Technological innovations, particularly in digital and mobile platforms, have boosted inclusive growth in developing African markets over the past several years.
Inclusive growth is defined as economic growth and development that enables lower income segments to gain access to basic goods and services – at more accessible price points and of a higher quality than was previously possible.
According to Wim van der Beek, managing partner at Goodwell Investments, “The mobile telephony revolution, which allowed for the proliferation of connectivity via low-priced feature phones, marked the first wave of innovations to spur inclusive growth in African markets. Mobile payment solutions like M-Pesa are a good example of this.”
New Delivery Models
This mobile payment revolution has enabled the introduction in Africa of the ‘on-demand’ model – which allows people, particularly in rural and remote areas, to use their mobile phones to access prepaid digitised services that are grounded in physical products. M-KOPA Solar has been the poster child of this model, providing ‘pay-as-you-go’ energy for off-the-grid customers using small solar home systems.
“We are now moving into the second wave of digital innovation with regards to inclusive growth, and this wave is being driven by five key megatrends,” notes van der Beek.
“The emergence of blockchain technology, big data, on-demand services, cloud computing and the Internet of things (IoT) are all spurring inclusive growth on the African continent. And it is the convergence of these exciting technology innovations that is changing the face of Africa.”
The Second Wave…
The Internet of Things (IoT), which speaks to the ever-faster integration of information and communication, is already shaping the way in which prepaid mobile products and services are delivered.
By way of example, Nomanini, the South African-based enterprise payments platform provider, has developed a rugged Point-of-Sale (PoS) device with a SIM card that communicates to a central cloud-based dashboard. This simple, but connected device enables informal market vendors to sell airtime and other virtual services.
The Nomanini platform is also a strong example of an enterprise that relies on cloud computing to power transactions. Instead of pouring massive investment into complicated hardware and programming tools, Nomanini relies on remote connections and world-class Software-as-a-Service (SaaS) platforms to power its offering.
On a more general level, cloud computing allows for cost reduction in both hardware and software – cutting out the need for both businesses and governments to spend huge amounts on IT. This becomes critical in remote areas where communication infrastructure is unavailable or costly to install and maintain.
“With regards to big data, mobile phones are now sending back huge volumes of critical data on a segment that both governments and the private sector have been unable to fully understand,” says van der Beek. “Indeed, data from mobile phones is beginning to unlock huge opportunities to better understand how certain segments spend, what they earn, the services they use, etc. Also, data gathered by companies, such as Nomanini, on patterns in informal retail will be of great value to big brands.”
Although it is still a relatively unknown and a seemingly complicated concept, van der Beek says blockchain technology – which is the database technology that powers Bitcoin – has the potential to ‘revolutionise’ the way certain public services are offered in Africa.
“Applications for the blockchain, for example in health care or land registries, extend far beyond Bitcoin and other cryptocurrencies. In our view, it might have the same kind of transformational impact as the introduction of the Internet browser,” he says.
Despite the growing excitement around new innovations such as blockchain technology and big data, van der Beek advises entrepreneurs in Africa and elsewhere to always keep the end goal in mind and to avoid pursuing ‘innovation for innovation’s sake’.
“In order to really move the needle when it comes to improving people’s lives in Africa and other emerging markets, we need to remain focused on the goals of inclusive growth – and allow this vision to shape the way technology is built and implemented.”
This article appeared in Disrupt Africa, February 22, 2016. It summarizes the contribution from Wim van der Beek at the third annual Sankalp Africa Summit in Nairobi, 24 to 26 February, 2016. “All conversations at this year’s Summit will revolve around the theme of “Spurring the Entrepreneurship Economy”.