Wiring Africa's New Frontiers

Ayisi Makatiani starts his day early, planning his next 14 hours as the sun rises outside his five-bedroom home in an upmarket suburb of Nairobi. In his plush, carpeted city office, the 34-year-old co-founder and ceo of Internet company Africa Online spends most of his time in meetings, answering e-mail from employees and colleagues around the world or talking on his mobile phone, pausing only occasionally to take in the stunning view of Nairobi 16 floors below. Like most cyber-ceos, Makatiani is in a constant hurry to stake out an ever-larger chunk of online turf, build his company's brand and make money. He travels across Africa, to Europe or to the U.S. every other week, runs to relieve stress and grabs short-break holidays on the Kenyan coast with his wife when he can. But while he may exhibit all the attributes of turn-of-the-century Internet Man—constant enthusiasm, an infectious self confidence and a never-ending desire to look at things in a new way—Makatiani also possesses something many of his competitors do not: patience.

That single quality helps explain much of his success in building Africa's largest Internet Service Provider outside South Africa. Against obstacles that Internet companies in the developed world rarely encounter, and on a continent in which, excluding South Africa, just one person in 270 uses the Internet (compared to one in three in the U.S. and Europe), Africa Online has proved remarkably adaptable—and profitable. Its revenues, which should top $12 million in 2000, are doubling every year. The company offers its services in eight countries and employs 450 people.

Makatiani recently launched the service in Zambia, and has plans to soon enter the continent's biggest markets, Egypt and South Africa, which together account for 70% of Africa's 5 million Internet users. "You've got to have patience and you've got to be able to understand the intricacies of every country. It's about connections and about who knows who," says Makatiani. "But once you've tapped into that network across Africa you can get things done quicker, faster and in parallel."

Africa Online began life in 1991 when Makatiani and a few Kenyan friends studying at Boston's M.I.T. built an online mailing list "so we could tell each other when we were going for dinner." Within a year more than 2,000 Kenyans around the world were mailing each other and receiving news from Kenya via a computer bought with donations from appreciative mailing list users. After finishing a degree in electrical engineering, Makatiani worked in software and as a consultant to a U.S. telecom company before a friend suggested he should turn the mailing list into a business. He formed a company with two Kenyan partners and started charging for the service in 1995. A series of buyouts and takeovers followed until a group of managers including Makatiani took back financial control in 1998 with the help of a loan from London-based, Africa-focused, automotive and information technology conglomerate African Lakes.

Building a company through so many ownership changes is tough; building one in Africa is even tougher. Like any firm doing business there, Africa Online faces stifling regulations and bureaucracy, inadequate infrastructure, political and economic instability and a lack of consumer spending power. Because of the novelty of the Internet in Africa, potential big players also learn that there's no point concentrating on any single part of the industry. To succeed, companies have to build both the infrastructure that makes access possible and the online services that make it attractive. "In Europe and the U.S. you can choose a niche and sell that niche," says Makatiani. "In Africa you have to be more of a portfolio company and choose three of four niches that complement each other."

The biggest hurdle is lack of access. Few Africans can afford a telephone connection, let alone a computer. In Nigeria, for example, only 15,000 people out of a population of 120 million have Internet accounts. Africa Online gets around this problem by offering cheap Internet access at more than 600 of its branded e-touch centers, where customers can send e-mails for about 10¢, roughly the cost of an envelope and pencil. The service has some 60,000 users and centers can be found in post offices, fast food outlets and stand-alone stores. In South Africa, the company's initial push will ignore the highly competitive home dial-up market there and concentrate on offering e-touch services to the growing, well-educated but computerless middle class.

To keep them coming back, Africa Online is hiring a team of journalists and designers to build what Makatiani says will be "the African portal." Last August the company announced an alliance with Barclays Africa, a bank operating in nine countries across the continent, to build and market Internet centers in major cities, and eventually offer Internet banking.

Still, the more his firm succeeds, the more likely it is that Makatiani will begin to face serious competition. South African Internet giant M-Web, already the biggest isp in South Africa, Namibia and Zimbabwe, is looking to move into countries farther north, including Nigeria. As African countries deregulate their telecom industries, large international firms are also likely to move in. "It's going to be a lot tougher," says M-Web's chief operating officer, Andrew Milne. "The introduction of something like wireless connections to Africa will change the landscape overnight."

In spite of those concerns, Makatiani is convinced that the new economy is spreading to Africa and he wants to be the person to tap that potential. He believes that someday African entrepreneurs will use Africa Online to create virtual offices from which they can e-mail, store private documents in safe files and do their banking. "When you start looking at 800 million people and start looking at one continent rather than separate countries, you start getting extremely excited," says an animated Makatiani, jumping up from his office sofa. "You say to yourself, ÔYou know, I can do what Bill Gates or Marc Andreessen or Steve Case have done in America.' Because you look at Africa as a United States of Africa, as one network; and then the opportunities are endless." At least if you're patient.