Summary: Forbes has published an article by Harry G. Broadman, CEO of Proa Global Partners, a global management consulting firm, exploring the question of whether Africa can cross the innovation divide.
Using solar technology to charge cell phones
Forbes has published an article by Harry G. Broadman, CEO of global management consulting firm Proa Global Partners, exploring the question of whether Africa can cross the innovation divide.
The article points out that the continent has in fact seen its fair share of innovation breakthroughs, but in terms of economic development, productivity-enhancing innovations may instead have adverse effects, such as causing a drop in demand for labor.
Here's the gist of the article:
Here's a task for you: ask a random passerby on a U.S. street if he thinks that major innovations are the prerogative of the world's most developed countries, especially those in the G20 that are the richest.
In the past, the answer to that question would have been a resounding yes - after all, those countries have an abundance of resources, both financial and human.
What may come as a shock, however, is that emerging markets are not only seeing more and more major innovations in the world economy, but that some sub-Saharan countries are fast becoming global leaders in specific activities. In fact, the continent is home to a number of tech incubators catalyzing brand new homegrown inventions.
It's hard not to celebrate the rise of the "new" entrepreneurs in sub-Saharan Africa. Look in any magazine that focuses on African business and you'll find a number of articles focusing on the region's innovations, and you'll sense that they exude a sense of oblivion. In many ways, this is understandable. After all, this is a region where nearly half of the 800 million-plus population lives in poverty, and poverty is growing.
However, that obliviousness may have happened too soon. For one thing, the process of economic development is intricate and non-linear. Moreover, in Africa, where the number of unemployed youth and adults remains high in most countries, innovations with productivity-enhancing attributes are likely to lead to a decline in labor demand instead, with bad results. Current African entrepreneurs may find themselves on the edge of danger.
Economists will tell you that technological progress drives economic growth. Fundamentally, innovation is largely driven by the quest to solve a challenge or capitalize on a new opportunity that boosts productivity. And productivity gains are the fundamental criterion for determining whether a nation is prosperous or not, and whether a business is successful or not.
Thinking back to the revolutionary birth of the semiconductor, the invention of the microchip (a miniature integrated circuit manufactured through an automated process) in the late 1950s had an impact on the U.S. economy not only in terms of reducing the amount of space taken up by electronic components, but also in terms of exponentially improving the performance of the electronic devices that had them built into them.
Many economists believe that the invention of the microchip has not only fundamentally altered the productivity structure of the U.S. economy, but has also had a direct and indirect impact on economic growth that is not adequately reflected in official economic data.
Innovation, of course, doesn't just mean a novel invention, advanced process, or product; it can also mean the development of new ways of applying existing technologies (whether complex or not) to solve unmet needs ("technology adaptation"); or it can mean the widespread use of existing technologies without any change in their use or design. use or design is not altered in any way ("technology adoption"). In either case, the result is an increase in productivity.
In fact, the word "technology" means different things to different societies, and its use has changed over time. Today, the word is often associated with electronics or digital products and services, but relatively basic, old-fashioned tools and processes also qualify as technology.
Fundamentally, technology is the practical application of knowledge to achieve a specific goal. Nails, for example, are the technology used to nail wood to a piece, and they in turn have spawned other technologies, from hammers to pressurized nail guns.
Innovation breakthroughs
So what are some of the recent innovation breakthroughs in sub-Saharan Africa? Here are some examples:
Mobile banking
The emergence of mobile banking in Kenya over the past decade is one of the continent's most famous home-grown inventions. Indeed, it epitomizes the phenomenon of technological advances originating in emerging markets eventually making their way to developed markets. The phenomenon is a symbol of the disruption of the traditional paradigm embodied in the "product life cycle".
Solar charging for cell phones
Using a cell phone that needs to be recharged is difficult in many parts of Africa because of unreliable or non-existent transmission networks.
Venture-backed, privately held Fenix International has launched ReadySet, a portable, solar-powered cell phone charger designed specifically for the African market, which boosts the use of otherwise unused cell phones, allowing users to bank on their phones and keep track of day-to-day changes in market prices, often in faraway places, so they can more effectively control the timing of harvesting crops. In addition, ReadySet is generating more revenue for cell phone companies.
Crop storage bag
Farmers in West and Central Africa have teamed up with agricultural researchers from Purdue University to develop a three-layer, waterproof, airtight storage bag that protects a wide variety of crops, including peas, corn, sorghum, wheat, rice, nuts, and beans, from moisture, pests, and heat.
As a result, farmers are able to adjust the planting time of their crops according to the weather conditions and sell the harvested crops only when the market price is higher, thus earning more income. In addition, the collection bags help farmers reduce their dependence on pesticides, which in turn makes the entire farming community healthier, as well as improves food safety. The bags are manufactured and distributed locally, thus creating a new labor-intensive industry.
Tablets for teaching
Local educational software companies in eastern Africa have teamed up with nongovernmental organizations to create a new pay-per-use tablet that lets teachers customize lessons and extract information from different curricula and other reading materials in a more economical way. The changeable curriculum materials help schools and their teachers address the lack of educational infrastructure, and the pay-per-use model saves students money compared with traditional textbooks or laptops.
Drone-based delivery of goods and health care services
Drones are not yet widely used for product delivery in developed countries. However, in parts of Africa, drones have been used to address underdeveloped transportation networks, especially in the healthcare sector.
In May 2016, UPS joined forces with robotics maker Zipline in a joint venture to begin delivering up to 150 blood transfusions a day to 21 rural clinics in western Rwanda. In Malawi, drones are also being used to test transporting blood samples from infants in rural areas for highly specialized HIV testing at major hospitals in the capital city.
Outside of the healthcare sector, Kenya is researching long-distance drone delivery services, with commercial drone delivery tests set to take place in 2017. Meanwhile, Rwanda plans to establish a "drone port of entry," with the goal of starting a commercial drone delivery service by 2020.
Africa's success in capitalizing on newfound paths of innovation is laudable, and hopefully will help the continent's countries achieve a true "economic takeoff". But much will depend on how African businesses and policymakers capitalize on this opportunity.
Given the current "initial conditions" in many African countries, especially the alarming unemployment rates, there is a significant downside risk that innovation, which is largely about boosting labor productivity, could reduce labor demand. Once innovation is achieved, Africa's aspirations for economic take-off could be jeopardized once again.