Genuine software may never find its way into Africa if the current trend of piracy continues. A report by Business Software Alliance (BSA) indicates that 35% of all software installed on computers worldwide is either counterfeit or unlicensed. It is worrying that in Africa alone, 80 percent of all software is counterfeit. The practice is so ingrained that even large business corporations are not spared. The corporations buy one genuine copy whose license allows it to be used on only one machine but (intentionally or unintentionally) use it on more than one computer to cut on costs. This means that software installed on the rest of the computers is unlicensed.

This activity may be blamed on the high market price that is a characteristic of most software, but it is utter disregard of intellectual property rights. Most software products are priced with the western markets in mind, disregarding the fact that different regions of the world have different income levels.  In an interview with IT Web, a web based IT news site, Microsoft General Manager for East and South Africa says that his company has a pricing structure that takes emerging markets into consideration, to meet needs of different sectors of the market. But has it helped reverse the trend?

There are no specific laws in some countries covering software piracy therefore creating a legal loophole. The BSA report indicates that lack of knowledge on the effect of using pirated software is a contributing factor to the escalation of the practice. Harmful effects of software piracy reach far beyond the software publisher in terms of lost sales. The ultimate victim in this crime is YOU the consumer. Computer viruses by pirated software can affect your system by causing serious disruptions. Pirated software lacks product support. The systems where these are installed may not recover from software failure. You may lose important information that is vital to your business growth. Your business as a brand may suffer tarnished reputation and worse still, you risk criminal charges being filed against you or your organization.

Software piracy will continue making software prices to rise because the manufacturers have to meet the costs of production through sales lost in piracy. The more the revenue lost because of pirated software, the less that can be spent on research and development of new products and new innovations. Software piracy cuts both ways: Due to the apparent differences in income levels between the developed and the developing world, pricing software based on this may significantly reduce piracy. Pegging a high price for products intended for low-income markets will encourage the practice since demand for such a product will have to be met somehow.

Demand for software increased when computer technology began to spread from the US to other parts of the world in the 1990’s but was not met in time through effective distribution of legal software. This led to increased cases of piracy as an expedient way to use computers. In Africa, software manufacturers have control of only 20 percent of the genuine market. Kenya, Nigeria and Zimbabwe were ranked among the top 25 countries where piracy is highest. Figures for year 2001 as captured in the BSA report estimate the losses incurred in Africa to be close to $147,172. The manufacturers lost four times what they sold.

In terms of dollar losses incurred by manufacturers, Africa’s share amounted to 3% of the global total. The Asia pacific region led the pack with 43 percent followed by Western Europe, North America, Latin America, and Eastern Europe with 24 percent, 18 percent, 8 percent, and 4 percent respectively. Vietnam and China ranked highest in country ratings since each had over 90 percent piracy levels.

What if the manufacturers used an entirely different marketing mix for Africa given the apparent difference in levels of income in Africa compared to developed nations?

Since business software aims at supporting businesses to improve on their bottom line (read returns), the manufacturers could start by creatively coming up with a business growth index for Africa then lower the price of their products accordingly. This will give them room to be increasing the price of their product based on the growth indices and the unique marketing mix of the different regions. The catch here would be to use a marketing mix (Product, Place, Promotion, Price) that will bring the 80 percent unlicensed software culprits into legitimate business. In this way, all parties involved (including the software manufacturers) will be able to grow their market shares without worry of being exploited.