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Industry Insight

Unconstrained by legacy

An incredible digital opportunity exists in Africa that will allow it to leapfrog the rest of the world.

While South Africans often cast their gaze to foreign lands to search for the latest and greatest in technology, sometimes the most ground-breaking innovations are found surprisingly close to home.

Rwanda, for instance, has quietly established the world's first national drone delivery system. With a distribution centre in its Muhanga region, custom-built drones fly up to 150 kilometres to carry blood supplies to transfusion centres in parts of the country where poor road infrastructure makes travelling difficult. Rwanda has already formalised a set of drone regulations, and is on track with its ambitious plans to build a fully fledged drone airport by 2020, serving various African countries.

Parallels can be drawn between African technology hotbeds – the likes of Rwanda, Kenya and SA – that are seeing massive interest and investment in their new ideas, and those European or Asian nations that prioritised technology in the previous few decades.

Rising star

Could Rwanda become the next Estonia, for instance? This European minnow punches way above its weight in terms of economic prosperity. Its rapid ascent was largely due to technology. Estonia is the birthplace of Skype, TransferWise, and a host of other digital innovations. Its citizens vote on smartphone apps. WiFi is streamed in almost every urban area. Children are reportedly taught to learn to code from the age of seven.

Imagine if, a decade from now, the continent could tell the same story about its African nations? Imagine if readers opened the morning news Web sites and saw headlines like this:

‘Africa's first company enters space tourism industry'

Or this…

‘Africa becomes first continent to launch single, virtual currency'

Or…

‘Robots play a critical role in eradicating Ebola across Africa'

Considering the ingenuity of the African people, the necessity to innovate, and their natural affection for new technology, there is nothing stopping Africa from making these headlines a reality.

Estonia is the birthplace of Skype, TransferWise, and a host of other digital innovations.

In fact, in less than a decade, Africans can expect to see four billion connected devices in the hands of a population of 1.5 billion people. Africa's population is not only growing faster than anywhere else in the world, but it is getting younger, and becoming more urbanised.

Most tellingly, ICT spending in Africa is predicted to reach $315 billion by the year 2025, which is 7% of the continent's GDP. For the sake of reference, it's currently sitting at just over 2% of continental GDP. This increased investment will result in accelerating digitisation among corporates and governments, greater levels of innovation, and improved global competitiveness. It might even result in some of those headlines above.

So, where can African firms lead the way in the economy of the future?

The might of mobile

The most obvious starting point is in the fields of mobile banking, mobile payments, and mobile airtime/data. East Africa is already recognised as the epicentre of global innovation in these areas. But Africa's capabilities can easily flow into adjacent areas as well – such as mobile entertainment, mobile health services, and mobile learning solutions. Perhaps the most exciting prospect is that with the explosion of mobile and cloud technologies, and the move towards infinitely scalable platform-based business ecosystems, things can happen very fast indeed. Consider that in just seven short years since its first app download, Uber's valuation is now higher than Delta Airlines'.

One of the great paradoxes of today's time is that what was at one stage considered to be a weakness, is now often seen as an advantage. Consider the recruiter looking at a baby-boomer with 40 years of experience, versus the millennial with an innate understanding of technology, and a good feel for the ‘customer of the future'.

A similar dynamic is at play at an organisational level, where those heavy industrial companies of the past – the likes of oil producers, vehicle manufacturers, gold miners or textiles factories – have lost the advantages they once held. Now, their massive operational costs and legacy infrastructures are regarded as weights that drag down profit margins and prevent them from moving with agility. Suddenly, highly adaptable ‘digital assets' are rising in value, as physical asset values plummet.

Africa has a golden opportunity to ‘leapfrog' more heavily industrialised Western nations, focusing on digital businesses and digital services that can be streamed around the world. In many ways, Africa doesn't have to battle through the painful process of re-sculpting large industrial corporates into digital, platform-based companies. For example, energy companies could begin new greenfields operations with the principles of smart grids and renewable energy in mind, instead of having to painstakingly transition from legacy power grids.

Distribution companies could leap straight into the realms of drones and crowdsourced deliveries, without having to fret about what to do with huge fleets of trucks and vans.

In almost every field, these kinds of opportunities exist. It's now a matter of opening the continent's imagination, making bold strides, and creating the right environment for digital business to flourish across Africa.


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