September 20, 2007
In reading the excellent piece on mobility in Africa in this week’s Business Week, you can’t help but get the feeling that the mobile platform is the economic spark the continent has long awaited.
We saw this first hand throughout our deep dives in Africa, and wrote about some of the fascinating mobile applications back in June. For the first time in a long time (ever?), Africans are not only rapidly adopting a so-called “first world” technology, but they are developing it, improving on it, and capitalizing on it. We have heard dozens of stories of local merchants and rural farmers using mobile phones to simply connect with buyers and sellers, improving market efficiencies and fattening bottom lines. For more on this, go to www.ibm.com, click on the Africa story, and select “The Mobile Imperative.”
But the impact of mobile phones has other, broader and more far-reaching positive effects as well. As the story in Business Week points out, Africa’s basic infrastructure is so lacking in some places, it can grind the wheels of commerce to a halt. Roads that are frequently impassable; huge swaths of land that are without electricity; painfully slow internet service. The growth of the mobile phone business, however, is starting to address some of these problems.
Now that wireless providers have learned that the rural poor is a market worth courting (there are more than 100 million mobile phone subscribers throughout Africa), there is reason to begin investing in infrastructure. To do mobile communications, you need fiber, electricity, and roads. Industry is taking the first steps towards addressing these needs.
In addition, communication, in any form, spurs commerce. Without it, you cannot have efficient markets. Now, for the first time, Africans are rapidly sharing information (sometimes in its simplest forms) and conducting business in a more sophisticated way. The result is higher margins for businesses, and better prices for consumers. It’s hard to see a loser in any of it.
Columbia University professor says plainly that mobile phones are the most important technology when it comes to transforming developing nations. Not $100 laptops. Not refurbished PCs that would take years to master. Mobile phones. Simple, affordable, easy-to-use mobile phones.
September 05, 2007
Just Doing It
Nobody likes meetings. And certainly the group that the Global Innovation Outlook assembled in Cape Town for our final deep dive on the economic enablement of Africa recognized this fact. They knew that these deep dive meetings will be successful only if they serve as a means to an end, only if there is a consequence, an action. These were not people who enjoyed sitting in a room, pondering the issues. They wanted to get things done.
“I don’t think the world needs another think tank,” said Amanda West, vice president of global innovation at Reuters. “What we need to be is a do tank.”
This sentiment resonated around the room immediately. The group included representatives from South African energy giants PetroSA and ESKOM, microfinance and private equity enablers Kiva.org and AfriCap, two groups designed to foster and support women-owned businesses, logistics and shipping company Safmarine, three of the finest universities in the world (Makerere, Instituto de Empresa, and the Royal Academy of Engineering), Siemens South Africa, Reuters, and the U.S. Embassy here in South Africa. We also welcomed a young entrepreneur from the Maasai tribe in Kenya, who runs a safari business in the Maasai Mara game reserve.
Some of them were new to the process. Others had been with us in previous deep dives. But they were all there because they share a simple belief that Africa has the potential to develop and grow in a way that is positive for both the continent itself, and the rest of the world.
It was clear from the outset that change was the mandate for this meeting. One diver said “I don’t think we should embark on this thing unless our intention is to seriously disrupt.” Another said, “I’m a strong believer in taking the first steps.” And Nick Donofrio, the executive vice president of innovation at IBM, reminded the group that “if nothing changes, nothing changes.” Finally, one dive implored us to be like Nike, and “just do it.”
And then we did.
We spent the entire afternoon in breakout groups with specific assignments. The tasks were difficult and daunting. The process was frustrating and uncomfortable. And the time was too short. But few could argue with the results. Here is a quick look at the three projects the GIO crafted during this workshop and will be working on in the coming months:
Skills Audit – Africa has more than 900 million people, but there are massive shortages of skilled labor. More importantly, if Africa is to emerge as a leader in the global economy, it will need to do more than just fill the skills gaps that exist, but also begin planning for future demand. One group proposed a comprehensive “Skills Diagnostics” exercise that would provide a template for how to bring together the private sector, government, academia and the NGO community to conduct regional studies that gauge the demand for different skills. That information could then be shared throughout Africa, creating a detailed skills map. The information would be hugely valuable, and could be used by governments to forecast future skills needs, and develop economic strategies accordingly.
Africa Grid – Microfinance has been a Godsend for thousands of individuals and small business owners throughout Africa. But it is expensive and inefficient. Loan officers on motorbikes need to travel for days to collect loans. And the interest rates are still too high. So one breakout group proposed an in-market initiative (for profit) that would act as an electronic broker of these microfinance transactions. The microfinance institutions could use the service to find potential customers, and vice versa. Along the way, data could be collected and aggregated on various borrowers, creating much-needed risk histories, which would then act as a new form of collateral for increasing loan amounts.
The Legal Informal Economy – Early on in our Africa deep dive session in Kenya, we began discussing the role of the informal economies of Africa. These off-the-books businesses are pervasive, sometimes employing more than half the population in some nations. But there is a need to legitimize these businesses, both for the tax revenue they would provide, and the benefits citizens obtain through registering themselves as such. This group decided that the barriers for most informal businesses to enter the formal economy are too high: taxes can sometimes be as high as 45 percent. So they proposed a new level of legitimacy: the registered, but untaxed business. They called it the “Legal Informal” economy. There would be incentives for these businesses to register, including small business assistance, access to new forms of capital for growth, technology infrastructure, and business training. After a time, they might grow to a level where they could then become formal businesses, employing more people, and paying taxes.
These issues are all incredibly complex, so please forgive the lack of details in these proposals. But these ideas represent real action towards change. People volunteered their organizations for participatory roles. Companies made commitments. Names were named. And in the end, momentum won out over inertia.