Why the rest of the world should care about innovation in Africa

FORTY years ago, when digital technology was on the rise and the rest of the world was shifting from analogue technology to digital electronics, no one was talking about Africa with regards to innovation. Within the past ten years, the continent has leapfrogged into the era of mobile phones and internet access in an effort to catch up with the rest of the world, writes Zahra Waliji.

Digital adoption in Africa is rising year-over-year. As mobile phones become common in even the most remote villages, digital penetration in Africa is expected to reach 50 percent within a decade. This digital revolution has played a vital role in sparking Africa’s innovative advances. The continent currently houses roughly 200 innovation hubs, 3,500 new tech-related ventures, and more than $1bn in venture capital. As digital infrastructure and energy reliability spreads, along with the compounding effects of connectivity, entrepreneurs will create and adapt technology to develop relevant solutions for everyday challenges on the continent.

While the rest of the world often perceives Africa as remote and lagging behind, that couldn’t be more false. Since Africa will account for half of the world’s population growth by 2050, Africa’s success will inextricably affect the rest of the world. The last time there was such a massive change in demographic was with China’s urban migration of 250 million people, which ostensibly fuelled the global manufacturing boom and the availability of cheap goods.  As former US President Barack Obama said at the UN Millennium Development Summit in September 2010, ‘In our global economy, progress in even the poorest countries can advance the prosperity and security of people far beyond their borders.’

Numerous African innovations have succeeded in developing practical solutions that not only solve regional problems but also have applications worldwide. For example, because access to reliable energy has been a major hindrance to development, alternatives such as solar energy have made major breakthroughs on the continent. Organizations such as M-KOPA and Mobisol have developed unique technology and rent-to-own payment models to provide electricity to low-income communities in sub-Saharan Africa.

Morocco recently finished tendering the construction of an 800MW solar project, which is aimed towards stimulating social and economic prosperity in the region. As solar and wind energy is going to account for 15 percent of the capacity additions for energy in the region next year, these solar innovations can be potentially applied to other regions with similar climates and energy dependency problems, such as the Middle East and South America.

Similarly, a product of Kenyan innovation, BRCK, has been rivalling Facebook’s Free Basics and Google’s Project Loon at increasing internet access. This product that was initially built to solve internet connectivity problems in the country using solar energy and SIM-card operated modems, has also been successful at bringing connectivity to internet dead-spots in Wisconsin.

Though created as a solution to a regional problem, such technologies have created unanticipated opportunities in markets across the world. While Africa is unique in many ways, in reality, most of Africa’s challenges of connectivity and infrastructure are universal. Therefore such technological advancements have the potential to transcend borders and create global impact.

Another sector that has demonstrated major breakthroughs on the continent is fintech. The Kenyan-based digital payment platform, M-Pesa, was launched as a mobile phone-based money transfer service to promote financial inclusivity among lower-income households in Kenya. This innovation has now surpassed borders to become the case study for global digital payments, with similar models operating in over 80 markets internationally.

Similarly, other African innovations in the fintech sector have simplified global trade and payments. Companies such as AZA, a Kenya-based digital foreign exchange, and payments platform, has revolutionised global payments through hybrid infrastructure to make cross-border payments faster and cheaper. What started as a niche product aimed at simplifying remittance payments for Kenyans living in the UK, is now primarily a digital foreign exchange and payment platform for frontier markets. Currently, more than 60 percent of AZA’s transactions are business-related and it has enabled over 27,000 users in more than 85 markets to make cross-country payments more efficient.

The growing expertise of African innovation and their extending research capacity is a stepping stone to economic development in the region, including better access to food, health, and higher standards of living as well as political and economic stability. This allows these nations to create better business climates, which benefits everyone in the global context through accelerated trade and growth across continents.

Moreover, a vibrant innovation sector drives prosperity and economic growth, creating a ripple effect of lower employment rates, improved infrastructure, and stability. In fact, a 10 percent increase in broadband bandwidth leads to broadband penetration leads 1.2 percent increase in a low to middle-income nation’s GDP This, in turn, decreases frontier markets’ reliance on foreign aid and loans, allowing them to prosper and grow independently as well as lessen the burden on donors.

Furthermore, African innovations can also create unexpected opportunities for multinationals. Startupbootcamp AfriTech (SBC), a leading African accelerator, has learned through their work that while corporates and large organisations have expertise in execution and scaling, startups are key in identifying problems and developing solutions.

The collaboration of global multinationals and African innovators can not only benefit startups with funding and resources but also gives large global corporates and organisations a testing ground for their innovations that is not heavily restricted by the presence of incumbents. These partnerships have the potential to make technological breakthroughs in developing solutions for global challenges on a larger scale.

Credit: Zahra Waliji