Founder Friday: Fighting the Good Fight

For centuries Africa has been exploited. Her natural resources plundered. Her people forcefully taken to labor and build other nations wealth and fight their battles. Yet she remains resource rich and boasts a young and burgeoning population. Despite this wealth, her people are the poorest in the world. Her infrastructure the weakest, and her markets the smallest. Is this purely by chance or accident? Or is there a more sinister cause? In my world, in my business, the telecommunications and internet sector, there are dark forces that have kept Africa at the bottom of the food chain and especially the country where I currently live and work, Malawi.

Business thrives on inequalities. Scarcity is one of the strongest and most compelling drivers behind a strong business case. Economics defines scarcity as the gap between limited availability of resources and the theoretical needs of people for such resources. The scarcity of goods plays a significant role in affecting competition in any price-based market. Greater or increased demand for scarce goods often leads to higher prices for the same goods.

Unfortunately the greed and insatiable appetite for more profit that drive many businesses often leads to situations where scarcity is created deliberately, for purposes of exploiting a group or groups of people. One such scenario is the global internet bandwidth market, especially as it relates to Malawi.

Globally, the price for wholesale internet bandwidth is 6 US cents, the equivalent of 49 Malawi Kwacha. The current wholesale price for internet bandwidth in Malawi ranges between US$ 50 - US$ 90. This is an increase of 80,000% - 150,000%!

A wholesale internet circuit running at 100 gigabits per second (gbps) globally costs US$ 6,000 per month as quoted above by Hurricane Electric. In Malawi, the same capacity circuit would cost US$ 5 million to US$ 9 million per month, and equivalent of 4 Billion or 5.4 Billion Malawi Kwacha!

You may ask "How come there is such a big difference?" or "Why is it so much more expensive to connect to the internet in Malawi?"

I ask "Who is making all this money at the expense of dirt poor Malawians?"

Here is a video that I hope sheds some light on what (part of) the African problem is.