Africa needs a technology bubble

Guest post by: John Wesonga
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Preparing for 2008 - By John Wesonga

According to the WSJ, silicon valley is on the brink of another technology bubble bust like what was witnessed in 1999. According to the article the emergence of "strange" website names such as Orgoo and businesses whose sole purpose is to sell t-shirts bearing the logos of internet companies(check out Startup Schwag) is evidence of a bubble and its eminent bust. I cannot even pretend to understand the dynamics of silicon valley, so I won't even argue with the writer of the article, but I'm left wondering when will Africa expereience it's own technology bubble?

A few years ago I had the pleasure of working with a web developer from India, and one day during our lunch break we began talking about the web development business in Kenya, in all the conversation he made one comment that resonated in my mind to this very day, "Kenya is currently in a web design bubble where companies can still charge $5000-$25,000 U.S. Dollars for websites and intranets, we had a similar situation in India until the market was saturated and now we do websites for us little us $250USD..your bubble will bust..." at that moment I didn't put much thought in to it but as I look at the last few years I relaise that the cost of web design is reducing significantly. Every web design company is undercutting its competition and only those that offer a niche product or have built a substantial corporate client base are able to sustain the high margins.But does this qualify as a "technology bubble"? or is it just a simple issue of supply now exceeding demand?

If we examine the technology bubble in Silicon valley we will notice that one of its hallmarks was a considerable increase in ICT investment and the sprouting up of web based businesses some of which had no sensible business plans. Billions of dollars was invested into these new ideas and the result was a boom in the economy on the upside, but a downturn when the businesses had to shutdown. The lessons learnt are yet to be forgotten.

In my view Africa needs a technology bubble, but ours must be a sustainable bubble if there is anything of the sort. A large investment in ICT based companies needs to be made, this will in turn spur growth and innovation in the industry. We need venture capitalists to make the financial investment in businesses and erase the notion that only silicon valley has all the ideas. Those are my thoughts on this.

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Preparing for 2008 - By John Wesonga

About the Author: John Wesonga

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Born in Nairobi, Kenya, John Wesonga is a partner and the Technology Director of Multiple Choices, a communications company that builds web 2.0 applications for the Internet and provides strategic advice on Online Brands. His interests include: web development, blogging, mobile technology, Africa, and Kenya. His blog, Afropreneur, is one of the most popular online resources for news regarding business and technology in Africa. He is also currently a student at Strathmore University, where he is pursuing a degree in Business Information Technology.
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