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Africa’s entrepreneurial revolution

Credit: Justin Sullivan/Getty Images For The Clinton Foundation

Credit: Justin Sullivan/Getty Images For The Clinton Foundation

August 16, 2018   4 mins

A few months back, President Trump referred to African nations as “shithole countries”. It is also alleged that, in an Oval Office meeting about immigration he said that Nigerians “live in mud huts.” His remarks are crude and offensive, but they also miss the vibrant economic engine the continent has become.

In sub-Saharan Africa as a whole, growth in 2018 is forecast by the World Bank to be 3.1%, rising to 3.6% next year. If you exclude the “big three” – Nigeria (2.5%), South Africa (1.1%), and Angola (1.6%), where oil prices and other special factors come into play – it’s closer to 5%. And the 3.1% average for all 49 nations obscures an even more interesting statistic – Africa hosts six of the world’s ten fastest growing economies:

“Most of 2018’s top performers are non-commodity intensive economies. The list is led by Ghana (8.3%) … Ethiopia (8.2%), Côte d’Ivoire (7.2%), Djibouti (7%), Senegal (6.9%) and Tanzania (6.8%).”

For comparison: while the US just announced an annual growth rate of 4.1%, according to a recent Bloomberg report it’s likely a blip (driven by the short-term impact of tax reform and anticipation of a trade war); the recent norm has been around 2%. The latest UK figure is a miserly 1.2%.

Africa hosts six of the world’s ten fastest growing economies

The African game-changer has been the mobile phone. By 2019, according to the World Economic Forum report, there will be 930 million mobile phones in Africa, which works out at almost one for per person: “There is greater mobile penetration than electricity penetration. Now, people are able to connect, get news, trade, get access to healthcare and even transfer money.”

It may seem counter-intuitive, but could the lack of traditional infrastructure actually be enabling this? I put this to Dr. Nagy Hanna, global innovation guru and former head of strategy with the World Bank.1 “That’s half the story. But yes – there are no legacy systems. There are mobile-based systems. Moving fast to a cashless society.” So what’s the other half? “The other story that is promising is the development of innovation hubs. Mostly in South Africa but also Kenya, Ghana – they’re not evenly spread.”

Innovation hubs in the West have historically been funded by venture capital. The most famous is Silicon Valley’s Y Combinator that has nursed a succession of star starts-ups including DropBox and AirBnB.

In Africa it’s a different story. In some cases, foreign aid is funding the hubs, Dr. Hanna tells me. In others, it’s smaller-scale private/local funding, mostly tailored to small-scale enterprises. Local inventers and innovators flock to them. “These are well-educated people…. Their problem is scaling up – to have a major impact on development.”

Major western companies are showing increasing interest. “The hope is that multinationals will move in, fund, bring scale. IBM, CISCO, Apple, are all engaged.” That’s because they see vast potential. Given the pace of both economic and population growth in these countries the potential of their markets is huge. What’s more, Dr. Hanna says, through participating in the local innovation scene in booming economies like Kenya and Ghana, these major companies “have a big opportunity to learn how to meet unique African needs and challenges.”

Of course, working in an environment without legacy infrastructure brings its own special problems. For example, logistics bottlenecks, which offer particular challenges to e-commerce, including high transport costs. There’s also a continuing need for a more business-friendly environment right across the continent. Kenya, for example, is still ranked number 91 in the world for business-friendliness. It takes an entrepreneur 25 days to set up a business in Kenya – in the United States, where I live, it literally takes less than half an hour.

Yet Kenya is an African success story, and host to one of the most innovative tech applications worldwide – the mobile banking app M-PESA. In the west we getting used to various payment systems that use our mobile phones, but M-PESA, launched over a decade ago, was way ahead of the game. (For comparison, Apple Pay was launched in 2014.) The statistics are stunning. M-PESA processes 48% of Kenya’s entire GDP. It’s used by 93% of the adult population.

Unlike more complex western systems, M-PESA doesn’t need an app – it’s based in the phone itself (many Africans do not have smartphones); SMS (texts) facilitate money transfers. Since it was launched, the number of ATMs in the country has dropped by a third. And its success exemplifies the need for western companies to engage on the ground – and the opportunity when they do. In the case of M-PESA, the prime mover was Vodafone’s Kenyan subsidiary, Safari.com. And, as is often the case with wildly successful innovations, the original goal was quite limited – to manage micro-lending.

Will these fast-growing African economies be the successors of the Asian tigers? Aid agencies funding innovation hubs and multinationals taking the long view and seeing vibrant markets down the road are marvellous signs of hope. But the real challenge lies in the hands of governments. Countries like Kenya are steeped in colonial-era regulation and a post-colonial tradition of heavy-handed political leaders. For Africa to realise its economic potential, those nations need to work their way up the business-friendly rankings, enabling them to capture the energies that technology and its entrepreneurs are letting loose. Getting rid of red tape is now the challenge.

Nigel Cameron writes about technology, society, and the future. In 2007 he founded the Washington think tank The Center for Policy on Emerging Technologies. His most recent book is Will Robots Take Your Job?


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Lena Bloch
Lena Bloch
3 years ago

Solzhenitsyn was a rabid anti-communist and an overt Nazi sympathizer. To quote his name in relation to anything just or truthful is really perverse…
“Solzhenitsyn began in 1962 to publish books in the Soviet Union with the
consent and help of Nikita Khrushchev. The first book he published was A Day
in the Life of Ivan Denisovich, concerning the life of a prisoner.
Khrushchev used Solzhenitsyn’s texts to combat Stalin’s socialist heritage. In
1970 Solzhenitsyn won the Nobel Prize for literature with his book The Gulag
Archipelago. His books then began to be published in large quantities in
capitalist countries, their author having become one of the most valuable
instruments of imperialism in combating the socialism of the Soviet Union. His
texts on the labour camps were added to the propaganda on the millions who were
supposed to have died in the Soviet Union and were presented by the capitalist
mass media as though they were true. In 1974, Solzhenitsyn renounced his Soviet
citizenship and emigrated to Switzerland and then the US. At that time he was
considered by the capitalist press to be the greatest fighter for freedom and
democracy. His Nazi sympathies were buried so as not to interfere with the
propaganda war against socialism.

In the US, Solzhenitsyn was frequently invited to speak at important
meetings. He was, for example, the main speaker at the AFL-CIO union congress in
1975, and on 15 July 1975 he was invited to give a lecture on the world
situation to the US Senate! His lectures amount to violent and provocative
agitation, arguing and propagandising for the most reactionary positions. Among
other things he agitated for Vietnam to be attacked again after its victory over
the US. And more: after 40 years of fascism in Portugal, when left-wing army
officers took power in the people’s revolution of 1974, Solzhenitsyn began to
propagandise in favour of US military intervention in Portugal which, according
to him, would join the Warsaw Pact if the US did not intervene! In his lectures,
Solzhenitsyn always bemoaned the liberation of Portugal’s African colonies.

But it is clear that the main thrust of Solzhenitsyn’s speeches was always
the dirty war against socialism – from the alleged execution of several million
people in the Soviet Union to the tens of thousands of Americans supposedly
imprisoned and enslaved, according to Solzhenitsyn, in North Vietnam! This idea
of Solzhenitsyn’s of Americans being used as slave labour in North Vietnam gave
rise to the Rambo films on the Vietnam war. American journalists who dared write
in favour of peace between the US and the Soviet Union were accused by
Solzhenitsyn in his speeches of being potential traitors. Solzhenitsyn also
propagandised in favour of increasing US military capacity against the Soviet
Union, which he claimed was more powerful in ‘tanks and aeroplanes, by five to
seven times, than the US’ as well as in atomic weapons which ‘in short’ he
alleged were ‘two, three or even five times’ more powerful in the Soviet Union
than those held by the US. Solzhenitsyn’s lectures on the Soviet Union
represented the voice of the extreme right. But he himself went even further to
the right in his public support of fascism.”
Mario Sousa “Lies Concerning the History of the Soviet Union”

Lena Bloch
Lena Bloch
3 years ago

These sick minds have also been trying to destroy Egyptian pyramids as “monuments of slavery”.