Recently Wayan Vota brought up the issue, Where Are the B2B Plays in African ICT Start-Ups? If you’re an entrepreneur, I believe that this is the question you should be asking right now.
When we launched Impact Enterprises in Zambia in June 2013, we did so believing every country has potential for growth and creativity. True, Zambia’s capital Lusaka isn’t having the digital boon Nairobi or Accra are experiencing. But here, too, the revolution will be coded, streamed, uploaded, texted, tweeted, emailed, and broadcast, if given the chance.
Impact Enterprises, our technology venture aimed at providing jobs for skilled Zambian youth, is taking the risk of giving the youth here the chance to compete with the rest of the world. Starting a tech company in a country known primarily for copper mining and Victoria Falls hasn’t been easy. Here are the top 10 reasons Zambia (and probably other African countries) isn’t allowing ICT to proliferate – and what they can do about it.
Top 10 ICT Entrepreneurs Challenges in Zambia
1. Government Policy Stuck in the 20th century
A clear regulatory framework is the foundation of a rich business environment. Zambia’s laws simply haven’t kept up with innovative ICT industries, such as outsourcing. Tax code doesn’t address digital businesses or intangible goods, leaving business planning a financial black box. Incentives such as tax breaks exist only for established industries such as mining and political agenda ignores ICT adoption.
2. Inaccessible Internet
Like in many African countries, Internet access is horrifically expensive. Fiber optic can cost thousands of dollars per month, while regular ADSL and 3G options are horribly unreliable and the ISPs complacent. Zambia needs to invest in fiber, hold telecoms accountable, and invite competition to drive down prices and increase speed. The capital expenditures and lower revenues incurred are more than made up by the economic benefit gained.
3. Faltering Infrastructure
According to the Zambia Development Agency, sometime in the last three years Zambia’s electricity consumption outstripped its installed supply. In the face of a power capacity deficit, Zambia has chosen to increase it exports of electricity to neighboring countries, resulting in rolling blackouts across the country. Putting the needs of its own people should be the priority of a country. A stable infrastructure means a dependable business environment.
4. Poor Quality Inputs
Buying products here (much of them cheap imports from China) isn’t a question of if they will break, but how soon. Although buying cheap up front may seem like a bargain, in the long run you’re looking at a money pit.
Sourcing high quality goods is difficult and costly. On a consumer level, by promoting higher quality goods and services, we set a benchmark for a better quality of life and indirectly boost consumer spending. For businesses, the availability of better inputs produces better outputs.
5. Failing Education Standards
In our first 6 months, we interviewed almost 300 candidates for employment. What we found was the majority of youth hopelessly unprepared for employment in the 21st century. It’s incredibly frustrating to see a candidate failing to compete for a job with practically no other opportunities in sight.
Some non-profits have made huge investments to establish training programs targeted at those who have fallen behind. However, for-profit startups simply don’t have the resources to fill the void of the education system.
6. Onerous Banking System
When you’re in start-up mode, time is your most precious commodity. Just to open a bank account is a constant runaround of paperwork, documents, and signatures. Worst of all, to access online banking costs a hefty monthly fee.
The banking system doesn’t benefit our employees either. Accounts charge a maintenance fee which comes to roughly 5% of their monthly income. ATMs are frequently out of order and teller lines are often backed up.
7. Informal Inputs
Many services here – particularly electricians, plumbers, carpenters – are performed through informal labor. We’ve waited weeks for an electrician to fix a light or a plumber to repair a water tank. Prices for everything must be negotiated, and the mzungu premium gets slapped on shamelessly. For entrepreneurs, this spells uncertainty and uncertainty can be disastrous.
8. Everything Runs On Zambia Time
I’m a New Yorker. I’ll admit, I’m accustomed to moving at a fast pace and having little patience. Moving to Africa was a terrible grind on my internal clock, but for a tech company trying to launch, time truly is money.
In Zambia, applications can take months to process and a business visa can sometimes be in limbo for over a year. Both the public and private sectors need to step up to the pace of the 21st century.
9. Skepticism for Tech Start-Ups
For most Zambians, a white American in town means one of two things: a Peace Corps volunteer or a USAID worker. Needless to say, ICT initiatives aren’t on most people’s minds. We pushed hard to launch quickly, but our eagerness was met with reluctance that led to many requests being ignored, delayed, or forgotten. In the last few months, we’ve started to feel a growing approval for our work, but it was hard earned.
10. “TIA” Is No Longer an Excuse
I can’t tell if “TIA” was already a phrase before the movie Blood Diamond, but it certainly has caught on around here. Little frustrations are now suffixed with, “TIA, my friend. This is Africa.”
Everyone needs to take ownership of the problem and be part of the solution. Dismissing every shortfall as the consequence of an unwieldy socioeconomic legacy protracts the problem and entrenches the attitude of complacency. Zambia, just like every country, is a society of people running their collective destinies, intertwined by individual responsibilities that reverberate throughout the collective and either empower or attenuate each individual.
In spite of everything, we’re still here. We’ve gotten a bit better at falling flat on our faces and we now have a lot more hands helping us back up. Impact Enterprises is the first social enterprise of its kind in Zambia and we hope to inspire other great entrepreneurs to find opportunities in challenging situations.
Written by Dimitri Zakharov, Founder & CEO of Impact Enterprises
You don’t seem to be having a ball of investing in that poor little patch of the world. Why not look elsewhere then? I shudder to think what your opinion is of the future.
I actually found his experience quite interesting and very similar to the same kinds of challenges i faced when opening up an ICT and Renewable Energy company in Uganda. I thought that being African (though not Ugandan) I would manage the situation better, be less frustrated and sort of ‘understand’ the situation. Instead, I found and sometimes still find myself trying to fix small problems that shouldn’t be difficult, e.g the fact that to pay the suppliers I have to issue a cheque instead of the convenience of online banking, and yes, the hefty prices attributed to that service. For large companies, this might not look like big problems but for small start-ups, they take a lot of time and money which you’d rarely have.
It’s interesting how the author uses his experiences form the small town of Chipata to generalise Zambia and especially its people.
A little context would help, Dimitri, especially for points 7 – 10.
Hello Dimitri:
The issues you brought up are in most developing countries. I am so happy you are persistent. Keep at it and one of these days, things will change and by that change the lives of so many people. I hope other entrepreneurs will follow your suit.
Best Wishes