Reasons Behind DMM Group Creating an IT All-Star Team in Rwanda: Told through a Tanzanian, University of Tokyo Graduate on a Mission

HeHe Labs, now acquired by DMM Group, was founded by Clarisse Iribagiza in 2010 when she was a fourth-year university student. (Photo: DMM.com)

“Invest 10 billion yen in Africa in the next 5 years.” It’s been a year and a half since the Chairman of DMM.com Co., Ltd. (DMM), Keishi Kameyama, declared the group’s expansion plan into Africa. DMM’s Africa division has since launched their businesses in East Africa, specifically Rwanda. DMM acquired 100% equity stake in HeHe Labs, a software development and management company, and has since updated its business entity name to DMM.HeHe. At the same time, DMM announced another one of its investment in AC Group, which conducts electronic money business for public transportation.

DMM is a Japanese Internet conglomerate, and the group revenue now amounts to approximately 200 billion yen a year from its wide range of businesses including Online Foreign Exchange Trading, Online Gaming, Online English Learning platform and many more. DMM is expanding its investments to widen its business offerings into areas such as supporting manufacturing and sharing economy services. DMM’s Africa division is one of these newly launched divisions.

Target company is an attractive venture company in Rwanda

Model of young entrepreneurs in Rwanda, Clarisse Iribagiza, CEO (Left), and Alex Kapungu (Right) (Photo: DMM.com)

Why did DMM proceed the way it did to acquire HeHe Labs? “The ultimate end goal is to create a top-tier technology company in Africa. In accumulating experience of launching variety of different businesses, DMM is looking to establish a wide-reaching ground where we can develop a wide array of technology businesses”, said Alex Kapungu, managing director of DMM overseas business division.

Being envisioned to play a core role for DMM’s expanding tech company bases in Africa, this vision encouraged DMM to acquire HeHe Labs. Founder of HeHe Labs and the current CEO of DMM.HeHe, Clarisse Iribagiza, is an icon among female entrepreneurs in Rwanda, highlighted and featured in Forbes Magazine, elected as one of the 30 most promising entrepreneurs under their 30s in Africa.

Clarisse got a clue for founding HeHe Labs in 2010, during her fourth grade in university, when she joined a hackathon, an event where engineers and designers in a group focus on working on creating awesome things together. Although, previously, HeHe Labs mainly focused its business on accepting outsourcing requests from local companies or NGOs, their accumulated knowledge of developing software is now helping them shift HeHe Lab’s services to software development for general consumers and more.

To make this shift successful, current chairman of DMM.HEHE, Alex Kapungu, is in charge of strategic management, managing their products will be Clarisse, the CEO, utilizing her background in engineering. They are expecting to grow their hiring count to 50 staff within a year, and then in the medium-term, to 100 (40 for engineers, 20 for sales, and the rest for IT consulting for local companies).

E-commerce business was the first area that they laid their eyes on. Along with the fact that a specific dominant distributor does not exist yet in Rwanda, delivery logistics network for end customers has also not been established. They also conceptualised a system where they utilise bike-taxi drivers around cities, mainly its nation’s capital, in Kigali, to transport baggage to end consumers. By the end of June, relevant services will be released at the earliest, they said.

Why DMM chose Rwanda

Rwanda is developing very rapidly with the government proactively promoting foreign investments (Photo: DMM.com)

There is a concrete reason for DMM’s first choice of base in Africa being Rwanda. Rwanda went through a genocide, which originated from the assassination of Rwandan president. However, despite this tragic setback in its recent national history, Rwanda successfully recovered, having turned its corner from this low period, and then took off on an economic growth path through its national policies to enforce high standard in IT security and education. This incredible turnaround and recovery is now having Rwanda dubbed as “the Miracle of Africa”.

With this progress and track record, Rwanda is establishing a reputation to be so-called the “Singapore of Africa”. Lowering income tax rates is just an example of how Rwandan policies are attracting IT companies from overseas and nurturing growth of start-ups.

Additionally, responsiveness and politeness from government officials and public servants are incomparable to other countries. “It would not happen to countries other than Rwanda”. As an illustrative example, I personally received an email from the Minister of Development of Rwanda, kindly asking if I have any trouble during the process of arranged visits to enter some of the office buildings for VISA support for expatriates.

DMM’s Africa division has a variety of talents, including alumni from Japanese trading companies and those who experienced working as Japan Overseas Cooperation Volunteers, a group also comprised of a diverse range of nationalities. However, despite the full ensemble of this group, without the leadership of Alex Kapungu, who answered this interview in his fluent Japanese, this Rwanda-based project would not have been successful.

Alex Kapungu, originally from Tanzania, has always been seeking opportunities to take businesses to his home country (Photo: the author)

Alex is originally from Tanzania, which is located right next to Rwanda. After his graduation from high school in Tanzania, he came to Japan through a scholarship programme funded by the Ministry of Education to spend a year in a Japanese-language school, and then onto the University of Tokyo. He spent 6 years in pharmacy studies until he graduated from the University of Tokyo Graduate School of Pharmaceutical Sciences. He took this specific path as he was imagining studying pharmacy would directly help him launch related businesses back in his home country of Tanzania.

However, he discovered that his idea was immature. A large amount of financial investment in the form of capital expenditure is required for development of such businesses. It was virtually impossible to realise such initiative start in developing countries.

While puzzled with the gap between the reality and the dream of the business ventures he envisioned, Alex happened to learn that one of his friends was applying for a job at Rakuten, a Japanese internet EC company, which intrigued him. Although he joined Rakuten with many of his business ideas, he left Rakuten no longer than two years after joining as “there was no plan for the company to expand their business in Africa and starting businesses on my own while still young appeared to be impossible at Rakuten”, Alex said. After he left Rakuten, he joined an outsourcing company for pharmaceuticals and medical devices.

A Crucial Decision to Participate in DMM.Africa’s project

Although Alex was indeed back in the pharmaceutical industry that he loved, he did not feel right abandoning his dream of “bring businesses back to his home country”. While seeking such opportunities, he encountered DMM.Africa. He instantly became interested in a quirky project proposed by Keishi Kameyama, Chairman of DMM, which allows for traveling to any country of choice in Africa, with an envelope full of 1 million yen in cash to do a research, on site, until they exhaust the whole given budget.

After pondering this difficult question of whether he should quit his current job, Alex realised the extent of the rarity of this opportunity, and decided to join the 1-million-yen, travel-to-Africa project of DMM.Africa.

Immediately after joining DMM, he did a market research on Tanzania as well as Congo for the first three months. Returning to Japan, he suggested that DMM start some service websites for making appointments for weddings and for launching IT services. Among them, he strongly suggested the necessity of having a physical base of service development teams in Africa, which led to this acquisition of HeHe Labs in April.

Alex’s goal is not only to target expansion of HeHe’s businesses in Rwanda. He narrates his vision as “building a firm organization in Rwanda, which will be an engineer group who is capable of variety of IT areas such as IoT, AI, Fintech and more. To challenge ourselves in expanding our businesses to other African countries, South America, North America and beyond.”

Although DMM does not disclose details and amounts for its investments and acquisitions, there seems to be more room to go until reaching the aforementioned investment limit of DMM that is declared as “10 billion yen in the next 5 years”. Needless to say, with the further business expansion planned in Rwanda and beyond as declared in DMM.Africa’s vision, it appears highly likely that other business projects will be established in other African countries by DMM. It is only the very beginning of DMM’s journey into the Great Africa.

Content of this web page is an English translation version of its original article covered by a Japanese media, Toyo Keizai Online. Click here if you wish to also access the original text in Japanese: http://toyokeizai.net/articles/-/172888

DMM.Africa Brief

Since its inception in September 2015, DMM.Africa has been founded as the frontline of DMM.com's company-wide effort to go global. Given the inevitable future that is defined by abundance of opportunities and explosive population growth, Africa has been designated as the next frontier of DMM.com and other leading global businesses. To secure our best footing in this uncharted territory, we are proceeding at full speed to build our operational base and our new core businesses in Africa. Towards that, in 2016, we hosted one of the largest business competitions the continent had seen: DMM.Africa Presents ABIC---Africa Business Idea Cup. As symbolised by our hosting of ABIC, our commitment remains to continue exploring the best local ventures, talents, and partners across and beyond the industry segments we've known.