Africa

The impact of technology in Africa

As a major transformative force around the world, technology is increasingly disrupting existing monopolies and in some segments, completely changing the game. From  artificial intelligence technologies (AI), financial services technology (fin-tech), Medical care technology (med-tech), education (edu-tech), innovations in law (legal tech), mining and exploration (mine-tech) among others, supported by high-speed internet penetration and mobile phones offers Africa a huge opportunity to enhance development.

Africa’s penetration of smartphones is expected to reach 50% by 2020, from only 18 percent in 2015.[1] Mobile payments are sweeping across the region with East Africa being the global leader in mobile payments. E-commerce is growing fast as is e-learning.

Technology has also been used to bring government officials to task and therefore there is an increase in integrity and accountability of government officers. This should offer investors comfort to come in. Given this relative stability, some of the regions commercially oriented start-ups such as Africa Internet Group and Interswitch are either being acquired or going public. Investors will be keen on which others show similar potential.

Ubiquity in internet access 

Placing internet access in a ubiquitous position requires consistent innovation. Companies have began testing alternative technologies to make this possible such as Google’s balloons [2] and Facebook’s solar powered drones[3]). Currently there are two impediments to a fully connected continent:

  1. Cost – costs are many times higher in Africa, an Internet Society report mentions that a person needs 15.7% of average GDP per capita in Kenya to get broadband – compared to less than 2% in Europe[4].
  2. Geography – the geography of Africa is extremely challenging with large open spaces or dense jungle – often sparsely populated.

Full internet connectivity is likely only going to come through a mix of technologies and cost improvements.

Example:

In 2013 Kenya completed a pilot on the deployment of internet use in rural areas. Dubbed Project Mawingu[5] (Swahili for “cloud”), Microsoft together with Strathclyde University, local telecoms firms and the Communications Authority began tests to provide affordable, high-speed wireless broadband to rural areas using alternative untapped technologies in TV “whitespaces” (TVWS).

White Space refers to the unused broadcasting frequencies in the wireless spectrum. Television networks leave gaps between channels for buffering purposes, and this space in the wireless spectrum is similar to what is used for 4G and so it can be used to deliver widespread broadband internet. It is believed that Kenya could lead the way with a model of wireless broadband access that in Europe and the USA has been tied up in red tape.  This pilot does not require mains electricity and is being run totally on solar power.

The internet  impacting  traditional/rural societies on education and social norms

There are, two schools of thought in African societies in relation to the impact of the internet:

  • Those who embrace the internet as a tool to protect, maintain and promote cultural diversity; and
  • Those who believe that the internet serves only to endorse capitalist ideals and sanction products of the modern industrial society[6]

There is no denying that a democratization of information will lead to impacts on traditional and rural societies.  Western social mores, celebrities and news are going to be now available to everyone.

That said, there is no guarantee that traditional and rural societies will be overwhelmed.  The internet will allow people’s art, language, culture, histories and traditions to be shared, learned, promoted and distributed[7].

The expansion of mobile money payment systems such as M-Pesa. 

Expansion to new markets in developing countries is continuing as is bringing more people into the mobile money market. As at March 2016, M-Pesa had entered into Tanzania, DRC, Mozambique, Uganda, Rwanda and Zambia.

In India, the National Rural Livelihoods Mission uses M-Pesa to enable financial inclusion for women’s groups. The Mission is using the service to disburse pre-natal health benefits.

A mobile money solution is proven in Kenya to bring people into the money economy and in unbanked countries, is a good way of bringing people out of barter into the money economy. However, M-Pesa’s current iteration will  not have success in more developed countries.  Mpesa failed in South Africa[9] partly due to the fact that most South Africans already have good banking access.

The impact of drone technology in inaccessible areas.

The potential in this space is huge. In Rwanda, San Francisco based start-up Zipline got the go ahead to pilot drone tech in doing daily deliveries of critical medical supplies (primarily blood and vaccines) to 21 locations across the country.  Drones allow items to be delivered in areas where roads are unreliable or impassable.

As elsewhere in the world, African regulators are struggling to determine the appropriate regulatory response. In Nigeria [10] the person flying the drone must have a pilot license and pay significant fees to get a security clearance.  Kenya has similar rules currently before the National Security Advisory Committee.  Until then, the use of drones is banned. Drones will remain a future technology until the regulatory issues are resolved.

The educated urban elite and global competitiveness

The educated urban tech-savvy African now has all his work and school in his phone and backed up in his email-managed cloud account. With good internet access, he/she can join meetings virtually, submit school assignments and work reports, run a successful business while still keeping tabs on family and friends.

The educated urban elite in Africa is becoming more like the urban elite of other countries and joining the global middle class.  Africans have been ready adopters of platforms like Facebook and twitter.

Africans are learning to code and adapting programs to their particular needs.  There is a thriving technology scene in Africa’s bigger cities – Lagos, Nairobi, Cairo – where Africans are developing African solutions to their problems.

That said, it is unlikely that African technology will emerge as a major player on the world scene.  The big money in technology resides in Los Angeles/San Francisco, London and New York.  Africa’s best and brightest technologists will likely end up in those cities working for Google, Facebook or Microsoft.

Social media as an organizational tool for political systems

The Arab Spring showed the power of social media on corrupt and violent governments.  High internet penetration and social media allowed protesters to mobilize and organize these revolutions.

Social media gives a voice to the people that might not otherwise have existed in many regimes.  It is clear that the Chinese Communist party has realized that not only does social media bring down governments but that it also gives governments a real time insight into what people are interested in[11].

In China, the government is both listening and also looking to capitalize on the data created by social media and internet interactions as a tool of social control[12].  China’s track record of censorship and suppression is now extending online with no open Internet and no Net Neutrality in their vocabulary.

In Africa there is a big hurdle to social media having a positive or negative social impact – only urban elites are generally on social media so it is unlikely to lead to a mass movement in sub-saharan African countries (Kenya and South Africa excepted where internet usage much more prevalent). Consequently, social media is unlikely to have any impact on political systems in the near term – but who knows about the future.

There will still be brain drain

The internet has removed the tyranny of distance and allows a good professional sitting in Africa to work anywhere in the world.  Sites such as upwork, freelancer and others allow people to sell their services to a worldwide market.

That said, the big deals and high profile jobs are still based in London, New York, Paris and Berlin.  It is, to a certain extent, a rite of passage for an African professional to seek professional fulfillment overseas.  The internet is unlikely to change this to any great extent.

Tech prospects on raw material extraction and advanced manufacturing in Africa?

  • Mining

African mining is currently extremely labour intensive and dangerous for the miners.  Technology will undoubtedly change both of these things.  Mining in many other jurisdictions is much more automated – especially once the grades of ore become poorer.

Much of the mine-tech used in Africa is developed abroad. As a result, most companies remain at the early stage of the adoption curve-placing a majority of their innovation focus on technological optimization of old techniques in a bid to reduce costs or discover deposits more efficiently. Given the rapid pace of technological advancement, companies have to keep an eye on cross sectional innovations that may impact mining in the future. These include:

Artificial Intelligence: The move towards autonomous vehicles and automated technologies such as Australia’s AutoHaul has already revolutionized mine operations. As the “intelligence” of these machines grows, they will be able to perform increasingly complex tasks, including hazardous processing activities—reducing labor costs and enhancing productivity as a result.

Wearables: there is huge potential for innovations in the occupational safety market which mining is one of them. For example Night runner a US product initially developed for night athletes is being reconfigured to cater for miners of the night shift.

  • Advanced manufacturing

The prospects for significant amounts of advanced manufacturing in Africa are bleak.  The lack of infrastructure (bad roads, ports, limited rail options), political instability in some states, lack of reliable water and electricity, lack of access to local markets and generally low productivity among the workforce means that companies seeking to set up advanced manufacturing generally look elsewhere.

That said, progress is being made in relation to each of these impediments and it may be that Africa can look forward to a future of rapid industrialization.

Investment interests and drivers

Africa shows that there is potentially a feasible market in catering to the developing lower classes.  You don’t need to have a product that appeals to the AB demographic in a western country to be successful or make a meaningful impact in Africa.  There is a huge demand for products and services that cater to the less developed parts of the continent.

For example the informal economy represents about 80% of the total job market. A large number of informal businesses lack access to services such as ERP systems, small business banking (even with Mpesa, a large number of Africans are still unbanked), affordable third-party logistics or internet access. These present a huge opportunity for VC-backed start-ups to attempt scalable applications.

Example:

Kenyan based startup Lynk focuses connecting households with informal workers. Borrowing from the LinkedIn model, the application has been dubbed the LinkedIn for the ‘linked out’ allowing customers to book services from over 60 categories, ranging from plumbers to nannies. The platform works via mobile app, the web and SMS, and automatically identifies qualified workers based on sub skills and other signals such as location, price range, language and experience.

There are several pre-requisites for Africa to draw investment and interest:

  • Political stability – African countries have risen from past hostilities, creating the political stability necessary to attract investment thus far. For the momentum to continue there has to be a continuation of this stability and a strong legal protection of assets.
  • Appropriate regulatory standards towards Data Protection and Cyber Security – Africa’s tech sector is not bullet proof to cyber threats that face the industry in other parts of the world. Anti-virus adoption and creation of awareness around cyber security is key to building the trust of investors. In addition, Africa needs an increase in tech lawyers to better advise potential investors.
  • Increase Africa’s internet bandwidth and develop a stronger and more reliable tech infrastructure.
  • Tech-preneurs need to be equipped with business skills – there is a reason why only around 2% of start-ups attract investors, compared to more than a third in Silicon Valley. Africans may be tech savvy but not so much in the business skills to successfully grow their companies.
[1] Estimated by MGI using forecasts from The mobile economy: Sub-Saharan Africa 2015, GSMA, 2015; UN Population Division
[2] https://en.wikipedia.org/wiki/Project_Loon
[3] https://www.wired.com/2016/07/facebooks-giant-internet-beaming-drone-finally-takes-flight/
[4] http://www.internetsociety.org/sites/default/files/InternetInAfrica-20150708%20Final.pdf
[5] See http://dynamicspectrumalliance.org/assets/TVWS_Report_for_Kenya_final_final_24_Aug.pdf  accessed on 3/1/2017
[6] http://www.ecoliteratelaw.com/09_DigitizationIndig.cfm?sect=text
[7] http://www.wadsworth.com/anthropology_d/special_features/ext/earthwatch/rt.html
[8] https://en.wikipedia.org/wiki/Natural_language_processing
[9] http://www.bbc.com/news/world-africa-36260348
[10] http://africanbusinessmagazine.com/sectors/technology/drone-technology-help-africa-overcome-developmental-challenges/
[11] https://www.washingtonpost.com/world/in-china-government-mines-public-opinion/2013/08/02/33358026-f2b5-11e2-ae43-b31dc363c3bf_story.html?utm_term=.347301bbf75f
[12] http://fortune.com/2016/11/29/china-alibaba-tencent-baidu-social-credit-score-behavior-grading-system/
[13] http://www.businessinsider.com/africas-population-explosion-will-change-humanity-2015-8

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