True digitalisation in Africa
New digital services are addressing some of the continent's most critical challenges.
The term digitalisation is often used in reference to things like automation, process efficiency, or paperless environments. While these are undoubtedly important within traditional organisations, 'digitalisation' really refers to something far grander. It's the application of technology to create entirely new customer value (such as new products or services, simplified distribution, better prices, etc), and even to create entirely new business ecosystems.
Throughout Africa, disruptive digital innovation, like mobile technology, has given people a way to connect with each other, get information, trade goods and services, access financial services, and enjoy improved healthcare, among many other advantages.
Across the continent, there are several great examples of companies born out of a spirit of digitalisation. Kenya's Twiga Foods, for instance, connects farmers with local store owners within the digital marketplace, integrating into informal delivery networks and mobile money platforms to facilitate the exchanges. This powerful platform helps alleviate food shortages and price volatility for local produce - it's a service that simply wouldn't have been possible without the East African region's embrace of mobile technology.
Or, consider the Cardiopad, developed by 24-year-old Cameroonian engineer Arthur Zang. Using electrodes attached to the patient, and real-time visuals rendered on a tablet at a cardiologist hundreds of kilometres away, the Cardiopad is helping to diagnose those at risk of heart attacks or heart disease - ensuring people are diagnosed and treated, and that lives are saved.
This is the truly exciting promise of digitalisation. Currently, only 2% of Africa's economy comprises Internet-related services, but this figure is expected to grow to 7% ($315 billion) by 2025. Most of this growth will be from new platform-based businesses in areas like mobile money networks.
The best solutions to local problems will come from locals immersed in African communities and countries.
In a recent report, PwC opened with the bold statement that "South Africa is poised on the brink of a digital revolution". It cites the incredible pace at which consumers are able to access information, entertainment and media content by the expanding access of the Internet and smartphones.
PwC notes three distinct waves of digital opportunity for African firms:
1. Improving e-commerce profitability via enhanced customer experiences, propositions, pricing, or distribution.
2. Better understanding customers' desired outcomes and finding ways to enable these outcomes.
3. Acting as a trusted party on behalf of customers to aggregate their data and manage relationships with other companies/parties.
In order to achieve the kinds of flourishing businesses that Silicon Valley produces, the venture capitalist and investor climate in Africa needs to recognise the potential opportunity, and realise the best solutions to local problems will come from locals immersed in African communities and countries.
African companies will also need to develop greater awareness and trust in the kinds of cloud-based, software-driven services that fast-growing companies use as a flywheel to achieve success. As digital awareness and skill-sets grow within local companies, their people will find new ways to apply a digital mind-set, to rapidly grow and innovate.
The biggest area of digital opportunity is also the biggest area of risk - big data. Firstly, making smarter use of data is an opportunity, as data is fast becoming the new currency of the business world. With cellular penetration rates almost matching the continent's entire population (1.1 billion), and expecting to rise to over 4 billion smart devices and connected sensors over the coming years, the data generated will provide a wealth of insights into consumer needs and behaviours.
With data - and the cloud - being so important, African businesses must look at the extent to which they are sufficiently 'beneficiating' their digital assets, and helping Africa to create truly digital economies. And this is where the risk comes in: by relying on international cloud services and software, African companies run the risk of passing over all their data to social networks, online business software providers and cloud computing companies.
Across the continent, free Internet connectivity is arriving from the likes of Facebook and Google, with drones, balloons, satellites and other technologies. But, users need to look carefully at the consequences of using many of these services - regarded as the new Trojan horse of the digital era - as they draw their value from data, networks and interactions.
African countries must strike a healthy balance between benefiting from global services, while also building their own cloud platforms, pushing the limits of technology, and continuing to innovate. By getting this balance right, the continent will be set up to bring more digital services to its consumers and communities, helping to address the critical challenges it faces.