Building E-Governance In Africa: One Pioneering Company’s Approach
Icon Capital Partners is a venture capital firm based in the United Arab Emirates that invests in small- and medium-sized organizations with strong fundamentals that offer e-governance and other online solutions. “For the past two years, we have been completely focused on sub-Saharan Africa and countries like Nigeria, Senegal and Gambia,” says Rajan Mohindra, founder and managing partner, in this interview with Knowledge@Wharton.
Building E-Governance In Africa
An edited transcript of the conversation follows.
Knowledge@Wharton: Please tell us a little bit about what Icon Capital does and what your focus is in Africa.
Rajan Mohindra: Icon Capital is a venture capital firm. We have invested in nine different technology companies, IT companies and companies in national security. For the past two years, we have been completely focused on sub-Saharan Africa and countries like Nigeria, Senegal and Gambia. One of the things we are trying to bring to Africa through the venture capital route is an operational model where we build solutions from the companies in which we are invested in. Not many technology companies at this point in time are focused on Africa.
We believe that for the social wellbeing of any nation there are two very critical elements. One is a safe nation, so security becomes paramount. The other is transparent governance. If people feel that they will be listened to by their governments and their voice has been heard, they feel more empowered. These are the two elements we are going to bring them.
On national security, we build intelligence and surveillance solutions, which include command-and-control centers. and stuff which will help the homeland security or the national security agencies to counter the threat of terrorism, petty theft and these kinds of things. On the e-governance side or the mobile government side, we help citizens to connect to the government, avoiding the middleman.
“The way smartphones are becoming cheaper by the day, we feel mobile government is the future.”
The challenge in the developing world is that most of the time, even if you apply for a license or a birth registration, you have to go through middlemen and the process becomes very difficult for the common citizen. If we can set up the technology that will help citizens interact with the government, they can apply for those things online. That removes a bit of corruption on the way.
Knowledge@Wharton: We’ll come back to the e-governance side, but why don’t we start with the security part. Can you give me some examples of the kinds of projects that you have done or that you’re working on right now?
Mohindra: I won’t be able to name the nations on the defense and national security side because there are non-disclosure agreements in place. But we are doing projects that include command-and-control centers, which will help to get all the information sitting in one particular central area. You gather information about suspects, you gather information about your critical national infrastructure like airports and seaports or central banks and so on and so forth.
There’s a lot of terrorism happening. To counter that, what they need is information at the right time. This is what we bring to some of the countries in Africa right now.
Knowledge@Wharton: Why the focus on Africa?
Mohindra: In the space we are in, there are the big players. They are well-suited for larger countries because their minimum billing is high. On the mid-sized end, there are hardly any players, and none in Africa. No one is focused on Africa because of the size of the tickets.
We feel that from a business perspective it makes a lot of sense to be in the sweet spot in Africa. That’s one. Second, someone has to do something in Africa. We feel that we can bring a lot of value.
Knowledge@Wharton: When you talk about the low price or the less expensive projects, what kind of cost ranges are you talking about?
Mohindra: Typically for us in the sweet spot, the minimum size is $5 million and the maximum is around $200 million. So these are not small.
Knowledge@Wharton: How do these projects get funded?
Mohindra: There are two or three ways. Multilateral organizations put in a lot of money. Secondly, countries like China or the U.S. or India or France — depending on the strategic nature of that (African) country — fund these kinds of projects. Third, everyone today has a security budget because you can win or lose elections based on the security level. Wherever they are getting infected by terrorism, they know one thing, that security is a necessity, not a luxury. They have to invest in security otherwise they’re going to lose the election next year.
Knowledge@Wharton: Why don’t we turn now to the e-governance side. Hopefully, there you can be a little more open and give examples of the kind of projects that you have done in different African countries.
“If we can set up the technology that will help citizens interact with the government, they can apply for those things online. That removes a bit of corruption.”
Mohindra: Sure. So first let me explain what we do in more detail. Besides doing the citizen-connect services I spoke about, which include things like birth registration, death registration, marriage, land, or whatever, the challenge is, not everyone is educated enough to use those services on a laptop or a mobile device. India is a perfect model. India has set up citizen centers, where they’ve established small-time entrepreneurs. You can go to these entrepreneurs, they will do the things for you and they will charge a small commission.
On the other side, we’re also working on projects that are specific to a certain agency. For example, electronic parliaments. We are doing paperless cabinet meetings and vote automation within the parliament. Another area is judiciary — electronic judiciary. Getting funding for these projects is not very challenging because a lot of people are interested. The multilateral institutions are interested in investing in something that is going to bring transparency to the government.
In some of these states in Nigeria, at the country level in Gambia, Senegal and Rwanda, what we are working on are similar projects which will include, for example, automating the land department. When you use a laptop, it’s called e-government. When you use a mobile, it’s called m-government or m-governance.
Knowledge@Wharton: Between the two which is growing faster and why?
Mohindra: We feel that eventually mobile is going to overtake electronic because of the penetration of mobiles. Africa has never had landlines in numbers comparable to other parts of the world. Today, most of the mobile devices are smartphones. It’s surprising, looking at the per capita income, but the smartphones are overtaking the normal phones. And the way smartphones are becoming cheaper by the day, we feel mobile government is the future.
With electronic government, what the government is doing is creating a source of revenue for itself because there is a per-transaction charge. Secondly, they are creating employment in rural areas because those who are educated can teach their fellow citizens to provide these services. But to answer your question, I feel that eventually mobile government will be a much bigger piece.
Knowledge@Wharton: If you look at the African e-governance market, how big is the opportunity and what are some of the challenges you face in dealing with them?
Mohindra: The big challenge, of course, is going to be the funding. Most of the time, these governments are not even aware of the possibilities of e-government; to educate them is the first step. Then we have to explain to them how to approach a multilateral agency, because they need to develop a business plan. If it’s a loan, how is the money going to come back, how is the government going to make revenue, and so on and so forth. So a project approach needs to be created. That’s the reason we got into consulting as another piece of our business. We feel that without fundraising, these opportunities do not exist at all.
There are a lot of interesting projects in Africa, but unfortunately none of them can be funded very easily. There has to be an ecosystem which we have to create. I personally feel that not many people are there educating them about e-government possibilities because they feel that basic needs — like power, infrastructure, roads — have to be sorted out first. But when I explain it to them, I tell them that both things can’t operate independently. If you make your citizens happy and they feel empowered and safer, you will have more time to do the kinds of things that they require.
Knowledge@Wharton: If you look at your activities over the next 18 to 24 months, where do you see your business going in Africa?
Mohindra: We already have a presence in several countries directly. We have our own sales teams and technical teams in Nigeria, Ghana, Gambia, Senegal, Ethiopia and Rwanda. Most of our products and solutions are built on top of Microsoft technologies. Microsoft, which is very prominent in Africa, is taking us to 40 countries. They’ve already started taking us to the French countries. We want to be present in most of the English- and French-speaking parts of sub-Saharan Africa.
Knowledge@Wharton: Long-term, what’s your dream for your business?
Mohindra: We want to be one of the largest technology companies of Africa. We want to utilize the sales platform to create other business opportunities, which are other than technology, in places like India or the Middle East. Because we have the platform in terms of networks, you can use those networks to create businesses that are not necessarily in the core business that you do.