91559 Feasibility Assessment for the Development of a Mobile Applications Sector in Afghanistan Copyright © 2014 Information for Development Program (infoDev)/The World Bank 1818 H Street, NW Washington, DC 20433 Telephone: (202) 473-1000 Internet: www.infoDev.org Email: info@infoDev.org All rights reserved Disclaimers infoDev/The World Bank: The findings, interpretations and conclusions expressed herein are entirely those of the author(s) and do not necessarily reflect the view of infoDev, the Donors of infoDev, the International Bank for Reconstruction and Development/The World Bank and its affiliated organizations, the Board of Executive Directors of the World Bank or the governments they represent. The World Bank cannot guarantee the accuracy of the data included in this work. 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Table of Contents Acknowledgements ..................................................................................................................................... 4 Executive Summary .................................................................................................................................... 7 1.0 Mapping of the Business Environment for the SMEs in the ICT Sector ......................................... 9 2.0 infoDev Initiatives.......................................................................................................................... 13 3.0 Opportunities for a Mobile Apps Market in Afghanistan .............................................................. 15 4.0 How to Accelerate the Mobile Ecosystem in Afghanistan ............................................................ 19 5.0 Implementation of the Mobile Ecosystem Enhancer ..................................................................... 21 Acknowledgements This study, Feasibility Assessment for the Development of a Mobile Applications Sector in Afghanistan , was commissioned by infoDev, a global technology and innovation program at the World Bank. The study was carried out under the supervision of Anushka Thewarapperuma and was prepared by Altai Consulting. Rodolphe Baudeau, Alice Bodreau, and Alexandre Plichon (all of Altai Consulting) conducted this study. A large number of organizations and individuals facilitated the fieldwork in Afghanistan and contributed to the work, including the teams from the Afghan Ministry of Communications and Information Technology (MCIT) in Kabul, developers, entrepreneurs and private sector actors, donors, local and international nongovernmental organizations (NGOs), and others. The study also benefits from the comments provided by a group who participated in the peer review process. The peer reviewers include Maja Andjelkovic, Toni Eliasz, Guillemette Jaffrin, Tim Kelly, Ellen Olafsen, Siddhartha Raja, and Julian Webb. Rick Doerr also contributed to the final publication. Thanks also to Carollyne Hutter for copyediting. Abbreviations and Acronyms ABADE Assistance in Building Afghanistan by Developing Enterprises AISA Afghanistan Investment Support Agency AMMOA Association of Mobile Money Operators in Afghanistan API application programming interface B2B business to business B2C business to consumer B2G business to government BDS business development services DFID Department for International Development (United Kingdom) GIZ German Agency for International Cooperation HR human resources ICT information and communications technology ISP Internet service provider IT information technology IVR interactive voice response KPI key performance indicator MCIT Ministry of Communications and Information Technology (Afghanistan) MNO mobile network operator SEAF Small Enterprise Assistance Funds SMEs small and medium enterprises SMS short messaging service USAID U.S. Agency for International Development VC venture capital Note: All dollar amounts are U.S. dollars unless otherwise indicated. Executive Summary Afghanistan has made significant progress in its development since 2001. Yet, these achievements remain continually fragile because of a volatile security situation and limited human capacity. In spite of these constraints, the information and communications technology (ICT) sector in the country has witnessed remarkable growth. An estimated 12 million mobile phone users utilize the services and products of four private mobile companies and one state-owned company. A recent survey conducted by the U.S. Agency for International Development (USAID) noted that around 80 percent of women in the country have regular or occasional access to a mobile phone. The government supports the ICT sector and is adopting technologies to expand service delivery and support good governance. The potential in this sector is vast with guaranteed high returns for employment opportunities, generating foreign investment and producing government revenue. infoDev focuses on enabling the start-up and growth of innovative, technology-enabled enterprises. Recognizing the capacity and potential in this sector, infoDev embarked on a feasibility study to gauge the ICT and mobile applications sector in Afghanistan. The feasibility aimed to map and understand the current business environment for small and medium enterprises (SMEs) in the ICT sector and assess the overall ecosystem for business incubation. The study also measured the opportunity to create and support a vibrant mobile applications-focused incubator. The analysis concludes by offering a set of recommendations and a roadmap on the way forward for implementation. The feasibility analysis spanned a period of one year commencing from January 2013. The infoDev team held three workshops during this time to raise awareness and gain feedback from a range of stakeholders from the government, private sector, nongovernmental organizations (NGOs), donors, academia, and other interested parties. The team interviewed more than 70 key stakeholders. They also conducted desktop research to measure the opportunities available in the sector. The results of this research and analysis were a wealth of data on the mobile ecosystem in the country, current initiatives, and existing gaps. Initial findings from the study reveal a promising terrain to stimulate the mobile app economy; for example, the existence of a dynamic mobile industry, increasingly affordable Internet access, a pioneering landscape for mobile innovation and entrepreneurship, and a strong commitment from donors and the government of Afghanistan. In addition, pressing social issues provide a window of opportunity for creative solutions to be provided through tech-oriented initiatives. The study estimated that the mobile app market will grow from its estimated $20–$33 million to $48– $60 million, at least twice the current size in the next three years. Gaps include lack of relevant skills and experience needed for the mobile app market (and also absences in resources needed to provide these skills), a deficiency in the awareness of the potential of mobile technology, and barriers because of the use of multiple languages and low levels of English language fluency. Methods to access the end user of mobile products remain nonexistent. The study notes that increased awareness, relevant skills, and access to practical experience in the mobile industry are a top priority. As such developers need access to tools that are localized. Finally, an alternative application distribution mechanism, which enables access to a greater market and capacity to bill services, is essential. The study underscores the importance of leveraging the existing government initiatives: an ICT incubator and related programs funded through the World Bank Group, other donor- driven programs providing access to funding, and locally driven grassroots programs supporting awareness raising. To address the problem of end-user access, the study offers a game-changing proposal to establish an app store that is built locally and provides locally relevant content. The app store can raise further awareness and build a pipeline of entrepreneurs and users to further drive the mobile market. The report attached provides a synopsis of the mapping of the ecosystem and a survey of current initiatives and existing gaps. Recommendations and a roadmap for designing future programs targeting mobile entrepreneurs are also included in the report. The subsequent PowerPoint offers a unique presentation of the analysis and results for this specific study. 1.0 Mapping of the Business Environment for the SMEs in the ICT Sector The study aimed to analyze seven essential components of the ecosystem of SMEs in the ICT sector: technical environment, ICT players, regulatory environment, human capital, business skills enablers, financial enablers, and catalysts. Technical Environment The technical environment in Afghanistan in terms of infrastructure, hardware, software, and network has grown and expanded exponentially. The fiber optic backbone for the country was launched in 2006 and has been partially completed and this will eventually connect it to international-level bandwidth.1 Although the first telecom operator was launched only in 2003, there are now five carriers operating in the country. Mobile penetration has soared growing initially from a base of 2 million users in 2007 to more than 12 million users currently, representing an increase of more than 400 percent.2 This represents almost two thirds of the overall adult population in Afghanistan. In 2012, 3G technology was launched and currently smartphone penetration is approximately 8 percent of overall device usage. Comparatively, Internet usage remains limited with only 1.7 million users on the web in 2011.3 To gauge the dynamism of Internet usage, the study assessed the number of Facebook users in the country, a number that grows on a daily basis. This number is expected to increase significantly in the years to come with Internet prices declining and access to bandwidth rising. Yet a number of impediments remain to the growth of penetration, including low literacy rates, limited command of English (as local content remains limited), lack of access to connectivity outside of city centers, and high price points for connectivity. ICT Players When considering the breadth of ICT stakeholders in the country, the range extends from small SMEs to multimillion dollar ventures. The study surveyed five categories of ICT players: mobile network operators (MNOs), internet service providers (ISPs), hardware companies, information technology (IT) services companies, and content providers.4 As indicated earlier there are five MNOs with the four largest serving a comparable number of customers. There are also 41 licensed Internet ISPs, with mostly business to business (B2B) and business to government (B2G) clients. Hardware companies tend to focus on consumer clients with the market dominated by small computer and mobile handsets dealers. IT services companies tend to have mostly B2B and B2G clients, and their services include software database development, website development, web hosting, and IT maintenance and support. Mobile software development in Afghanistan is still in its infancy. Content service providers hold mostly B2B and B2G clients, and apart from the media, very few Afghan companies provide content to mobile app developers and MNOs. Their business models focus on revenue sharing (25 to 50 percent of revenue per download), 1 http://www.instatelecom.com/trf_dsl.html. 2 https://wirelessintelligence.com/. 3 www.itu.int. 4 https://wirelessintelligence.com/. which can be a challenge as these companies do not benefit from a strong bargaining position with their potential partners. Regulatory Environment The legal and regulatory framework for the telecom and Internet sector is built on the Telecom Law, enacted in 2005 and the Telecommunications and Internet Policy approved in 2003. These laws concentrate on technical elements, rather than on content and services. The laws include no specific provision for licenses for mobile content or service providers. Content providers are instead regulated under the national media law. Currently, there is also no regulatory framework for software providers in Afghanistan, including for mobile applications. SMEs in the country note that any process associated with the law takes significant time and resources with the actual procedure often times remaining vague. A new ICT law is currently being drafted that will likely target these existing gaps. Human Capital Afghanistan is one of the youngest countries in the world with 46 percent of the population below 15 years of age.5 This has created a reservoir of human resource potential. However, only a small number of Afghans have access to higher education because of a lack of capacity. Although universities have improved their curricula, they still suffer from a shortage of skilled teachers and a lack of hi-tech equipment and facilities. Major universities in the country produce graduates with IT degrees (roughly 900 per year) with close to 3,500 students currently enrolled. But the graduates’ skill levels are unequal with many needing further training once they enter the job market. Mobile software development is not offered in local universities and what is offered for software programming is still very basic. Usage of Dari and Pashto hampers the access to global knowledge and resources. With a long tradition of entrepreneurship, the Afghan private sector continues to thrive driven by SMEs, in spite of a distorted markets, especially in human resources (HR). The country holds name to a number of large private ventures reaching regional markets (such as the Safi Group or Alokozay Group) and benefits significantly from a vibrant diaspora with strong networks overseas. Since the fall of the Taliban, the number of businesses launched has soared. According to the Afghanistan Investment Support Agency (AISA), 5,283 ventures (176 in the ICT sector) were registered in 2012 compared to 3,539 (19 in the ICT sector) in 2003. However, with the massive influx of aid money and proliferation of international agencies as well as foreign military presence, the Afghan private sector has been deprived of locally grown skilled resources, creating numerous market distortions. As a consequence, labor for the same skills and capacity is more expensive in Afghanistan than in neighboring countries. Business Skills Enablers 5 http://unstats.un.org. A large number of business development services (BDS), or programs and organizations that promote and enhance entrepreneurship, currently operate in Afghanistan supported by the donor community, the government of Afghanistan, and various professional associations. Donors (USAID, World Bank, Germany Agency for International Cooperation [GIZ] , Department for International Development, United Kingdom [DFID], and Australian Aid) have been involved in large private sector development programs focused on SMEs. Approximately 650 BDS providers exist in the country, with their main areas of involvement being basic business training, business planning, marketing and sales, and legal support. Financial Enablers A variety of funding mechanisms are available to innovative SMEs. Accessing traditional loans within the banking system continue to be difficult for SMEs. Only 6.3 percent of total loans from Afghan banks are to SMEs, and typical corporate loans are not adapted to the needs of the Afghan SMEs. However, several donor initiatives provide grants to SMEs and invest in key infrastructure projects. These include the following: (1) USAID’s Assistance in Building Afghanistan by Developing Enterprises (ABADE) Program, which provides matching grants, technical assistance and business advisory services, and supports improving the business environment by lifting specific regulatory and procedural barriers, and (2) the Afghanistan Business Innovation Fund (ABIF), which is a donor-backed (DFID and USAID) investment challenge fund that supports innovative projects within traditional private sectors. Finally, private investment funds (aka venture capital [VC]) are still very rare in Afghanistan with the Small Enterprise Assistance Funds (SEAF) backed Afghan Growth Finance (AGF) fund as the most active VC for SMEs ($25 million committed capital since 2007). Catalysts A number of initiatives within the MCIT, under the umbrella of the E-Afghanistan National Priority Program, have been designed to leverage mobile infrastructure. MCIT has launched several ambitious programs to stimulate the IT sector in Afghanistan while improving access of government services to citizens. With World Bank funding, the Ministry plans to also implement four mGov projects: mGov strategy, Mobile Service Delivery Platform, DEWAE6 Innovation Support Program, and ICT Village. The mGov strategy aims to formulate the government strategy for the sector, while training governmental employees so that they can identify and report opportunities for mobile apps to deliver governmental services. The Mobile Service Delivery Platform, HOSA,7 will host and make accessible mobile apps that provide government services, which could include mobile health alerts, school admissions, citizen surveys, and transports alerts. DEWAE provides $5 million in grants to boost the application economy in four award categories: mTechnology (apps that address challenges and service delivery, program management, and performance management), mGovernance (supports a specific impact through the use of mobile apps for service delivery programs), students (encourage innovative and socially geared thinking and ideas from students), and IT Champion awards (recognize people who have contributed to 6 http://dewae.mcit.gov.af/en. 7 http://hosa.mcit.gov.af/en. the promotion of ICT in Afghanistan). The ICT Village is an incubator located in Kabul that is dedicated to support IT entrepreneurs and will be launched soon. The ICT sector has seen several professional organizations emerging over the past few years, including the National ICT Council, Afghanistan Computer Science Association (ACSA), the National ICT Association of Afghanistan (NICTAA), iHub, and Open Source Afghanistan. Finally, impact events have taken place in the past couple of years to mobilize the Afghan ICT community, including events organized by the Kabul Innovation Lab, Open Source Afghanistan, and iHub. 2.0 infoDev Initiatives infoDev focuses on enabling the start-up and growth of innovative, technology-enabled enterprises. Since 2010, through its Creating Sustainable Businesses for the Knowledge Economy (CSBKE), a public/private partnership with Ministry of Foreign Affairs of Finland and Nokia, infoDev has supported a range of cutting-edge global and regional mobile applications initiatives. The study assesses these initiatives and proposes a model that can be utilized in Afghanistan. Three models were designed to maximize the development impact of mobile technology and generate innovative entrepreneurship: from light (mHub) to full (mLab) to virtual (virtual incubator). mHubs mHubs are multistakeholder social networks that organize informal gatherings, competitions, competitions that involve entrepreneurs, local businesses, and individual mobile users, peer-learning sessions, training and mentorship programs, and national and international conferences. They aim to bring together organizations and individuals who are interested or willing to work around mobile technologies. Based on informal meetings, they bring in mobile-centric events to the community, including hackathons, challenges/events, and information meetings with VCs. They do not require any specific governance in the way they are designed, at least in the early stages. They can be supported and backed by private sector organizations whose business interests are in line with the emergence of an active innovation mobile scene. infoDev has supported mHubs in Nepal, Moldova, Georgia, Azerbaijan, Vietnam, Uganda, Kenya, and Tanzania. mLabs mLabs provide the environment to help nurture and create sustainable mobile businesses. They also act as role-players in the mobile ecosystem. Since they have a physical location, they can help incubate technology entrepreneurs who can interact, work, and gain access to tools and expertise to start and grow their businesses. They offer a wide range of services both to residents and nonresidents. Residents or incubatees benefit from premium services onsite: office space, Internet access, testing facilities, and equipment. Nonresidents can also access training and workshops, consulting/mentorship, and access to investors. The governance schemes for mLabs can vary with leadership from a NGO, private sector organizations, or a consortium of organizations. infoDev supported mLabs in Kenya, South Africa, Vietnam, and Armenia. Virtual Business Incubator A virtual business incubator acts as an incubator without walls and aims at reaching potential nonresident incubatees through a variety of mechanisms. It goes beyond a physical space and concentrates on services. Services provided include training and mentoring, networking, and seed capital. The governance of the model can vary depending on the type of services offered with examples ranging from foundations to private ventures. The infoDev supported virtual incubator in Vietnam is helping the existing state- owned incubator, as well as building a network of entrepreneurs and investors. Lessons Learned from infoDev Initiatives For all models, the key is to understand the target audience to be served and their relevant needs. Building on an existing community is a critical first step. Once the community is built, the brand inevitably can become strong. It is then possible to attract partners and sponsors that can be sources of revenue and expand on the brand making it even more relevant to the community. Designing the appropriate governance for the model is important. The governance has to be in line with the overall objectives of the initiative, whether a foundation, a NGO, or a private company. For mHubs, the key is to use a limited number of champions to build the community. Champions should encourage and pitch new ideas to keep the community attracted, whether it is events (such as hackathons) or opportunities (new challenges) or exposure to a new technology (training on latest Android API). For mLabs, building or setting up the physical premises can take considerable time and heavy capital expenditure. These activities can divert the mLab from delivering other services or getting the brand and the community installed. A secured location can become a disadvantage as it makes the mLab less accessible to the audience it wants to reach. In a place where there may not be a critical mass of innovators, a physical place might be needed where individuals can come together and support each other. For the virtual incubator, it is possible to be creative in organizing events at no cost. Events are organized based on existing networking organizations (such as student groups or clubs), and online social network support the consolidation of the community. Best Practices from infoDev Initiatives A number of best practices have emerged among these initiatives that focus specifically on design, internships, and tools all built to fill in the gaps. To enhance product design, some mLabs have built up a specific service or a range of services. Expertise and training can be provided to incubatees and non- residents to select the appropriate platform for their project and to understand and become trained on how to design a best in class application. Internship and mentorship opportunities allow young graduates or individual developers to get their first experience in developing apps. Interns can be mentored by experts from the mLabs, receive training, and work directly on a project or idea generated by the lab and the community. Finally, access to billing remains a constraint common in many emerging and developing markets. A number of mLabs aim to tackle the issue either through a dedicated portal that would be operated by the lab or through a specific entrepreneurial activity that is a part of the incubator. 3.0 Opportunities for a Mobile Apps Market in Afghanistan Following the analysis of the ecosystem in Afghanistan and taking into consideration data and estimations from relevant reports,8 this study approximates that the mobile app market will grow from its $21.5– $33 million to $48–$60 million. The main assumptions for this analysis include an increase in the number of Internet and 3G users by 15 percent, increase in smartphone penetration by 15 percent, and a wider focus on innovation and usage because of a number of supporting government initiatives, including DEWAE and HOSA. The analysis also estimates a growth in the number of local mobile content providers from the five companies currently active in the market. The main growth potential impacts SMEs, be it mobile content or software providers. It is estimated that the market for Afghan-based mobile content providers will grow from $0.5–$1 million to $3–$4 million. The market for Afghan-based mobile software providers will grow from $1–$2 million to $5–$6 million. The rest of the growth will be from the mass market, mainly through the market for MNOs. By understanding these market factors, a more complete picture can be created to know which areas incubation can support in the Afghan ecosystem. The analysis and estimations are included below: 8 http://documents.worldbank.org/curated/en/2010/06/16278125/mobile-applications-afghanistan- mainstreaming-across-government-developing-ecosystem . Mobile Content Providers to MNO and Mass Market 2013 2016 # of providers (1) 5 40 Average revenue per provider in $k (2) $ 120 $ 100 Total revenue in $k $ 600 $ 4,000 In the slide, ranges of $0.5-$1m in 2013 and $3-$4m in 2016 are presented to take into account the uncertainties in the assumptions taken Commissioned dev - Mobile Software Providers Afghan-based to Government, Institutions, and Businesses 2013 2016 # of providers (3) 10 20 Average revenue per provider in $k (2) $ 150 $ 270 Total revenue in $k $ 1,500 $ 5,400 In the slide, ranges of $1-$2m in 2013 and $5-$6m in 2016 are presented to take into account the uncertainties in the assumptions taken MNOs to Mass Market - ARPU based Analysis (4) 2013 2016 Average ARPU in $ $ 6 $ 6 Share of ARPU VAS (5) 3% 5% Total monthly revenue in $k $ 2,160 $ 3,900 Total yearly revenue in $k $ 25,920 $ 46,800 In the slide, ranges of $20-$30m in 2013 and $40-$50m in 2016 are presented to take into account the uncertainties in the assumptions taken MNOs to Mass Market - Users based Analysis 2013 2016 Average subscription fee in $ (per month) $ 1 $ 1 Average download fee in $ (per month) $ 0.3 $ 0.3 # of unique mobile users in Afghanistan in k 12,000 13,000 Share of VAS users (6) 15% 25% Estimated number of VAS users in k 1,800 3,250 Yearly subscription fees revenue in $k $ 21,600 $ 39,000 Yearly download revenue in $k $ 6,480 $ 11,700 Total yearly revenue in $k $ 28,080 $ 50,700 In the slide, ranges of $20-$30m in 2013 and $40-$50m in 2016 are presented to take into account the uncertainties in the assumptions taken Sources: (1) Based on estimated number of publishers active on the Afghan market —see "Hyp. Afghan app store" sheet. (2) Based on interviews with ICT SMEs in Kabul. (3) The increase in number of actors is based on the impact of mobile initiatives (HOSA) and on the increasing demand from gov. institutions. (4) Industry benchmarks: Wireless Intelligence, Ovum, and MNOs interviews. (5) VAS = excludes voice, SMS, and data revenues. Includes mobile money. Highly driven by RBTs in Afghanistan. (6) Interviews with MNOs. Market Gap Although the mobile app market appears primed for growth, a number of critical gaps need to be filled to correctly seize the mobile app opportunity in Afghanistan. The main gaps can be classified under lack of access to relevant people and skills, tools, and end users (that is, the mass market). People and Skills: Surveys and analyses have demonstrated that there is a lack of awareness of mobile technology and its opportunities in the country. Many Afghans, including students of information technology themselves, are not aware of the prospects that would be available in this market. The Afghanistan workforce also lacks the relevant skills and experience required for on the job opportunities in the sector. Tools: Along with the lack of skills, Afghans interested in mobile app development do not have the ability to access the necessary tools to create apps. A majority of the tools available are open source and easily available online. Since a majority of Afghans do not speak English (or if they do, fluency remains limited), the tools remain inaccessible to them because of language and cultural barriers. End Users: Finally, there are barriers for mobile app developers in Afghanistan to access the mass market. Most Afghans do not have a compatible handset, and when they do, most do not know about available platforms (such as iTunes). When the platforms are known, a majority of the population does not have access to credit cards or payment means to purchase the apps. The only channels available for independent developers and entrepreneurs in Afghanistan today are (1) commissioned development, that is, not the mass market and (2) negotiation with MNOs. Opportunities Within Afghanistan, infoDev’s support to accelerate the growth of the mobile app sector will come as a complement to the existing MCIT or mGov initiatives and to the growing networking arenas. It will build on the current momentum around HOSA, DEWAE, and the ICT Incubator, as well as leverage the existing networking arenas already in place (such as iHub, NICTAA, Open Source Afghanistan, TechNation, and TechDera). With this understanding, three areas have been identified to deepen the support to the mobile ecosystem. The initial scope should include the following: (1) increase awareness, skills, and access to practical experience, (2) provide tools, derived and localized, from mobile open source software, to accelerate the adoption of mobile technology by entrepreneurs, and (3) enable access to the mass market and the capacity to monetize services, by creating an alternative application distribution mechanism for SMEs. Targeting People and Skills The immediate opportunities for action to support individuals and skills include raising awareness around the mobile ecosystem, increasing skills in mobile software, and improving hands-on experience of IT students. Currently, the level of awareness among individuals and SMEs about the business potential of mobile technology is still low. Initial efforts should be put into creating a community of interest around mobile opportunities. A natural first step is to increase awareness through such events as competitions and hackathons. Awareness can also be raised through industry partnerships (platform and technology providers), who can support training bootcamps and challenges. Individual’s skills also need to be adapted to the mobile ecosystem. To date, none of the IT institutes, whether private or public, provide specific training on mobile software development. All stakeholders interviewed were interested and ready to adjust their curriculum to include mobile software development courses. These should be adapted to both current market demand (including Java, SMS, and interactive voice response [IVR]) as well as anticipate the demand for the next generation of native apps based on major operating systems and technologies. Finally, IT students need further experience, which can be increased via mentorships and internships. All institutes surveyed suggested that they would be more than ready to provide students internship opportunities and project-based courses. This gap can be rectified by adjusting curricula to include compulsory internships as a part of the course program and by building partnerships between ICT companies and IT institutes to provide internships and project opportunities for students. Targeting a Gap in Tools A list of open source tools and software should be selected that are relevant to the Afghan context while taking into account the business potential per sector. Open source mobile software is available on all platforms and can address the needs of many businesses and sectors (such as eLearning, data collection, or content publishing tools). A localized version of the software would need to be offered to the community. Support should be provided to private and public initiatives to produce local language versions (in Dari and Pashto) and documented versions of the software. The tools can then be offered to the community of developers, entrepreneurs, and training institutions who can in turn utilize the tools as part of the course offering. On Accessing the End Users Since accessing end users remains a significant impediment, developing an independent platform for service and content providers would benefit the full ecosystem in Afghanistan. The system could replicate HOSA, the comparable initiative launched by the government, with a dedicated distribution platform for apps originating in the private sector. It would provide integrated billing access (via airtime or mobile money) to all MNOs and act as a distribution portal for content and service providers, enabling SMEs to target the mass-market easily and bill content and services. 4.0 How to Accelerate the Mobile Ecosystem in Afghanistan Based on the needs assessment, interviews conducted with local stakeholders, and infoDev’s global experience, a light footprint model that will support current initiatives and fill existing gaps is recommended. A hybrid of two different models, mHubs and virtual incubators, has been studied to support the mobile ecosystem. The mLab model was eliminated as a possibility since the goal is to build on existing incubators initiatives and this gap can be fulfilled by the proposed ICT incubator initiative of MCIT. In deciding between the mHub and virtual incubator models, both had pros and cons. For the mHub model, its efficient ability to mobilize and organize a community around the mobile economy, complementary to current initiatives, and enable national reach through networks of regional IT institutes were considered pros, while limited support to early-stage startup development and lack of focus on providing access to finance were considered cons. For the virtual incubator model, pros included focused support to startups and existing ventures (including through access to finance) and access to international networks, while cons included the potential to neglect the initial effort required to build technical capacity, difficulty in reaching the tech community if little tech services are provided, and difficultly in building a sustainable model as most services will be provided at cost. In order to meet the needs of the Afghan ecosystem, an amalgam of the mHub and virtual incubator, titled the Mobile Ecosystem Enhancer, has been recommended. Governance Along with the service model, the governance structure for the proposed mobile ecosystem enhancer needs to be designed with the program’s core objectives in mind. Two governance schemes are applicable to the Mobile Ecosystem Enhancer: fully private or consortium. The fully private scheme, with one or several privately owned companies, provides added value as the implementers are in the same sector, would be complementary to the companies’ core business, and there would be a clear leadership structure and capacity to implement. However, it would be difficult to act as a legitimate centerpiece of the ecosystem, and there could be a market distortion if only one private actor is selected. The consortium scheme, an alliance of organizations (whether public or private), can bring in various stakeholders each with a specific input for the project (such as institutes, the government, or private companies), and offers broad support and involvement across the ecosystem. However, it could have no clear leadership, it is not the core business for the stakeholders or participants in the consortium, and it could have limited capacity to resolve disputes (for example, without a clear memorandum of understanding among the consortium members stating specific roles and responsibilities). Services Offered The program should be built around a portfolio of services to increase technical capacity and the sustainability of emerging mobile ecosystem. The Mobile Ecosystem Enhancer will aim to provide the following service lines: (1) mobilize talents and develop skills, (2) support the emergence of sustainable actors, and (3) provide relevant tech tools to the community. The aim for the first service line is to rapidly build a strong community of tech entrepreneurs within the mobile ecosystem, while increasing mobile software skills. The activities (along with their outputs) that will be provided in this service lines include events (talents mobilized), competitions (ideas and apps developed), training (upgraded skills), partnerships (training content and technology available), and internships (increased experience). The organizations and initiatives to support or complement these activities are the iHub, MCIT ICT Incubator, MNOs, IT institutes, and MCIT’s HOSA. The second service line, supporting the emergence of sustainable actors, is designed to encourage local ICT incubators and incubatees. With a proposed Afghan app store, the objective would be to provide the capacity for SMEs to access the mass market. The activities (along with their outputs) that will be provided in this service line include mentorship (support to startups), access to finance (access to international funding and establishing a network of local investors), and support to existing incubators (focusing on training and incubatees support). The organizations and initiatives to support or complement these activities are the MCIT ICT Incubator, ABADE, MNOs, and the Association of Mobile Money Operators in Afghanistan (AMMOA). The final service line, providing tech tools to the community, will deliver specific mobile software that will be localized to fodder more opportunities for ideas and entrepreneurship. The activities (along with their outputs) that will be provided include training on tools (exposure to technology enablers), support of tools (maintenance and upgrade of tools), software localization (localized tools build services with), and internships (first-hand experience on tools). The organizations and initiatives to support or complement are MCIT’s DEWAE, local IT Institutes, SMEs, MCIT’s HOSA, and Open Source Afghanistan. Focus on Kabul As a part of the recommendation, Kabul has been identified as the location for the Mobile Ecosystem Enhancer. It is the hub of most ICT and entrepreneurship initiatives today in Afghanistan so it is a natural first step to develop mobile app entrepreneurship. By locating the Enhancer in Kabul, it will (1) help access targeted beneficiaries, (2) participate in galvanizing the Afghan ICT community to create a momentum, and (3) allow for more numerous and relevant partnerships and opportunities. While it will be located in Kabul, ad hoc events and training workshops will provide opportunities for national outreach in other provinces. Afghan App Store Accessing end users in Afghanistan remains a hurdle. Afghans do not have a compatible handset, and when they do, most do not know about the platforms (such as iTunes). When the platforms are known, a majority of the population does not have credit cards or payment means to purchase the apps. The only channels available for independent developers and entrepreneurs in Afghanistan today are (1) commissioned development, that is, not the mass market and (2) negotiation with MNOs. An independent Afghan app store, built initially on an Android platform (operating system based on a Linux kernel), will enable content and services providers to monetize their apps. The platform will be the cornerstone infrastructure of the Afghan app economy and will benefit all stakeholders. It will be the intangible infrastructure through which all private providers or end-users of mobile apps will be able to connect and exchange. Its funding is essential to enabling a sustainable ecosystem. Financing the platform depends on donor involvement as private actors in the country do not have the capacity to invest in the platform themselves. The platform will be a game changer for app developers to access the end-user and for users to access Afghan content. 5.0 Implementation of the Mobile Ecosystem Enhancer Key Performance Indicators The Mobile Ecosystem Enhancer’s impact will be measured through nine key performance indicators (KPIs) and is estimated to produce the following results after an initial three-year implementation period: 25 startups created, 20 startup teams receive mentoring and coaching, 425 highly skilled jobs created (including in existing ventures), 100 internship positions filled, 25 investors identified, 15 plus million apps downloaded (including 12 plus million in year three), 500 apps commercialized, 40 events organized, and about 600 individuals trained on mobile technology. In order to reach these results, an investment of $1.1 million for three years is required. The gross revenue generated in year three is estimated to be $5 plus million inclusive of revenue generated from the app store. Budget The capital needed before sustainability is reached in year three would be approximately $1.1 million. The initial and running costs will total $800,000. Initially, $400,000 will be necessary to set up the app store along with other required tools. In year three, another $400,000 will be necessary for maintenance, running, and advertising costs. After year three, the program should be mostly supported by the revenues generated by the Afghan app store, partners, and sponsors. In year three, the analysis estimates $270,000 in direct revenue from the app store with another $130,000 in indirect revenue from advertisers, sponsors, and partnerships. The revenue generated from the app store is based on sales of $5.4 million in year three (with a 5 percent operating fee). Risks and Mitigators: In order to mitigate risks for this initiative, a step-by-step approach is recommended during the implementation phase, while establishing stronger links with stakeholders in the ICT sector Risks Mitigators Gap between skills built and market Establish strong links with the private sector and demand mGov programs to dimension and design the training curricula to their needs. Implement the program in a modular or step-by- step approach so as to take corrective measures when necessary. Lack of absorption capacity and Conduct additional research to size the potential difficulty to identify the right audience and get a thorough assessment of the candidates needs by type of candidates. Lack of coordination with other on- Establish strong links with ongoing initiatives, such going initiatives: risk of duplication as the ICT incubator, from start to differentiate the offering of each initiative and create Difficulty in attracting sufficient complementary programs. candidates because of multiplication of offers for IT students and SMEs FEASIBILITY ASSESSMENT FOR THE DEVELOPMENT OF A MOBILE APPLICATIONS SECTOR IN AFGHANISTAN Copyright 2013 AGENDA 1. Introduction 1.1 Definition 1.2 Context 1.3 Objectives 1.4 Timeline 2. Mapping of the Business Environment for SMEs in the ICT Sector 3. Description of Current Initiatives Outside the Country and Relevance to Country 4. Opportunities for Incubation in Afghanistan 5. How to Accelerate the Mobile Ecosystem in Afghanistan 6. Implementation of the Mobile Ecosystem Enhancer 2 1.1 INTRODUCTION > DEFINITION Over the course of the project, reference will be made to the “mobile app economy” or the “mobile applications sector.” What is the mobile app economy? • A range of economic activity, including enterprises, involved along the value chain of creating, distributing, and consuming digital content, services, and transactions over mobile technology. • Enterprises active in the app economy include app startups, device manufacturers, mobile operating system providers, network operators, software and content agencies, and others. IVR 3 1.2 INTRODUCTION > CONTEXT Several drivers contribute to make Afghanistan an attractive country to further develop mobile entrepreneurship. Afghanistan is a promising territory to spur the app economy A dynamic mobile An increasingly A pioneering territory A strong commitment industry affordable Internet for mobile innovation from donors and GIRoA • Afghanistan has a • Etisalat, MTN, and • Afghanistan was one of • Donors have shown a thriving mobile sector Roshan have launched the first countries in strong commitment to with 4 large mobile 3G the world to launch support innovative operators (including 2 • Smartphones are mobile money services approaches in the telecom giants, penetrating the market with Roshan. Mobile fields of health, Etisalat, and MTN) with decreasing entry money is now offered education, agriculture, • Coverage is now prices by Etisalat and other democracy & satisfactory • Fixed Internet prices MNOs are planning to governance nationwide and prices have sharply declined launch their own • Previous initiatives on have steadily since 2011 with the • Other innovative app development decreased over the launch of the ADSL offer initiatives include m- supported by USAID past few years of Insta Telecom, Agriculture services, proved very popular allowing some such as Malomat • Afghan Government is households to have a committed to launch connection at home strong mGov initiatives + Major social issues open a window for creative approaches to address them, including tech-driven initiatives. 4 1.3 INTRODUCTION > OBJECTIVES The feasibility assessment for the development of a mobile applications sector in Afghanistan encompasses 4 main objectives: 1 2 3 4 Map more Map and specifically the Assess the understand the ecosystem for feasibility to Provide current business business create/support a recommendations environment for incubation (with a mLab (looking at on the way high-growth deep-dive on tech’ different models forward oriented firms in businesses, and/or proposed by the ICT Sector mobile infoDev) applications) The overarching goal of the project is to support the emergence of a mobile applications sector in Afghanistan. 5 1.4 INTRODUCTION > TIMELINE Two workshops have been organized to share findings and collect feedback from the project stakeholders: January May 21st: July 2nd: 30th: First workshop on Final workshop on Kick-off module 1 and 2 module 3 and 4 meeting Secondary 5 weeks research Interview of 40 to 50 7 weeks individuals Opportunity 3 weeks assessment Finalizing 1 weeks assessment Additional interviews 2 weeks and benchmark Formulation of 2 weeks recommendations 6 AGENDA 1. Introduction 2. Mapping of the Business Environment for SMEs in the ICT Sector 2.1 Introduction 2.2 Technical Environment 2.3 Overview of the ICT Players 2.4 Regulatory Environment 2.5 Human Capital 2.6 Business Skills Enablers 2.7 Financial Enablers 2.8 Catalysts 2.9 Main Donors Active in the ICT Sector in Afghanistan 3. Description of Current Initiatives Outside the Country and Relevance to Country 4. Opportunities for Incubation in Afghanistan 5. How We Plan to Accelerate the Mobile Ecosystem in Afghanistan 6. Implementation of the Mobile Ecosystem Enhancer 7 2.1 MAPPING > INTRODUCTION Seven components of the ecosystem of SMEs in the ICT sector have been identified as essential and will be developed in this section: Technical Regulatory ICT Players Human Capital Environment Environment • Exposure to • Current scene of the • Existing laws and • Human resources, technology, Afghan ICT players in regulatory frameworks skills, and knowledge tech environment, Afghanistan that relate to ICT or that impact the mobile including Internet and other legal factors app economy in data access that would impact Afghanistan mobile app entrepreneurs Business Skills Financial Catalysts Enablers Enablers • Set of programs and • Existing opportunities • Ongoing projects and organizations present to access capital in existing organizations in Afghanistan to Afghanistan via grants, that support mobile enhance loans, or equity app entrepreneurship entrepreneurship in Afghanistan 8 2.2 MAPPING > TECHNICAL ENVIRONMENT Mobile usage has soared in Afghanistan. Today, as many as 12 millions Afghans are mobile phone users. 14,000,000 +417% • Since the first operator was 11,902,989 launched in 2003, Afghanistan 12,000,000 10,937,872 has seen a tremendous uptake 9,603,563 10,000,000 8,018,383 of its telecom market. 5 8,000,000 6,696,453 carriers are now operating in 6,000,000 Afghanistan 4,482,441 4,000,000 • Mobile penetration has grown 2,303,228 Mobile penetration from about 2 million users in 2,000,000 has boomed 2007 to almost 12 million - users at the beginning of Q1'07 Q1'08 Q1'09 Q1'10 Q1'11 Q1'12 Q1'13 2013* which represents 2/3 Mobile phone users evolution (Q1 2007 to Q1 2012)* of the Afghan adult population • Among VAS offered today by MNOs, Ring Back Tones** (RBT) are by far the most successful: according to MNOs, between 18% to 30% of their customer base has at least once used this service, i.e., between 2 million to 3.5 million users • 3G has been launched in March 2012 in Afghanistan and is now offered by 3 Smartphone operators: Etisalat, MTN, and Roshan penetration is • Smartphone penetration is estimated at 8% of total devices in circulation by several growing MNOs Source: (*) https://wirelessintelligence.com/; (**) Interviews with MNOs. 9 2.2 MAPPING > TECHNICAL ENVIRONMENT > INTERNET ACCESS IN AFGHANISTAN The number of Internet users has reached 1.7 million in Afghanistan in 2011 and is expected to grow significantly in the years to come with prices declining. 500,000 +178% 460,000 • At the end of 2011, the number 450,000 of Internet users can be 400,000 350,000 estimated to 5% of the total 350,000 289,000 300,000 population* corresponding to 250,000 228,000 Internet usage approximately 1.7 million of 200,000 165,000 Internet users (i.e., people who 150,000 remains limited have accessed Internet over the 100,000 but has grown last month) in Afghanistan, or 50,000 rapidly much more according to other - Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 sources Facebook users evolution (March 2011 to March 2013) • The dynamism of Internet usage is also reflected in the number of Facebook connections ,which has experienced a strong growth over the past 6 months (+33%)** with 460,000 Facebook accounts • While Internet offers used to be almost exclusively for corporations given the very Internet prices high prices of subscriptions (in 2002, monthly connection cost up to $10,000 for 64 have gone down kbps, in 2007 it cost up to $250), with access to It is now affordable for rather affluent households: higher bandwidth – For example, INSTA now offers a 256/128 kbps connection for 1,250 AFN/month (~$22) and up to 2,048 kbps connection Source: (*) http://www.itu.int; (**) Socialbakers. Note: (***) Back in 2005, the Ministry of Communication planned to increased internet penetration from 0.25% to 10% in 2010. 10 2.2 MAPPING > TECHNICAL ENVIRONMENT > OPTICAL FIBRE BACKBONE & INTERNET The fiber optic backbone is partly completed, linking Afghanistan to international bandwidth. Barriers to Internet access still remain. • In 2006, the Afghan government launched an initiative to build a 4,810km optical fiber cable ring The backbone around the country linked launched in 2006 with Afghanistan’s neighbors has been partly • More than 2,678 km have completed been completed today, including connectivity with Iran, Pakistan, Tajikistan, and Uzbekistan Afghanistan’s optical fibre backbone • In spite of all those developments, penetration growth has been slower than expected and several factors could impediment a further development of Internet usage: Barriers to – Low literacy rate and limited command of English (as local content remains Internet access limited) still remain – Connection prices have decreased but remains out of reach for the majority of the population – Lack of access outside city centers Source: USAID and Internews report; Ministry of Communication and Information Technology; Afghan Telecom; http://www.instatelecom.com/trf_dsl.html. 11 2.3 MAPPING > OVERVIEW OF THE ICT PLAYERS ICT players in Afghanistan range from multimillion dollar ventures to small SMEs. Four categories of ICT players have been identified: MNOs and ISPs - Hardware companies - IT and software companies - Content providing companies MNOs and ISPs • MNOs: There are 5 operating carriers in Afghanistan. The four largest ones are: - 6.3m users* - 4.7m users* - 5.7m users* - 4.5m users* - Offers mobile money - Offers a range of VAS - Offers 3G - Offers 3G based on short code and - Offers mobile money - Offers a range of SMS - Launched their own web SMS, including a music, - Offers 3G based apps, including portal Kahkashaan that Islamic, educational, - Offers a range of apps Ring Back Tone (RBT) supports SMS, IVR, USSD, game content through SMS and IVR and SDK, web, and WAP apps, - The platform is provided - Offers four main IVR Ring Back Tones (RBT), including RBT by regional contractors services: TeleMufti, TeleDoctor, TeleLawyer - Will launch a web and - Local content is provided (India, Pakistan) mobile portal in end of by Yama Ramin and Tolo - Local content is provided that provide advices and TeleVasar for classified May 2013: should - Offers Malomat**: an IVR by ACTC support WAP, Web, USSD and SMS-based m- ads and SMS apps agriculture app - MTN play, a web portal, will be launched in Q2 2013 • ISPs: - There are 41 licensed Internet ISPs in Afghanistan - Targeting large corporations/organizations that are less price - Clients: mostly B2B and B2G sensitive - Access is mostly provided through WiFi and VSAT technology Source: (*) https://wirelessintelligence.com/; Interviews. Note: (**) In partnership with Mercy Corps and DAI – IDEA NEW. 12 2.3 MAPPING > OVERVIEW OF THE ICT PLAYERS IT services and content providers companies are usually SMEs facing similar challenges in terms of recruitment, training, access to market, and sustainability. Hardware companies • Clients: mostly B2C • Essentially imported • The market is dominated by small computer and • There are a limited number of large players and mobile handsets dealers authorized dealers mostly for PCs IT services companies • Clients: mostly B2B and B2G • Services include software database development, website development, web hosting, IT maintenance and support • Very few players specialize in one area, mobile software development is still in its infancy • IT services market had a limited number of players in 2007 (less than 30). It has grown to an estimated 176** active players to date Content providers companies • Media are natural content provider for mobile app developers. Tolo, for example, provides content to several MNOs • Apart from the media, very few Afghan companies provide content to mobile app developers and MNOs • Clients: mostly B2B and B2G • Business models: revenue sharing, i.e., 25% to 50% of revenue per download • This revenue sharing model can be a challenge as those companies don’t benefit from a strong bargaining power with their potential partners Source: (*) https://wirelessintelligence.com/; (**) AISA; Interviews. 13 2.4 MAPPING > REGULATORY ENVIRONMENT > BACKGROUND The legal and regulatory framework for the telecom and Internet sectors is built on the Telecom Law and the Telecommunications and Internet Policy. 2002 • Decree 4517 granting the MCIT authority to issue licenses and spectrum frequency permits to private investors and the power to adopt policies, laws, regulations and procedures. 2003 • New Telecommunications and Internet Policy approved by the council of Ministers. • MCIT establishes the Telecom Regulatory Board (TRB), an interim body responsible for monitoring licenses and spectrum permits. 2004 • New National Numbering Plan (NNP) and National Frequency Table drafted by TRB. 2005 • New Telecom Law enacted. 2006 • Establishment of the Afghanistan Telecom Regulatory Authority (ATRA) as a permanent and independent regulatory body, in replacement of TRB. 2010 • E-Afghanistan National Priority Program presented as one of the 22 NPPs and endorsed by Joint Coordination and Monitoring Board (JMCB). • The E-Afghanistan Program is serving as the national development framework for the ICT sector for the next 3 to 5 years. 2013 • New ICT law / amendment currently being drafted by MCIT for approval mid-2013. 14 2.4 MAPPING > REGULATORY ENVIRONMENT > REGULATORY FRAMEWORK FOR MOBILE SERVICE PROVIDERS The current regulatory and legal framework concentrates on technical elements, rather than on content and services. A new ICT Law is currently being drafted. • 10 licenses distinguished in Internet policy The licensing • There are no specific licenses for mobile content or service providers. The Value regime Added Services (VAS) concern MNOs and has not been issued so far • No licensing regime for short code services • ATRA is responsible for supervising the allocation of short codes to private actors Short code • Procedure includes initial agreement with a provider (MNOs) and then getting the allocation of the short code by ATRA procedure • Based on a registration fee (5,000 AFN) + a fee by category (Gold, 70k AFN, Silver 67k AFN, Normal 57k AFN, and an annual renewal fee of 2,000 AFN) • As per the Constitutional Law, the Ministry of Information and Culture is responsible Content providers for the regulation of content fall under the • There is no involvement of the MCIT / ATRA, apart for regulation of the content media law filtering policy • This is not likely to be addressed by the new ICT Law While software • There is currently no regulatory framework for software providers in Afghanistan, providers have no including mobile applications • Software providers can operate under the general business license regime (Ministry of specific regulatory Commerce / AISA) framework • This is not likely to be addressed by the new ICT Law SMEs face regulatory challenges while developing mobile apps: SMEs complain that getting short codes or having content approved by the Ministry of Information and Culture takes time and significant resources. The process is not always clear to them. 15 2.5 MAPPING > HUMAN CAPITAL > POTENTIAL Afghanistan is one of the youngest countries in the world but only a small number of Afghans have access to higher education. • 46% of the Afghan population is below 15 Afghanistan is a years of age. Afghanistan is the 8th youngest reservoir of human country in the world* resource • Between 2001 and 2012, primary school potential… enrollment rose from around 1 million to nearly 8.2 million** • Universities have improved their curricula. They still suffer from a shortage of skilled …but only a small teachers and a lack of equipment and Afghanistan’s population pyramid graph*** number of Afghans facilities have access to • Some institutions, such as the American University of Kabul have positioned themselves higher education as “state of the art” because of lack of • General access remains very low: In 2012, a record of nearly 40,000 university places capacity got awarded for a formal admissions capacity of 34,260 students**** • Private training organisations complement university tuition and allow young Afghan to combine studying and having a job at the same time Language issues limit access to • Dari and Pashto constitute barriers to access to global knowledge content, especially on the Web, since these languages are not very widespread global knowledge Source: (*) http://unstats.un.org; (**) Unesco; (***) United States Census Bureau (2012); (****) Ministry of Higher Education. 16 2.5 MAPPING > HUMAN CAPITAL > ENTREPRENEURSHIP Afghanistan has a long tradition of entrepreneurship. The private sector is booming driven by SMEs, in spite of market distortions, especially in the field of HR. • Afghanistan has given birth to large private ventures reaching regional markets Afghanistan has a (e.g., the Safi Group or Alokozay Group) as well as SMEs long history of • Afghan entrepreneurs often benefit from strong networks overseas thanks to the large entrepreneurship Afghan diaspora in North America, Europe, Pakistan, and Iran • According to AISA: The number of – 5,283 ventures have been registered in 2012 compared with 3,539 ventures in businesses 2003 launched since the – 176 ventures in the ICT sector have been registered in 2012 compared with 19 fall of the Taliban ventures in 2003. Ventures in the ICT sector represent 3% of the newly registered has soared ventures in 2012 • The massive influx of aid money and international agencies, as well as foreign military Afghanistan suffers presence, has deprived the Afghan private sector from precious skilled resources and from a distorted created numerous market distortions HR market • As a consequence, for the same skills and capacity, labor is more expensive in Afghanistan than in neighboring countries 17 2.5 MAPPING > HUMAN CAPITAL > IT SKILLS IT degrees are delivered by major universities and private institutes. Close to 3,500 students are currently enrolled. • 830 IT students graduated in 2013, with an overall 3,500 IT students enrolled* 1,000 • Students from public universities are mostly full time, 1,500 while students at private institutes are mostly part Around 900 IT time 500 students graduate • After graduation, the majority of students go to work 500 each year for banks and government ministries. A lot of the graduates, in particular from the private institutes, Kabul University & ICTI are already employed Herat University • Curricula are centered around programming, Nangarhar, Mazar, Khost, & Polytechnic Private institutions database, and network management • Graduates need further training once they # Private institutes… 74 enter the market; 100% of private businesses …but the skills interviewed have indicated that they conduct … of which CS degree 20 levels are still their own in-house training** … of which Kabul based 15 unequal • Internship and hands-on experience are still missing for students • Mobile software is not taught and software programing is still very basic Source: (*) Ministry of Education; (**) Altai Consulting and interviews of universities and institutes. 18 2.5 MAPPING > HUMAN CAPITAL > IT SKILLS The curriculum taught within the leading universities and institutes focuses on network and database. Internships and hands-on projects are still rare. Kabul University Kardan Institute American University Launch 2008 2009 2006 Admission test Koncor Koncor Koncor Dedicated time • All students are full time • Most students are part time • All students are full time • 4 years • 3 years • 2 years • General curriculum includes • General CS are mostly all • General education includes Curriculum maths, physics, Islam, history, basics required maths, physics, humanities, General language, and introduction to • CS core courses includes and introduction to information IT introduction to all IT fields technology • 1 year • 2 years • 2 years • 2 specializations: network or Curriculum • Specialization includes • Specialization includes software Specialization network, database, and network, database, security, software engineering • Programming includes asp, programming .net, php, java, C++ • Internship mostly within • Required as part of the final Internship / governmental organs year • Internship program recently Project • Mandatory project for 4th year started with IT private actors • Usually within current job students Alumni • No alumni network • No alumni network • No alumni network 19 2.6 MAPPING > BUSINESS SKILLS ENABLERS A large number of business development services (BDS) currently operate in Afghanistan supported by the donor community, GIRoA ,and professional associations • Since 2007, the USAID-funded ASMED program has directly and indirectly provided Donors have been business skill training to over 20,000 clients throughout the country, has supported involved in large more than 9,300 Afghan businesses, and facilitated access to bank loans and equity financing to 103 of those companies* private sector • ABADE is succeeding ASMED with a goal to generate $180 million of investment in development the private sector, targeting SMEs and innovation, with a initial target of more than programs focused 400 recipients** on SMEs • Other donors and entities, such as the World Bank and GIZ (New Market Development Project), DFID, and AUSAID play a major role in private sector development • There is an estimated number of 650 BDS providers in Afghanistan***, their main areas of involvement include basic business training, business planning, marketing and sales, legal support, and others • A national association of BDS has been created to group BDS providers: Afghan An estimated Consulting Companies Association number of 650 BDS • Afghan Ministries (such as MoCI) are supporting entrepreneurs through targeted providers now BDS programs operate in • Afghan Chamber of Commerce and Industries (ACCI) support entrepreneurs through Afghanistan training sessions, business matchmaking events, and fairs • Portals, such as Afghanistan Building Markets, have been put in place to help Afghan businesses access market and support them in getting access to tenders*** • Some specific initiatives have positioned themselves as business accelerators, e.g., the Herat incubator Source: (*) ASMED; (**) ABADE; (***) http://afghanistan.buildingmarkets.org/ 20 2.7 MAPPING > FINANCIAL ENABLERS > OVERVIEW Apart from the banking sector, other funding mechanisms are available to innovative SMEs. Venture capitals (VCs) are still a rarity in Afghanistan. • As of September 2012, loans by Afghan banks to SMEs accounted only for 6.3% of Accessing loans total loans* within the banking • This is partly because of the limited capacity of the recipients to complete the system is difficult collateral documentations required by the Banks for SMEs • Typical corporate loans are not adapted to the needs of Afghan SMEs, with an average mark at $250k • ABADE is planning to generate massive investment in the private sector within the next four years, with a specific focus on innovation and through grant mechanisms Several donor • DFID has created Imurabba, the Afghanistan Business Innovation Fund (ABIF) in 2011 initiatives provide running until 2014 to support SMEs grants to SMEs and • TFBSO has been operating since 2011 in Afghanistan and is the main supporter of the invest in key International Center for Afghan Women’s Economic Development, which will be infrastructure launched in May 2013 projects • The World Bank is funding, through its FSRPP* project, the deployment of a modernized inter-bank card and mobile payments switch Private investment • Private investment funds are still a rarity in Afghanistan fund, aka VCs are • SEAF-AGF has been active since 2007 and devoted part of its funding to ICT ventures, still very rare including Rana technologies Source: (*) Da Afghanistan Bank, Financial Supervision Department, Nov. 2012. 21 2.7 MAPPING > FINANCIAL ENABLERS > ABADE Following ASMED, USAID has launched ABADE, its new framework to provide assistance to SMEs in Afghanistan. ABADE framework • Time frame: 4-year program, from November 2012 to October 2016 • Implementing partners: VEGA / IESC • Objectives: increase domestic and foreign investment, stimulate employment within the private sector • Key targets: - Generate $180 million in private sector investment - 365 public-private alliances - 41 innovation public-private alliances Components Technical assistance and business SMEs and Public-Private Business enabling environment advisory services • Through a competitive process, • Technical assistance provided to • Improve business environment by awards to SMEs ABADE to provide recipients and program lifting specific regulatory and matching grants on a 1:2 basis stakeholders, including operations procedural barriers, including • Public Private Innovation Alliance & management, access to finance, support to ministries and analytical (PPAs) are designed to stimulate and quality studies innovation focused initiatives. ABADE funding to be matched on a 1:1 basis Roll out • 1st round of requests for application launched in Feb. 2013 • SMEs enterprises alliances (Jan. to Sept. 2013), estimated • PPAs innovation alliances (Jan. to Sept. 2013), estimated funding $10m, total awards 100, average award $250k funding: $3m, total awards 15, average award $150k 22 2.7 MAPPING > FINANCIAL ENABLERS > IMURABBA - AFGHANISTAN BUSINESS INNOVATION FUND The Afghanistan Business Innovation Fund (ABIF) is a donor-backed investment challenge fund that supports innovative projects within traditional private sectors. • ABIF is a $7.5 million investment challenge fund financed by DFID & AUSAID, launched 400 358 in 2011 and due to run until March 2014 350 300 ABIF is now into its • ABIF offers grants as an incentive to invest 250 second in innovative business models, products, or 200 170 competitive round services / typical grant size is $250k 150 100 of investment • Committed capital to date: $2.5 million and 50 14 13 33 24 7 7 projects funded challenge with 7 0 1st round 2nd round projects funded so • Key sectors include: Dec. to July 2012 Dec. To July 2013 far – Horticulture, livestock, carpets, furniture Concept notes Draft shortlist – Health care, household services Final shortlist Projects funded – Mining services • The challenge is mostly advertised through the partnering networks of AISA and ACCI (including local provincial branches) along with dedicated road shows & workshops • Throughout the selection process, applicants, supported by the ABIF team and a ABIF wants to selected number of BDS firms, move from the initial concept note to a complete incentivize, not Business Plan (BP) / financial model, including a 4-year cash forecast subsidize • The grantees propose different milestones within their BP: funding is provided upon completing of milestones supported by documentation, to ensure that the agreed upon investments have been made Source: ABIF Interview. 23 2.7 MAPPING > FINANCIAL ENABLERS > IMURABBA - AFGHANISTAN BUSINESS INNOVATION FUND > THE AL-HADI PROJECT One of the grantees of the first round, the Al-Hadi project introduces the first branded pharmacy chain of Afghanistan embedding mobile into its approach. Project background • Al-Hadi Ltd is a family-owned business active in the pharmaceutical sector since 1994 (import) • It has the license to import more than 80 products and a national distribution network • There are to date no pharmaceutical chain in Afghanistan • Counterfeit medicines are a real issue on the market Bringing in innovation through mobile • The Al-Hadi project introduces the first pharmacy chain to leverage the commercial potential of quality assurance while specifically targeting lower income customers • Using mobile technology to support the brand strategy - Every product sold by 786 is barcoded. Customers will be able to send the barcode by SMS to a short code number, 786 - Once the barcode has been verified against the 786 database, the customer will then receive an automatic reply confirming the product and the expiry date • The project is currently in pilot phase, with 5 shops being set up. If the pilot is successful, 15 additional shops will be launched across Kabul Source: ABIF. 24 2.7 MAPPING > FINANCIAL ENABLERS > VCS > SEAF The SEAF backed Afghan Growth Finance (AGF) fund is the most active VC in Afghanistan for SMEs. • AGF is a $55 million investment fund seeking to provide long-term assistance to SMEs • Investments range from $100k to $4 million Afghan Growth • Committed capital to date: $25 Finance has been million active in • Key sectors include Afghanistan since – It & Technologies 2007 – Dry fruits and Nuts – Transports and logistics – Cold and dry storage – Carpets – Marble and stone …and invested, for • The objectives is to help Rana tech to become first ISP/ICT company to offer instance, in Rana broadband Internet services to all 34 provinces of Afghanistan. technologies Source: SEAF-AGF. 25 2.8 MAPPING > CATALYSTS > OVERVIEW OF THE MGOV INITIATIVES Initiatives within the MCIT, under the umbrella of the E-Afghanistan National Priority Program, have been designed to leverage the mobile infrastructure. MCIT Policy • The MCIT has launched several ambitious initiatives to stimulate the IT sector in Afghanistan, while improving the access of governmental services to Afghan citizens • Those initiatives include: - eGov projects - mGov projects The MCIT is implementing 4 mGov projects, funded by the World Bank 1 2 3 4 Mobile Service DEWAE mGov strategy ICT Village Delivery Platform Innovation Support Program • The aim is to formulate • Awarded to • Awarded to AIMS • The aim is to gather all IT the mGovernment strategy Paywast/Ustronics • In 4 years, a total of $5 related private and public and includes governmental • Includes the development million will be awarded organizations in the same employees training of 30 mobile apps through grants area delivering governmental • Includes an ICT incubator services 26 2.8 MAPPING > CATALYSTS > 1 MGOV STRATEGIC FRAMEWORK The MCIT is working on formulating the mGov strategy. Training has been provided to governmental employees so that they can identify mobile apps opportunities. Scope of work • The aim is to : - Formulate the mGovernment strategy - Train governmental employees so that they can identify and report opportunities for mobile apps to deliver governmental services • Timeframe: - The report published 2013 - About 150 governmental employees and 1,500 individuals have already been trained • Two other documents will be published in the coming months that will help shape the mGov strategy: the ICT policy and the IT industry report • « The report will provide an assessment of the current situation and a recommendation of the mobile strategy that can be implemented in Afghanistan until 2016» Mr. Payab - MCIT • The report emphasizes that although the mGov strategy is centrally designed through the MCIT, its success will require local representatives that can raise awareness and build capacity locally • Health, education, and agriculture will be addressed as a priority Expressed needs / Opportunities • Needs to be create synergies between all mGov projects: “all • Capacity building is key these projects should go hand in hand” 27 2.8 MAPPING > CATALYSTS > 2 MGOV MOBILE SERVICE DELIVERY PLATFORM The mGov platform will be set up within the next 6 months with a initial delivery of 10 applications. The platform will be called HOSA.* Organization in charge • Paywast/Ustronics: - Launch year: 2011 - Location: Kabul - Ownership: Subsidiary of UStronics - Manager: Khaled Qaderee - Staff: 30 employees - Core business: Providing SMS-based services Scope of work • Develop and launch a platform that will host and make accessible mobile applications that provide governmental services - The platform will support IVR, SMS, and USSD apps. It will be available in Dari, Pashto, and English - The platform will provide hosting to applications developed by private companies as long as they offer a governmental service - An API will be provided for approved third party applications to connect to • In addition to the platform, 30 mobile applications providing governmental services will be developed - Mobile applications are developed in collaboration with ministries. Apps copyright will belong to the ministries - Billing will vary: some apps might be free for end-users, others might not be • Timeframe: 24 months contract. 1st step: October 2013, the platform and 10 mobile applications launched - Tentative apps (still in discussion) include: citizen survey, exams results, mobile health alerts, school admissions, transports alerts, disease surveillance and outbreak reporting, request and tracking Expressed needs / Opportunities • Create a formal association for mobile developers where they • Create a platform similar to the platform developed today for can exchange their ideas (following the model of AMMOA) the mGov project to host apps not linked to government • Enhance the current curriculum of universities services • Note: (*) HOSA means “easy, convenience” 28 2.8 MAPPING > CATALYSTS > 3 DEWAE – INNOVATION SUPPORT PROGRAM The Innovation Support Program will last until 2015 with a $5 million grants to boost the application economy. Organization in charge • AIMS: - Launch year: 1997, a UNDP-funded NGO until 2008 - Location: Kabul - Executive Director: Mr. Azizi - Staff: 17 employees - Core business: Management Information System and Geographic Information System Time frame and governance • Time frame: 4-year contract • $5 million of grants will be awarded in 5 batches: 1st batch 2nd batch 3rd batch 4th batch 5th batch April-May 2013 Sept-Oct 2013 May-June 2014 Feb-March 2014 August-Sept 2015 • DEWAE reports to the Special Executive Board constituted of : two representatives of the MCIT, one representative of the Ministry of Higher Education, one of the Ministry of Education, one of the Ministry of Public Health, one of the Ministry of Rural rehabilitation and development program, one of the Ministry of Agriculture, one of the Computer Science Department at Kabul University • Applications will be first reviewed by a Panel of experts: 7 experts from the public and the private sector will shortlist applications. A panel of judges: 3 to 5 representatives from the public and the private sector will award the grants. Members of both panels remain to be appointed Expressed needs / Opportunities • Create a mentorship program to accompany grants winners • Create a certification body as there can be doubt on the • Create a technology awareness program authenticity of apps and software offered in Afghanistan 29 2.8 MAPPING > CATALYSTS > 3 DEWAE – INNOVATION SUPPORT PROGRAM The scope of grants focuses on 4 categories with the objective of making governmental services accessible to a wide audience. Scope of grants • Process: - 4 different types of grants - For mTechnology, mGovernance and Students award, AIMS in collaboration with the MCIT will issue challenges on the topic of government services that could be made more accessible. Applicants will have to answer those challenges - « It will be a two-way traffic »: AIMS will gather challenges raised by the public and issue some of them for the competition mTechnology awards mGovernance awards Students awards IT Champion awards To award and support the To reward and support a To encourage innovative and To reward the services of development of mobile apps specific impact through the socially geared thinking and people who have to address challenges and use of mobile apps for ideas, targeting students in contributed to the services delivery, program service delivery programs the field of technology promotion of ICT in management, and • 28 Practice awards • 27 Young ICT Innovator Afghanistan performance management - Value: $80,000 awards • 21 IT Champion awards • 28 Idea awards: - Concepts ready to roll - Value: $5,000 - Value: $2,500 - Value: $2,000 out - Mobile apps - The Special Executive - Concept • 27 Technologists awards Board will nominate • 28 Solution awards: - Value: $5,000 those awards - Value: $5,000 - Any IT solution - Concept + implementation plan • 28 Practice awards: - Value: $80,000 - Ready to roll out 30 2.8 MAPPING > CATALYSTS > 4 ICT VILLAGE The ICT Village, a public-private initiative will not be operational in the coming year. But an incubator dedicated to support IT entrepreneurs will open by the end of 2013 Organization in charge • Ownership: MCIT • Location: Kabul • Management: through private contractors • Scope: support to IT entrepreneurs Scope of work • The ICT village is a medium/long-term plan of the MCIT to locate all IT-related organizations in one location in Kabul: the MCIT office will be established in the ICT village as well as headquarters of private companies such as software companies and Mobile Network Operators • Included in the ICT village is the ICT incubator which should be launched in 2013: - It will be located in Kabul. Location is still under discussion • The incubator will be set up within the next 6 months; it should be up and running by December: - Currently in the first phase of the request for expression of interest phase - Final proposals should be received by end of May - Mid-summer: the incubator manager should be in place • The Incubator is would possibly host: - Ideas & projects coming out of the Innovation Support Program, DEWAE - Talents having gone through the Skills Development Project (World Bank/MCIT) • The incubator would have to reach sustainability within 2 to 3 years 31 2.8 MAPPING > CATALYSTS > PROFESSIONAL ORGANIZATIONS The ICT sector has seen several professional organizations emerging over the past few years. • National ICT Council - Formed in 2007 to define & coordinate technological standards across ministries - Chaired by 1st VP, members include key Ministers & representatives from private sector, media association, ICT consumers Professional • ACSA: Afghanistan Computer Science Association organizations - Founded in 1999 to advance professional excellence in ICT - Projects include localization of software, ICT awareness campaign, promotion of represent the internet policy, regulatory reform interest of both the public and the • NICTAA: National ICT Association of Afghanistan - Formed in Feb 2006 as an alliance & umbrella association of non-government ICT private sector players - 3 permanent seats at National ICT Council are reserved for NICTAA • NISPAA: National ISPs Association of Afghanistan - GIPI-AF (Global Internet Policy Initiative) initiated establishment of NISPAA in 2006 • iHub - Informal network of IT professionals organizing monthly events open to all - Soon to start “weekend code” 3 organizations • AMMOA are covering new - Newly formed associations of the 4 leading MNOs to promote mobile money - Acts as a lobbying and coordinating entity. Sponsored by USAID grounds • Open Source Afghanistan - Promotes open source software in Afghanistan - Recently held an event at Nangarhar University 32 2.8 MAPPING > CATALYSTS > EVENTS Impactful events have taken place in the past couple of years to mobilize the Afghan ICT community. Kabul Innovation Lab Open Source Afghanistan iHub • Organized by: Internews, • Organized by: Open Source • Organized by: Farshid Ghyasi sponsored by USAID Afghanistan, last event sponsored (Netlinks) and Javid Hamdard • Participants are media, information by FirstRate Afghanistan (private (Internews) and ICT and companies and NGOs ICT company) • Participants are ICT students and • Goal: To develop innovative • Participants are ICT students and professionals, any ICT enthusiast technology-based systems to professionals • Goal: informing the ICT improve the reach of the media, • Goal: Provide awareness and community on opportunities in professional standards, and training on Linux and Free/Open Afghanistan and on the latest quality of content Source Software (FOSS) technologies available Latest: April 3rd 2013 Latest: February 11th to 14th 2013 Latest: February 19th to 21st 2013 • Frequency: once a month, • Frequency: once a year • Frequency: once a year usually the first Thursday of the • 1 day session and 3 days • 3 days event month workshop • Number of events completed: 7 • A couple of hours long sessions • Number of events completed: 2 • Location varies. The last event • Number of events completed: 12 • Location: in Kabul was organized in Jalalabad • Location: in Kabul 33 2.9 MAPPING > MAIN DONORS ACTIVE IN THE ICT SECTOR IN AFGHANISTAN The most active donor in Afghanistan on ICT and entrepreneurship is USAID, as well as the World Bank and DFID. • Funds the deployment of a modernized inter-bank card and mobile payments switch • Funds 4 mGov projects for the MCIT: i) mGov • The Financial Access for Investing • The Mobile Solutions Technical strategy, ii) Mobile Service Delivery Platform, iii) in the Development of Assistance and Research program Afghanistan program is helping aims at fostering the rapid DEWAE Innovation Support Program, iv) ICT Village the Afghan government and the adoption and scale-up of mobile private sector develop a robust money, mobile technologies, and • In collaboration with GIZ, funds the New financial sector. Includes AMMOA , mobile data solutions Market Development Project, which aims at which groups the four main MNOs the revitalization of private sector activities of Afghanistan and aims at in Kabul, Mazar, Jalalabad and Herat developing the mobile money economy • TFBSO’s initiatives include the Herat incubator and the American University • Funds Imurabba, previously known as ABIF (the • ABADE is succeeding ASMED with a Afghanistan Business Innovation Fund): a $7.5 goal to generate $180 million of million investment challenge fund financed by investment in the private sector, DFID & AUSAID, launched in 2011 and due to run targeting SMEs and innovation, • Event aiming at developing until March 2014. Offers grants as an incentive to with a initial target of more than innovative technology-based invest in innovative business models, products or 400 recipients systems organized once a year services / typical grant size is $250k. Committed since 2012 by Internews capital to date: $2.5 million and 7 projects funded. 34 AGENDA 1. Introduction 2. Mapping of the Business Environment for SMEs in the ICT Sector 3. Description of Current Initiatives Outside the Country and Relevance to Country 3.1 Introduction 3.2 Three Models 3.3 Lessons Learned 3.4 Best Practices / Suggested Ideas 3.5 Operational KPIs 3.6 Financial KPIs 4. Opportunities for Incubation in Afghanistan 5. How we Plan to Accelerate the Mobile Ecosystem in Afghanistan 6. Implementation of the Mobile Ecosystem Enhancer 35 3.1 INFODEV INITIATIVES > INTRODUCTION Some infoDev activities are focused on mobiles. Its program Creating Sustainable Businesses for the Knowledge Economy program (CSBKE) has supported 12 initiatives to date. • CSBKE was launched in 2010 and is based on a public/private partnership with the Promote and Ministry of Foreign Affairs of Finland and Nokia support mobile • With a focus on mobile applications, business incubation, and technology entrepreneurship entrepreneurship, it has supported the launch of 10 regional initiatives Georgia Armenia Azerbaijan Moldova Nepal Vietnam Uganda Kenya Tanzania South Africa 36 3.2 INFODEV INITIATIVES > 3 MODELS Reviewing infoDev supported initiatives in other countries sheds light on different concept models* than can be used to engage entrepreneurs around mobile technology. • All initiatives are designed to maximize the development impact of mobile technology and generate innovative entrepreneurship mHub, mLab, and • The concept models are different and go from a light footprint model based on virtual incubator social networking—mHub—to a full incubator model—mLab follow different • The virtual incubator model is an alternative model, focusing more on supporting models entrepreneurs than on technology • Depending on the countries and initiatives, governance schemes vary (and range from NGOs to fully private contractors) infoDev’s initiatives 1 2 3 mHub mLab Virtual incubator • An mHub is an informal • An mLab provides the • A virtual business incubator network gathering a environment to help nurture acts as an incubator without community of individuals and and create sustainable mobile walls and aims at reaching organizations around the businesses. It also acts as a potential incubatees through a opportunities of the mobile role player in the mobile variety of mechanisms ecosystem ecosystem Note: (*) The models are here presented for the purpose of discussion. Initiatives on the ground adjust to local market conditions and are often built on a portfolio of services across models. 37 3.2 INFODEV INITIATIVES > 3 MODELS > 1 MHUB An mHub is an informal network gathering a community of individuals and organizations around the opportunities of the mobile ecosystem. • A mHub is a social network focused on mobile An mHub is a • Its aim is to bring together organizations and individuals who are interested or social networking willing to work around mobile technologies hub • It is an informal network building a community of shared practice, lobbying to lift the constraints of the ecosystem and channelling opportunities • The social networking hub is typically based on: - Regular informal meetings bringing together industry professionals, individual Based on informal developers and academics meetings, it brings - An online platform acting as a forum and a networking tool for the community in mobile-centric • In addition, mHub can be used as a channel to advertise or organize specific events events to the such as: - Hackathon community - Challenges and contests - Informal meetings with VCs And does not need • As it is mostly based on informal networking, an mHub does not require any specific any specific governance in the way it is designed, at least in the early stages governance • It can be endorsed or animated by a private organization whose business interests requirements are in line with the emergence of an active innovative mobile scene 38 3.2 INFODEV INITIATIVES > 3 MODELS > 1 MHUB > CASE STUDY NEPAL The infoDev supported program in Nepal, Mobile Nepal shows what can be achieved by setting up a networking hub. Key figures Services and activities • Mobile Nepal, a mHub, started its activities in • Raise awareness among students about the June 2012 potential of mobile for innovation • Location: Nepal • Programs at university, training sessions, and • Ownership: local private contractor modules YoungInnovations • Competition and challenges, including • 1 full time project manager + 1 project hackathon coordinator • Pitching events, idea submission • Budget : $25k for 2 years / additional grants • Online forum, discussions and community from the WB ($15k + $25k) to organize events • Funding secured for 2 years Projects Among the many projects of Mobile Nepal • Hackathon: 3 organized so far. The latest included 39 participants, 10 applications developed over 2 days, and 3 winning apps • Training: 6 sessions, including 1 iOS, 3 Android (basic), and 2 development fest in association with Google Developer Group • Workshop: 1 advanced workshop on Android apps development • Outreach and talk program: focus group discussions, visits to universities to raise awareness around mobile applications, organized events • Regular meetings: every 2nd and last Saturday of the month, open discussions around mobile technology • Events: Pivot Nepal currently running, competition for mobile app ideas, 116 submitted, 15 selected, $1,000 for the top 3 ideas, $3,000 for the wining idea Local mobile ecosystem • Mobile penetration in Nepal: 62%, 3G available but only covers • No access to international credit card; thus, billing is an issue 30% of the population. Smartphone penetration remains low with mobile money still in its infancy 39 3.2 INFODEV INITIATIVES > 3 MODELS > 1 MHUB > CASE STUDY NEPAL Mobile Nepal was built on: starting small, an appetite for constantly bringing new ideas, and the involvement of a private actor. Thoughts on the mobile app sector • Mobile entrepreneurship is mostly smartphone apps and most developers are focusing on this ecosystem: - “As a company we have worked with the ministry of public heath to launch a SMS-based app. It took us 2 years to launch the solution which is too long for young entrepreneurs.” • Creating a local app store is an option to bypass the billing constraint: - The local app store will work only on Android - It will require cooperation from the MNOs Key learnings • Built the community first and then establish the partnerships: - 10 to 15 champions have been identified to get traction from the communities - The large set of partners includes business organisations, such as the local Chamber of Commerce for Pivot - “Focusing on mHub, and getting to know the sector and be identified within the sector was good.” • Always bring new ideas into the hub to keep up the brand: - Topics and organization of the hackathon have constantly changed - New events and meetings organised (Pivot, Spaceapps challenge) • To have a private company in charge of the program brings additional value 40 3.2 INFODEV INITIATIVES > 3 MODELS > 2 MLAB An mLab provides the environment to help nurture and create sustainable mobile businesses. It also acts as a role player in the mobile ecosystem. • An mLab will have a physical location, incubating technology entrepreneurs who An mLab is an can interact, work, gain access to tools and expertise to start and grow their infrastructure for businesses mobile • It also aims at playing a leading role in the mobile ecosystem, supporting entrepreneurs nonresidents and acting as a gateway to access industry players and investors • Residents benefit from premium services on site: - Office space / Internet access / testing facilities / equipment It offers a wide • In addition, a wide range of services are proposed to both residents and range of services nonresidents: - Training / workshops both to residents - Consulting / mentorship and nonresidents - Access to investors • The location is often used to organize various events in relation with the community: - Mobile Monday, code sharing, contests, hackathon, and others • An mLab can be an NGO, run by a private organization or by a consortium of organizations Governance • Given the wide objectives of an mLab, a consortium of organizations seems to be schemes can vary appropriate as it brings together various stakeholders with each its own area of expertise, for example, university, private IT venture, government 41 3.2 INFODEV INITIATIVES > 3 MODELS > 2 MLAB > CASE STUDY EAST AFRICA mLab East Africa was launched as an incubator, based on a consortium of 4 public and private organizations. It hosts a yearly start-ups pitching competition: Pivot East. Key figures Services and activities • mLab East Africa started its activities in • Incubation space and facilities 2011 • Support mobile entrepreneurs • Location: Nairobi, Kenya, but also covers ‐ Training Tanzania, Uganda, Rwanda, Burundi ‐ Business skills • Ownership: Consortium of 4 organizations, ‐ Access to finance public and private • Marketing intelligence • Team: CEO, 2 assistants, 1 admin, 1 com, 1 • Training programs tech, 1 social media • Events (hackathon, Devcamp) • Budget for 2 years: $700k grants, $350k • Challenges generated revenue. Objective of 50% self- funded for 2013 Incubated projects & tools • 6 incubated projects supported with a target of an additional 5 in 2013: ‐ 3 projects targeting mass market, through health, students, agriculture ‐ 3 projects focusing on businesses, 2 products with mobile payment for retailers and one mobile marketplace ‐ In addition, mentorship and other incubation services provided to another 5 companies • The main channel to reach the target audience is through the organization of a yearly competition: Pivot East ‐ It is a start-ups pitching competition, on a regional base. Advertised through social media, dedicated workshops, and road shows ‐ All entries are managed online, processed by a jury ‐ The event is sponsored by major players of the industry: Qualcomm, Intel, Microsoft, Facebook, and Nokia Local mobile ecosystem • Mobile penetration: 30m mobile subs, 3G coverage in all major • Access to billing remains a big challenge for developers and cities, smartphone penetration around 2m, Android lead editors of content and services 42 3.2 INFODEV INITIATIVES > 3 MODELS > 2 MLAB > CASE STUDY EAST AFRICA For mLab East Africa, building a sustainable model requires to bank on start-ups targeting mass market. Thoughts on the mobile app sector • Developers and business model ‐ Strong belief that skills and money will come from the mass market. “The idea is to support companies that will scale beyond service / commissioned development.” ‐ Looking for $35k to $50k micro VCs, “We are trying to built a community of local investors, which could help bridge the gap between expectations of the VCs versus the capacity of the start-ups.” • mLab as an equity partner? The Pivot East 2012 edition ‐ “Long-term revenues for the lab will come from the success of the people we incubate.” Key learnings • mLab East Africa is a consortium of 4 organizations, both private and public, each bringing an area of expertise ‐ eMobilis: a training institute, focusing on mobile software ‐ iHub: bringing the network and the reach to the tech community ‐ The University of Nairobi / School of Computing ‐ World Wide Web Foundation, for curriculum and content • The challenge of sustainability ‐ Building the physical premises took a lot of capital expenditures and time ‐ “A lot of our operations have revolved around fundraising, instead of delivering.” ‐ Once brand is installed and strong partners and sponsors on board, it has been possible to sponsor each space of the premises 43 3.2 INFODEV INITIATIVES > 3 MODELS > 3 VIRTUAL BUSINESS INCUBATOR A virtual business incubator acts as an incubator without walls and aims at reaching potential incubatees through a variety of mechanisms. Virtual business • A virtual business incubator goes beyond a physical space incubators are • Three types of concepts exist: - Incubators offering mainly business development services concentrating on - Networking focused incubators services - Finance focused incubators • Virtual incubator will focus on three types of different service concepts: training and mentoring, networking, and seed capital Services are • Training and mentoring: delivered to - The focus is on developing entrepreneurial capacities to get start-up off the ground. Typical example is to connect a would be entrepreneur with a mentor to entrepreneurs to coach the business plan phase help them get • Networking: their business off - The aim is to bring together entrepreneurs and investors into the same network. Typical examples are business plan competition or mobile Mondays the ground • Seed capital: - The objective is to provide seed investment capital combined with short or long term mentoring Governance can • Governance of virtual incubators may vary depending on the type of services vary depending on provided the type of • Examples of governance vary from foundation to private venture services 44 3.2 INFODEV INITIATIVES > 3 MODELS > 3 VIRTUAL BUSINESS INCUBATOR > CASE STUDY VIETNAM The virtual incubator in Vietnam is supporting the existing state-owned incubator as well as building a network of entrepreneurs and investors. Key figures Services and activities • Location: Hanoi also covers main cities in • Mobile social network: Vietnam ‐ Demo days • Ownership: private Topica (main business is ‐ Development camps eLearning) • Virtual incubator / support to • Team: 1 project manager, 1 admin, 2 team entrepreneurs, incubators: members ‐ Start-up events • Budget for 2 years: $300k grants. Objective ‐ Training for incubation managers of sustainability within 2 years • Virtual incubator / network of investors: ‐ Develop network of international and local investors / business angels Projects & tools • Initial KPIs: 8 mobile events – 700 participants, 5 start-up events- 500 participants, Demo day events – 100 participants, investment network – 10 deals generated • Training to Vietnam incubators managers: ‐ Mostly directed at government run incubators. Ongoing training sessions based on use cases (start-up & entrepreneurs) • Start-up events ‐ Close links with all main universities. Very successful in attracting young audience to events, mostly mobilizing through Facebook (9,000+ followers) • Investment network: business angels group set up, but no investment generated so far ‐ The event is sponsored by major players of the industry: Qualcomm, Intel, Microsoft, Facebook, Nokia Local mobile & ICT ecosystem • Mobile penetration: 3G widely used in all major cities, • Private mobile software ventures exist, only small size. Most of smartphone penetration: iOS, Android, Windows the services billed are through MNOs, with revenue share for editors 45 3.2 INFODEV INITIATIVES > 3 MODELS > 3 VIRTUAL BUSINESS INCUBATOR > CASE STUDY VIETNAM Topica has come up with a simple and cheap way to build a strong network of would be entrepreneurs, targeting mostly the youth. Thoughts on incubation & the local ICT sector • Target the youth: ‐ Vietnam has numerous start-ups in the ICT domain ‐ Topica has been targeting students, mostly through universities and entrepreneurs clubs ‐ “They are the ones who are missing the finance and the capacity for IT.” • Network: online and regional ‐ The network has been mostly consolidated through a very active online community via Facebook ‐ But also completed by a set of satellite centres to reach the The Pivot East 2012 edition region, through contacts with local students and entrepreneurs A start-up event in a coffee shop clubs Key learnings • A simple methodology to build the virtual network: ‐ Mostly based on organizing events for entrepreneurs to network ‐ Potential investors are also coming ‐ The venue generally takes place in a coffee shop, with a deal with the owner => no cost ‐ 700 entrepreneurs reached so far • For Topica, supporting this initiative is complementary to its core business: ‐ Main business is on eLearning. By building the network of entrepreneurs, Topica gets access to use case, for which they produce online videos that thy distribute on their eLearning platform, as online teaching material ‐ They are quick in delivery, able to take risk and to provide the business support 46 3.3 INFODEV INITIATIVES > LESSONS LEARNT Some lessons learnt are common to all models. Others are specific to each model. Lessons learnt across all models • The key is to understand who you are serving and what are their needs. Building on the community you want to reach is a critical first step • Once the community is built, the brand becomes strong. It is then possible to attract a large set of partners & sponsors that will generate revenues and make the brand even more relevant to the community • Designing the appropriate governance for the model is important. Whether a foundation, an NGO, a private company, the governance has to be in line with the overall objectives 1 2 3 mHub mLab Virtual incubator • Use a limited number of champions • Building or setting up the physical • Possible to be creative in organizing to build the community: once on- premises can take a lot of time and events at no cost board they will act as ambassador capital expenditure… • Events are organized based on for the hub and bring their network • … which can divert from delivering existing networking organizations of partners and individuals other services or getting the brand (students groups, clubs) • New ideas are constantly needed to & the community installed • Online social network support the keep the community attracted, • A secured place can become a consolidation of the community whether it is events (for example, disadvantage as it makes the mLab • Attracting and building the network hackathon) or opportunities (new less accessible to the audience it of business angels is not a short challenges) or exposure to a new wants to reach term effort, it requires more time technology (training on latest • In a place where you don’t have the and effort Android API) critical mass of innovators, you might need a physical place where individuals can come together and support each other 47 3.4 INFODEV INITIATIVES > BEST PRACTICES / SUGGESTED IDEAS Best practices have emerged among the initiatives interviewed: they include focusing on design, internship, and tools all built to fill in the gaps. • Some labs have built up a specific offer or a range of services in regards to product design: - Based on findings that the capacity to design products (user interface, user experience) was poor Enhance product • Expertise and training are provided to incubatees and nonresidents to: design - Select the appropriate platform for their project - Understand and get trained on how to design a best in class application • This new area of expertise also provides more attractiveness toward the lab reinforcing its position as a hot bed for innovation • In most of the countries where infoDev initiatives are based, it is hard for developers to try and find an internship in relation to new mobile technology Provide internship • Some labs have created and provided internship opportunities for young graduates and mentorship or individual developers to be able to get their first experience in developing opportunities application • The interns are mentored by experts from the labs, receive training and work directly on a project or idea generated by the lab and the community • Access to billing is a constraint common to many emerging countries Open access to • Some labs are trying to tackle the issue either through a dedicated portal that would the mass market be operated by the lab or through the project of an incubatee (for example, a start-up who wants to provide a market place) 48 3.5 INFODEV INITIATIVES > OPERATIONAL KPIS Five operational KPIs have been defined as a framework to identify which model can be operationally successful in a given context. KPIs • Definition mHub mLab Virtual Incubator • Typical output Based on mentoring model • Ability to engage • Lab = innovation hot • Limited community • Based on events Reach & with the bed + focal point mobilization community • Dependent on online community tools • Access to nonresidents • Engagement through • # of IT individuals also through events mentorship • Both online + physical • Brand equity • Mostly online • Mostly online location Brand • x% of brand • Dependent on • Dependent on • Impact of quality of awareness / equity community ideas / projects community • Full scope provided to • Mostly focused on • Scope of services • Mostly events and residents access to finance & provided informal gatherings Services • # of projects / • Depends on • To nonresidents business development through events and services indiv. supported partnerships meeting • Mentorship • Capacity to • Limited to challenges • Specific as per type of • Strong potential of generate / contests organized Partnership events or community physical location partnerships • And / or quality of addressed • Event based • # of partners ideas catalyzed • Depth of financial • Incubated projects act • Core expertise of such • Through challenges & Access to support provided networking events as a showcase incubator finance • # of projects only • Capacity to attract the • Capacity to attract the funded best ideas best ideas 49 3.6 INFODEV INITIATIVES > FINANCIAL KPIS Building a sustainable model remains a challenge. Each model has its own strengths and weaknesses. KPIs • Definition mHub mLab Virtual Incubator • Typical output Based on mentoring model • Level of Capex • Cost of setting up CAPEX required • Low Capex required physical location • Low Capex required • x% of total budget • Management team + • Level of running • Limited to • Limited to maintenance of OPEX cost management team location management team • x% of total budget • Event based • Event based • Event based Revenues • Revenues • Mostly from sponsoring • From sponsoring • Mostly from sponsoring generated from events events events from partners • Limited contribution • From physical location • Limited contribution partners • x% of running cost to running cost (rents) to running cost Revenues • Revenues • Based on sponsorship, • Access to office space generated from • Access to business from e.g., Industry sponsor or testing labs services development services for a training session • Mostly sponsorship services • x% of running cost • Possible if governance • Possible if governance Revenues • Revenues allows equity allows equity from generated from • Not applicable • Commissioned based • Commissioned based, capital capital e.g. % of funding e.g., % of funding • x% of running cost raised / apps raised / apps investment published published 50 AGENDA 1. Introduction 2. Mapping of the Business Environment for SMEs in the ICT Sector 3. Description of Current Initiatives Outside the Country and Relevance to Country 4. Opportunities for Incubation in Afghanistan 4.1 Overview of the Mobile App Ecosystem in Afghanistan 4.2 Sizing the Opportunity 4.3 How to Get There? 4.4 Key Triggers 4.5 Applying the Most Appropriate Model in Afghanistan 5. How we Plan to Accelerate the Mobile Ecosystem in Afghanistan 6. Implementation of the Mobile Ecosystem Enhancer 51 4.1 OPPORTUNITIES > OVERVIEW OF THE MOBILE APP ECOSYSTEM IN AFGHANISTAN An overview of the ecosystem of SMEs in the ICT sector can be provided through seven essential components: Technical ICT Players Regulatory Environment Environment • 12m mobile users Four categories of ICT • Concentrates on players: • 8% smartphone technical elements, • MNOs and ISPs penetration rather than content • Hardware providers • More than 5% and services • IT services providers Internet penetration • A new ICT law • Content and media providers currently being Human Capital drafted • A young population Catalysts with growing access to Addressable Afghan mobile app market education • MCIT mGov initiatives: • Long tradition of HOSA, DEWAE, and the entrepreneurship ICT incubator • 3,500 IT students • Numerous ICT related enrolled out of whom Financial organizations and 830 IT students will Enablers Business Skills events, including iHub, graduate in 2013 Enablers • Grant programs are NICTAA, Open Source • Mobile software available, e.g., Afghanistan, • An estimated number development not ABADE, Imuraba TechNation & TechDera of 650 BDS providers included today in • Loans and VCs are now operate in curriculum rare to non-existent Afghanistan in Afghanistan 52 4.2 OPPORTUNITIES > SIZING THE OPPORTUNITY The mobile app market is deemed to grow from $21.5-33m to $48-60m. The main growth potential concerns SMEs, be it mobile content or software providers. Mobile content providers Mobile services providers Mobile software providers Afghan-based Foreign-based Afghan-based • To date < 5 actors • No local technical providers • To date < 10 actors • Main content is music & TV identified • Commissioned developments voting • Service providers also • Mostly IVR / SMS based services • Revenue share with MNOs provide localized content • Smartphone apps picking up only recently 25%-40% $3-4m $5-6m $0.5- $1- 1m 2m Government & MNOs Business institutions $40-50m Key assumptions • Increased connected users with Internet & 3G to 15% in 2016 $20- • Increase smartphone penetration to 15% in 2016 30m* • Impact of DEWAE & HOSA on innovation and usage Mass market Estimates 2013 Estimates 2016 Source: Estimates based on mobile applications in Afghanistan, a World Bank report, international benchmarks, and interviews with actors; (*) Based on current VAS estimate of which 90% is RBT. 53 4.3 OPPORTUNITIES > HOW TO GET THERE? > GAPS IDENTIFIED Serious gaps have been identified when it comes to seize the mobile app opportunity in Afghanistan. 1 • Lack of awareness: awareness of mobile technology and its opportunities remains low, including among IT students. This is not a surprise since so far no IT institute includes mobile app development in its curriculum People & Skills • Skills and experience: companies often remark that their junior employees, although IT graduates, lack not only skills in mobile app technology but also practice in IT in general 2 • A majority of Afghans don’t speak English and even if developers and ICT students are more likely to, English fluency remains inconsistent Accessing Tools • Mobile apps development necessitates tools. Some of those tools are open source and easily available online but remain inaccessible to Afghans because of language and cultural barriers 3 • The developers and entrepreneurs mastering mobile technology and who have identified opportunities complain of barriers to access the mass market: – Most Afghans don’t have a compatible handset Accessing the End – When they do, most don’t know about the platforms (for example, iTunes) Users (that is, the – When they do, most don’t have credit cards or payment means mass market) • The only channels for independent developers and entrepreneurs in Afghanistan today are: – Commissioned development, i.e., not the mass market – Negotiating with the MNOs 54 4.3 OPPORTUNITIES > HOW TO GET THERE? 3 areas have been identified to deepen the support to the mobile ecosystem. These should come as a complement to the MCIT / mGov initiatives and the growing networking arenas. • With 10 government applications available before the mGov initiatives Build on the end of the year, HOSA can have a positive collateral HOSA effect in boosting apps usage & adoption Stimulate usage & adoption of mobile momentum apps around HOSA, • DEWAE aims at supporting the emergence of DEWAE DEWAE, and the innovative ideas both from students and the ICT sector Stimulate ideas & innovation ICT incubator • The ICT incubator is to focus on bringing sustainable ICT INCUBATOR innovative ICT SMEs to the market Grow ideas into business • With the networking activities deployed by several organizations, e.g., iHub, Leverage the NICTAA, Open Source Afghanistan, and TechNation & TechDera, a tech community is existing emerging networking arenas • It provides an active arena of tech-driven individuals and institutions, both from the academic and private sector that can be leveraged • In collaboration with the existing initiatives, there still is a need to deepen the support How could infoDev provided to the mobile ecosystem in Afghanistan. Initial scope should include: accelerate the – Increase awareness, skills, and access to practical experience 1 mobile app sector – Provide tools, derived and localized from mobile open source software, to 2 growth in accelerate the adoption of mobile technology by entrepreneurs Afghanistan? – Enable access to the mass market and the capacity to monetize services, by 3 creating an alternative application distribution mechanism for SMEs 55 4.4 OPPORTUNITIES > KEY TRIGGERS > 1 POTENTIAL ACTION PLANS ON PEOPLE & SKILLS Immediate opportunities for action include raising awareness around the mobile ecosystem, increasing the skills in mobile software, and improving hands-on experience of IT students. • The level of awareness among individuals and SMEs about the business potential of mobile technology is still low Raise awareness • Initial efforts should be put into creating a community of interests around mobile around mobile opportunities ecosystem • A natural first step is to increase this through events (competitions or hackathons) opportunities • This should also be done through industry partnerships (all main platforms and technology providers), who can provide training boot camps and challenges • To date, none of the IT institutes, whether private or public, provide specific training on mobile software development Adapt the skills to • All stakeholders interviewed were interested and ready to adjust their curriculum to the mobile include mobile software development courses ecosystem • This should be adapted as per the current market demand, with a focus on java, SMS, and IVR technology, as well as anticipate the demand for the next generation of native apps based on major operating systems and technologies • Most ICT private actors interviewed stated that IT graduates lack hands-on Increase experience experience of IT • All IT institutes suggested that they would be more than ready to give to their students internship opportunities and project-based courses students with mentorship and • This gap can be bridge by: internship - Adjusting curriculum to include compulsory internships - Building partnerships among ICT private sector companies and the main IT institutes to provide internships & projects opportunities 56 4.4 OPPORTUNITIES > KEY TRIGGERS > 2 POTENTIAL ACTION PLANS ON TOOLS Providing mobile open source tools that are relevant to the Afghan market could help accelerate adoption by tech entrepreneurs of business ideas & projects. • Select a list of open source tools and software relevant to the Afghan context taking into account the business potential per sector • Open source mobile software are available on all platforms and can address many business issues / sectors: Select open - eLearning source mobile - Data collection and monitoring software - Content publishing tools - Streaming radio - Geo-localization tools • Support private and public initiatives to produce a local (Dari, Pashto) and documented version of the software Provide a • Bring the set of localized tools to the community of developers, entrepreneurs, and localized version training institutions who can then use them to: and bring it to the - Learn and improve their technology skills community - Launch projects and prototypes to improve hands-on experience - Grab a business opportunity provided by the technology with a minimum of investment in capital and little barrier to entry 57 4.4 OPPORTUNITIES > KEY TRIGGERS > 3 POTENTIAL ACTION PLANS ON ACCESSING THE END USERS Accessing the end users remains a hurdle. Replicating HOSA, with a dedicated distribution platform for apps coming from the private sector, would benefit the whole ecosystem. • The platform would provide integrated billing access (via airtime and mobile money) A independent to all MNOs platform for • It would act as a distribution portal for content & service providers enabling SMEs service & content to target the mass market easily and bill content and services providers • It should be designed to benefit all stakeholders: users, MNOs, providers Benefits for MNOs Benefits for mobile content & service providers • Boost of app usage • A unique brand is marketed as providing local content & services: • Revenue share deal heighten reach • Identification of talented SMEs • Direct access to end users and integrated billing system with all MNOs • Revenue share deal Platform • The platforms allows access to IVR, java and SMS… • The platform is marketed under a unique brand • … as well as smartphone apps Benefits for the end users • Users are exposed to one brand, marketed as the portal • Each service listed by the platform can be free or at that delivers local content and services cost • Access to the platform is free of charge • Users are billed as per airtime or using mobile money • Services are available across all networks payment 58 4.5 OPPORTUNITIES > APPLYING THE MOST APPROPRIATE MODEL IN AFGHANISTAN > MHUB IN THE AFGHAN CONTEXT The mHub model would concentrate on providing mobile centric services, with the primary objectives of complementing the mGov initiatives and existing networking arenas. KPIs Pros Cons • Comes as a complement of ICT incubator • Difficulty to raise interest among Reach & community and in support of existing social network developers with no physical location • Focus on marketing the MCIT initiatives • No ownership of events & ideas • A brand could be built around the tools • Brand could be inaudible if strong efforts in Brand provided (such as HOSA or Open Source marketing other initiatives are made in tools) parallel without synergies • Services designed to support identified gaps • Can drain out interests from community of Services • Focus on mobile technology training and developers and entrepreneurs training on tools • Maintenance of the tools • Dedicated partners for the tools • Links more difficult with private actors Partnership • Partnership with IT institutes on training • Capacity to attract sponsors and projects • Redundant with the role of the ICT Access to finance • Could be added but not the primary focus incubator? • Very low Capex needed, limited Opex • If low brand equity, impact on capacity to Sustainability • Capacity to attract sponsors to self fund attract sponsors events & training Note: (*) The models are here presented for the purpose of discussion. Initiatives on the ground adjust to local market conditions and are often built on a portfolio of services across models. 59 4.5 OPPORTUNITIES > APPLYING THE MOST APPROPRIATE MODEL IN AFGHANISTAN > MLAB IN THE AFGHAN CONTEXT The mLab model would provide the full scope of services, be strongly supportive of the private sector, and be solely dedicated to the mobile ecosystem. KPIs Pros Cons • Physical location: a must to catalyze the • Comes in competition with all other ICT community incubators, even though it is purely focused Reach & community on mobile • Focus on marketing the MCIT initiatives • Community is too small? • Brand could be built on full scope: services, • Can comes in competition with branding Brand tools, hot bed for innovation effort of ICT incubator if not hosted in the • Easier to establish links with private sector same structure • Full scope of services provided • Redundancy of services offered by different incubators Services • Possibility to set up internship and • Need to coordinate incubators in order to mentorship programs onsite avoid duplication • Physical location is an asset to attract • Too many recipients, risk of too few Partnership sponsors and establish long term sponsors and partners partnerships • Risk of redundancy • Could act as a role player in providing • Competition with other ICT incubators Access to finance access to donor-funded private sector • Lack of focus on building the applicants investment programs (e.g., ABADE) business skills • Physical location provides a long-term asset Sustainability for potential revenue • Negative impact of high running costs Note: (*) The models are here presented for the purpose of discussion. Initiatives on the ground adjust to local market conditions and are often built on a portfolio of services across models. 60 4.5 OPPORTUNITIES > APPLYING THE MOST APPROPRIATE MODEL IN AFGH. > VIRTUAL INCUBATOR IN THE AFGHAN CONTEXT The virtual incubator model comes as a support to already existing IT incubation initiatives, with a focus on building the community of ideas, entrepreneurs, and local investors. KPIs Pros Cons • Will be based on the reach of MCIT / mGov • No fully owned community Reach & community initiatives, thus national and at least for 3 years • Dependency on other initiatives • With no specific branding, could lose Brand • More of a supportive brand impact and capacity to attract the best ideas • Core activity to provide support and • Should all incubators be included? Services training to incubators • Risk of redundancy with the many BDS • Strong focus on access to BDS and finance already available • Will focus on building partnerships with • Limited number of actors financial enablers Partnership • Difficulty to coordinate with all donors and • Capacity to attract and build networks of governmental initiatives local investors • Access to financial enablers • The market place of ideas, entrepreneurs, Access to finance and local investors may not be large • Build local investors network enough at the beginning to be attractive • Low Capex involved • Potential negative impact of low brand Sustainability equity in attracting sponsors and partners • Capacity to self fund events Note: (*) The models are here presented for the purpose of discussion. Initiatives on the ground adjust to local market conditions and are often built on a portfolio of services across models. 61 AGENDA 1. Introduction 2. Mapping of the Business Environment for SMEs in the ICT Sector 3. Description of Current Initiatives Outside the Country and Relevance to Country 4. Opportunities for Incubation in Afghanistan 5. How we Plan to Accelerate the Mobile Ecosystem in Afghanistan 5.1 Model & Governance 5.2 Services Offered 5.3 Focus on the Afghan App Store 5.4 Risks & Mitigators 6. Implementation of the Mobile Ecosystem Enhancer 62 5.1 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > MODEL & GOVERNANCE > MODEL We recommend following a light footprint model that will support current initiatives and fill the gaps, as it is more relevant to the Afghan context. Building on existing • No need to open new physical premises incubators initiatives Two different models can be considered to support the mobile ecosystem Model mHub Virtual Incubator Build a community of techno Support other incubators and provide Core focus entrepreneurs access to finance Reach National National • Relatively low cost • Relatively low cost • Efficient to mobilize and organize a • Focused on supporting startups and community around the mobile economy existing ventures, incl. access to finance Pros • Complementary to current initiatives • Comes in support of various incubators • Enables national reach through networks initiatives, with dedicated services of regional IT institutes • Access to international networks • Could miss the initial effort required to • No or limited support to early stage build tech capacity startup development • Difficulty in reaching the tech community Cons • Not focused on providing access to if few tech services are provided finance, a critical step in the Afghan • Difficulty in building sustainable model as context most services will be provided at cost We recommend a hybrid of the mHub and Virtual Incubator: the Mobile Ecosystem Enhancer. 63 5.1 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > MODEL & GOVERNANCE > GOVERNANCE The governance of the Mobile Ecosystem Enhancer should be looked at in line with its core objectives. Designing the right • The overall objectives is to support SMEs and the private sector governance Two governance schemes are applicable to the Mobile Ecosystem Enhancer Scheme Fully private Consortium An alliance of organizations, whether Description One or several privately owned companies public or private • Brings additional value as the • Can bring in various stakeholders each implementer(s) are in the same sector with a specific input for the project: • Complementary to company’s core Pros institutes, private companies, gov. business • Broad support and involvement across the • Clear leadership, capacity to implement ecosystem and roll out • Difficulty in acting as a legitimate center • No clear leadership identified piece of the ecosystem • Not core business for the stakeholders / Cons • Market distortion if only one private participants to the consortium actor is selected • Limited capacity to resolve disputes 64 5.2 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > SERVICES OFFERED We recommend that the program should be built around a portfolio of services, with the aim of increasing technical capacity and the sustainability of the emerging mobile ecosystem. The Mobile Ecosystem Enhancer will… 1 2 3 Mobilize talents and develop Support the emergence of Provide tech tools to the skills sustainable actors community • Mobilize talents and ideas • Provide support to startups • Localize mobile software tools around the opportunity of the and existing actors toward that can have a sectorial or a app economy investment readiness, social impact • Increase skills, with basic and including: • Demonstrate / train IT advanced mobile software • Mentorship individuals and entrepreneurs training to be proposed to as • BDS on the potential for venture many IT individuals as possible • Access to finance • Cooperate with universities • Support IT universities and • Provide capacity to the and IT institutes in localizing institutes to adjust curricula community to access the mass the tools to bring hands on • Provide more internship market and monetize content experience to students opportunities to students to & services by building an increased level of hands on independent Afghan app store experience • Support other incubation initiatives, through training, and access to services for incubatees 65 5.2 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > SERVICES > MOBILIZE TALENTS AND DEVELOP SKILLS The aim is to rapidly build a strong community of tech entrepreneurs within the mobile ecosystem, while increasing mobile software skills. Activities Output Components • Organization of regular meetings, e.g., once a month, to gather entrepreneurs and Talents tech individuals or groups interested in the mobile ecosystem Events mobilized • Organization of tech driven events, such as hackathon or dev camp to promote specific sectorial agenda, e.g., mHealth, mAgriculture, mLearning Ideas and apps • Competitive events based on idea submission and selection, best ideas / team to be Competitions developed funded and nurture in relation with other incubation programs • Provide basic mobile software training to IT students and IT professionals • Provide advanced mobile software training to IT students and IT professionals Upgraded skills • Provide specific tech platform training, e.g., Android or Windows phone, to IT Training students and IT professional • Provide support & resources to IT universities / institutes to design and incorporate mobile software into curricula • Built partnerships with local IT SMEs to get them involved in events, training, and Training content & workshops Partnerships techno available • Built partnerships with main mobile platform providers to get them involved in events, training, and workshops • Use network of partnering IT companies & IT institutes to generalize internship Increased programs for IT students Internships experience • Get IT students / institutes to participate to hands on projects, such as hackathon or dev camp Organizations Initiatives ICT incubator MNOs IT Institutes HOSA / MCIT 66 5.2 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > SERVICES > SUPPORT THE EMERGENCE OF SUSTAINABLE ACTORS This module is designed to support local ICT incubators & incubatees. With the Afghan app store, the objective is to provide the capacity for SMEs to access the mass market. Activities Output Components • Provide mentorship, business or technical, to projects incubated within other Mentorship Support to startups incubators as well as to any mobile technology startups Access to • Build connexion and give access to international funding programs, such as WB, Access to international ABADE, or ABIF, to mobile entrepreneurs finance (1) funding • Organize mobile startups pitching events to create network of entrepreneurs and financial institutions, whether private or public Access to Network of local • Organize mobile startups pitching events to try and attract network of local business finance (2) investors angels • Build legal and business framework for the Afghan app store: contract with MNOs, develop revenue sharing agreement among all parties, content regulation, and Afghan app management Access to mass • Build technical infrastructure, including mobile and web store front, gateway store market interconnected to MNOs billing systems, content management platform for services providers • Manage store, animation, marketing, litigation Support to Focus on training • Support other ICT / innovation incubators, with a focus on mobile • Provide training module regarding mobile software to incubatees existing and incubatees • Provide access to finance incubators support • Build specific mentorship alliances with incubated projects Organizations Initiatives ICT incubator ABADE, ABIF, WB MNOs AMMOA 67 5.2 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > SERVICES > PROVIDE TECH TOOLS TO THE COMMUNITY Specific mobile software tools will be localized to provide more opportunities for ideas and entrepreneurship. Activities Output Components • Use available localized tools to promote mobile technology toward tech and Training on Exposure to entrepreneurs, through events tools technology enablers • Train IT students, business students, and SMEs on how to use tools and leverage them to build services Support of Maintenance and • Maintain tools, including documentation and product upgrade tools upgrade of tools • Assess and prioritize mobile software tools available either by economic sector, Software health, education, agribusiness, or linked to specific activities with economic or social Localized tools to potential, such as mLearning, monitoring, or gaming localization build services with • Build localized versions of tools that have the largest potential for Afghanistan, also in relation with HOSA and DEWAE programs First hand • Cooperate with universities and IT institutes to use localization projects as enablers to Internships experience on tools gain experience for IT students Organizations IT institutes SMEs HOSA / MCIT Open Source AF Initiatives 68 5.2 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > SERVICES > WHY FOCUSING ON KABUL? Kabul is the hub of most ICT and entrepreneurship initiatives today in Afghanistan. It is a natural first step to develop mobile app entrepreneurship. • Most ICT students are completing curriculum in Kabul either at Kabul University, Polytechnic, ICTI, or within a private institute • The private sector regarding ICT is also mostly based in Kabul: MNOs manage their network from there and ICT SMEs are for a large majority in Kabul • The MCIT, a major actor of the development of ICT in Afghanistan, is focusing on Kabul Kabul is the hub with the ICT village and the ICT incubator of the Afghan ICT • Numerous initiatives concerning ICT and entrepreneurs are based in Kabul: the ICT community incubator but also monthly iHub meetings, International Center for Afghan Women’s Economic Development, and others Locating the Enhancer in Kabul will help accessing targeted beneficiaries, participate in galvanizing the Afghan ICT community to create a momentum, and allow for more numerous and relevant partnerships opportunities • Other provinces will be targeted through ad hoc events and training workshops, National outreach • which can be implemented through partnerships with initiatives and associations through ad hoc already targeting the provinces: the Open Source Afghanistan event was organized in events & training Jalalabad in February 2013; the DEWAE - Innovation Support Program aims at building awareness of its grants in the provinces 69 5.2 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > SERVICES > A PLACE FOR WOMEN The Mobile Ecosystem Enhancer will welcome female entrepreneurs the same way it will welcome their male counterpart. A reservoir of • 830 IT students will graduate in 2013, with an overall 3,500 IT students enrolled* female IT students • On average, 10%** of those students are women • Roya Mahboob founded her software company, Afghan Citadel Software Co. in Herat in 2010 • The company develops software for private and public entities A role model: and now employs 25 people, 18 of whom are women Roya Mahboob, • She also launched http://www.womensannex.com/, a web CEO of Afghan platform that hosts videos and blogs of women from Central Citadel Asia • Her profile in Time’s 2013 list of the 100 most influential people in the world, written by Sheryl Sandberg, COO of Facebook, has put her on the map for international recognition • The International Center for Afghan Women’s Economic Development, hosted by the American University of Afghanistan and funded by a $5 million grant from the U.S. Department of Defense Task Force for Business and Potential partners Stability Operations • Techwomen, launched by TechNation, an Afghan IT firm, the National ICT Alliance of Afghanistan (NICTAA) and other ICT professionals Source: (*) Ministry of Education; (**) Interviews of universities and institutes; (***) http://auaf.edu.af/about/international-center-for-afghan-womens-economic- development/. 70 5.3 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > FOCUS ON THE AFGHAN APP STORE Accessing the end users remains a hurdle. An independent Afghan app store, built initially on Android, will enable content and services providers to monetize their apps. • The platform would provide integrated billing access (via airtime and mobile money) A independent to all MNOs platform for • It would act as a distribution portal for content & service providers, enabling SMEs service & content to target the mass-market easily and bill content and services providers • It should be designed to benefit all stakeholders: users, MNOs, providers Benefits for MNOs Benefits for mobile content & service providers • Boost app usage • A unique brand is marketed as providing local content & services: • Revenue share deals heighten reach • Identification of talented SMEs • Direct access to end users and integrated billing system with all MNOs • Revenue share deals Platform • The platform allows access to IVR, java, and SMS… • The platform is marketed under a unique brand … as well as smartphone apps • The initial focus is on Android Benefits for the end users • Users are exposed to one brand, marketed as the portal • Each service listed by the platform can be free or at that delivers local content and services cost • Access to the platform is free of charge • Users are billed via airtime or through mobile money • Services are available across all mobile networks payment 71 5.3 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > FOCUS ON THE AFGHAN APP STORE The Afghan app store is the infrastructure that will foster the Afghan app economy. Its funding is key in enabling a sustainable ecosystem. • The platform is the intangible infrastructure through which all private providers or The platform will end-users of mobile apps will be able to connect and exchange be the corner • It will benefit providers, MNOs, and mobile content and service providers by fostering stone mobile app adoption in Afghanistan, galvanizing its usage and providing a framework infrastructure of for revenue share deals the Afghan app • It will benefit end-users as it will facilitate access to mobile app whatever the economy and will operator end-users have chosen benefit all actors • It will facilitate payment through an integrated billing system that is beneficial to both providers and end-users • Private actors today either don’t have the interest or the capacity to invest in the platform by themselves: – MNOs are already investing in proprietary platforms, incentives for them to partner and fund the platform by themselves are low Financing the – Other private actors do not have access to sufficient funding platform depends – The MCIT is in the process of creating its own platform dedicated to apps providing on donors governmental services involvement • In the media sector in Afghanistan, USAID is currently funding a platform that will enable producing automated media ratings. The objective is to provide transparency to the media and advertisement sector. – The initial investment is of $250k with an objective of a commercially viable platform within 2 years 72 5.3 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > FOCUS ON THE AFGHAN APP STORE > THE PLATFORM The platform will be a game changer: for app developers to access the end-user and for users to access Afghan content, with an initial focus on Android. Afghan app store Browse catalogue Update installed apps Paid Free App published Application details Technical and Select billing method Download editorial validation Description, price, Airtime Mobile Money app.file Download Register with Load or update app Check credit MM account Content management MNOs Billing OK Gateway NOK 73 5.3 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > FOCUS ON THE AFGHAN APP STORE > THE CUSTOMER JOURNEY The Afghan app store will be accessible via a smartphone app with a primary focus on Android. 1 2 3 Marketing & branding Distribution Delivery Available on Google Play / Android smartphones New releases Afghan Apps Discover APPS 100% Afghan made! • The Afghan app store is • The Afghan app store is • The app store is available for free advertised using relevant published and made • All that is required from the end user is a media, with a focus on web available for download on connection to Google Play, that is, an Android banners: blog, web, and others Google Play smartphone, data, and a Google account • Facebook network with an • Download mechanisms can • The Afghan app store displays a list of apps, with information page on the also be triggered by SMS, a brief description of what it does, including text Afghan app store service email, via Facebook or a and images website 74 5.3 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > FOCUS ON THE AFGHAN APP STORE > THE CUSTOMER JOURNEY Users can browse through the available applications and download them for free or for a fee that is paid using their operators billing system. 4 5 6 Discover Billing & download Use New releases Application Application Application Enter your mobile money 50 Afgh 50 Afgh login and password: Download Login : 50 Afgh Passwork : Editor’s choice Once you have installed this Confirm application, your friends will no longer hear from you. It is highly addictive and will help you run your business in a better BUY way. You can check online on your upcoming meetings, add Editor’s choice Editor’s choice comments and take notes during a conference. Once you have installed this Once you have installed this Become a fast efficient application, your friends will no application, your friends will no entrepreneur. longer hear from you. longer hear from you. It is highly addictive and will help It is highly addictive and will help you run your business in a better you run your business in a better way. way. • The user can browse through • If the application chosen is • Payment confirmation is • The application selected is all the available for free, the user can issued per SMS downloaded onto the applications, per categories, download it directly • The user can also check smartphone per latest releases • If it is a paid application, the list of past purchases • The user can now enjoy the • Each application is the user is prompted to app or services presented in detail, login, using its operators including users rating login ID • How the service will be charged can then be selected, using airtime or a mobile money account 75 5.4 ACCELERATE THE MOBILE ECOSYSTEM IN AFGHANISTAN > RISKS & MITIGATORS In order to mitigate risks for this initiative, a step-by-step approach is recommended during the implementation as well as establishing strong links with stakeholders in the ICT sector. Risks Mitigators • Establish strong links with the private sector and • Gap between skills built and market demand mGov programs to dimension and design the training curricula to their needs • Implement the program in a modular/step-by-step approach so as to take corrective measures when necessary • Lack of absorption capacity and difficulty to • Conduct additional research to size the potential identify the right candidates audience and get a thorough assessment of the needs by type of candidates • Lack of coordination with other ongoing • Establish strong links with ongoing initiatives, initiatives: risk of duplication such as the ICT incubator, from start to • Difficulty to attract enough candidates because of differentiate the offering of each initiative and multiplication of offers for IT students and SMEs create complementary programs 76 AGENDA 1. Introduction 2. Mapping of the Business Environment for SMEs in the ICT Sector 3. Description of Current Initiatives Outside the Country and Relevance to Country 4. Opportunities for Incubation in Afghanistan 5. How we Plan to Accelerate the Mobile Ecosystem in Afghanistan 6. Implementation of the Mobile Ecosystem Enhancer 6.1 KPIs 6.2 Budget 6.3 Roadmap 6.4 Feedback from Workshops 77 6.1 IMPLEMENTATION OF THE MOBILE ECOSYSTEM ENHANCER > IMPACT The Mobile Ecosystem Enhancer’s impact will be measured through nine KPIs: After 3 years…  25 startups created  15+ million apps downloaded (including 12+ million in year 3)  20 startup teams have received  500 apps commercialized mentoring and coaching  425 highly skilled jobs created  40 events organized (including in existing ventures)  100 internship positions filled  About 600 individuals trained on mobile technology  25 local investors identified Investment required: $1.1m for 3 years Gross revenue generated: $5+ million in Year 3 With the app store 78 6.1 IMPLEMENTATION OF THE MOBILE ECOSYSTEM ENHANCER > KPIS > MOBILIZE TALENTS AND DEVELOP SKILLS This module should address IT students in priority, and set an ambitious target in the number of students going into the mobile app economy. Activities KPIs Risks & challenges Mitigation strategies • 1 monthly event: hackathon, dev • At least all 5 major cities exposed Events camp, pitching • Activities too concentrated in Kabul (roadshows) events • Reach 1,000 people • 1 yearly • Identify clearly the technology competition • Confusion with HOSA and DEWAE Competitions • 150 applicants activities platform, for example, Android with links with Afghan app store • 5 projects selected • 10% of IT graduates • Organize onsite training, for • Full-time students not available or example, in the IT institutes trained interested in attending • Provide specific support and Training • 300 IT professionals • Difficulty for IT institutes to training to IT teachers • 20% of IT institutes implement mobile curricula • Development and adaptation of supported curricula • 10 local partnerships Partnerships • 3 technological • Limited interest from international • Connect with foundations partners partnerships • 10% of IT graduates • Increase number of hands on • Limited number of SMEs offering Internships enrolled on mobile- internship opportunities projects with IT institute, such as centric internships app prototypes or tools 79 6.1 IMPLEMENTATION OF THE MOBILE ECOSYSTEM ENHANCER > KPIS > SUPPORT THE EMERGENCE OF SUSTAINABLE ACTORS The Afghan app store is the cornerstone of this module to support the emergence of the app economy. It requires a strong involvement of local MNOs. Activities KPIs Risks & challenges Mitigation strategies • 20 startups Mentorship supported • 2 startups funded per year on average • Limited seed funding available for • Involve key international • 6 mobile startups Access to pitching events tech startups stakeholders at a very early stage • Limited interest of local investors • Involve international Afghan finance (1) organized per year for tech ventures diaspora • 25 local investors identified • All MNOs on board • Collect MNOs vision and inputs at a • Afghan app store very early stage of the project • No legal and tech agreement with available within 6 • Use competition to boost attraction several or even all MNOs Afghan app months • Lack of apps providers of the Afghan app store store • 50 apps available within 1st year • Number of download below • Localize hit international games to expectations boost attractiveness • 600k download within 1st year Support to • 100% of ICT • ICT incubators do not get involved • Involve ICT incubators existing incubators with mobile entrepreneurship supported incubators 80 6.1 IMPLEMENTATION OF THE MOBILE ECOSYSTEM ENHANCER > KPIS > PROVIDE TECH TOOLS TO THE COMMUNITY The tools provided to the tech community should match their needs and interests, and be easy to adopt and maintain. Activities KPIs Risks & challenges Mitigation strategies Software • 10 tools localized • Difficulty in bringing tools that • Design framework for selection that includes easy to use / exploit as a localization need limited IT capacity to use must have • 5 workshops Training on organized • Tools do not meet the needs of • Test interest & appetite of tech community before localizing the tools local IT / entrepreneurs • 300 people reached tool Support of • 100% of tools • Tools selection criteria should • Tools potentially difficult and costly maintained and include robustness and ease of tools to maintain over time upgraded maintenance • 30% of tools co- • Limited number of IT institutes on • Involve institutes from the very Internships developed with IT board with localization projects early stages, that is, design and institutes selection 81 6.2 IMPLEMENTATION OF THE MOBILE ECOSYSTEM ENHANCER > BUDGET After 3 years, the program should be mostly supported by the revenues generated by the Afghan app store, partners and sponsors. Revenue for Year 3 (growth phase) Costs (initial & running) AFGHAN APPSTORE CAPEX required for the set up of the - Usage based fee (per application Afghan app store + tools CAPEX $270k (Total) used, etc.) - Subscription based Direct $400k Revenue + MAINTENANCE COSTS for the ADVERTISERS & SPONSORS platform - Advertising and sponsorship revenues $130k PARTNERSHIPS + RUNNING COSTS (such as events or training) OPEX (for Year 3) - Techno and platform providers to support services and activities ADVERTISING COSTS to support the $400k Indirect - Mobile hardware manufacturers brand of Afghan app store Revenue Capital needed before sustainability in year 3 would be about $1.1m. 82 6.2 IMPLEMENTATION OF THE MOBILE ECOSYSTEM ENHANCER > BUDGET > ASSUMPTIONS FOR RUNNING COSTS YEAR 3 Yearly running costs amount to a total of $400k for year 3. Training and recruitment of experts are an important part but key to trigger a massive impact. Item Assumption Costs 4 full-time local project managers, in charge of organization and Human resources daily operations, one dedicated to the app store. 2 part-time $182k experts, one for training, one for mentorship Covers share of office space, laptops, and communications as Office expenses $31k well as the yearly audit Covers roundtrip tickets every 3 months - for each of the experts Travels & logistics $31k and 5 roundtrip travels to the provinces 12 events per year, 1 competition, training design & workshops Offered activities $135k and app store maintenance Branding & TV and other media $20k advertising Total yearly $400k running costs 83 6.2 IMPLEMENTATION OF THE MOBILE ECOSYSTEM ENHANCER > BUDGET > ASSUMPTIONS FOR THE AFGHAN APP STORE The Afghan app store could generate sales of $5.4m in year 3, with an increased number of available apps. Item Assumption Year 1 Year 2 Year 3 Number of apps Number of apps increases as more 50 200 500 available actors gets in 15 to 30% of Android smartphone Number of active users are active on the Afghan app 100,000 250,000 500,000 users store x Download per user The more apps, the more downloads 6 12 24 per year = Downloads per year 600k 3,000k 12,000k x Number of paid apps increases with % of paid apps 10% 20% 30% app quality x Average price Based on current VAS pricing $1 $1.25 $1.5 = Gross revenue $60k $750k $5.400k With an operating fee of 5%, year 3 revenue for the Afghan app store will reach $270k. 84 6.3 IMPLEMENTATION OF THE MOBILE ECOSYSTEM ENHANCER > ROADMAP Key milestones for year 1 of Mobile Ecosystem Enhancer initiative are represented in the roadmap below. Q1 Q2 Q3 Q4 Implementing Host Development of Staffing partner selection range of service Governance Governance defined Negotiation of partnerships Negotiation of private Partnerships with institutes & universities sector partnership First training Design of mobile Training Training session curricula for IT institutes sessions Kick-off Dev Camp Pitching Pitching Pitching Pitching Pitching Pitching Events event Hackathon Dev Camp Hackathon Competition Hackathon Dev Camp Mentorship & Start ups are enrolled internship Specifications & contract with App store design & App store MNOs development Launch Selection and design Tools of tools 4 tool localized 85 6.4 IMPLEMENTATION OF THE MOBILE ECOSYSTEM ENHANCER > FEEDBACK FROM WORKSHOPS All stakeholders agree on the potential of the mobile app sector in Afghanistan. They insist on having a collaborative approach and premium support to the private sector. Business environment and the mobile ecosystem in Incubation model and recommendations for action Afghanistan • Stakeholders agree on the initial key findings • Stakeholders agree that a full mLab, such as regarding the business environment for SMEs incubator, would replicate the MCIT incubator • Current sizing of the number of people having initiative access to Internet and potential target within 3 • The portfolio of services and the approach years is debated. The view presented in the proposed by the Mobile Ecosystem Enhancer is analysis is seen as pessimistic considered as appropriate • All stakeholders insist on the necessity to focus the • The app store is seen as an opportunity to unlock activities on Kabul first and then reach out to the the mass market for SMEs and entrepreneurs provinces • Stakeholders also suggest that infoDev initiative • Stakeholders insist that security is a key issue when should support and not duplicate the current it comes to implementing the app store and that it initiatives launched by the Afghan government / should be addressed accordingly, for example, by MCIT (HOSA, DAWAE) using an independent testing / certification entity • Other billing alternative, especially within the banking sector, should be looked at • Stakeholders insist that the app store is a temporary solution 86 6.4 IMPLEMENTATION OF THE MOBILE ECOSYSTEM ENHANCER > FEEDBACK FROM WORKSHOPS The Afghan app store is the infrastructure that could foster the Afghan app economy. Ownership and security are perceived as main constraints. • The app store would benefit small private tech actors who cannot at present address The app store is the mass market forseen by • Android seems the right platform to build the app store on stakeholders as a • Being able to access the billing infrastructure of the MNOs through the app store is a tremendous must opportunity • The app store is a good short or mid-term temporary solution to lift the billing constraint • Security could be an issue, and it should therefore be addressed very carefully – Security of the overall platform Ownership – Quality and reliability of the applications that will be released on the app store and security • Stakeholders suggest that an independent entity be in charge of supervising a testing are perceived procedure / certification before publication on the app store as the main issues to • Ownership of the app store should be very clear address – Content management will be sensitive – If successful, the revenue fees should be allocated in transparent manner • Other billing solutions should be looked at, especially with the banking sector 87 AGENDA 1. Introduction 2. Mapping of the Business Environment for SMEs in the ICT Sector 3. Description of Current Initiatives Outside the Country and Relevance to Country 4. Opportunities for Incubation in Afghanistan 5. How we Plan to Accelerate the Mobile Ecosystem in Afghanistan 6. Implementation of the Mobile Ecosystem Enhancer 88