Addis Fortune (Addis Ababa)

17 August 2014

Ethiopia's Tech Industry Emerges

As people go online to meet and interact with friends and relatives or put up their latest photos, young homegrown entrepreneurs are creating money making opportunities and getting their share of the booming internet marketplace.

Three companies are reaching Ethiopian customers in the millions according to quantcast.com, alexa.com and other leading web audience research organizations. In addition, one of them, mekina.net, has been showcased as one of the two largest internet companies in Ethiopia, valued at 500,000 dollars in a June 2014 article by the Economist magazine; DireTube, a media and entertainment website, came in first at two million dollars.

When Araya Lakew, 32, founded Mekina.net in 2010, there were only 200,000 facebook users in Ethiopia; in the four years since then that number has grown more than nine fold to 1.9 million, with nearly 50,000 of them liking its facebook page. Going by the click, another business that does business online, delala.com, has amassed over 111,000 likes.

As the number of internet users in Ethiopia grows, a number of companies that try to do business online are thriving despite the absence of an online payment system and an efficient delivery system for items bought online. Local players, such as mekina.net and delala.com have recently been joined by et.kaymu.com, an online business with a presence in 30 countries, which launched an online market place from its office at Lucky Tower, an upscale neighborhood behind Edna Mall in Bole.

As the Amharic name indicates Mekina.net deals in cars. The business model Araya says, is to showcase cars for which he charges 250 Birr for every advertisement with a discount for long term users. Additionally he also sells various types of ads to local companies. Araya said that he built his business mainly through online ads and search engine optimization (SEO), which makes a website more visible in search engine results. For example when typing "Vitz" and "Ethiopia" next to each other in Google, Mekina.net shows up among the very first in the list.

When he first started, the biggest challenge was finding domestic users.

"Most people in Ethiopia use the internet for only email and Facebook," said Araya, who considers Mekina.net an "ad platform for buyers and sellers of cars."

He sums up the overall purpose of his site as "a community website facilitating the buying and selling of cars."

Geoffrey Green, the 30 year old country director of et.kaymu.com, characterizes businesses like mekina.net as using the 'Classifieds' model meaning goods and services are provided online through advertisement posts. A major example of this is Craigslist, a very popular American website with sections such as jobs, housing, personals, for sale and items wanted.

Another type, according to Green, is a trade e-commerce platform, a major proponent of which is Amazon.com, an international electronic commerce company based in Seattle, Washington. As an Ethiopian example of this Geoffrey cited Ethio-souk.com. Exhibiting more than a passing knowledge of the Ethiopian business sector, he went on to discuss the existing two year pilot project between M-Birr and the National Bank of Ethiopia (NBE) to facilitate mobile based online payment systems.

Araya has diversified his online businesses with an assortment of websites dealing in different areas. Sheger.net is for consumer goods classifieds; Betoch.net is just like his service for cars except oriented towards the sale and rent of houses; and a new venture called Sefer.net, which focuses on travel information. Sheger.net is the second most successful of his online businesses, after mekina.net. A glance at Sheger.net reveals various products such as: Toshiba Core I3s, iPhones, and imported dining tables. Above everything there is a search box which reads, "What are you looking for" in both Amharic and English.

Delala.com, named after the Amharic word for broker, boasts being one of the most viewed Ethiopia websites, a feat the 28-year old founder, Mohammed BerKhdle, achieved in seven months after creating the company aiming to change the shopping habits of Ethiopians forever. The firm engages in creating a platform for the sale and rent of vehicles, houses and various consumer goods. In addition service providers like gardeners and plumbers can also be found while browsing through the website

On delala.com, visitors make a tour by category. Every item posted there comes complete with name of the seller as well as contact address, but with or without prices. A graduate of Gondar University and head of the Harari Transport Bureau until he moved on to delala.com, Mohammed demonstrated how, when buying a car, visitors can find what they wanted by choosing the vehicle make, year manufactured, price, and fuel type, which he believed gave Delala.com an edge over the competition and made life easier for visitors.

Mekina.net requires people who wish to sell a car to sign up, fill a form, add three photos of their vehicle with description and click submit. Then these people pay a visit to the company's office to pay before the post actually shows up on the website. Araya, a graduate from HiLCoE School of Computer Science & Technology, has configured Mekina.net to be available to mobile internet users.

Delala.com has a management team comprising Muhammed himself and two other people, Munib Abdul Kerim and Hafiz Ahmed. Together they work to increase the number of visitors. They point out that amongst the things that make their venture sustainable is offering free service to the end user and thereby increasing their number of visitors. In the process, targeted ads can be posted based on the visitors' browsing habits. For instance as a car buyer is bound to need insurance, an insurance company would pay more for an ad placed at some later stage in the buying process.

Et.Kaymu.com has a team of "local contractors" actively working with businesses and reaching consumers around the country. This business has been operating in Ethiopia for three months as of August 14, 2014. It is funded through a three-way investment by Rocket Internet, a German firm that introduces internet ventures in emerging markets; MTN, a South African telecom company; and Milicom, a telecom and media company headquartered in Luxembourg, and serving mainly African and Latin American countries.

In Ethiopia, under Greene's management, a team of young people are busily engaging in creating "a low cost way of accessing goods and services," as Greene explained. He stated that Et.Kaymu.com is creating strong partnerships with local businesses and providing them with shop spaces free of charge on their website. Among the top Ethiopian adapters of this new way of selling are large malls, street shops, and vendors in the Mercato area.

A major barrier to growth for et.kaymu.com, Greene says, is more the lack of a local delivery system for mass consumers rather than a lack of regulatory framework. Greene sees this as a great growth opportunity and a lucrative sector for investors.

"I see incredible opportunities in Ethiopia and we are looking to become more engaged in the near future," he says.

Apparently, at present it seems to be working just fine for customers. Semira Nurhussien imports and distributes computers and accessories through her company Technoquarter, a computer and accessories vendor in Kasanchis. Both an advertiser and user of Delala.com, she told Fortune that this website is driving a lot of business to her company.,

"Since I started using this service about three months ago, my business has benefited considerably," said Samira.

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