As addressed in Calestous Juma’s Berkman talk on September 15th, the African continent sits poised on the fulcrum of growth. Market inefficiencies exist and are held in stasis until government reforms and deregulation opens floodgates of market opportunity, diversification, and stipulated foreign capital injections that create windfalls of improved accounting standards, corporate governance, and transparency. And then there’s technology.
Building upon rapidly advancing technology, Africa is attempting to leapfrog those previously requisite waypoints for growth. Mobile phones have eclipsed the need for fixed-line communications. High-bandwidth cables beginning to encircle the continent, coupled with Google’s support of middle-Earth orbit satellites, could lead to a data service revolution, even in rural Africa. Mobile is trending past voice to data, and mobile is trending past communication to transaction. The greatest threat to the ATM comes not in the form of bullet-proof glass “mobile banking” units used by Kenya’s Equity Bank, but in the form of hand-held mobile devices. The advent and adoption of transaction services that enable mobile payments such as Safaricom’s M-PESA in East Africa is beckoning obsolescence for brick and mortar banks. Though Equity Bank has inspired millions of Kenyans to open bank accounts, and is currently home to over 50 percent of all Kenyan accounts, Safaricom’s novelty is groundbreaking and has inspired imitation.
For educated and established African entrepreneurs, these changes herald a time that could not be better. Though capital markets remain under-developed, investment inflows –comprised of both Development Finance Institute (DFI), institutional, and private capital– are beginning to fuel expansion. Operating costs in Africa remain higher than in the developed world, but capital structuring focused on post-investment management and execution is becoming more viable as Diaspora repatriation is improving education and presumed operational abilities. But behind the façade of these burgeoning global businesses, it’s still a different story.
Behind the capital injections and international press is a continent comprised of Small and Medium size Enterprise (SME) entrepreneurs, informal labor markets, and tremendous agricultural potential. Companies such as Karuturi –which raises maize, palm, and flowers–are demonstrating that in East Africa it’s agriculture that can, per dollar of investment, impact the most people via employment. Though technology will continue to improve the lives of Africans through greater access to information, the advent of broadband and mobile will certainly change lifestyle, but may not yet change livelihood. Tech application for agriculture may not be as sexy as mobile banking, but it is these synergies –moving from broadband to breadbasket– that will empower change in both lifestyle and livelihood across Africa.