. For brands, this poses an incredible opportunity to gain exposure to a large new audience.

‘Lite’ services to curb mobile data charges 

While recent investments by telecommunications companies have helped improve mobile broadband infrastructure across all spectrums, mobile internet connectivity remains precarious in Africa. A significant number of users in Nigeria, South Africa and Egypt are reporting slow or unreliable mobile internet connections.

Still, users are increasingly relying on their mobile data to access services. As a result, consumers are getting more conscious of data consumption and charges, which could come to limit the use of services and engagement with brands. This moves the next barrier for these consumers away from infrastructure, and towards the cost of mobile data when accessing digital services. Our research discovered that the top concern for many consumers was the cost of data; something digital brands need to be aware of when packaging their services to consumers.

In Nigeria, there are 86 million internet users who are consuming digital content. 73 percent of Nigerians stated that low consumption of mobile data was the most important factor when it comes to selecting digital content. A typical 1GB data package costs around $18 a month in Nigeria and streaming a single House of Cards episode on Netflix can cost consumers $13 on top of a subscription to the service. This cost can be prohibitive to consumers. This is why ‘Lite’ versions of content that use less data are desirable, and for consumers who have occasional access to free Wi-Fi, apps offering offline access will help alleviate consumption of data, making services more accessible.

Addressing affordability

There is no denying that the appetite for mobile digital services and content is on the rise, driven by Africa’s growing middle class that is more globally connected than ever before. 86.5 percent of the consumers surveyed in Nigeria, South Africa and Egypt are willing to pay for high-value digital services on mobile devices, but affordability is still very important when deciding to purchase digital services.

In fact, payment method, price and data charges are the top three factors that influence the purchasing decisions of consumers in emerging markets when it comes to digital mobile services. When it comes to price, our survey found that 88 percent of consumers seek prices that are adjusted to their local currency, and 87 percent want low data charges.

There are significant GDP per capita discrepancies that brands need to take into account when setting prices for services in emerging markets. Across our research sample, GDP per capita in Nigeria is $3,200, Egypt is $3,100 and South Africa is $6,400. The typical premium app priced at $2.99 might represent a significant portion of the household income in these emerging economies, which makes premium apps unaffordable for the average African consumer; therefore, brands need to adjust pricing to align with the average local household income.

However, price is not the only factor brands need to consider when moving to developing markets, as offering the right choice of payment is also important. Thankfully, Africa has proven to be a fertile hub of innovation when it comes to payments technology, as more bespoke offerings are created to address the needs of this historically under-served region. According to World’s Bank Global Findex Database in low-income developing countries just 7 percent of the population has a debit card, and only 2 percent have a credit card.  With so much of the population either unbanked, or underbanked, new payment solutions had to be found to ensure the continent’s population could have access to the new digital services they crave.

Upstream’s research shows that using the mobile operator bill, either via pre-pay or post-pay, is still the preferred way to pay for downloads and subscriptions to digital services and has become an important way for digital brands to monetise services. Providers therefore have to take this into account when developing pricing and payment strategies for this market.

Future opportunities in digital service

As a constantly evolving environment, many countries in Africa still face issues with infrastructure and the development of public services. The rise of smartphone access is enabling technology to fill in some of the gaps more quickly than a centralised government initiative can manage. The biggest areas for growth in digital services in the African market are education, health, financial digital services that are tailored to the local market. More specifically, the demand for education services, such as languages, history, geography, is also on the rise. 31 percent of consumers questioned want to be able to access more education related services and content on their mobile devices in the future. Companies that are able to tap into the demand for educational services with localised, native language content will be able to steal a march on this important category.

Businesses are only going to achieve successful cut through in the African market if digital offerings are relevant to the environment and the needs of consumers. This means putting technological accessibility and holistic pricing strategies at the heart of creating relevant digital services. Only then will digital providers stand a chance at capturing the interest of Africa’s growing tech-savvy consumers.

 

Kostas Kastanis is the Head of Strategy at Upstream. Upstream is a mobile commerce accelerator that uses a MINT technology platform to collate insights from billions of mobile interactions. Kostas has previously worked for companies like Mastercard and McKinsey & Company.
 

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Jun 18, 2021

GfK and VMware: Innovating together on hybrid cloud

GfK
VMware
3 min
VMware has been walking GfK along its path through digital transformation to the cloud for over a decade.

GfK has been the global leader in data and analytics for more than 85 years, supplying its clients with optimised decision inputs.  

In its capacity as a strategic and technical partner, VMware has been walking GfK along its digital transformation path for over a decade. 

“We are a demanding and singularly dynamic customer, which is why a close partnership with VMware is integral to the success of everyone involved,” said Joerg Hesselink, Global Head of Infrastructure, GfK IT Services.

Four years ago, the Nuremberg-based researcher expanded its on-premises infrastructure by introducing VMware vRealize Automation. In doing so, it laid a solid foundation, resulting in a self-service hybrid-cloud environment.

By expanding on the basis of VMware Cloud on AWS and VMware Cloud Foundation with vRealize Cloud Management, GfK has given itself a secure infrastructure and reliable operations by efficiently operating processes, policies, people and tools in both private and public cloud environments.

One important step for GfK involved migrating from multiple cloud providers to just a single one. The team chose VMware.

“VMware is the market leader for on-premises virtualisation and hybrid-cloud solutions, so it was only logical to tackle the next project for the future together,” says Hesselink.

Migration to the VMware-based environment was integrated into existing hardware simply and smoothly in April 2020. Going forward, GfK’s new hybrid cloud model will establish a harmonised core system complete with VMware Cloud on AWS, VMware Cloud Foundation with vRealize Cloud Management and a volume rising from an initial 500 VMs to a total of 4,000 VMs. 

“We are modernising, protecting and scaling our applications with the world’s leading hybrid cloud solution: VMware Cloud on AWS, following VMware on Google Cloud Platform,” adds Hesselink.

The hybrid cloud-based infrastructure also empowers GfK to respond to new and future projects with astonishing agility: Resources can now be shifted quickly and easily from the private to the public cloud – without modifying the nature of interaction with the environment. 

The gfknewron project is a good example – the company’s latest AI-powered product is based exclusively on public cloud technology. The consistency guaranteed by VMware Cloud on AWS eases the burden on both regular staff and the IT team. Better still, since the teams are already familiar with the VMware environment, the learning curve for upskilling is short.

One very important factor for the GfK was that VMware Cloud on AWS constituted an investment in future-proof technology that will stay relevant.

“The new cloud-based infrastructure comprising VMware Cloud on AWS and VMware Cloud Foundation forges a successful link between on-premises and cloud-based solutions,” says Hesselink. “That in turn enables GfK to efficiently develop its own modern applications and solutions.

“In market research, everything is data-driven. So, we need the best technological basis to efficiently process large volumes of data and consistently distill them into logical insights that genuinely benefit the client. 

“We transform data and information into actionable knowledge that serves as a sustainable driver of business growth. VMware Cloud on AWS is an investment in a platform that helps us be well prepared for whatever the future may hold.”

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