Rwanda Rwanda

I am now in Kigale, the capital of Rwanda. Most people have heard about Rwanda because of the 1994 genocide. The first thing I did when I got here was visit the genocide museum. The museum is very well done. I came out of the museum learning much more about the genocide than I had known previously. It was also more moving than I had expected, people sobbing while reading the displays and watching the videos about the horrors of the genocide. There was also a broader memorial to the other genocides of the past century on the upper floor and pictures and short bios of children that were victims of the genocide.

After visiting the museum, I wandered around the city a bit to get myself oriented. Everyone is generally pretty friendly and although Rwandans tend to stare at me a lot compared to other countries I've visited, I felt it was pretty safe throughout the city. Rwanda is also known for its conservation efforts and clean streets. They ban plastic bags in the country and every third Sunday of the month, Rwandans are required to clean up the streets as part of a community service program. Finally, most Rwandans do not speak English very well, speaking French more commonly. Therefore it was difficult to communicate and interact with a lot of locals. I found it frustrating since a lot of the Rwandans are friendly and wanted to start up conversation with me.

Traveling Through East Africa

Today I head to Rwanda to experience a bit of a different side of Africa. I am hoping to secure a gorilla tracking permit so that I could go and see some gorillas in the wild. The area I am visiting is where Diane Fossey did her work on the mountain gorillas and the book/movie, "Gorillas in the Mist" is based, Volcanoes National Park in Rwanda. I would also like to visit the genocide museum and the hotel where the movie "Hotel Rwanda" was based on, which I watched in South Africa just before leaving for Rwanda.

Afterwards, I am not quite sure what I will be doing. I am debating between climbing in Kilimanjaro and just hanging out near the Rwenzoris mountain range in Uganda. On September 1, I take a flight from Dar Es Salaam, Tanzania back to the U.S. So between now and then, I am not sure what I will be doing exactly, but I am looking forward to seeing more of Africa. This point forward, most of my blog entries will be able my travel experiences in East Africa.

Lessons Learned

Today was my last day at HBD. In the end, I had a good experience in my internship, learning about investing in businesses in Africa and gaining an understanding of certain industries, which should be useful in my career in the future. I had a conversation with somebody from the World Bank yesterday and she asked me about how my experience had been and what I thought I had learned from working in South Africa. I hadn't thought about it much until just then, but this was my response.

Because a segment of the population in South Africa has high education levels, it makes sense to seek out entrepreneurs with ideas to create meaningful businesses. HBD is one of the few true venture capital firms in South Africa and probably the rest of Africa as well. However, most of the products and services that these entrepreneurs offer are not suited for markets in Africa. Instead, they usually look to the U.S. or European markets as places to eventually scale up in their business plans. This means that these products and services that the entrepreneurs are developing are not necessarily going to benefit the people living in Africa, but rather those living in developed markets.

Therefore, from my perspective and understanding, VC in Africa is really an outpost for talent and ideas to bring back to the developed markets. In otherwords, VC in Africa is just an extension of the bigger developed markets of the U.S. and Europe and not necessarily an integrated part of the African markets. This model seems to be useful for HBD VC, but wasn't necessarily what I expected when I came here.

I imagine the private equity markets might be a different story, since they invest in companies in more mature industries that may have a footing in African markets, such as retail and real estate. But my goal was to understand how entrepreneurship in high growth companies in Africa might spur growth in the rest of the economy, and I haven't seen too much evidence of that as of yet.

Medical Treatment in Botswana

Dial 'M' for Mobile Payments

During my time at HBD Venture Capital, I’ve looked a lot at the mobile payments industry. One of HBD’s portfolio companies is Fundamo, a mobile banking and payments service provider, which works with financial institutions and mobile phone operators to create products and solutions in the mobile payments space.

The growth of mobile phones is recognized as one of the few success stories in Africa. Industry watchers mostly attribute the growth of mobile phones in Africa to a lack of infrastructure, creating the demand for communication systems based on mobile technology. The prevalence of mobile phones has already surpassed the prevalence of computers and the internet in Africa. Prepaid cost structures and cheap phones produced by handset manufacturers make mobile devices affordable for the poor. Some even argue that mobile phones could help alleviate poverty by providing the poor with access to services. For example, fishermen are able to use their mobile phone to get pricing information from local markets, creating a better match-up between supply and demand and more profit for the fishermen. See this CNN article for more coverage on the mobile phone boom in Africa.

Therefore, there is a lot of hype over the mobile payments industry and there are several key companies that play in this space. However, because the mobile payments industry is pretty much in its early stages, it is hard to figure out what technologies are hype and what will become the enduring standards. Here is an overview of the industry and where I think it is going:

First thing that is confusing is the terminology. Mobile payments, mobile banking, mobile finance, what does it all mean?

• There are three different categories of products and services your phone can provide: mobile banking, mobile payments and mobile commerce. These services can also be called mobile transactions.
  
• Mobile banking is basically internet banking services extended to the mobile device, such as checking your account balance and paying bills.
  
• Mobile payments includes any products and services for use by the mobile phone to make payments or facilitiate transactions. This includes wallets, domestic transfers, cross-border remittances and proximity payments. None of these technologies are standardized and there is a lot of debate to which ones will take off and which ones will flounder.
  
• Mobile commerce is a catch-all term that includes anything from coupons, advertising, to ticketing (imagine swiping your mobile phone to access the subway system or to fly on a plane).
  

Who are the major industry watchers?

• From what I could gather, the Yankee Group and Juniper Research are the two main authorities for research on the industry. You will find some information on their websites, however most detailed reports costs a lot of money.

What is the current market size and/or growth potential?

• Your guess is as good as mine. Yankee Group and Juniper Research attempt to estimate this, however, even their own estimates vary wildly from month to month. However, the growth of mobile transactions should mirror the growth of internet commerce and its trends (with an obvious 5-year lag). If we were to characterize growth in three stages, emergence, explosion and ubiquity, internet would be coming out of its explosion stage and into its ubiquity stage, whereas mobile would still be in its emergence stage. One thing is for certain, growth is inevitable.
  

What are the "hot" techologies in the mobile payments space?

• NFC or "Near Field Communication" is the use of RFID technology to create a proximity payment solution. What this means is that you will be able to pay for a good at a merchant by swiping your mobile phone in front of a POS terminal, instead of having to take out your debit/credit cards. Only problem with this is that there is a significant amount of capital investment required for this system to be fully implemented. However, a large retailer such as Wal-Mart, fed up with paying fees to Visa/Mastercard, may decide to implement such a system.
• International remittances is a $318billion market currently dominated by MoneyGram and WesternUnion. Due to the ubiquity of mobile phones, even in poor migrant communities, the international remittances solutions may be a big market for mobile payments.

What are the biggest concerns or risk factors for the industry going forward?

• Since the industry is still in its early stages, there is still much need for the standardization of technologies. For example, will the use of SMS to transfer funds be the dominant mode of payments. Or will NFC-enabled devices take off?
• Business model and revenue sharing issues still pose a big challenge for the industry. For example, how will financial institutions and mobile phone operators work together to create a workable business model where both parties benefit.
• Financial regulations of financial transactions, especially cross-border transactions, require legal knowledge and the ability to work with and educate regulators from various countries.

In conclusion, the mobile banking and payments industry presents an attractive opportunity for entrepreneurs, and a possible interesting and innovative way to serve the unbanked in the developing world. Growth is inevitable, although there are certainly a number of challenges that need to be overcome in order to realize this growth. A successful entrepreneur in this space will have the technical expertise and marketing ability to convince consumers to adopt their products and will also have the ability to manage the complicated external environment and various players in the supply chain.

Climbing Table Mountain

One tourist attraction that is a must do while in Cape Town is to go to the top of Table Mountain, which is a range of mountains that overlooks the city of Cape Town and is what makes the city look so picturesque. I’ve hiked up Table Mountain three times since I’ve been in South Africa. It’s probably been one of my favorite things to do here. You can either take the cable car up to the top, or hike up one of the numerous trails up to the top. It’s not an easy hike. It is mostly a steep incline to the top on stone stairs. It can take anywhere from 1 to 3 hours to the top, depending on which route you take. Table Mountain attracts a lot of clouds so it is important that you attempt the climb when it is a sunny day, otherwise you might end up with bad weather on the way down, which is not the safest thing to do. Also, local South Africans will warn you not to go alone because there is a risk of muggings, but as long as you stick to the popular routes and go on a sunny day, it should be pretty safe. The most popular route goes up a gorge to the left of upper cable station, if you are looking at Table Mountain from the Gardens area. To get to the trailhead, just keep going on the road past the lower cable car station for another 5 minutes and you will see the trailhead.

Once you reach the top, there are beautiful views of one of the most beautiful cities in the world. There are clear views of the Atlantic and Indian Oceans. Also you will be able to see the Table Mountain range all the way to Cape Point on a clear day. Also, there are plenty of extreme sports to participate in at Table Mountain, including abseiling, hanggliding and basejumping. At the upper cable car station, you will meet all the other tourists that took the easy way up. There is a restaurant and gift shop. (Great place to pick up some water and an apple). One thing I would not advise you to do is run all the way back down. Ok, that’s what I did and now my calves are really sore.