The Technology Powering Africa’s Economic Rise
September 13, 2021
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by Stephen Kanyi

The ‘Africa Rising’ narrative has been going on for some time now. Two decades, to be exact. Since 2000, ironically after the infamous Heart of the Matter piece on the Economist, the ‘dark’ continent has gone through one of its greatest periods of growth in history.

Putting aside the pandemic, which took a significant economic toll all around the globe, the continent had been recording pretty decent figures in most of the important metrics of a healthy developing economy.

Countries such as Ethiopia, Ivory Coast, Senegal, Tanzania and even troubled Niger and Sierra Leone were recording well over 7% growth rates in GDP. Some even briefly recorded double growth figures between 2012 and 2015.

These have been coupled by significant numbers of jobs created and hence growth in incomes (albeit unequally) in all economic groups.

While this narrative has been questioned and at times ‘debunked’, as an African residing in the continent I can vouch for its validity. The life of the average African is significantly better than it was two decades ago. Living standards are higher, there is better access to essential services like healthcare, education and housing and most importantly, the political climate is resolutely more peaceful.

What is however a little confounding is, what exactly has been the cause for a turn of fortunes in a continent that had been declared hopeless just at the turn of the century?

A simple and common answer to this question is technology. Yet, to me, this answer is a little simplified. Yes, technology is undoubtedly the main driver of economic growth in human history. The simple fact that before the industrial revolution 90% of human beings on the planet lived on less than a dollar a day attests to the power of technology.

What is however a little perplexing is why it took so long for Africa to catch up with the rest of the world. Industrialization started in the late 19th century and yet more than a hundred years later, Africa was yet to profit from it.

What factors or rather, what technologies have enabled Africa to finally tap into the power of industrialization and technology after a century of being left behind?

This is a long list, some of which we are going to discuss in detail.

I would first, however, like to bring to rest the theory that politics has something to do with Africa Rising. The truth of the matter is Africa’s governance, while having improved, is not significantly better than it was, say 50 years ago, when most nations got their independence from their colonial masters.

Most African governments are rifled with tribalism, nepotism, greed and corruption. They are either led by dictators who have overstayed their terms or opportunists who disguise themselves as visionaries. In fact, to this day, most nations are still trying to figure out their politics. Continuous constitutional changes, political clashes and outright coups across the continent are still evidence of this struggle.

And yet, despite these impediments, Africa is still moving forward. Crawling to better its future despite these odds.

How are they doing this and who exactly is responsible is the subject of this piece. The short answer is technology.

One technology/innovation, in particular, has been the primary driving force behind Africa’s continuing growth. From it, a number of innovations have sprung up and within them are massive opportunities for growth.

Mobile and Internet Penetration

A lot has been said about the rising rate of mobile penetration in Africa. As of 2019, there were 477 000 mobile subscribers in Sub-Saharan Africa comprising just over 45% of the total population. This is set to reach 475 million internet users by 2025.

The importance of mobile and internet use cannot be overstated, especially in a continent that had no previous communication infrastructure to speak of. This is unlike the West, which already had landlines before they had mobile phones.

For most of Africa however, such technologies didn’t exist. Governments did not have the technical know-how or in some cases, even the ‘goodwill’ to build such infrastructure.

The mobile phone, however, completely bypassed this deficit, putting what is essentially a very powerful computer in the hands of millions of people across the continent. It has enabled people in remote areas to communicate seamlessly, access information and products in areas farther than they would have ever imagined.

 All of these are achieved through private industry and not large government projects.

A GSMA report estimates its contribution to the continent at a whopping $184 billion by 2024.

Moreover, internet penetration has spawned various industries and innovations whose contributions go far deeper.

  1. Fintech

For most people, fintech is the first thing to comes to mind when innovation is mentioned alongside Africa. It is by far the most vibrant and the most promising sector of the continent’s economy attracting the highest amount of foreign direct investment. Fintech is responsible for successful startups like Chipper cash and Flutterwave, both of which comprise Africa’s newest unicorns.

While Nigeria currently leads the continent in the number and size of fintech startups, it is in Kenya where fintech has had the most impact and the most success. This can be brought down to one key innovation: mobile money platform Mpesa.

Mpesa needs no introduction, at least to anyone that has been paying attention to Africa for the last few decades. Started in 2007, telecom giant Safaricom’s mobile money arm has changed the country and the whole world with its simple and yet very effective way of sending money using even the most basic mobile phones.

When it was first introduced, more than 90% of Kenyans were unbanked. This meant that sending money from one person to another could take days if not weeks (trust me, I know). Today, it takes no more than fifteen seconds to complete a transaction which now comprises more than just sending money. In fact, as an Mpesa user myself, I don’t remember the last time I used physical money to do anything. With my phone, I can complete virtually any transaction, offline or online.

The success of Mpesa in Kenya has been replicated in other developing nations all around the world with varying degrees of success. Telecom companies like Airtel and Orange have all tried to get into the mobile money industry. As a result, millions of people from East, West and Central Africa have access to banking services at cheaper rates.

And yet, a lot still remains to be done. Up to 66% of Africans remain unbanked and thus unable to move out of poverty. Fintech, having already proved viable still has a lot of room for growth and investment. More importantly, it is currently the best way to reach remote and underserved communities providing them with banking services and a link to the modern world.

2. E-Commerce

With increasing internet penetration and the vibrant fintech industry, other opportunities open up. One important one is e-commerce.

Trade is an integral part of a functioning economy. It is arguably one of man’s most important activities enabling people to access products they do not produce.

In Africa however, lack of enough infrastructure and trade barriers continue to hamper the free exchange of goods and services. While developed regions such as the EU trade mostly with each other, intra-African commerce still remains below 10%. Most African nations still play the feeder role to their former colonial masters, trading raw materials for processed high tech goods.

Serving a similar role as mobile phones, e-commerce could also help bypass government red tape and an overall infrastructure deficit to take products to people who desperately need them, no matter how remote they may be located.

Jumia, the biggest e-commerce platform in Africa has already demonstrated the potential of this promising sector. Founded in 2012 the company just took four years to achieve a $1 billion valuation becoming the continent’s first-ever unicorn.

Niche startups like Kenya’s Sokowatch and Nigeria’s FarmCrowdy also demonstrate how online shopping can help promote local trade helping to link sellers and buyers despite the infrastructural and logistical deficits.

My favourite example is in Rwanda where drones are used to deliver medical supplies to remote areas in the mountains.

E-commerce however still accounts for a meagre 3% of the continent’s overall trade volume. Most sellers lack the technical and financial capacity to access the online market which today encompasses the whole globe.

These two innovations are just two of the many technologies helping better the lives of millions of Africans across the continent, despite government inefficiency. This however does not mean that they can do it all alone, drones can only carry so many goods at a time while communication networks and devices require a stable electricity connection.

Governments still have a major role to play in the continent. Politics, if done right can be the last major development that would foster, not inhibit innovation and therefore development.

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