Sunday, September 27, 2009

Africa – stop wasting time and skills with the old model

Last Friday, September 25, I spoke on a panel at the AngelAfrica conference in Manhattan. Though I cannot call myself an expert on Africa, its problems and possible solutions, a lot of work on strategies for emerging countries and many discussions in the past year got me into a position where people listen to some strategic comments.

Around the world, well educated often very successful expatriates in mature countries like the US look for ways to also be successful in their home countries. We all know about the Indian professionals that went back to the country of their ancestors to be successful entrepreneurs. Now, not only India, but many countries in the emerging world provide a basis to passionate individuals for social, economical or political success.

The last frontier is Africa.

This continent has many more challenges that need to be overcome than most other places around the world. The first is already highlighted by the term we use to name the area: Africa; a whole continent. Not a country, a commonwealth, a union and not even a loosely coupled area with reasonable economical, social, cultural or political ties. From an economical perspective, only some 9% of trade happens between African countries. In Latin America that figure is 18.5% and in Europe, 71.4% (source). So the only market that is really large enough in sub-Saharan Africa to be self sustainable is South Africa. It requires the development of a lot of trust through personal networks, enterprise ties, physical infrastructure to start making a change. The conference was such a network event.

The second big challenge has to be noted when looking at the speed (or better slowness) of life. Things do not have to be as fast paced as in New York, but when a process as simple as paying your bill requires hour of travel and hours of waiting in line, then everything becomes a drag and hampers any innovation. In a recent documentary by the BBC, this is called out as a key factor that keeps Africans in poverty.

Fortunately, this is an opportunity in itself, too. At the AngelAfrica conference, Nvalaye Kouroma, the CEO of the thoughtfully named company AfricXpress introduced their mobile phone based payment solution which takes a lot of slack out of the system. Money can be transferred from personal device (typically a phone) to another or to directly pay a bill. This dramatically improves the efficiency and effectiveness of that process. It now only takes seconds – or minutes, when an agent is involved – and what is sent is guaranteed to reach its target. Compared to these productivity improvements, the transaction costs can be neglected. Now people can focus on important things in their live and not waste precious time standing in line or making unnecessary trips.

So at the conference I spoke about my favorite topic: cloud computing and I made the bold statement that is not the underlying IT that is differentiating, it is what you do with it. Leave the “IT production” to those that can deliver it cheaply, environmental friendly out of the cloud and focus on innovation that uses IT. Why waste the expertise of the comparably few college educated skilled resources working on the IT hardware, if you can have them apply IT to solve real problems in healthcare, education, energy generation or transportation.

One question I got was whether the African people shouldn’t first learn the basics: bits and bytes and raw IT and then apply that experience to more sophisticated solutions without having to rely on others to deliver IT from the outside.
But what good should that do? I guess the world’s best auto mechanics are all in Africa. They can keep cars, trucks and buses on the street that were scrap in other parts of the world. And they gained that experience over the past decades, learning a lot. But did that skill set develop into making cars, come up with extensive transportation models? It obviously did not, because you do not need to know how to repair a truck to run an advanced logistics operations. In addition even if one wanted to, there is no infrastructure in place to support an innovative transportation system and it will take decades, before one will.

That situation is very different in IT. There are now at least 10 times more mobile phones in Africa than landlines. Telecommunication companies leapfrogged the costly build up of fixed lines in the ground and only send the signals over the air. Furthermore, the ring for broadband communications is closing around Africa, connecting the continent to the rest of the world. By 2011 nearly 7 Tbit/s will be available to ocean based African countries and from there will swiftly extend throughout the continent. So the barrier to use IT innovatively is gone and my call to action is to not waste time and skills dealing with the interior of the engine. When the motor is already humming, its use will get you to greater success much faster.

Most importantly, the people are there to make all of that happen – if they are not networking, innovating or raise investment money at a conference here in New York, then they are in Ghana, Kenya, Tanzania.

It is my belief that cloud computing can be a key enabler to innovation in African and other emerging countries. Problems and concerns about security, privacy or trust can be overcome rather easily. One needs to just do it and not waste time with the old model.

Update: Good summary on the "The power of mobile money" in the Economist.


  1. Thank you again for joining the ICT panel at AngelAfrica's West Africa Investment Forum in NYC last Friday. The cloud computing discussion was indeed fascinating, and I'm glad to see that the conversation is continuing here.

    While nobody can doubt the leapfrogging advantages of cloud computing to the developing countries, the issue of building centers of innovation within African countries cannot be easily dismissed. Leapfrogging is great - but if one day we can have a Silicon Valley in Africa that will be even greater. Can't there be a balance between being an innovator and just an adopter of innovation?

    Nathan Chiume

  2. Nathan - thanks for your comment. And I very much agree. Country or regional cloud innovation centers make a lot of sense and they provide economical advantages far greater than local traditional IT, even if not as good as a larger service provider could.

    I tried to take a rather extreme position to make a point. Some local expertise for cloud infrastructure is absolutely needed. But the appeal of cloud is its very high degree of automation, self service and therefore lights out operations. Therefore, the number of people needed to work on the inside of cloud computing should be much smaller than on the "outside".
    For me, the real innovation therefore comes by applying IT, not delivering it. So by focusing on that application you get what you are looking for: Being an innovator.