Emerging Market Tech Series: Africa, a Tech Innovation Hub?

Recently, there has been a lot of talk about the growing economic opportunities in Africa.  It seems like everyday there is a new article about China or Brazil scrambling to snatch up natural resources across the continent.  However, one trend that has been largely lost in the plethora of coverage on business in Africa is that the continent is slowly becoming a hub for technological innovation.

To many, Africa is synonymous with poor infrastructure, limited electricity, and outdated technology.  While there is no doubt that Africa lacks some of the fundamental elements for technical expansion (electricity penetration is a dismal 25%), the inherent hurdles to doing business in such a difficult environment have spawned some of the world’s most exciting and innovative technical developments in recent years.  When it comes to technology in Africa, the rule is innovate or die and western companies could learn a lot from studying some of the unique projects being launched there.

Perhaps the best known example of such innovation is the M-Pesa mobile payment system.  Launched by Safaricom, Kenya’s largest mobile network operator, the M-Pesa system has quickly become the developing world’s largest mobile payment system.  M-Pesa allows users to withdraw, deposit, and transfer money via their phones with just the push of a few buttons.  For most Kenyans banks are few and far between and opening a bank account can be a time consuming and complex process.  M-Pesa also limits the need to carry large quantities of cash which reduces crime.  The system, launched in 2007, has grown to 17 million subscribers in Kenya and has been wildly successful.  For comparison, consider that just today Starbucks announced that U.S. consumers will soon be able to purchase coffee via their smartphones.  They are a bit late to the party and yet years ahead of other American chains.

A lesser known, but equally exciting innovation by Safaricom is its micro-insurance system run via M-Pesa.  The scheme lets farmers insure their plots against drought or flood and allows them to invest in better seeds and fertilizer without the fear of losing all their money.  Farmers purchase the insurance on their phones and a system of 30 solar powered weather stations determine when conditions have made crops inviable, automatically triggering payments.  The lack of paperwork, bureaucrats, and surveyors mean the program has extremely low overhead.

Safaricom is not alone in innovative tech for Africa.  In fact it has a lot of company.  Earlier this year Forbes published a list of the top 20 tech start-ups in Africa which included companies like Yola which lets users build professional looking free websites in minutes with drag and drop features or Obami which is a social learning platform for South African schools.

So don’t be surprised if the next facebook or Twitter comes from Africa.  They say necessity is the mother of all inventions.  Africa has plenty of needs and it has the entrepreneurial inventors to turn those needs into opportunities.  Western companies would do well to look towards Africa when it comes to technology and innovation.  Who knows, it might well be where their next big competitor comes from.

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