10 ideas to Start a Profitable Business in Africa - Part 2

2. e-government or mobile-government

How to empower African administration to server their citizen with internet and mobile technology.

In this second article of the series, I’ll will present 10 untapped opportunities for startups to empower African public administrations to serve their citizens using internet and mobile technology, also called e-Goverment and m-Government (m for mobile) opportunities.

According to the 2012 United Nations E-Government Survey, most African countries are lagging in the global effort to improve e-government services. For Startups looking for opportunities to serve African governments, it means there are lot things left to be done, and loads of money to make too. Governments spending on e-government worldwide has reached more than 10 billions dollars last year, and will be sharply increasing during the upcoming years, analysts predicted.

#1 Recruitment and career management solutions

Hiring, retaining, and motivating great people are challenging thing to do for anyone, but much more for African governments which are all struggling to attract great talents. They are in direct competition with the private sector, and international organizations which are more flexible, more attractive and also pay much more.

For governments which are looking to upgrade themselves, and staff their organization with talented and motivated individuals, tools like recruitment and career management solutions are a must have. The good news for startups which want to go into this area is that I don’t know one single African government which has already deployed this kind of human resource management tools.

Good Recruitment and career management solutions should include a complete employment lifecycle features:

- Strategic human resource planning

- General and Specialized Recruitment procedures

- Executive Search & Recruitment

- Career management and employees motivation schemes

- Talent Management Tools and Services (Assessment Centers, Psychometric Testing, Graduate Solutions, Recruitment skills training, Career Management, Coach Training, Development Centres, High Potential Programs, Leadership Development, Coaching and Mentoring, Organizational Change Support, Career Coaching, Outplacement Support, Senior Executive Career Transition)

No country could be built without a strong human resource development, deployment and management skills.

#2 Government procurement and warehouses/inventory management solutions

This a very sweet opportunity to explore, because most of governmental institutions have very little expertise in the area of procurement tools, world class logistic, and warehouse and inventory solutions and innovations are things most governments don’t have the skills for.

The benefits for government are quick and easy to demonstrate: centralized purchasing and budget management, enhanced supplier management and information sharing, automated purchase order generation, reduced duplication, administration, and overhead costs, etc.

The best tools will have some features like below:

- Supply Chain Planning

- Demand Planning

- Vendor Managed Inventory

- Supplier Management

- Procurement

- Strategic Sourcing

- Warehouse Management

- Transportation Management

- Order Fulfillment

- Contract Management

The implementation of this kind of tools will require high level political decision, because most of African government corruption is possible exactly because of the lack of tools like this.

#3 Chambers of commerce, Taxes Collection & Government Payments solutions

Here we could think about 4 kinds tools:

Business administration and Tax

- Online pre-applications for business license

- Online business tax payment and business license renewal

- Online tax wizard

- Online search of county businesses

- Corporations filings & searches

- Initial business filings

- Corporations certificates of existence

- Registered agent designations

- Registered principal searches

- Corporate letters of good standing

- Corporate annual report filings

- Business name availability searches & registrations

- One Stop Business Registration

- Over-the-counter credit card processing

- Certificate of compliance filings

- Corporate image searches & retrievals

- Business license applications

- Annual business renewals

- Trademark searches & registrations

- Deed searches & document retrievals

Professionals Licensing/permits

- License renewals

- License reinstatements

- License status monitoring (for individuals or groups)

- Receive real-time license monitoring updates for changes in status

- Professional license database lookups

- Continuing education credit submissions & tracking

- Interactive mapping overlay for professional license database lookups

- iPhone and smart phone mobile apps for professional license database lookups

- Secure transaction payment processing, billing, and reconciliation

- Customized reporting

- Real-time online customer service

Public events, Streets and outdoor licensing & permitting services

- Online application

- Follow up system

- monitoring systems

Property Tax 

- Online property tax payments

- Online historical tax record search

#4 Encryption, cyber security, and data security solutions

Most of African governments are  vulnerable to foreign countries spying, intrusion and data integrity corruption. High level official offices and phones numbers could be easily taped. Computers networks are poorly secured, many African businesses are victim of online and physical fraud.

Any good solution in this area should cover keys elements as:

- Network Security

- Website Security

- Email

- Mobile Devices

- Employees affiliations and integrity report

- Facility Security

- Operational Security

- Payment Cards

- Incident Response and Reporting

- Privacy and Data Security

- Scams and Fraud detection

If some highly trained local hackers, acting with integrity and trust would come up with solutions and tools that would help local officials, they would make loads of money.

#5 City & Mayor services

City service will be well empowered by IT solutions for managing some routines tasks like:

Marriage License

- Online pre-application

- Online commemorative license ordering

- Online duplicate ordering

- Online historical data search

Civil documents service

- Birth Certificates

- Court and Prison Records

- Marriage Certificates

- Marriage Termination Documentation

- Passport, ID cards

- Photographs

- Police Certificates

- Adoption Documentation

Motor Vehicles

- Online renewals

- Online email notification sign-up

- Online address update

Notary Public

- Online pre-application

- Online renewal of commission

- Online address update

- Online notary public search

#6 Law enforcement officers’ solutions

IT solutions in this segment might focus on services like follow: 

- Online incident reports

- Online inmate lookup

- Online wanted criminals list

- Online arrest reports

- Online accident reports

- Online traffic citation payment

- Online court fees and fines payment

#7 Roads and governments real estates management solutions

This segment is one of the most profitable area where smart entrepreneurs could make a difference and make loads of money.

IT solution here should focus on assets and inventory management tools, then and move to field report services. Most of the information on government building, and states infrastructure are now kept in large boxes of papers, hardly accessible, and which doesn’t help in anyway to manage the states resource properly, and also plan maintenance, upgrade or extension.

The kind of solutions needed are Property & Asset Management Solutions, which main features might include:

Road management & design

- Road Management Act, regulations & codes

- Register of Public Roads

- Road Management Plan

- Notice of Incident

- Road Use & Performance

- Types of roads

- Traffic systems & signals

- Design standards, manuals, notes

- Real time Traffic & road conditions

- Road projects (Planning & proposals)

- Tenders & suppliers

- Annual reports

Public real estates assets management

- Public Buildings and estates Act, regulations & codes

- Register of real estates

- Types of real estates

- Public assets Management Plan

- Notice of Incident

- Real estates Use & Performance

- Buildings control and security systems

- Design standards, manuals, notes

- Real time real estates conditions

- Real estates projects (Planning & proposals)

- Tenders & suppliers

- Annual reports

#8 Land Information Management solution

This area is full of private and public opportunities. Smart entrepreneurs will have a lot of fun working on those opportunities and will be rewarded with long term, convertible assets and with loads of recurrent money.

Land Information Management solutions will help people secure land tenure, improve land rights registration, and civil records management. Best solutions would include:

- Land registry system,

- Geographic information system (GIS)-based land cadastre system,

- Property information and taxation system (utilities, taxes, zoning, land use, public safety, cadastre, registry, etc.),

- Real estate industry tools (mortgages, title guaranty, property appraisal, real estate brokers, etc.)

- Automating land registration system

- Indexing and imaging of the public records

- Archiving historical documents for preservation

- Integrating with the existing central government information systems

#9 Payment Solutions for eGovernment Portals or mGovernement

Invoicing the public sector, getting paid and paying the governments in many countries are not easy things to do. It’s time consuming, and frustrating and you have to face outdated procedures being applied by unskilled and poorly trained employees. There are only few governments with a decentralized payments gateways that are automated and connected to a centralized payment and accounting system.

The best solutions would include:

- the management of all transactions that flow between government agencies and their constituents regardless of the payment type (cash, bank transfer, credit cards, debit cards, and ACH) or the payment channel (Cash, Web, mobile, over-the-counter, interactive voice response, mobile, and subscription), and also

- the necessary automation of workflow, notification, roles and access rights.

#10 Government IT infrastructural management solution

Top level entrepreneurs would focus on this area, backed with sufficient seed funding, and staffed with highly qualified IT and management people in the core team. They should be able to design top level network, and plan government wide IT infrastructure, and have savvy political skills to navigate in the messy political scene without compromising their integrity and code of honor.

Most African governments need top down solutions providers able to act first as advisers, then research and Development (R&D) partners, and then move on to long term partnership with solutions including:

- Network

- Hosting Services

- Properties Operations

- Training

- Security

The above 10 ideas are very exciting, and working on them will give you a sense of mission as they will affect the lives of millions of people.

10 ideas to Start a Profitable Business in Africa - Part 1

From today, we are starting a series of posts focused on ideas to start a profitable business in Africa . We will present them segment by segment. Here are 10 ideas to start a business targeting expatriates in your country.

Overall, our purpose is to simulate your mind, and encourage you to start your next business in Africa.

1. International Aid and investment segment opportunities

The international aid for Africa is a $40-billion-a-year industry. Most of this, is easy money to take, mostly for corruption and overpaid expatriates; however smart startups would be wise to explore the needs of this huge international organizations full of the laziest people in the planet always in search of someone to do their job for them or make their life easier. Here is a list of 10 ideas to create customized services or application for their use:

#1: Personal Service provider for local expatriate

More and more foreign people are heading to Africa, the last frontier of economical opportunities. Additional to the foreign aid employees, there are also more and more expatriates coming to Africa with the $48 billion-a-year foreign investment in Africa Business.

In some cities like Nairobi, Luanda, Dakar, Accra, Addis-Ababa these expatriates are thousands. They are rich, noisy, visible. They have very specific needs compared to local people.

Any smart company that would successfully create a set of services (travel, visas, registration, residency status, dual nationality questions, legal issues of marriage and divorce, visa runs) for this community in any given country, could easily expand the same concierge service to other countries. There is lot of money here waiting for smart and opportunist entrepreneurs.

#2 First-world quality Internet, mobile services or application customized for local environment

These guys have money. They are used to some first-world internet and mobile service they won’t have locally. It’s important to study their daily life in your city, survey them about their needs, and find out about things that might be very helpful for them to survive in Africa jungle. They will thank with their easily earned dollars and smiles.

#3 Food delivery for infrastructure/construction workers

It’s the easiest and quickest way to become rich. Design a mobile food service specialized in construction sites. You move your restaurant to serve breakfast, lunch, snacks, sandwich and casual drink close to the workers. You move and follow the sites. You are the first to know all new construction sites where will be hundreds of workers and expatriates. Deliver good food, cheap, and fast with a friendly touch.

There are hundreds of construction sites in many countries, financed by foreign aid or investment.

#4 Online expat forums

There are many expatriates forums online, but very little cover African countries, with ground information and assistance.

This forum could started with very little effort in connection with local expatriates. You might first start by creating a local association for expats in your city/country with social gatherings and activities, then move on to have an online version focused on providing useful and relevant information.

2 girls and one guy could start this on their free time, and finally make it a profitable business with add-ons services.

One advise: focus your forum on one country, yours.

#5 Controlled origin vegetables and meat delivery service

Most of the vegetables, and meat in the local market in big cities in Africa are not trusted by expatriates.

There is a huge opportunity in putting in place a good logistic to identify and deliver to urban market a controlled origin food that these expatriated population can trust. They are ready to pay 10 times local prices.

#6 Create a full-service job agency

One of the biggest issue you have when you start a business in Africa is how to find good employees, with required competencies, work ethics and good health.

Most of the international organizations, corporations in Africa spend countless hours on their hiring process, but to find out that they have failed to hire the right people. Employees turnover is huge.

There are very few professional head hunters, and very few job agencies with specialized skills. This is one of the best opportunity to pursue at this present time in Africa.

#7 Field Data collection & statistics

Independent projects monitoring and postmortem data collection is one of the fields where international organizations in Africa needs help. They need this data for their report and spend huge amount of money for that.

Currently this job is done by hiring huge consulting firm in London, which in turn subcontract to some small consulting firms in Europe which organize data collection teams on the ground. The teams are disband at the end of each project.

A local company which will specialize in field data collection will fill the gap for the international organizations, but also be a good service provider for local government which in most case doesn’t have any reliable statistics institute.

These kind of company could be started by a group sociologists and statisticians with the support of a networks of niche experts.

#8 Local investment opportunities / banking services

Africa is currently perceived as a new land of opportunity by the whole world. Old colonial powers and Chinese are in fight to have access to the emerging opportunities. Expatriates living in Africa are now better off investing their money in African banks or companies’ stocks than into their failing banks and economies. That create a huge opportunity for investment advisers and personal finance planners to create tools and services for this community.

This opportunity could be explored as a confidential investment newsletter, investment boutique, index fund or index tracker agency.

#9 Procurement services for international projects

This is a huge opportunity for young business administration graduates who have deep passion for international commerce, procurement, and have the discipline to manage large scale logistic projects.

Many African countries still lack reliable and large scale Procurement outsourcing services providers in front a huge and growing demand either by local entrepreneurs, and administration or by international organizations.

#10 Expat newspapers, magazine, Classified

Expatriates communities classified paper and online magazine is a profitable niche business to explore in big African cities where there are thousands of expats.

It could be done as an extension to a large circulation magazine or an independent endeavor

That’s all for today. During the next days, this series on Business opportunities in Africa will continue to cover the following areas:

10 Key Elements to Make a Business Plan Fundable

People ask us if they really need ANY business plan. In fact, a business plan is needed more by you than investors, as the blueprint for your company, team communication, and progress metrics. Things that make it investment-grade for outside investors will also benefit you, since you are the ultimate investor.

First of all, any good business plan should demonstrate that you have done the homework to be an expert in your industry, and in what it takes to build a successful business from your idea. I’ll skip the basics here, and highlight only key elements that investors focus on:

1. Define the problem. Every plan must start with the problem you are solving, not a description of your company and product. Explain in terms your mother could understand, and quantify the “cost-of-pain” in dollars or time. Terms like “every customer needs this” and “next generation platform” are far too soft, and should be avoided.
   Many entrepreneurs scare away potential investors by claiming that their technology represents “truly disruptive technology.” What that may mean is that you haven’t figured out yet what problem it solves, or it may take many years for people to get it. No investor wants to wait that long for his payback, or fund the years of waiting.
2. Solution and benefits. This is not the place for a detailed product specification, but an explanation of how and why it works, including a customer-centric quantification of the benefits. Skip the technical jargon and hyperbole. Do describe your intellectual property and “secret sauce”.
   Focus is the keyword here. Pick a specific solution that you have built or prototyped, rather than rambling about all the possible things that could be done with your idea. Clearly define the customer, channel, and revenue model associated with this solution.
3. Industry & market sizing. Start with the evolution of the overall industry, market segmentation, market dynamics, and customer landscape. Remember that investors like industries that have a billion dollar opportunity, and a double-digit growth rate. Data from accredited market research groups like Forrester or Gartner is required for credibility.
   It always amazes me how an entrepreneur can define his market opportunity so broadly, and then assess his competition so narrowly in the next breath. You won’t impress investors by claiming that everyone in China needs one, and nobody else has exactly the right features to compete with you.
4. Explain the business model. This is how you will make money, who pays you, and gross margins. In this section, you need to be passionate about revenue, profit, and volume growth. Many people seem to use the social network advertising model for revenue, but forget it assumes at least 100M users and $50M investment.
   Avoid any statements like “All we have to do is get 1% of the market.” There are two problems with this assertion. First, no investor is interested in a company that is only looking to get 1% of a market. Second, that first 1% is the toughest of any market, so you look naïve implying it's easy to get.
5. Competition and sustainable advantage. List and describe your competition, direct and indirect, including customer alternatives. Asserting you have no competition is not credible. Then detail your sustainable competitive advantage, and highlight barriers to entry which will keep your competitors at bay.
   Often I see statements like “Microsoft is too big/slow to be a threat.” Usually the reason the big companies are no threat is because the market is too small. But investors know that sleeping giants do wake up, the moment your company shows some traction. Competing with IBM, Microsoft, and other large companies should never be minimized.
6. Marketing, sales, and partners. Describe your market penetration strategy, sales channels, pricing, and strategic partnerships. Here is also a good place for a rollout timeline with key milestones. Convince investors that you have lined up sales channels, strategic partners, and a viable marketing strategy.
   Be careful with assertions like “We have strong interest from a major customer.” The mention of unsigned contracts normally takes away more credibility than it adds. You can bolster this position by including a Letter of Intent (LOI), contract summaries, or even testimonials.
7. Executive team. Investors invest in people - not just ideas. Convince investors that your team is experienced in starting a new business, and have great expertise in the selected business domain. Include Advisory Board members and key industry people connections.
   Sometimes I see statements like “A world-class CEO will be joining us after funding.” Rest assured that potential investors will ask for names, and place some calls. Soft responses from your candidates will definitely kill your credibility.
8. Funding requirements. Explain how you calculated the funding requirements, and show details on planned use of funds. Quantify existing skin-in-the-game, by insiders and outsiders, including sweat equity and capital. Include a current valuation estimate.
   The most credible sizing approach is to do your financial model first with the volume, cost, and pricing parameters you want. See where your cashflow bottoms out. If it bottoms out at minus $400K the first year, add a 25% buffer, and ask for $500K funding.
9. Financial forecast and metrics. Project both revenues and expense totals for next five years, and past three years, if relevant. Show breakeven and growth assumptions. Details should be available in a separate financial model, but not included here.
   Remember that investors are looking for large, scalable, high-growth opportunities. Attractive deals show double-digit positive growth per year, and revenues that are projected to $20M or more within five years.
10. Exit strategy. This section is only required when you expect outside investors. These investors want to know that you are thinking about a liquidity event – when and how they will get their money out, with ROI. For a family business, don’t project an exit.

An investment-grade business plan is a professionally prepared document, preferably about 20 pages, to satisfy both angel investors and venture capitalists. In preparing it, try to look at your project through the investors eyes. If your plan is missing one or more of the above elements, it will likely be deemed not “fundable”, and rejected.

The best plans are not usually the fanciest or the longest. They are not measured by the quantity of impressive graphics or the size of the revenue projections. Investment-grade ones attempt to answer every question an investor could possibly ask, except maybe “where do I sign”?

Adapted from Marty Zwilling

Norfund - Investment Funding for SME's

Norfund – the Norwegian Investment Fund for Developing Countries – was established by the Norwegian Parliament in 1997. The organisation is the government’s main instrument for combatting poverty through private sector development and Norfund’s objective is to contribute to sustainable commercial businesses in developing countries. Funding is provided via capital allocations from Norfund’s development assistance budget.

Many countries support development through similar investment funds and Norfund and its international sister organisations are known as Development Finance Institutions (DFIs).

Norfund provides equity, other risk capital, and loans to companies in selected countries and sectors where businesses lack access to sufficient capital to develop and grow. The sectors in which Norfund invests are clean energy, financial institutions and agribusiness, in addition to small and medium sized companies through investment funds.

Our main investment regions are Southern and Eastern Africa, and we have offices in Nairobi, Johannesburg and Maputo. Norfund also invests in selected countries in South-East Asia and Central America via our regional offices in Bangkok and San José.

Norfund always invests jointly with partners, both Norwegian and non-Norwegian. By co-investing with others, we leverage additional capital and can ensure the industrial and local knowledge needed for each investment. Norfund is set up to serve as an instrument for Public Private Partnerships.

All of Norfund’s activities are conducted in accordance with the core principles of Norway’s development cooperation policy.

Norfund is a state-owned company with limited liability, established by a special Act of the Norwegian Parliament. Norfund is owned on behalf of the Norwegian government by the Ministry of Foreign Affairs. The Minister of Foreign Affairs has constitutional responsibility for the organisation and Norfund’s Board of Directors is appointed by the King in Council.

At year-end 2013, Norfund had a portfolio of about USD 1.6 billion (NOK 9.6 billion) and 54 employees.

Investment process

To enter into dialogue with potential partners, Norfund normally requires a well thought-through business idea and business plan. Norfund conducts detailed due diligences on the projects, and requires close co-operation with all partners throughout the investment process.

When investing, Norfund spends considerable resources on understanding the business concept involved and gaining knowledge of how the investment may have a positive as well as a negative impact on its surroundings. Furthermore, we also assess the quality of the partners and their ability to succeed commercially.

Norfund does not expect ‘perfect enterprises’, but we will refrain from financing projects that will lead to irreparable environmental degradation, and from entering into cooperation with partners who demonstrate a lack of willingness to ensure safe and fair labour conditions. Establishing a mutual understanding of the standards that will serve as a basis for the operations and embedding these in a binding agreement between the parties are key steps in this process. Ensuring investment agreements that make room for effective exercise of ownership as a minority shareholder is a further important element.

To find out more about Norfund click here