Forget bootstraps, Africa is a continent dragging itself up by its code strings to become a global player – but it needs more software developers, writes BRETT PARKER, SAP Africa Managing Director.
Over the last year, all eyes have been on Africa’s technology sector. And for a very good reason: infrastructure growth is booming. Between 2010 and 2016, seven new undersea cables brought fast data connections to the continent, with two more already under development. Meanwhile, mobile providers have invested $13.6billion into getting 500,000,000 Africans online by 2020.
But as necessary as infrastructure investment is, it alone won’t take African business global. So what technological development or product has the potential to make African businesses global players?
Tech sector already outperforms expectations
A common misconception is that raw materials are the big African growth story of the last decade. But according to research by Freshfields, since 2004 Africa’s technology companies have delivered 19% annualised returns, compared to just 11% in commodities.
A clue to why the African tech sector is growing can be found in the East African mobile payments industry. In most of the world, mobile payments is a niche sector, because consumers have many other convenient ways to pay –bank cards, credit cards and banking transfers, for instance.
But in Sub-Saharan Africa, only 34% of people have a bank account. This used to be a significant barrier to any transaction that wasn’t small-scale or local. Or, in plain English, it was a huge inconvenience.
Change began in 2007, when local telco Safaricom teamed up with Vodafone to develop the mobile-payment system M-Pesa. Its creators expected M-Pesa to have 250,000 customers by the end of its third year. After just two years it already had over two million customers.
By 2014, the East African mobile-payments market was worth US$61 billion. There were 41 new African mobile-payment start-ups. A huge 80% of all the world’s mobile payments were African. And global players were looking to Africa to see what lessons they could learn.
So is mobile-payment the technology that could take African business global? There’s clearly huge potential for the industry to grow and act as an enabler for other sectors: in particular African SMEs and sole traders, who need a means of making and accepting online transactions. But for a fundamental transformation to take place, it needs to be about more than just one industry.
Overcoming barriers through technology
Another brake on the globalisation of African business is the tariff and non-tariff barriers that inhibit the growth of a single African market. This is something that African businesses need to change if they are to grow to the point of being ready to operate on a global scale.
Here again, signs are positive. For instance, the NGO, TradeMark East Africa, worked with the Ugandan government to develop an online reporting system for non-tariff barriers (NTBs) to trade.
Exporters in East Africa can now report NTBs online or via SMS, resulting in a 20% reduction in the time taken to move goods around the region. This is expected to lead to increased trade, lower costs and higher regional GDP.
At the same time, the adoption of online revenue, legal and other government systems is helping African countries cut red-tape and increase the speed at which businesses can operate. In Addis Ababa, for instance, tax assessments can now be made online: giving taxpayers access to faster decisions, with less form filling.
Without doubt, institutional barriers to trade and growth need to be broken down, if African business is to go global. But technology is only one part of the solution. Much more depends on political will and clout.
The foundation of any technological revolution
To take on the world, African business will need investment in technological infrastructure. It will need break-out technologies that allow it to disrupt and then likely lead existing global markets. And it will need technology solutions to problems that currently hold it back. But there is something more fundamental than all of these factors:
Africa is the world’s youngest continent. This will give it a demographic dividend, just as the last generation of economic tigers is beginning to age. But only 1% of the 11 million African young people who come of age every year have even basic software coding skills. This is a waste of talent and a barrier to growth. Without basic STEMS skills, let alone coding knowledge, African entrepreneurs won’t be able to grow their businesses to the point of being ready to compete on the global stage.
In April 2016, Africa Internet Group (AIG) – the holding company for a range of online businesses – was valued at US$1 billion, making it the first ‘African tech unicorn’. AIG’s success is not a one-off. M-Pesa in Kenya, the mobile advertising platform Twinpine in Nigeria, and South Africa’s content-distribution service 8bit – among many other successes – prove that.
“If it works in Africa, it’ll work anywhere”, jokes Juliana Rotich, the co-founder of BRCK, a Kenyan-made Wi-Fi hotspot and battery designed for use in the field. And there are hundreds of African technology companies with innovative ideas, ready to prove her right. But in order to do it, they need access to a skilled, digital workforce.
The technology that will take African business global? As AIG and M-Pesa have shown, it’s the software developer’s kit, in the hands of an African programmer and entrepreneur who’s been trained to use it. The time to start training the next generation of African programmers is now.
Africa gets broadband boost
ITU and Nexpedience, a supplier of proprietary point-to-multipoint broadband infrastructure, are partnering to bring broadband access to Africa.
Under the terms of the deal, Nexpedience will provide 180 new Expedience base stations worth USD 1 million, to be deployed in six nations across the continent. The first nation to benefit from the new infrastructure is Burundi, with deployments also planned for Djibouti, Burkina Faso, Mali, Rwanda and Swaziland.
Designed to withstand extreme meteorological conditions and capable of providing up to 32 kilometres of sector coverage, Nexpedience’s base stations have been specifically designed for rural deployment.
ITU’s Wireless Broadband Network in Africa project aims to develop and implement wireless broadband connectivity and applications that will provide free or low-cost digital access for schools, hospitals, and under-served populations in rural and remote areas Africa-wide.
At the signing of the agreement in Geneva, Brahima Sanou, Director of ITU’s Telecommunication Development Bureau (BDT) emphasized the need to make developing countries part of the global broadband revolution: ‚”This partnership represents another important element in ITU’s efforts to bring broadband technology to the world even in the poorest nations. I am confident that this new partnership will accelerate broadband uptake right across the African continent, bringing the power of high-speed connectivity to users everywhere, from big cities to small villages.‚”
Kiriako Vergos, CEO of Nexpedience said: ‚”Giving access to broadband technology to underserved populations in Africa is of great importance to us. There are enormous benefits to be derived from a ‚’broadband-seed’ deployment strategy, and we decided to partner with ITU because we know that the organization has the team in place to get it done.‚”
ITU Secretary-General Dr Hamadoun Tour√© said the new agreement is a ‚”major step forward in getting Africa connected‚”. Dr Tour√© led the establishment of the Broadband Commission for Digital Development in 2010, which has the aim of putting broadband at the heart of the global development agenda.
Nokia backs tech hubs for developing world
Nokia, AppCampus and infoDev are collaborating with mobile innovation hubs across Africa, Asia and Latin America to act as scouts for local talent.
Nokia, AppCampus and infoDev, a global innovation program of the World Bank, have announced a collaboration with mobile innovation hubs across Africa, Asia and Latin America – a move that will empower these hubs to act as scouts and agents for local talent, fast-tracking their access to AppCampus funding.
AppCampus was established in 2012 as a mobile application accelerator program managed by Aalto University in Finland. With an 18 million euro joint investment between Microsoft and Nokia, the aim is to foster mobile application development on Windows Phone and any other Nokia platform.
The announcement earmarks part of that investment fund for twenty six awards per annum for the best mobile innovation ideas to be made via the mobile innovation hub network, starting with infoDev’s mobile application labs in South Africa, Kenya, Armenia and Vietnam, as well as mobile application laboratories in Egypt (TIEC), Nigeria (CC Hub) and Mexico. The value of each award ranges from 20,000 Euro (US$ 26,000) to 70,000 Euro (US$ 90,000) depending on the complexity of the solution or business model behind the idea.
‚”By working jointly with the mobile innovation hubs, we are able to connect more effectively with local developers in emerging markets and provide support in terms of funding, especially for locally relevant innovations,‚” says Pekka Sivonen, Head of AppCampus. ‚”Although the criteria to access the AppCampus funding remains the same, with ideas needing to be original, competitive and scalable, the advantage is faster processing and the mentorship provided by these innovation hubs.‚”
The hubs and mLabs will be responsible for scouting talent and vetting ideas to be submitted to the global pool. infoDev’s mLabs foster regional entrepreneurship, employment and competitiveness by providing open spaces where developers can find training, mentoring, technical expertise and access to financing. In a short time, mLab-supported startups have brought over 120 commercial apps to market The best new entries from this network will compete against each other each quarter for the available awards.
‚”Nokia, working closely with infoDev, has supported the establishment and operation of a number of mLabs across emerging markets in support of local developers,‚” says Jussi Hinkkanen, vice president corporate relations for Nokia Middle East and Africa. ‚”The AppCampus collaboration showcases our commitment to strengthening the growing mLab network around the world and infoDev’s vision of supporting emerging market entrepreneurs in conquering local, regional and global markets‚”.
The official launch of the program took place during the mobile stream at the Global Forum on Innovation & Technology Entrepreneurship in East London, South Africa, organized by infoDev and the South African Department of Science & Technology. A key theme of the Forum is how innovation can lead to high-growth entrepreneurship which creates sustainable jobs. Valerie D’Costa, infoDev’s Program Manager says, ‚”The AppCampus initiative fits with the philosophy of infoDev of supporting innovative entrepreneurs from developing countries. We want to support those who can excel with some level of mentorship, skills training and seed financing. We provide potential job-creators better access to markets, which is what we are all about.‚”