Africa’s Digital Revolution

Africa tech scene

Can the development of a tech sector help African economies?

It’s no secret that Africa has benefited enormously from the mass up take of mobile telephony, along with Chinese demand this has been one of the key drivers of African growth in the last decade, all thanks to the quick and easy productivity gains that come from the massive jump in connectivity and inexpensive communication that mobile phones afford.

Now the next stage in communications involving 3G and 4G, affordable smart phones and the rise of African software companies promises to uplift the continent in the same way, perhaps even allowing economies to see the creation of a significant knowledge sector, using local expertise in technology and programming to create jobs and exports rather than agriculture or mining. Or is this idea like much of what we read on the internet,  hyperbole? Is it really possible to start building economies around the use of digital technologies? Below I take a look at which sectors can most gain from these trends.

The five areas in which African nations can truly benefit from new technologies:

Banking: By embracing mobile banking African nations (Kenya is already well ahead in this regard partly thanks to M-Pesa) can leapfrog more technologically advanced countries by avoiding the construction of costly bank branches and infrastructure, moving to a decentralised, widely accessible and low cost financial system. Access to bank accounts and financial products is a key pillar for businesses to expand and grow and also allows the use of important financial products such as mortgages and insurance. Crypto currencies like Bitcoin (the link take you to a fantastic interactive infographic explainer) also fit into this scenario; a frictionless system of payment, borderless and protected from the vagaries of inflation is just what Africa needs for commercial transactions.

Education: There are major efficiency savings to be made by using online education systems. Online the cost of educational content is low or even free, plus there is the opportunity to watch the world’s best lecturers and access standardised testing. However these advantages are dependent on good internet access in often remote areas and inexpensive computing equipment, which despite falling costs is still pricey for many households and communities. Accessibility is improving; the innovative use of blimps and drones to extend signals has been useful especially given Africa’s vast scale. Outside companies like Google and Millicom have launched schemes like the “Android One” to provide affordable handsets to the continent.

Consumer goods: As Africa’s middle class grows, so does its appetite for the opium of consumer goods; this includes everything from “essentials” like washing powder and shampoo, to the luxury end of market such as expensive scarves and jewellery. Just like any other part of the world much of this can move online, and the productivity gains can be potentially impressive in an enormous continent like Africa as goods do not have to travel as far to reach their end user.

Agriculture: Digital technology has the power to provide farmers with valuable information, anything from the weather to up to the minute crop prices along with the opportunity to sell their goods to a wider market. Access remains a major problem in rural areas, but overtime coverage will continue to expand, especially when the long term benefits are realised.

Government: can provide the tools to deliver services over the web, saving journeys and allowing instant access to information, this will mean citizens can easily pay taxes plus learn about services such as permits, grants and planning. Of course access to information can be danger to governments, as people can learn about corruption, mismanagement and waste, then help likeminded people to organise and protest, hence many authoritarian governments have been keen to control aspects of the web.

Konza Tech City

Some countries are better prepared for this than others; Kenya has a thriving tech scene neatly titled “Silicon Savannah” based around the Konza technology city which contains incubator units, start-ups and the usual tech ecosystem. Konza is perhaps the most high profile of the many tech centres springing across the continent.

In Africa these centres are still hindered by a lack of connectivity, poor electrical supply as well as lack of capital but if there is one sector which relies on ingenuity and knowledge over capital and government policy it is the technology sector where valuable companies can be built with relatively little. Rwanda has embraced the tech sector making it one of the centre pieces of its economic master plan, but many other countries lag behind with no discernible strategy, understandable given there are so many other priorities.

Is the Continent Really Rising?

However it has to be said that all these aspirations are a long way from being reached, Africa still has the widespread problem of ingrained poverty with many of its people continuing to die of highly preventable diseases due to poor sanitation and potable water. Most of the continent still does not have access to electricity and millions are not working thanks to lack of opportunity. So while these exciting trends in digital technology will help many, there is a large number who are unhoused and underfed who are a long way from tasting the fruits of the digital revolution.

Adopting affordable technology, faster connectivity and new tech related ventures can help Africa bridge the productivity gap and will be a major boon to the continent’s expanding middle class, but it is apparent that it is only one element of the puzzle that is economic development.



Categories: Frontier Market Strategy, Frontier Markets, Innovation

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