Innovation has become a constant topic in Africa, but there has been an emphasis on doing things and less time has been spent thinking about the impact of what’s happening. RUSSELL SOUTHWOOD, CEO of Balancing Act, tries to understand what it means.
Everyone involved in innovation in Africa likes to hear a warming story. As one of the presenters at Fail Fest London put it last week, there’s got to be an image showing a girl looking into a computer screen that puts a golden light on to her eager, upturned face.
Africa’s Innovation agenda has two threads – one donor driven and the other focused on private investment – but as with much else on the continent, each is intertwined with the other.
So whether it’s a donor driven competition or a private investor, there are always parable narratives that capture the spirit of what everyone is hoping to achieve. Whether it’s farmers using phones to get better crop information, a young women buying insurance on her mobile or a young start-up winning a competition prize, these seductive narratives work a bit like the fraudster’s pitch.
I want to be told that innovation is changing lives and Africa is on an upward curve but the danger is that we all end up believing our own propaganda. Because it becomes widely circulated in the media and on social media, it doesn’t necessarily mean it’s true. So what follows is my attempt to try and take apart what might be working from what isn’t.
Start-ups in Africa will tend to work in the larger markets where there are sufficient consumers with mobile phones and enough disposable income for them to get user numbers. Without user numbers, there will not be continuing investment and/or more grant funding. On this basis, start-ups are more likely to be successful in Ghana and Nigeria and Tanzania than they are in Mali, Mozambique or Malawi to take three smaller economies at random.
Start-ups have the same problems that larger companies do in Africa. It’s hard to trade across national boundaries, something that Mo Ibrahim has made one of his constant themes. Many country markets are simply too small but operating in more than one small country is challenging. The absence of common market rules across countries makes the continent a nightmare even for well-endowed multinationals. So it is perhaps hardly surprising that the majority of African start-ups stay in a single country market.
Multi-country roll-out requires capital and some degree of patience and neither of these are in steady supply at the moment. There are a couple of good examples like Africa Internet Group and One Africa Media but these are the exceptions rather than the rule. Despite the constant drumbeat of the Africa Rising tune, there is actually a shortage of investors for African start-ups.
There have been several straws in the wind. Kresten Buch’s pioneering accelerator 88 Mph has pulled back from further work as it tries to find ways to get money out of the start-ups it’s already invested in. Overall, the number of exits from the African start-up ecosystem has been tiny. Another incubator operator told me that only one deal was on the table when they when they went looking for investors so it was not a long queue. For the few bigger international investors, Africa remains a tiny part of their investment portfolio.
Mbwana Alliy of the Savannah Fund (an accelerator and seed fund) told me that almost everyone he was able to raise money from had some connection with Africa and that connection was often personal: for example, they had been on holiday to the continent. Investors are not sitting on the West Coast of America saying I wonder what’s happening in Silicon Savannah. Indeed quite a few would probably be hard-pressed to find it on a map.
Worse still, the current international Internet boom will soon reach its bust: there have been at least two of those since I started following events on the continent. Even worse still, the constant currency devaluations in major markets like Ghana, Kenya, Nigeria and South Africa mean that the value of any investment and its revenues erodes along with the currency.
But let’s put the money to one side for a moment and just look at impact. Start-ups have been responsible for creating a new atmosphere of innovation and are changing how things are going to be done. Although it’s not explicitly stated, all of the good energy and ideas generated by African start-ups is supposed to rub off on the wider society. And they have gone a long way to helping change the mood music in some countries about what can be done if you’re young and have an idea.
Also as Bastian Gotter of Spark told me, the start-ups can offer young Nigerians the chance to break out of the need for connections, patronage and bribery. When you’re able to connect directly with a consumer market, you don’t necessarily need those things. However, both of these things – the rub-off effect and breaking away from patronage structures – may be long-term goals that will take more than ten years to achieve.
So let’s look at some of Africa’s bigger problems and see whether start-ups and innovation can bring about change. Nairobi has gone from being a busy city to one where when there are heavy rains, there is complete gridlock. People sleep in their cars overnight. Despite all the new road-building, even when it’s not raining it can take 2-3 hours to get across the city. This is a productivity issue on a massive scale. Has there been innovation from start-ups or Government to tackle the issue?
There is the ever-dependable Twitter feed @Ma3Route but that simply is about negotiating chaos not changing it. There is much that can be said about Uber (and other local Kenyan versions) but they are unlikely to crack Nairobi’s gridlock. I’ve picked on Nairobi but there are a dozen other African cities with problems that are as bad. Car sharing? Public transport? Rail systems? Park and ride? Bicycles? Electric vehicles? You know the answers to these questions.
Energy is a pressing problem of huge scale for the continent. It’s also a productivity problem as every time the power goes off, people can’t work. Furthermore, everything has to be constantly rebooted and breaks down more often as a result. Local diesel fuelled generators are hugely inefficient.
VC4Africa has an admirable accelerator scheme for energy start-ups. Microsoft has put money into a real wind technology innovator Saphon Energy. But against the scale of the task, these are but tiny gnat bites on the elephant’s bottom. Akon Lighting is a fascinating
initiative (see Energy below) but it is barely off the starting blocks. Where are the micro-grids? The energy distribution players? The tech innovators proposing to import Elon Musk’s Powerwall batteries or their less efficient equivalent from China?
Education is a key part of any different future in Africa. Almost everyone who has been through the system – in whichever country on the continent – will tell you that rote learning does not breed people who can analyze and problem solve. Teacher absenteeism remains high. Projects like the late-lamented Mark Bennett’s iSchool in Zambia are heartbreakingly good. There is also a stream of impressive young African innovators teaching STEM skills through things like robotics and coding. But none of this has yet really entered the bloodstream of African education systems.
I don’t want to bludgeon the point but the impact of innovation so far has been largely marginal on anything that Government delivers. Yet each of the three areas above – transport, energy and education – offer enormous opportunities for Innovation.
Making All Voices Count – an initiative to encourage social start-ups to promote transparency and accountability – is a great initiative. But it relies on trying to persuade a deeply unproductive public sector to react to pressure to become more productive for its citizens. Where is the encouragement for the public sector to innovate? To find ways of spending public funds more effectively? Where are local city innovation schemes? The innovation schemes that get local government to promise and deliver?
But this is not just a public sector issue for many of Africa’s larger private sector companies still have not yet got the innovation message. Some banks have taken initiatives to encourage and acquire fintech start-ups but these initiatives are the exception rather than the rule. M-Pesa started the whole thing and they are trundling along behind. Many of the traditional private sector companies in Africa remain stuck in working practices that went out of use elsewhere in the 1960s and 1970s.
Why does productivity matter for Africa? Let’s just take one example that runs like a thread through all the issues raised above. Africa absolutely must have Internet bandwidth that is cheaper than elsewhere globally because it does not yet have the volume of people who can afford it. There will only be a critical mass of users if lower bandwidth costs are achieved.
In terms of data infrastructure, Sub-Saharan Africa is probably one of the most expensive places to operate globally: diesel deliveries for some base stations in one West African country require a boat and hand wheelbarrow for delivery. For data to become cheaper, the mobile companies (or someone else) need to be innovating new ways of delivering bandwidth more cheaply. Bandwidth is the petrol that fuels innovation and without cheap bandwidth innovation in Africa will be stillborn.
As Harambe’s Matthias Reichwald wrote in Issue 70 of Innovation in Africa:” I see enormous potential for the continent to take the lead in designing disruptive systemic solutions inspired by the vast infrastructure vacuums that still exist in most countries. Whether these are innovative ways to deliver health care and education, groundbreaking ideas in agribusiness and transportation or unprecedented ways for more inclusive governance or approaches to produce energy. Africa’s advantage is that it can leapfrog in areas where the West is dealing with heavy legacy structures which impede innovation”.
The challenge now is to turn this analysis into projects that fundamentally change Africa rather than simply provide seductive success parables that give their promoters a warm glow.
* Russell Southwood is CEO of and founder of Smart Monkey TV. Subscribe to Smart Monkey TV on YouTube
IoT at starting gate
South Africa is already past the Internet of Things (IoT) hype cycle and well into the mainstream, writes MARK WALKER, associate vice president of Sub-Saharan Africa at International Data Corporation (IDC).
Projects and pilots are already becoming a commercial reality, tying neatly into the 2017 IDC prediction that 2018 would be the year when the local market took IoT mainstream. Over the next 12-18 months, it is anticipated that IoT implementations will continue to rise in both scope and popularity. Already 23% are in full deployment with 39% in the pilot phase. The value of IoT has been systematically proven and yet its reputation remains tenuous – more than 5% of companies are reluctant to put their money where the trend is – thanks to the shifting sands of IoT perception and success rate.
There are several reasons behind why IoT implementations are failing. The biggest is that organisations don’t know where to start. They know that IoT is something they can harness today and that it can be used to shift outdated modalities and operations. They are aware of the benefits and the case studies. What they don’t know is how to apply this knowledge to their own journey so their IoT story isn’t one of overbearing complexity and rising costs.
Another stumbling block is perception. Yes, there is the futuristic potential with the talking fridge and intelligent desk, but this is not where the real value lies. Organisations are overlooking the challenges that can be solved by realistic IoT, the banal and the boring solutions that leverage systems to deliver on business priorities. IoT’s potential sits within its ability to get the best out of assets and production efficiencies, solving problems in automation, security, and environment.
In addition to this, there is a lack of clarity around return on investment, uncertainty around the benefits, a lack of executive leadership, and concerns around security and the complexities of regulation. Because IoT is an emerging technology there remains a limited awareness of the true extent of its value proposition and yet 66% of organisations are confident that this value exists.
This percentage poses both a problem and opportunity. On one hand, it showcases the local shift in thinking towards IoT as a technology worth investing into. On the other hand, many companies are seeing the competition invest and leaping blindly in the wrong direction. Stop. IoT is not the same for every business.
It is essential that every company makes its own case for IoT based on its needs and outcomes. Does agriculture have the same challenges as mining? Does one mining company have the same challenges as another? The answer is no. Organisations that want their IoT investment to succeed must reject the idea that they can pick up where another has left off. IoT must be relevant to the business outcome that it needs to achieve. While some use cases may apply to most industries based on specific circumstances, there are different realities and priorities that will demand a different approach and starting point.
Ask – what is the business problem right now and how can technology be leveraged to resolve it?
In the agriculture space, there is a need to improve crop yields and livestock management, improve farm productivity and implement environmental monitoring. In the construction and mining industry, safety and emergency response are a priority alongside workforce and production management. Education shifts the lens towards improving delivery and quality of education, access to advanced learning methods and reducing the costs of learning. Smart cities want to improve traffic and efficiently deliver public services and healthcare is focusing on wellness, reducing hospital admissions and the security of assets and inventory management.
The technology and solutions selected must speak to these specific challenges.
If there are no insights used to create an IoT solution, it’s the equivalent of having the fastest Ferrari on Rivonia Road in peak traffic. It makes a fantastic noise, but it isn’t going to move any faster than the broken-down sedan in the next lane. Everyone will be impressed with the Ferrari, but the amount of power and the size of the investment mean nothing. It’s in the wrong place.
What differentiates the IoT successes is how a company leverages data to deliver meaningful value-added predictions and actions for personalised efficiencies, convenience, and improved industry processes. To move forward the organisation needs to focus on the business outcomes and not just the technology. They need to localise and adapt by applying context to the problem that’s being solved and explore innovation through partnerships and experimentation.
ERP underpins food tracking
The food traceability market is expected to reach almost $20 billion by 2022 as increased consumer awareness, strict governance requirements, and advances in technology are resulting in growing standardisation of the segment, says STUART SCANLON, managing director of epic ERP
Just like any data-driven environment, one of the biggest enablers of this is integrated enterprise resource planning (ERP) solutions.
As the name suggests, traceability is the ability to track something through all stages of production, processing, and distribution. When it comes to the food industry, traceability must also enable stakeholders to identify the source of all food inputs that can include anything from raw materials, additives, ingredients, and packaging.
Considering the wealth of data that all these facets generate, it is hardly surprising that systems and processes need to be put in place to manage, analyse, and provide actionable insights. With traceability enabling corrective measures to be taken (think product recalls), having an efficient system is often the difference between life or death when it comes to public health risks.
Sceptics argue that traceability simply requires an extensive data warehouse to be done correctly, the reality is quite different. Yes, there are standard data records to be managed, but the real value lies in how all these components are tied together.
ERP provides the digital glue to enable this. With each stakeholder audience requiring different aspects of traceability (and compliance), it is essential for the producer, distributor, and every other organisation in the supply chain, to manage this effectively in a standardised manner.
With so many different companies involved in the food cycle, many using their own, proprietary systems, just consider the complexity of trying to manage traceability. Organisations must not only contend with local challenges, but global ones as well as the import and export of food are big business drivers.
So, even though traceability is vital to keep track of everything in this complex cycle, it is also imperative to monitor the ingredients and factories where items are produced. Having expansive solutions that must track the entire process from ‘cradle to grave’ is an imperative. Not only is this vital from a safety perspective, but from cost and reputational management aspects as well. Just think of the recent listeriosis issue in South Africa and the impact it has had on all parties in that supply chain.
Thanks to the increasing digital transformation efforts by companies in the food industry, traceability becomes a more effective process. It is no longer a case of using on-premise solutions that can be compromised but having hosted ones that provide more effective fail-safes.
In a market segment that requires strict compliance and regulatory requirements to be met, cloud-based solutions can provide everyone in the supply chain with a more secure (and tamper-resistant) solution than many of the legacy approaches of old.
This is not to say ERP requires the one or the other. Instead, there needs to be a transition provided between the two scenarios that empowers those in the food supply chain to maximise the insights (and benefits) derived from traceability.
Now, more than ever, traceability is a business priority. Having the correct foundation through effective ERP is essential if a business can manage its growth and meet legislative requirements into the future.