Disruptive innovation is transforming Africa’s economic potential, creating new target markets and unprecedented consumer choice. The specter of economic populism that is haunting Europe and America is partly rooted in perceptions of unemployment and inequality arising from how businesses deployed technology in the last few decades.
Africa will not be spared from the sweep of such populism and opposition to new technology. Capitalising on these potential opportunities demands a complete rethink of customer engagement and business development strategies. So how can your business ride the wave?
- Unconstrained by legacy
Africa has far less legacy to get in the way than in other regions, creating a clean sheet upon which companies can develop their own distinctive business models. We see this in the speed that many markets are expanding. We also see it in the blurring of industry boundaries – the coming together of renewable energy, mobile payment and consumer finance is a clear case in point.
- The power and potential of disruption
Technological disruption is transforming markets and societies across Africa in ways that wouldn’t have been possible even five years ago. And this opens up huge and still largely untapped commercial potential for domestic and international businesses.
From the demographic dividend of a young and rapidly expanding population to an increasingly affluent and aspirational middle class, Africa has the potential to become a new powerhouse of production and consumption in the 21st century, just as Asia was able to do in the late 20th.
- Implications for businesses and policymakers
Drawing on our market experience and wide-ranging market analysis, we believe that there are five fundamental priorities for mainstream businesses, disruptors and policymakers:
- Mainstream businesses
Disruption isn’t just a tech opportunity but opens up opportunity for further commercial potential through development of the relevant infrastructure.
Partnerships with Africa’s growing tech hubs and ‘technopreneurs’ can provide access to innovation. Broaden your outlook to include Africa’s emerging consumer class
Keep a disruptive mindset get to market quickly and be prepared to fail but learn and adapt. Think differently about your workforce: a disrupted economy demands people who are creative, collaborative and ready to embrace change.
One size fits none in Africa models can’t necessarily be lifted directly from one country and replicated in another. Look beyond technological innovation to ensure the business model and customer relevance. Think about where you fit in and what gaps you can fill in the existing markets. Think scale and look how to build up growth capacity and market reach before you outgrow your platforms. Expect resistance from vested interests and look at partnership as an initial option.
Embrace change and technological disruption as an opportunity. Improve data quality and share to target investment and improve efficiency of public services. Leapfrog developments elsewhere. Put agriculture at the forefront of development, to boost yields and move up the value chain. Foster greater transparency and trust through digital connectivity.
We discuss six main ways in which businesses, disruptors and policymakers can capitalise on the potential of disruptive technology in Africa.
1. Driving efficiency in business and public service
Boosting connectivity through increasing access and affordability is essential for disruptive development in Africa. Connectivity links consumers to businesses but also enables innovators to share ideas and seek funding and advice through the shared economy. While mobile connectivity is well-advanced across Africa, internet availability lags behind. Less than 30% of African people have access to mobile broadband (compared to 43% in Asia) and only 15% have internet at home.
2. Strengthening trust and combatting corruption
Blockchain is emerging as a key tool in stamping out corruption and waste, particularly in the public sector. Blockchain is already being used in Africa to improve traceability in the diamond trade, and has the potential for many other applications including combatting tax avoidance, avoiding land registry disputes and providing greater transparency of public spending.
3. Improving market access and ease of doing business
Nigeria’s experience highlights the opportunities and challenges facing companies in Africa’s e-commerce sector. Nigeria is Africa’s largest market, both by size of GDP and population and with an estimated two thirds of Nigeria’s internet users having shopped online at least once, there is an e-customer base of almost 60 million Nigerians. Drone technology and 3D printing have also helped Africa to bypass infrastructure challenges and improve access to markets, previously unreachable.
4. Healthcare and crisis prevention
Disruptive technology is helping to overcome the traditional barriers of distance and limited access to healthcare. One example is Peek, a portable eye examination kit which lets users carry out eye exams by taking high quality retinal images with their mobile phone. Another combines big data and drone technology to avert potential epidemics through early detection and tracking.
5. Education, innovation and job creation
From Cape Town up to the ‘Silicon Savannah’ of East Africa, more than 100 tech hubs have been set up across Africa over the past decade to help foster home grown innovation. Many hubs focus on supporting social enterprises that are developing solutions to social problems. Technology has also been transforming teaching and training in Africa, through delivering educational content on mobile and online channels.
6. Bringing the informal sector into the mainstream economy
Mobile connectivity brings financial inclusion by enabling banks and telecoms providers to reach out to previously unbanked customers with low cost accessible services. Through the success of the M-PESA payments platform. The industry, especially through smartphones, has become a hotbed for creativity and a source of inspiration for young innovators and entrepreneurs.
The entry of Uber tells a different story. The initial perception was of instant disruption. Taxi drivers in Kenya have at times responded by physically attacking Uber drivers. For them the loss of livelihoods was real and immediate. Their fear of loss was heightened by the fact that consumers may prefer Uber, a process that would facilitate the demise of their businesses.
The way forward for Uber entails searching for technological inclusion. There are several ways by which this can be pursued. The first is for Uber and local taxi services to find ways to share the market. This could be done through joint ventures. Kenya has one of the highest rates of inclusion in Africa, yet comparable platforms in other countries have found the going harder.
New local entrants are emerging in Kenya and South Africa, but they have an uphill battle competing with the well-established Uber brand. Access to new technologies might hold the key to such inclusion. Kenya’s Safaricom, for example, has launched Little Cab using its strong mobile technology base to compete with Uber. South Africa, which has been slow to adopt mobile money technology, is finding it harder to compete. Striking taxi drivers have called on the government to restrict Uber’s operations.
Finally, helping riders and drivers to overcome their constraints promotes inclusion. When Uber realized that Kenyan riders were reluctant to pay using their bank accounts, it allowed them to pay cash. Uber is also helping drivers in Kenya, South Africa and Nigeria to acquire their own cars.
Other approaches include new app-based rider services. South Africa VW, for example, has launched such a service in Rwanda. South Africa VW plans to expand its service to Kenya and other African countries. The examples of mobile phones and Uber underscore the importance of inclusion in promoting the adoption of new technologies.
It is often argued that while new technologies may destroy jobs, it also creates new ones. Historically this has been true and will continue to happen. But when it comes to automation, it is important to note three key differences between historical trends, especially those informed by the Industrial Revolution in England two centuries ago, and contemporary developments.
Robots and automation will rapidly invade every conceivable human activity. Their spread is a global phenomenon, and no region of world will be able isolate itself from their diffusion. Countries such as China that built their industrial base on the backs of cheap labor are at the forefront of adopting industrial robots.
The pace of technological change is discernibly exponential, and disruptions often occur soon after new technologies are introduced. Uber is less than a decade old but its tumultuous entry is already being felt worldwide. More disruptions are expected in the sector, especially through the introduction of driverless cars despite current concerns over safety.
The argument that displaced workers can be retrained to do new tasks no longer holds universally true. Robots are learning to perform new tasks faster than we can train old workers. We are entering the age where the robot will make other robots faster than humans can reproduce themselves.
Disrupting Africa: Riding the wave of the digital revolutions – PWC.
What innovation and technological disruption really means for Africa- Quartz Africa.