Dalberg has released a report titled Kenya’s Digital Economy: A People’s perspective. It finds that, in terms of digital transformation, Kenya is a lower-middle/income country that shows some characteristics of a higher middle-income economy.
The survey is based on in-depth responses from 2,456 people in Kenya’s 47 counties. It was done in 2020 to assess their perceptions on the state of the supporting ecosystems, digital infrastructure, enabling resources, applications and services.
The report differentiates between the uptake of “basic” digital services (sending money, buying airtime/data) and “advanced” digital services (e-commerce, paying for goods and services – health, education, agriculture, supporting livelihoods). It notes that some challenges to the next step of Kenya digital economy including exclusion and digital safety (fraud/harassment, cybercrime when using devices).
A stunning finding is that there is a low demand for advanced digital services, beyond mobile money, digital communication and social media. This is because non-users and 30% of current basic digital users do not find digital products or applications that are relevant.
Some of the sectors it touches on:
Agriculture: Kenya is one of the most advanced agri-tech markets with approximately 30% of agri-tech startups in Sub-Saharan Africa operating here and with 18% having their headquarters in the country But the awareness of landowners of digital services is low. 45% of those surveyed are not aware, while just 13% use digital services for their livelihoods – mainly to communicate with customers, suppliers and vendors while 10% use it for inputs and 15% for knowledge sharing. Half of those who do, use it as a result of assistance from field agents who are strong support factors for rural digital economies. Also half of adult female farmers face challenges in affording devices and accessing the internet which makes them hard to reach with interventions.
Health: There is low use of digital health services with only 15% of respondents aware, and of those, 35% use it mainly to consult health workers and pay for medicine with mobile money. The challenges cited are high costs and mistrust of doctors they can’t see while a quarter are concerned about sharing health information online.
Ecommerce is urban: 23% use e-commerce in urban areas compared to 9% in rural ones, and in Nairobi and the central region, uptake (24%) is twice as popular as in other counties in the rest of the country where it ranges between 1-12%.
On Financial Access:
Mobile Money has (+) and (-) aspects. The usage of mobile money is near-universal with 95% of lower-income and 93% of rural people using it as Kenyans have good user experiences with it, unlike some other countries. And while there have been concerns about fraud, 80% have trust in mobile money, but also 53% cite high costs as a reason not to use mobile money, more so with lower-income Kenyans.
Easy Credit: The report cautions that government should watch for debt traps from increase ease of digital credit in the country. Half of the respondents have had to sell assets, borrow more or reduce food & education expenditure to repay a loan – and this increases the chance of financial exclusion. Also, basic digital users lost an average of Kshs 1,470 to fraud while advanced users lost twice as much (Kshs 2,996) over the past three years. This is a risk that can grow as more unexposed people turn to advanced services and may face devastating losses that they cannot absorb.
Social safety nets: People with government stipends or pensions are more likely to use e-government services (such as eCitizen, iTax NHIF) than other Kenyans in general.
Entrepreneurs use it little: Among self-employed and business owners half use digital services and mainly for basic reasons like communicating with customers and vendors. Only 15-18% use it for advanced reasons like keeping business records, tracking stock, paying taxes, selling services and buying supplies through e-commerce platforms.
The report by Dalberg, done with support from the Omidyar Network, along with its data sets, can be downloaded here.
Roblox Corporation will list on the New York Stock Exchange as RBLX.
How much do we know about Roblox? Kids spend hours on it every day, but do they how Roblox works and the numbers behind it? Take a peek into the IPO prospectus for Roblox.
Founded in 2004 by David Baszucki and Erik Cassel. Today, Baszucki is the CEO and second-largest shareholder with 12% behind Altos Ventures that has 21%.
The company has eight classes of stock some preferred, some convertible and more restricted share units have been granted to employees in the IPO.
The company had $489 million revenue in 2019 and $589 million in the first nine-months of 2020. $409 million (70%) of its revenue is from US/Canada, 17% from Europe, with Asia-Pacific adding 8% and the rest of the world is 5% (28.2 million).
The company has $1.49 billion assets, 801 million of which is in cash.
It lost $86 million in 2019 and $205 million in the first nine-months of 2020. It has carried forward accumulated tax loss credits with the US government of $162 million and $54 million in the state of California.
Users & Experiences:
Key attractions that draw users to Roblox are unique identities, interaction with their friends, low friction (easy to join) and the variety of 3D experiences easily accessible on most devices whether they run on iOS, Android, PC, Mac, Xbox, Oculus Rift etc.
Most experiences are free and users can then purchase others such as clothing and avatars. Users do this using ‘Robux’ which they purchase with a credit card, subscriptions or one-time mobile payment (such as with M-Pesa), and use the Robux is to access digital items such as avatar and features.
The user base is currently 51% male and 44% female, with 72% of uses using mobile devices. Geographically, 33% of users are in the US /Canada, 29% in Europe 15% in Asia and 22% in the rest of the world. The Roblox business case going forward depends on growing internationally, particularly in Europe (Germany & France), and Asia (South Korea). Also, in February 2019 they entered a joint venture with Tencent to use the Roblox platform in China and Roblox owns 51% of the JV.
Users aged 9-12 years are 29%, under-9s are 25% and 13-16 are 13%, while 14% of Roblox users are over 25 years. They hope to grow the over-13 crowd as they have a higher propensity to spend on content.
During Covid-hit in 2020, active users have gone up from 18 million in 2019 to 31 million by September 2020 from 180 countries. On average, people spend 2.6 hours per day on Roblox.
Roblox has 18,000 servers in the US, Europe and Asia that handle 10 million requests per second.
Users are able to draw from a library that has 18 million experiences and the company uses machines and 1,700 humans to moderate this content.
It has 7 million developers and 960,000 of them earn on the platform. Developers can build in their native languages and machines translate the content into 11 languages including English, Japanese, Korean, Spanish, Chinese, German and French.
Creators receive 30 % of revenue from the creations while developers receive 70% of Robux spent on their experiences. In the nine months to September 2020, developers earned $209 million up from 72 million in the same period last year. 1,050 developers earned $10,000 or more and 250 earned more than $100,000 in Robux.
If they want to cash out of the developer exchange program, the rate is one Robux is equivalent to $0.0035.
Underwriters of the IPO are Goldman Sachs, Morgan Stanley, J.P. Morgan, Allen & Co, Bank of America, and RBC.
The auditor is Deloitte while the firm of Wilson Sonsini is the legal counsel.
Edit:In January 2021, Roblox issued 11,555,553 shares of Series H convertible preferred stock to certain institutional accredited investors in a private placement at a purchase price of $45.00 per share for aggregate gross proceeds of approximately $520 million. There was no underwriter or placement agent used in connection with this sale. The shares acquired by such investors will be registered for resale in connection with the registration statement of which this prospectus forms a part.
By raising some money before going public, Roblox was able to pad its balance sheet and preserve the ability to bring in more capital through a secondary sale later this year.
Roblox had been considering a more traditional IPO, but tabled its plans last month after DoorDash and Airbnb popped on consecutive days, leading to concern that the company risked leaving too much money on the table.
Because it’s not doing an IPO, Roblox no longer requires underwriters. Goldman Sachs and Morgan Stanley will stay on as financial advisers, but JPMorgan, Bank of America and RBC Capital Markets were removed from the filing.
VC funder and startup accelerator Antler Global held a demonstration day yesterday in Nairobi where founders of four companies got to explain their practical solutions to existing challenges in the sectors of health, fintech, advertising and e-commerce.
The Singapore-founded Antler has offices in London, New York, Amsterdam and now Nairobi, among others. Antler aims to turn exceptional individuals into great company founders through networks of advisors and by providing funding to enable the building of strong teams to launch and scale ideas. They currently have a portfolio of 120 investee companies.
The four new ones in Nairobi are among fifteen companies that have received pre-seed funding of $100,000 from the Antler East Africa Fund. They are drawn from 1,250 individuals who applied to join the Nairobi program which started in August 2019. The Demo day talks were by:
AIfluence: an Artificial Intelligence-based platform that connects influencers with brands and measures the impact and ROI of their campaigns. The company has lined up additional funding and advertising deals with Tik Tok.
Anyi Health: Enable patients to apply for credit right at hospitals.
ChapChapGo: Aims to fix the broken supply chain of fast-moving consumer goods, in which 70% of trades are still informal – with these purchases happening in a 19thcentury system where people queue to buy, queue to pay and arrange their own delivery. The company aims to leverage on wholesalers through an app, and by using WhatsApp for customer service and sales, to deliver goods at prices that are up to 25% cheaper for consumers.
Digiduka: Enables kiosks and shops receiving cash from low-income buyers to also process digital payment on. Many kiosk merchants find mobile money payments too costly and make many trips a week to purchase goods and permits in cash. The company aims to have kiosks double their income by offering digital services that will see them earn 75% of the commission, with Digiduka keeping the 25%. The founders say that pilot has been viable, with a payback period for kiosk owners of one month.
November 11 marks a huge shopping festival by Alibaba in China. Known as “Singles’ Day” or “11.11”, it is now acknowledged as the largest e-commerce day in the world. It is mainly on Alibaba platforms like Tmall and Taobao. Rival commerce sites such as JD.com and Lazada also run their own festival days during China’s long shopping season.
Singles’ Day 2019 saw another record year of sales reaching $23 billion (158 billion yuan) in nine hours. Sales hit $1 billion in the first minute and 500 million shoppers were expected to participate. This was achieved despite a slowdown in China’s economy and the ongoing trade spat with the US. Singles’ Day is three times bigger than the largest US largest shopping day – Cyber Monday which had $8 billion of sales in 2018.
On 11.11, Alibaba sells more on one day than many countries do in a year.
Alibaba founder Jack Ma has a plan for the company to attain $1 trillion of gross merchandise volumes in 2020 and create 100 million jobs, and serve 2 billion customers. As such the company is expanding in other countries. In 2017, Russia, Hong Kong and the US were the main markets.
International brands are signing on with discounts and specials, and in 2018, 237 brands, including Apple, Estée Lauder, L’Oréal, Nestlé, Gap, Nike, and Adidas has sales of 100 million Yuan ($14 million) on Singles’ Day.
The holiday was originally aimed at young men (bachelors), but has now evolved such that key targets for brands include China’s 400 million millennials, the “aspirational class” and women, the “she economy.”
Over 80% of the Singles’ Day sales are made on a mobile device .. so retailers need to enhance the whole shopping experience by employing unique mobile features like live streaming, interactive games, virtual reality, video marketing, and digital storytelling.
On Singles’ Day in 2017, 1.5 billion transactions were processed by Alibaba’s Alipay.
Kenya’s Safaricom, which has a partnership with AliExpress, also had some Singles’ Day promotions. They signed a deal in March this year enabling Kenyans to shop on ALiExpress and pay with M-Pesa.
Ogilvy Africa and Ogilvy Social Lab held a session in Nairobi a few days ago. Speakers tackled the state of social media in 2019 in terms of technology usage, making brands stand out, and the role of influencers, among other items.
It looked at trends in the world of media dominated by platforms like Facebook, Twitter, Amazon, Google (the four horsemen of the internet), and we learnt that we are in the middle of the biggest social experiment ever as billions across the globe use these platforms every day to network, communicate, transact, engage and get information.
Some of the highlights included:
People look at their mobile phone screens an average of 53 times a day – consuming information as text, images, video, and stories in bit sizes.
Users spend an average of 6 hours 45 minutes per day consuming digital media, with social media accounting for 2 hours and 20 minutes of that. In Kenya, one study found that young users spend 3 and ½ hours a day on social media.
Kenya has 8 million Facebook users and 700,000 Twitter users. It also has 1.5 million on Instagram and 2.1 million on LinkedIn.
But engagement is a poor predictor of business results. Brands should produce less content, personalize it and pay to promote it.
Everything is becoming a shop – thanks to tools like augmented reality, ordinary objects like posters and benches can come to life when viewed through a phone lens – and lead to hidden videos and links to merchants as seen in Snapchat Lens, Google Lens and Shopping on Instagram. An example was cited of the Jordan shoe sale marking the 30th anniversary of Michael Jordan’s iconic dunk – people at special Nike parties who watched a geo-located augmented-reality advert on Snapchat were able to order a new release of the vintage shoes, in their size, and have them delivered to their homes in two hours. The shoes sold out in a few minutes.
People go to YouTube with ‘intent’ – they know what they are looking for and want to watch (usually in the evenings) and this contrasts with ‘discovery’ driven video consumption in the daytime. Also, the first seconds matter the most – there is 47% awareness created in the first three seconds of a video message.
The most ignored influencer is the one who works in customer care.