

Being in Africa Makes You Untrustworthy - OoTheNigerian
http://whiteafrican.com/2010/07/05/being-in-africa-makes-you-untrustworthy/

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philk
A few thoughts:

a) Comparing Nigeria at 8% with the US at 65.1% is not a particularly fair
comparison as the US economy is ~83 times the size, and the average citizen is
much richer meaning more discretionary income.

b) It's worth noting that the amount of fraud coming from Africa, while
smaller than the United States, is still happening despite all of the
additional security measures.

c) Africa isn't particularly attractive as a business destination. It's
fragmented into 53 separate nations (many of which are poor; his country,
Kenya, has an economy one five hundredth the size of the US) and is frequently
corrupt. This means there isn't much competition, if Paypal made security
particularly onerous for US customers competitors would move in and take
advantage, in Africa clearly this isn't happening.

d) I can't help but wonder why this chap isn't attempting to take advantage of
the gap being left by the distrustful foreign companies if there really is
such a great opportunity for business over there.

e) Complaining about the fact that no one wants to do business with you is
understandable but doesn't do anything to make your life better.

~~~
hash
I wrote the article, so will just respond to a couple items here. If you read
it you'll note that most of what you said I agree with.

I'll start by saying that I wish I had the time to work on a solution for
this. There is _a lot_ of money to be made in Africa, as products like Mpesa
show us. I'm currently up to my eyeballs at Ushahidi (www.ushahidi.com), the
iHub (www.ihub.co.ke) and AfriGadget (www.afrigadget.com).

You'll note that I was specifically saying that it does not appear to make
business sense for some of these web organizations to pay attention to Africa.
There is lower hanging fruit elsewhere, so why should they?

Most shouldn't. Probably. However, it's interesting to note who is paying
attention and who is putting money into figuring out how to monetize the web
and mobile space in Africa. A couple:

Google - Google Kenya was the first independent office (sales, engineering and
product development) that they had in the world.

Facebook - I didn't see this coming at all, but they were the first to zero-
rate their site.

Nokia - Nokia runs a couple research labs on the continent and spends a good
amount of resources figuring out customer needs.

Though there are startling opportunities, and the chance to make real (big)
money in Africa, it isn't where you want to put your money first to turn a
quick buck. It's where things will be happening in the future, and that's why
those with the deeper pockets are taking advantage of.

Outsiders need deep pockets and a long-term strategy when working here. This
is why the space is ripe for local entrepreneurs to move and make headway in
users and market share while there is still a gap.

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jasonkester
I think the relevant statistic to track would be ($ in attempted fraudulent
transactions) / ($ in attempted legitimate transactions). I think that would
answer the question of why a country like Cameroon shows up on the black list
while Australia does not.

~~~
VengefulCynic
I agree. I would be interested to see some sort of analysis of quantity of
fraud per thousand transactions on a country by country basis. I think it
would be much more useful than the percentage of global fraud that each
country is responsible for.

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karzeem
With the obvious caveat that you can't generalize about people, there's still
a problem you have to deal with when operating in a lot of third-world
countries.

I'll use Lebanon, since I happen to know it somewhat well and am spending a
month there now. Corruption and dysfunction in government and private industry
are rampant, as are smaller-scale violations (most of the drivers are horrible
and dangerous, lots of people butt in line, etc). Basically, it's easy to get
screwed.

Why? I don't think it's because the people are inherently mean, because when
you meet them, they're wonderful. I think it's actually pretty simple. In
plain old evolutionary terms, the society selects for screw-you behavior and
against cooperation. If you're the best, nicest driver, your reward is that
you never get where you're going. If you always refuse to bribe government
employees, your prize for your integrity is watching someone without such
scruples get more of what they want, faster.

(I'm making it sound like a backwater. Despite all of the above, it's actually
a wonderful place to visit.)

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jeb
This is why china is making quick inroads into Africa. They don't have this
blanket perception of Africa, they rather work those spots that actually make
them money.

I betya in some strategy meeting in paypal, it was decided to shut down all
African countries. Someone clicked some buttons and that's the end of access
from Africa.

The Chinese would work differently - they'd still try to squeeze whatever
juice can still be got out that. Africa is increasingly becoming Dubai/China
focused, and at some point the west will realise that a huge market does not
recognize them as viable business partners anymore.

Consider Dubai as a pivoting point for India/China and Africa. That's a new
center of the world that is developing independently of the west.

~~~
felipe
> This is why china is making quick inroads into Africa. They don't have this
> blanket perception of Africa.

I disagree. After all, Africa in Mandarin is _feizhou_ , literally "wrong
continent". (USA in the other hand is _meiguo_ , or "beautiful country")

China is going to Africa for resources because that's the only place they can
trade peacefully, without relying on the military, like the US does.

~~~
jeb
Those names for Africa and the U.S are not modern inventions. See my reply
below about China resources.

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c1sc0
Untrustworthy or "not worth the trouble"?

~~~
philwelch
Exactly--sure, there are more fraud perpetrators in USA, but there are also
more legitimate businesses using PayPal, I bet.

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ceci
When it became tight for Western investors and companies in non web related
businesses, they turned their attention to the emerging economies in Asia.

Now they are beginning to move to Africa as China and India are becoming
saturated for non web businesses. What does this tell us in the hacker
community especially as the web space in the West is becoming really
saturated. Simple, just make your startup to be Africa friendly, if you can't
make it your main strategy and you stand a better chance of not entering
Techcrunch's deadpool.

So what are the advantages of doing this:

1\. You will own the largest market share by the time the established web
companies choose to come into that market. Eg Baidu controls 70% of the search
market in China. Google and others share 30%. Facebook had to play catch up to
Studivz in Germany and ofcourse sued them, <http://tcrn.ch/cfpc9Y>.

2\. Based on the above, when the big boys like paypal etc are ready to enter
the market, they will be forced to partner with you or buy you outrightly. see
<http://bit.ly/cESeqo>.

3\. The IPO's that have been so elusive in the US and europe are more easily
attainable over there. After your IPO, you can come back and buy the biased
established but struggling web based companies in the West. Remember how Asian
companies were cherry picking US companies during the global crises, that will
be your game.

So make sure you have a strategy for Africa and other emerging economies as
you build your web app. Good luck.

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ori_b
More interesting would be looking at the ratio of customers or online spending
to cybercrime. When making a business decision, you have to look at the reward
as well as the risk.

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nzmsv
Online stores and payment providers have profiled countries for a long time
now. It wasn't long ago that logging into your PayPal account with a Russian
IP would instantly block it. Yes, this kind of treatment is discriminatory.
But this is also a business decision that had to be made considering the
potential cost of fraud and profits.

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moultano
This is the ugly side of bayes rule. In some situations, it isn't possible to
gather enough evidence to overcome the prior.

