The Other AOL - Africa Online

Edited/Distributed by HURINet - The Human Rights Information Network
## author     : AXEOXALA@AOL.COM
## date       : 05.02.00
The Other AOL - Africa Online

In a poor region where only one in 50 people have phones,
Africa Online has eked out a success story as the only
pan-African ISP.

By Matthew Yeomans

In late January the African Internet community was abuzz
with the big AOL (AOL) news. But it wasn't the America
Online (AOL) -Time Warner merger that caused the stir. It
was Africa Online and its latest power move - the
acquisition of Net2000, the second most popular Internet
service provider in Kenya, for $3 million.

By global standards, Africa Online is a minor player with
only 13,500 active dialup subscribers in six countries. Yet
to many people in sub-Saharan Africa (which doesn't include
the far more developed South African market), Africa Online,
the only regional pan-African ISP, is the Internet.

Ayisi Makatiani founded the company in 1994 with two friends
while he was studying electrical engineering at MIT.
Financed at first with credit cards, Africa Online started
as a Web site with news from Africa for U.S. readers until
Boston-based International Wireless bought it for about $1
million and helped turn it into an ISP. Two years later,
after International Wireless had joined forces with Prodigy
(PRGY) , Africa Online severed itself from its parent with
the help of a $2.8 million convertible loan from an old
British colonial conglomerate, African Lakes. In return,
African Lakes received no less than 65 percent of Africa
Online and fulfilled its desire to develop Africa's IT

"From a pretty early stage, we were very focused on
expansion," says Makatiani, 33. "We saw how POPs were being
built across the U.S. and we decided to go ahead and connect
all of Africa." Nevertheless, says cofounder Amolo Ngiweno,
building the brand has been a struggle because of "the utter
lack of telecommunications infrastructure ... and
unfavorable regulatory environments" in the region.

There are plans to run fiber-optic connections up both the
east and west coasts of Africa, but at this point, only one
in 50 sub-Saharan Africans has a telephone. Meanwhile, many
of Africa's state telecoms, including the one controlling
the potentially lucrative Ethiopian market, prevent private
ISPs from doing business. But some places like Kenya, Ghana,
Nigeria and Cote d'Ivoire - fearful of being left behind by
the online revolution - have begun to relax their regulatory
stranglehold, allowing Africa Online to plan an expansion
into six additional countries later this year.

 Makatiani believes he and his African partners have had an
 edge competing in the region's hamstrung markets. Having
 been brought up in Africa and yet knowing how to do U.S.
 business, he and Ngiweno were able to master the African
 bureaucracy in a way that outsiders couldn't "[even] though
 we never bribed anyone," he adds. "It is difficult for
 anyone to play catch-up with us after we've established a

 But how will the 330-employee Africa Online expand its
 business when so few people have PCs or telephones? Central
 to the company's growth is E-touch - a program to install
 Internet access in thousands of public communication
 centers across Kenya. That way, the vast majority of
 Kenyans who don't have their own phone or PC (only one in
 6,000 sub-Saharan Africans owns a PC) can use pay-per-use
 Internet service. There are 220 E-touch centers in Kenya
 serving more than 40,000 people. "It's going to
 revolutionize the Internet in Africa," says Makatiani,
 emphasizing that two-thirds of the centers are outside
 Kenya's cities and cater to a rural population that has so
 far been ignored by the technological revolution.

 Still, as Africa Online moves to secure the next generation
 of Africa's Internet users, its success depends on the
 continued deregulation of the continent's telecoms. And
 that could also be its greatest challenge. For with
 deregulation comes competition, most notably from ISPs in
 South Africa and inevitably, the U.S. and Europe. Then,
 being known as the "other" AOL might not be good enough. -
 James Winfield, Jr. Trilogy Software, Inc.

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