Culture of social networks in Africa on the example of trade

12/1/2009 | Christian Kreutz

There are over one billion Internet users worldwide according to a list from Wikipedia. Every day thousand of people joining social networks such as Facebook. How can these social networks be used to boost business? Are there differences between countries or regions how such social networks work? Mark Davies from Esoko, explains intriguing thoughts from his work in Ghana on market information systems through mobile phones.

The next billion

It is not easy to get figures, but the ones existing might come as a surprise to some. The largest social network in China, QQ has over 300 million active members. According to Appfrica, South Africa has 1.1 million Facebook members, Morocco 369,000, Tunisia 279,000, Nigeria 220,000, Kenya 150,000,and Mauritius 60,000.  Here are more details on social networks worldwide. The key role will be around mobile phones as the main way to access and interact in online social networks. According to research from Frost & Sullivan and Colibria, mobile social networks will grow ten fold to over 500 million users in Latin America and Africa in the next five years.

Culture and impact

But what happens in this social networks is what we know little about. What are the impact of such networks and their potentials beyond pure leisure exchange? This question has made me thought for a while and wonder what is the role of different cultures in such communities. For Anand Giridharadas, Facebook becomes an Indian village. Back at the ICT observatory I had an interesting discussion with Mark Davies around these questions, which I have recorded and transcribed below.

The key role will be around mobile phones as the main way to access

Christian: Hello Mark. We attended the last day of the ICT Observatory. We've had very interesting discussions the past days, and I would like to ask you, or discuss with you, the topic about social networks in Africa. Especially, you already mentioned that in your project, you really want to go in that direction using mobiles and the web for farmers, and to bring farmers and traders together. What do you think is the role of these networks and their potentials for the future?

Mark Davies: Well, I think it's really interesting that we've been through a period of three or four years, where networks seem to be one of the most compelling and interesting uses of the web, or the web 2.0. We've experience FaceBook, Twitter, and these other, MySpace.

Sitting in Africa, where we're working in Africa, and we're working in commerce and trade, it's all about social networks. You're trading with individuals that you know, this is perhaps a friends, or an associate, or somebody within your village. There is some identity that you can associate with them, and there is an element of trust.

So it's just intriguing to consider, if we took some of those principals of FaceBook, of Twitter, of MySpace, and we used it in a environment where, actually, social networks are even stringer. Does that mean that they are more or less appropriate? I think that's what's fascinating us.

Certainly in the case of European trade, or me as a businessman in America, I didn't need to know the person that I was trading with. I working within legislative framework I was working where standards and grades existed, and we knew who and what we were trading.

In Africa, if you're trading something, how do you insure that you get paid? How do you insure that the item that you're trading is what you've agreed upon? How do you insure that these things are what they say they are? You use networks as a way to reinforce, in this informal sector, that kind of commence and trade.

I think that's where we're looking at using technology to reinforce those networks, and make it easier for you to extend your networks beyond, perhaps, the geography or immediate linkages that you currently experience.

Christian: So that would mean the physical presence, the face-to-face exchange, is very important. To which extent do you think it is possible to do something over the Internet, when it comes to something as serious as trader and business-to-business solutions through mobile phones?

Mark Davies: Well I don't think you do trade over the web, I don't think that's what happens. But I think it's about "how do you exploit some of your social capitol using the web?" I don't think that means everything suddenly happens on the web, I don't think that we're going to see e-commerce anytime soon.

But how do I connect to somebody who might be in a different village, further away? If somebody has said that they have a product that I'm interested in, how can I use some networking tool to get closer to that person, to establish some identity or some reputation?

Perhaps I might find somebody that I already know in their community. And I can ask them "do you know so-and-so? Are they trustworthy? Can I send them the money before they send me the product?" I think that's the way.

It's a little more complex, it's about minimizing risk. You're using social networking, you're using technology to minimize your risk. Not to replace complete transactional activities, which will still be, if not face-to-face, it will be mouth-to-mouth. You will be negotiating, you will be arguing, you will be qualifying the deal.

But you can certainly use technology to use society, and used linkages as ways of minimizing your risk. In the same way how Grameen, with finance and loans, has leveraged your community, your network to create social pressure on you to pay back during certain periods, or on certain dates. In the same way, we can use social networks to create peer pressure so that you're not abusing a trade or commerce relationship, in a similar way, with a stranger.

Christian: Very interesting. You also told me that you, for implementation, that you think about reputation. The keyword is reputation. Can you imagine something like eBay for rating and reputation? To which extent could that work? Especially, also, what could be the role of mobile phones then?

Mark Davies: Well, I think that people trade in Africa based on reputation. They know that "I may not even get the best price from this person, but I know that I will get paid, and I know that I will paid quickly." These are the sorts of reputations that are important when you are choosing "who might I trade with?"

So the fact is that I think people in Africa, more or less, are simply not digitized. They don't exist in a database. They have have a SIM card. Do they have a phone number? Yes. Do they have a postal address, or in they in a electoral register? These thing are beginning, but in effect, they aren't accessible. You can't find a profile to find out whether this person has abused previous trading relationships or not.

So I think, that as we profile people and put them into these databases, and digitize communities, we can associate content, observations, and commentary about them that can help other people interact with them. And again, reduce their risk. Now whether, in the simplest form, that might mean "are you allowing that community to rank and rate an individual?" We don't know.

It's, I think, a very dangerous games to be in. Because people may have all kinds of reasons why they might want to rank you and rate you, that are not particularly objective. So I think we need to think very carefully about who can rank who, under what circumstances. How can we keep it objective? Do we have particular agents, or brokers, that have greater weighting, or ranking, to their own ranking of other individuals?

But very simply, you could see a system whereby I, on a mobile phone, could enter the could enter the mobile phone of the person I'm trading with, and just establish "does the person exist? Are they on a system somewhere? How long have they been on that system? If they've been on it for three weeks, can I trust them? And if they've been on for three years, maybe there's some more credibility there. And can you tell me how many complaints have been approved by brokers within that platforms, so that I can see that there is quite some risk with doing a trade with this person?"

So very much like eBay. 73 percent score, because 300 people have ranked this person and had a positive experience. That introduction of reputation into markets in Africa, will have a profound impact on expanding circles of trade.

Christian: That means, of course, more sales for products, and more...

Mark Davies: Yes, I think it's not only about trying to push product our of Africa, to the rest of the world. It's within Africa, it's within the sub-regions. It's between Ghana and Burkina, that we find trade breaking down because there are barriers of language, barriers of trust, barriers of regulation.

A great deal of thinking is being emphasized on "how do we create inter-regional trade, so that the wealth can be rationed within these African communities? That we can increase production, that we can increase demand within national consumer populations?"

As such, I think these tools, and these technologies, can play a very important role in facilitating that, and allowing cross-border trade with people that you might not have traded with before. Even if it just means "how do I convert a price into my currency?" In northern regions of Ghana, where you're trying to understand what the price is in Burkina, it's in French and it's in CFR, in their currency.

So it's very difficult to kind of compare. "Should I go a few extra kilometer, and buy or sell that product." Technology can be used, and it will be on the mobile, to breakdown those kinds of barriers or language and currency, so that you can judge for you self what is the opportunity that is presented.