First published on Agenda as part of the World Economic Forum Annual Meeting 2019
Africa has not been spared from the impact of globalization as the world’s economies and societies have become more and more integrated. There has however, been more movement of ideas, technology and goods into the continent than out. But if globalization is to deliver its promised prosperity and benefits, bi-directional, mutually beneficial and cooperative engagement between Africa and the rest of the world is imperative. Today, African entrepreneurs are using their imagination to drive the next wave of globalization, exporting innovative African-baked technology.
The challenges of doing business in Africa are widely known: weak infrastructure; immature capital markets; poor quality of education; low GDP per capita, which shrinks the disposable incomes of would-be consumers; and populations spread across staggering distances, which complicates delivery.
These issues can blur Africa’s potential. But it is precisely the quantity and depth of these challenges that enable African entrepreneurs to appreciate problems and inefficiencies in a way that’s not possible when the challenges are not so serious. Leveraging the power of emerging exponential and digital technologies, African entrepreneurs are now living through an unusual time, in which the capacity of technology to solve problems is starting to match the scale of these market challenges.
The best way forward for Africa’s growth is to leapfrog using exponential technologies, as has been achieved with cellular network coverage and mobile technology over the last 25 years. Today, 800 million Africans own a mobile phone. We have seen global unicorns such as Uber and Airbnb expanding aggressively into the continent.
We have also seen the growth of locally developed solutions targeting local communities, such as the small business payment champion Yoco; trucking logistics leader Kobo360; the Uber for domestic workers SweepSouth; agritech supply chain delivery service Twiga Foods; e-commerce superstar Jumia; and of course, Kenya’s spectacularly successful mobile money service mPesa, which now has 20 million active monthly users.
Many more African entrepreneurs are now producing world-class technology that is being consumed not just by local communities, but in the US, Europe and other global markets, changing the tide of globalization. Many of the challenges we see in Africa were solved long ago in countries with much higher gross national incomes (GNI) before the advent of digital technology. Typically, they were solved using analogue solutions, and even if things weren’t perfect, they worked well enough for everyone to forget the flaws. Ironically, this has the effect of making inefficiencies less visible, and therefore provides less of an incentive for the creation of innovative digital solutions.
This is what gives African entrepreneurs an advantage. We can look back at these limited, “good enough” historical solutions, and we can see their deficiencies and inefficiencies. Africa is in a position to solve its challenges using exponential technologies, and in doing so, it can leapfrog what exists in countries with higher GNI. The African context provides the most fertile ground in which to innovate, because it is where these problems are most deeply felt, and are big enough both to motivate investment and recover the cost of that investment. And because today’s solutions will use exponential technologies, African entrepreneurs can take those innovations to places around the world where the problem may be relatively smaller, but where valuable efficiencies could still be generated, using their ready-built and ready-to-scale solution. Here are some African companies already proving this.
The increasing appetite for Internet of Things (IoT) solutions has spurred a proliferation of start-ups and large corporates focusing on industry applications, data analytics and machine learning solutions to extract the value of the data that IoT makes available. IoT.nxt, based in South Africa, saw that big business in Africa faced a crippling problem. Inadequate infrastructure and basic equipment meant businesses simply weren’t ready to go digital, and companies were not willing to invest in unproven technologies.
IoT.nxt innovated around this customer friction, to bring lots of disparate end devices equipment online, onto a digital platform so that their clients could enter the digital age without replacing all their existing equipment. Unknowingly at the time, they built an advantage in connecting devices at the edge to enable the IoT.
Companies in higher GNI countries are facing the same equipment challenges and cost pressures in connecting devices at the edge. Accordingly, IoT.nxt is positioned within the global IoT landscape, with growing interest coming from the US and Germany. Dell is also now preinstalling IoT.nxt’s technology into their gateways as an “IoT in a box” solution.
With all the excitement around data analytics, delivering business value often gets lost. Dataprophet has carved out a niche in artificial intelligence for the manufacturing and automotive industries. A general lack of technical skills in South Africa means the country’s factories and automotive industries can find it hard to hire suitably qualified staff — unlike in Europe, for example, where better schooling and generational knowledge transfer to young people translate into the required industry skills. This skills gap has led to high defects and poor quality of output in South Africa’s manufacturing and automotive industries, generating raised costs and diluted investment value.
Dataprophet has innovated around this customer friction. The company has devised a solution involving cameras on the factory floor, data collection and machine learning algorithms. The company can now track where in the manufacturing process defects are arising and how; what caused them; and how to prevent them happening again, through targeted training, changing settings and new business rules. The net result is that they have now reduced defects in industrial plants from double digits to single digits, and even, in some cases, to zero. Their solution can also be deployed on existing factory floors, which makes it affordable.
The high level of defects was an African problem, and justified the business case for solving it. Now this solution is being exported to markets that may not have been able to justify the business case, given their lower defect rates, such as the US.
Chronic food insecurity is a pertinent issue in Africa, where there will be 1.3 billion more people to feed by 2050. Aerobotics have built an analytics platform — probably the biggest in the world of analyzed plants and crops — to help address this challenge. Farmers in developing countries are often not highly skilled; have weak access to information, finance and insurance; and can struggle to grow beyond subsistence farming. The main barrier to growth is a paucity of data about their land, farming practices and raw materials.
Aerobotics has captured vast amounts of data on arable land and crops using drones equipped with multispectral cameras that can detect the concentration of chlorophyll in the crops’ leaves, for example, or which plants or trees need more water or nutrients. Through their proprietary artificial intelligence software, Aerobotics’ platform can discover and analyze problems, pests and diseases affecting individual trees or vines on a farm. In addition to crop health, the software also measures size, height and canopy volume. Using the data collected and by leveraging machine learning, it can predict with greater reliability the yield in any given area, based on a photo and without intervention from the farmer. By the end of 2018, Aerobotics’ software had processed 13 million trees and vines. They are now exporting their services to the US.
These three examples illustrate the same pattern of innovation: build the solution where the customer friction is the highest, because there you can solve a real and crippling problem with a stronger business case. Once built, the solution can be evolved and exported to higher GNI markets. African entrepreneurs can use their heightened imagination and “experiential wisdom” to create solutions for problems that are not, at least initially, as noticed or as high priority in higher GNI countries.
This “noticeability” keeps African entrepreneurs ahead of the curve. Given the nature of exponential technologies, the solutions can then be used to disrupt other markets. This dynamic puts Africa in a more progressive position in the global economy, and will be key in driving a bi-directional, mutually beneficial approach to globalization on the continent.