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
Building Africa’s Century
The 4th industrial revolution will be on the agenda of this week’s Gartner IT Symposium in Cape Town. Doug Woolley, GM of Dell Technologies South Africa, ponders its meaning for Africa
Is this Africa’s Century, as President Cyril Ramaphosa said at the recent WEF on Africa gathering? I believe so. The event made solid headway in charting a course forward for African-centric solutions to our challenges.
Technology featured often in discussions and the 4th Industrial Revolution was a central theme. Many of the outcomes also tied to a more connected digital world. But those are the broad strokes. What happens next?
An important avenue can be found in all the individual investments made inside societies, such as broadband. The spread of connectivity is in part due to telecommunications firms being mandated by the Government to reach rural and under-serviced communities. But the major momentum behind broadband stems from demand. From individuals to enterprises, a hungry broadband market has helped South Africa become much more connected.
This paradigm applies to other technology investments as well. All of them add up to support the ideas and advancements that were discussed at WEF on Africa. The need for better services and performance through technology stokes the Fourth Industrial Revolution’s engine. Every network, every datacentre, every smartphone is a piece of the puzzle that will create Africa’s Century.
We are further along the curve than most people realise. If I can judge a country’s potential based on how digitally mature its organisations are, then South Africa is not in bad shape. Earlier this year, the annual Dell Technologies Digital Transformation Index ranked South Africa in the top ten, ahead of most developed nations. The investments made by the Public and Private sectors are taking root.
It may not make headlines, but all these individual ambitions pointing in the same direction are building the change we all want to see.
This brings me to the Gartner IT Symposium Xpo, the business-technology event taking place at the Cape Town International Convention Centre from 16 to 18 September. If WEF on Africa challenged for solutions at a high level, then the Gartner Symposium is where those individual investments come into play.
The nitty-gritty of the 4IR era will be on the Symposium agenda. Research by World Wide Worx on the uptake of 4IR technologies among South African enterprises will be presented tomorrow (Tuesday) by one of the company’s data analysts, Bryan Turner.
I also anticipate discussions about multi-cloud. Cloud has grown tremendously as African organisations saw the progress that came with investing in it, connectivity and data – the core ingredients of the 4IR era. Now they are looking ahead to what can be done next: that multi-cloud is on the agenda shows how Africa’s technology capability is growing.
Unified workspaces will be another good conversation topic. What happens in the office doesn’t stay in the office. Our technology habits follow us home and, more often, our home habits follow us to the ofﬁce. This makes perfect sense, because 4IR is primarily about people being empowered by technology. Our workplace technology habits are microcosms of our overall use of technology.
Multi-cloud is the ‘infrastructure’ of the 4IR conversation and the workplace is where these technologies deliver some of their value. Considerable buzz is growing around unified workspaces, which make office environments more manageable and secure while reshaping them to fit the needs of modern employees.
Stop by the Dell Technologies stand and see how we’re helping create that momentum with multi-cloud, unified workspaces and through many other channels, including skills development and supporting SMMEs to grow.
How do we create Africa’s Century? Through those individual investments that collectively stoke the engines of our country and continent. It’s not just for the big players: 4IR can provide for every organisation regardless of size. Those investments are investments in the future of Africa.
PayPal pictures how the future will be won – or lost
By AAYUSH SINGHANIA, director of Commercial Operations for PayPal Cross-Border Trade Markets
There’s no doubt that technology has already re-shaped the way the world thinks about buying and selling. Who would have thought twenty years ago that people would be shopping on their phones?
Despite the huge changes to the shopping experience in recent years, it’s important to understand that we are only part-way through this journey. We are in the midst of the fourth industrial revolution, and as technologies continue to advance, and we as a society adapt our behaviours, new opportunities and risks will present themselves to merchants of all sizes.
Here is where I see the future of commerce being won and lost, as we continue on this technology journey:
Meeting ever-increasing demand for personalised experiences
We’ve already witnessed the transition of commerce from brick and mortar to the web, and then from the web to mobile. The next phase of internet-connected devices will make commerce even more contextual whereby anything you can interact with can be a platform for commerce. Imagine being able to point your phone at your best friend’s shoes, and almost instantly they are in your shopping cart, ready to be delivered to your home?
Mobile has already made shopping an “all the time” activity and has given us a taste of what it’s like to have hyper-personalised experiences. While a consumer walking into a retail store is limited by physical space, the online world offers an unlimited shelf for merchants to deliver tailored customer experiences. Looking ahead, innovations in artificial intelligence and machine learning hold great promise to further deliver on this hyper-personalisation, by being able to learn about who a consumer really is as a person and their individual preferences.
As a result of this evolution, customers have moved from being surprised and delighted by personalised experiences to expect them in every context. Many customers, for example, now get frustrated when they receive advertisements for products that they’ve already bought, or have no interest in. This shift has made it critical for merchants to avoid delivering homogenous experiences to shoppers who demand personalised interactions across all contexts. In doing so, it’s important that merchants find a balance between personalising their offerings and ensuring consumers don’t feel their privacy is being invaded. Shoppers want to feel like a brand understands them, but isn’t stalking them, particularly in the wake of several high-profile data breaches.
Closing the consumer fulfilment gap to deliver seamless experiences
With new advancements in technology comes the ability to create seamless customer experiences that narrow the gap between customer desire and fulfilment. Gone are the days where shoppers decided to purchase an item and they were happy to wait a week to receive it – for many, two-day shipping still isn’t quick enough. The invention of the internet meant people could shop from home, and recently we’ve seen this evolve further where consumers prefer to shop on-the-go via mobile.
The big question is, what’s next? We’re already seeing the growth of commerce through technologies like AI-enabled voice assistants and virtual reality, so it’s critical that merchants keep pace with innovations that enable them to close the gap between desire and purchase in a delightful way.
At the end of the day, businesses need to remember that the act of filling up a cart and the process of checking out is not the fun part of making a purchase – these are points of friction – and technology is the answer to removing these frustrations for customers.
Managing customer reactions to technology disruption
Every tech disruption in its early days delivers excitement, fear, anxiety and doubt – not necessarily in that order. We all go through a phase of tech humanisation, because technology grows as we do – and we help shape the development of new solutions.
Technology has been used for good and bad, and technology that causes eye-raising experiences at the start will generally normalise in time. Remember the first video cameras on phones? As people learned how to use the technology, content got posted that shouldn’t have. Everything from the telephone, to radio and the television all caused concern and were initially criticised when first introduced to the public, but with time they’ve become part of our everyday lives. As technology evolves, companies learn from it, and the acceptance and humanisation of technology will take place for both consumers and merchants as new innovations are applied to the world of commerce.
Merchants need to have a mindset that’s focused on being a customer champion, while recognising that customers need to adapt to new technologies in their own time. To do this, businesses must leverage technology to build the right features that aren’t intrusive, but geared towards helping people, and respect the customer’s choice to turn technology on or off.
Technology innovation will continue to re-shape commerce in the years ahead, with the potential to deliver new growth opportunities for merchants, and offering customers more choice, convenience, value and instant gratification. In a broader sense, these innovations can also help promote employment by breaking down traditional barriers to buying and selling. For merchants, the opportunities will arise, they just have to know how to take advantage of them in the right way.