Africa – “Garbage Chute” of Western Mobiles

Making Money off the Poor!

For my last post I was searching the web for alternatives that are tantamount to Apple’s latest success Siri. While we are wondering about which speech recognition program works best, some people that by the way make up about 15% of the world’s total population still live in a, as we would consider it, technological stone age. Never been in touch with phones or whatsoever they surely got different issues than looking for voice control applications. I’m talking about Africa, a “garbage chute” for old, technologically rewind mobile phones that are in our “developed” countries anything but a profitable business.

Africa’s Mobile Revolution

“Africa is at the center of a mobile revolution”, writes Kilian Fox in The Guardian. According to his statistics there were “fewer than four million mobiles on the continent in 1998” which has gone up to 500 million today and is still rapidly growing every year. Mike Kujawski sets these numbers in relation with the total population of the continent. Taking his numbers into account 30% of Africa’s total population is already in possession of mobile devices that were predominately manufactured at little cost. This is where it’s becoming interesting.

The Aspiration for Technological Benefit!

Apparently the majority of the Africans are unable to afford Laptops, computers and other modern devices as ca. 50% of Africa’s total population still lives below the poverty line. But just like us these people want to benefit from electronic systems that make interpersonal communication and accessibility much easier. Due to their technological pre-stage some businessmen have struck gold and started buying cheap, obsolete mobile phones in our countries to sell them for an affordable price to the African population. Ken Banks has already introduced Spice Mobile which built “The People’s Phone” for India and rolled it out in Europe. Such plain phones offer an extremely narrow profit margin but open bright markets.

An Example

An example: Let’s assume we produce very simple mobile phones for average costs of €10. We speculate that out of 1.2million Africans, 900.000 people will buy our phone which we sell for only €20. Considering these numbers we could expect earnings of €9.000.000 with the possibility to expand our production to other continents and countries. Since the electronic development is an ongoing process companies can steadily “recycle” outdated phones and sell them in technologically backward countries.

The Future Goldmine

This concept refers to the so called “Long Tail”. It basically describes that selling a couple high-priced devices to a particular group of customers is just as profitable as providing plain, cheap phones for a poor but huge target group. Fox writes about a “booming industry” and though countries like India as well as the African continent have already been introduced to such phones it’s still seen as a future goldmine.