Africa’s Digital Acceleration

The first time I visited Kenya and Tanzania it was at the beginning of year 2008 and I was surprised to see how countries with no phone lines had bypassed the need for infrastructure with mobile connection which was at times more widespread than in rural areas of Asia or even Europe.

Several years went by and in my second trip to Kenya (and first of many) in 2016 I discovered a country that rather than only accept deployment of existing technologies from US or Europe is also striving to be at the forefront of increasing innovation. Take M-Pesa (M – of course – for mobile, pesa meaning money in Swahili).  M-Pesa is a mobile phone – based money exchange platform, launched at the end of last decade by Safaricom and Vodacom in Kenya and Tanzania.  The service allows users to deposit money into an account stored on mobile phones, and transfer money on a direct peer-to-peer exchange through text messages, completely doing away with bank services or other intermediaries.

Mobile-based payment is a technology that has not quite taken off in Europe, US or Asia – though Apple pay is trying to push it through, with limited success – but has been transformative for microeconomy in Kenya, where there is still a large slice of population which does not have a bank account (and I might add – for those who do – ATM machines do not work as often as one might expect or hope for).

Since then, M-Pesa has spread wings also in a number of other countries in Africa, Middle East and Eastern Europe.  In the meantime, the appetite for digital services has grown. In May this year, Telkom Kenya launched a – very appreciated by its users – free whatsapp service.  The move could steer users from Telkom Kenya’s competitors, while at the same time allowing time for digital services powered by mobile apps (such as Amazon and Amazon Prime – which are not yet available in Kenya but hopefully soon will) to grow and spur data use.

Other African countries have joined the bubbling pot: in late 2016 Senegal announced the launch of eCFA Franc: a digital currency. It is not yet clear what kind of success eCFA Franc is having, but the idea and potential of it are certainly a promising start.

Education is not lagging behind: in April this year for example the Rwanda government announced a partnership with Microsoft with the intention to digitise Rwanda education through a “smart-classroom” project.  Nairobi schools offer very advanced programs fully integrating solid academics with access to technology.

What is the source of the wind behind Africa’s innovation streak?

Most African countries are developing economies with great potential for growth. In the past decades progress was halted for lack of  traditional old economy infrastructure (eg roads and landlines). However by doing away with the need to invest capitals and work in building infrastructure, and jumping straight to digital, there is now space to experiment with new technology without being weighted down by bottlenecks of existing infrastructure and its regulatory constraints.

Disintermediation is also the key to new possibilities. Where intermediation finds its bottle neck in bureaucracy and corruption, the possibilities offered by peer to peer technology (such as M-Pesa) and disintermediating technology such as blockchain are infinite.

Urban planning is another area where innovation would be of great benefit to Africa. Take the city of Nairobi, where a very modern lifestyle battles with the absence of modern and well connected roads while the Jomo Kenyatta International Airport is better connected than our (sadly) decreasingly connected Milan airports and the small and surprisingly efficient Wilson airport serves flights to a number of regional touristic and business destinations. A futuristic approach might do away with the need for roads and jump straight to drone transportation for logistics or even – with a further technological acceleration – experimenting with flying cars.

It is to be expected that a further acceleration in innovation will appear when entrepreneurs gain wider access to financing via venture capital funds or also non traditional means, such as crowdfunding.

cropped-foto-stefania-sito-web-3.jpg© Stefania Lucchetti 2017. For further information Contact the Author

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