The “Africa rising” narrative in Kenya is always linked to the ICT sector, in particular mobile technologies, mobile apps, and internet-based applications. I wonder what will happen to this optimism after learning that Mocality, one of the big investors in this field, decided to shut down:

“Mocality has achieved some incredible things over the last four years, and has touched the lives of many people in Africa, but alas, all good things must come to an end.”

Few ICT enthusiasts in Kenya saw this announcement coming. Mocality, the online business directory owned by Naspers, a South Africa-based media company, will close down operations in Kenya and Nigeria on February 28th. In 4 years Mocality managed to register over 100.000 businesses in Kenya. The plan was to expand throughout Africa and create the largest business directory in the continent –none of this will happen.

Is this a hit to ICT-led afro-optimism?

To some extent, I believe it is. Or at least, it has brought some realism back to the discussion on ICT in Africa. In this blog I always argued that the expansion of the ICT sector is a great opportunity, but it has to go hand by hand with expansion in the industrial sector, manufacturing in particular, or it’ll be a hype, or even a bubble, with little effects on job creation and sustained economic growth. But if you look at the media coverage on the topic, hype has been all over the place. Look at Wired UK a year ago:

Want to become an internet billionaire? Move to Africa”:

If you want to become extremely wealthy over the next five years, and you have a basic grasp of technology, here’s a no-brainer: move to Africa.

Wired is not the Journal of Development Economics, and the exaggeration is probably intentional (I hope so anyway), but it signals the hype surrounding the ICT sector in the continent.

Perhaps Mocality made its move in the Kenyan market a little too early. Perhaps the problem is much deeper and the Kenyan market is simply not ripe for this kind of business. Mocality did not explain the reasons behind their decisions to close down, but rumors are that  the operating costs were too high and the returns on the investment were not satisfactory. We can’t forget that the Kenyan economy is still largely informal and being online or not doesn’t make much of a difference for most enterprises.

But Kenya is also a fast-growing and fast-evolving economy, and the optimists among us might argue that Mocality is leaving the market just a little too early. Mocality CEO Neil Schwartzman had a very different opinion, however, stating that:

“reaching profitability was not a reasonable near-term prospect.”

Ouch

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