Google’s deal-hunter in Africa

It is a cheerful sunny day and I am struggling to take notes over the rising chatter of caffeine-starved Nairobians streaming into the Java House at the ABC Place for their Saturday brunch.

My conversation with Ms Isis Nyong’o, the business development manager of Google’s operations in Kenya, and some of the firm’s sub-Saharan markets, has meandered into a stream of conscious exploration of the future of mobile Internet in Africa.

One question continues to puzzle me. How does Google plan to make enough money to justify its presence in Africa, a pursuit that has continued to elude many talented local and foreign tech entrepreneurs?

What does Google see that others do not?

“We have not taken a conventional profit-and-loss approach in our operations in Africa, we are investing for the long term,” says Ms Nyong’o.

Last year, Google announced a major investment in 03b Networks, a venture that will provide high-speed, low-cost internet to “other three billion” people in emerging markets in Asia, Africa, Latin America and the Middle East.

These are mostly villagers who will not benefit most from the massive investments that African governments are making in fibre-optic cable.

Dreams deferred
In Kenya, Google has bought into Mobile Planet, a firm that specialises in value-added short messaging services. The company has also made headway in building a map service, and is investing heavily in developing local products that will continue to draw the masses to the internet.

Google, now in its second year of operations in Africa, is coming into a continent where the narrative of tech entrepreneurship is a sad tale of dreams deferred.

Poor government policy, weak infrastructure, and low market development in the past decades almost always guaranteed business failure.

But the environment is now shifting rapidly, as the benefits of opening the telecommunication sector across Africa has led to a mobile revolution. In Kenya, it is estimated that 15 million subscribers out of a population of 40 million now use cellphones.

This dynamic market environment — driven by the mass adoption of mobile phones — is going to challenge the approaches that firms like Google take in connecting Africa to the internet, making it one of the biggest business problem of the day that Ms Nyong’o and the team at Google Kenya, is struggling to solve.

This is how to develop a new market, and a business model that will hopefully enable Google to make money in Africa in the long term.

Critical mass
“We actually want not only Google to make money, but Africa as well, by enabling the wider internet ecosytem on the continent to grow and make money,” she says.

Mr Russell Southwood, the publisher of Balancing Act, an influential newsletter that tracks developments in the African telecoms, media, and technology industry, expects Google to continue making money out of advertising as it does elsewhere in the world.