Timely interventions for a deserving region. But, a model was initiated in East Africa in Kenya first by UNIDO. Energy Kiosks. Well, taking it to higher level is needed and done now. vkd.
I have no association with this company but you should check out two companies Biolite and Wonderbag - just Google them.
Biolite is a fantastic company innovating stoves that can run cleanly on wood and generate electricity.
Wonderbag is an insulated bag that reduces the need for fuel by using residual heat in slow cooking.
Both these improve living standards economically, improve health and safety, help build enterprise and self-sufficiency and increase opportunities for education.
Darkness into light? Stove saviours? Energy infrastructure and distribution should be afforded the same evangelical zeal associated with technologies and business models. Hydroelectric power (e.g. Ethiopia, Sudan) or natural gas (e.g. Nigeria) have great potential for energy poor and rural peoples. Let’s add to the list: 6) commitment to state capacity, and 7) concern for energy access and energy justice.
Agree with your sentiments, Samer. Why should ‘solutions’ be off the radar in order to be off the grid. In South Africa, Eskom is practical about this: They admit there are places that will not be on the grid in the foreseeable future so they offer connections to off-grid energy packages for a price that is part of their total system. In other words, subsidised.
It is a solution that is not ‘for the poor’ it is just part of the total offering to the community. Some people will be off grid for a long time to come.
For ideas on how to bring rural electrification please see the Terra Watt Prize by National Geographic which ran a year ago. That was an interesting competition. It was specifically aimed at locating solutions to rural lighting and small power needs for groups. Some of the entries were rural electrification companies that specialise in microgrid solutions.
Kerosene-powered TEGs are coming too. Kerosene can be burned extremely cleanly and can be replaced with bio-kerosene (bio-paraffin), same as biodiesel. The Biolite stoves use a TEG.
The big future is thermoacoustic generators (TACs), if you ask me. They out-perform solar 2:1 per $ and TEGs by far more than that. They are far more compact, plus they can run at night. They can already replace alternators on vehicles, powered by the exhaust heat, in the 5 kW range.
After carefully reading this article, I felt that Mr. Romisher’s claims are somewhat exaggerated. Perhaps, I should remind Mr. Romisher that (across most of Sub-Saharan Africa):
1. Poor electricity infrastructure is not a technological problem. It is usually a problem rooted in state capacity and local political economy: basically, how local elite share the spoils of the political game—spoils which include control of energy infrastructure.
2. Transition to solar energy? “Just as cell phones displaced landlines,...solar energy will bring electricity to the masses, displacing kerosene…” Em, no. Mobile telephony did not displace landlines. There were practically no landlines in the first place. In my native country Nigeria (population 160mln), for instance, there were fewer than 150,000 landlines before the advent of mobile telephony. The mobile phone industry built its infrastructure from scratch. Can one say the same about solar energy providers? Don’t they need to use existing electricity infrastructure?
3. About urban centres. Any effort to improve electricity supply in countries like mine cannot ignore the large urban centres. It is one thing to provide lighting for off-grid rural dwellers, but quite another to do so in urban centres, which have (often dilapidated) electricity distribution systems.
Instead of touting one-size-fits-all technological panaceas, we should be more sophisticated in mapping out the problem domain. Different technologies may be more appropriate in different countries. Moreover, any sustainable solution cannot obviate questions of local political economy, regardless of the availability of cheap solar energy.
You are right, Ona. I used to live in Ibadan and there are times when solar is hopeless.
The innovations in thermoacoustics are likely to create a whole new playing field. Solar PV is not cheap enough and is made only in a few countries. TAGs are medium level technology and are far more tolerant of being overheated. TEGs have soldered connections.
TAGs can operate at night, Imagine if in Kandahar of Ulaanbaatar the poor townships were supplying 500 MW into the local grid? We should find transformative technologies. Before cell phones, it was difficult to organise a meeting in most countries.
The paramount consideration in economic development is not technological innovation. It is financial empowerment. Hernandez de Soto proved this in Peru. He tried to apply the same techniques in Egypt that were used to transform the Peruvian economy. Peru is the only country which has defeated a terrorist movement, the Shining Path, with economics. To paraphrase de Soto, transformative economic change occurs when capital is applied to the lowest economic rung of the economic ladder of a country. The regulatory and politic climate must simultaneously constitute an ecosystem of empowerment of opportunity, income and wealth, mohamed el Erian’s trifecta of inequality. This also constitutes the unenaliable rights described by the Declaration of Independence (of the U.S.).
I was born and raised in Tanzania and studied using a kerosene lit lamp much like the one Gesper used in this story. We had one wind-up telephone for the whole town of 30,000 people and 100,000 people in the surrounding villages. Today, almost every household has a cellphone. Having seen the revolution in the telephony area and how quickly that happened and having witnessed the innovation in the use of mobile platforms that followed as well—where there may soon not be a need for credit cards and cash as they would be replaced by mobile money—I am a believer in technological leapfrogging. The beauty of the type of technological leapfrogging represented by distributed systems (power, communication, finance) is that they also lead to financial access and financial empowerment, as well as securing property rights (cadastre linked to mobile platforms that allow fast verification of ownership) and many other possibilities. In the place I grew up, today solar panels are used to run small sewing machines, hatcheries, and to refrigerate vegetables and fruit. Pay-as-you-go technology and systems that link use to affordability allow massive change at a fast pace. The key issue is to keep adapting the technology until the failure rates are reduced and the flexibility of use possibilities are increased. For Africa which is blessed with many sunny days, such innovations in the solar power space, are not only relevant but they are imperative. Thank you for the wonderful article and the comments in this blog.
One of my clients, in NY, takes orders for cosmetics and other products from Tanzania via WhatsApp. He delivers from his warehouse in Nairobi using the express bus system as a sort of Fedex, UPS or DHL. He is paid via M-Pesa.
The problem is not technological leapfrogging. It is financial leapfrogging. My client who is originally from Nigeria and is located in NY, uses the credit union system to sell capital goods to Nigeria. How? U.S. Credit unions have an MOU with U.S. Ex-Im Bank. With the Export Letter of Credit insurance program and guaranty programs of Ex-Im, (or Small Business Administration) a credit union customer is provided the means to export capital goods.
The opportunity is provided by the cultural link between the previously low income resident in the U.S. and the financially empowered buyer in Nigeria. The problem is that no one is teaching, is imparting the “deep knowledge” of how international trade, renewable energy and energy efficiency can benefit the intensely sunny world. This is what is required. This is the effort I lead. The U.S. government (I am a former get employee) and U.S. universities (I am a former college professor) do a mediocre job of teaching our “underserved counities about international trade.
The problem is ignorance. The solutions are education, organization and of course, leadership (I am a former U.S. Marine major).
Technology flows to markets with effective demand ie people with money to buy the gadgets. Poor people dont have money.
Mobile cellphone spread very quickly to improve connectivity among African people across geographic spaces. But improved communication has not significantly increased incomes and reduced poverty and food insecurity among the African peoples at the bottom of the pyramid. In Southern Africa majority of cellphone using urban and rural poor living on less than $1.50 per day do NOT have money to juice-up and do business on mobile payment system. The African middle class already with access to conventional savings and loan products from commercial banks are the ones benefitting materially from mobile technology as another option for checking banking accounts, and scouring for better investment opportunities for their positive monthly savings, and accessing best credit plan available for them. The poor at the bottom of the pyramid are not rendered bankable nor creditworthy merely because they now have mobile phones
On the same vain, one can equally critique the hype about solar technology electrifying rural Africa. I sincerely wish solar technology would become theprimary source of energy in my village I grew up and still call home. I have seen small pilot projects heavily subsidized through development assistance or soft capital that have proven very difficult to scale-up and meaningfully commercialize by targeting the rural population. Who is benefitting then from solar technology if its not the rural poor? It is someone like me in African urban areas living in a grid connected house and has the option to utilize solar energy or gasoline powered generator or kerosine lamps or candles to light-up my urban house to insulate myself against frequent electricity blackouts from an overloaded Southern African grid.
As the cost of solar installation decreases relative to cost of grid-supplied hydropower, I will increase usage of solar energy from present 60% to 100% in urban areas. Private solar-prenuers are estblishing more and more retail outlets in urban areas for selling imported solar products primarily to urban residents with higher disposable incomes than the rural population. Very few private business are establishing outlets in the off-grid rural areas because effective demand is limited among the rural poor. Solar energy is lighting-up urban Africa already lit-up from the grid because the African middleclass urban population is taking up solar energy in its optimal mix of energy solutions in the face of frequent blackouts due to an overburdened hydro-electricity power supply grid. By the time solar energy is cheap enough for the African rural poor at the bottom of the pyramid, remaining African forest would be so depleted that price of firewood ( cheapest source of energy in the African village) would be beyond the reach of the villager. As long as there is an abundance of freely available trees in the African woodlands, solar energy and rural electrification will continue to privillage for the rural elites and not the primary energy source for the average low-income rural family. Unless price of solar energy tecnology were to fall relative to the best of best avaialble substitute ie firewood and kerosine light
Reneth - what an interesting contribution with several important perspectives that bear directly on the future of technology adoption. Thanks.
My experiences as a manufacturer of rural production equipment, selling into the same off-grid populations is as follows.
Rural families have ‘representatives’ in towns who generate income and sent it home. This remittance is often in the form of goods that are unaffordable for the rural poor. Migrants are the major source of economic levelling. The rural people are largely poor, yes, and they are there, but they are connected, many of them. They don’t get their material goods by buying them, the goods are sourced and funded by the urban employed within the extended family. School fees are often paid for by this mechanism. A well-employed person is cursed with the burden of raise and schooling a multitude.
Thus I found that the buyers of rural production technologies are from town, buy they do, but not use it. It is for unemployed people at home to make a business. My ‘customers’ are not my real customers. Because training is essential, I have to find a way round that by offering training to whoever shows up, not only for ‘buyers’. The users, not the buyers, show up fro training.
The cost of not having a cell phone is very high. While the nuclear family view often dominates Western thought about rural Africa, that is simply not how people live. One cell phone per village is enough if it is shared and paid for by the whole group. In the Sahel it will be the Hajis who have one first.
One person will run a business selling talk time. In Ulaanbaatar one can see a single person sitting by the road on a chair with a small table and what looks like a regular phone. It is connected to the cell network and people use it and pay a small amount per minute. In RSA they are called cell phone spazas. Access to cell phone communication at a price is WAY better than trying to use a telegram at a post office miles away by bus. Cell phone penetration in urban areas is individually oriented. But in rural areas the dynamics are really different. People are far more cooperative, and expect to pay to use someone’s device.
It is also often the case that a cheap phone is provided by the urban worker and money is sent home to use it by the urban family. This is very common in the DRC, for example. Vodacom was I think the first to offer this, within their customer base, in the 90’s. It quickly became popular. The rural phone calls the urban phone and hangs up after 1 or 2 rings (depending on the pre-arranged signal) The urban person calls back and again hangs up after a coded number of rings. That is free ‘communication’ paid for by the network. When they really need to talk, the urban prepaid account sends money to the rural account.
Looking at this from the outside, one does not see these interactions - one just sees a single rural cell phone in a community that ‘needs a lot more but they are too poor to afford them.’ This view is the result of the difference between the works of a social scientist and an anthropologist. A survey of income and assets does not provide a picture of what people are doing with the assets they have access to. An anthropologist brings the whole picture. It is not typically Western, and why should it be? Canadians rent skis, and cars, and movies, and post hole diggers - because they are too poor to buy their own! Heh heh.
My conclusion is that cell phones made and are making a far greater contribution to the economy that meets the eye, mostly by increasing the amount of communication and lowering the cost to individual poor families. It is heaven today compared with rural Swaziland or Malawi in the 1970’s. The reason M-Pesa (Kenya) is so popular is because it makes trade coordination and remittances so easy. Ditto the DRCongo. It brought ‘banking’ to a great many people who were never going to have an account - and still don’t.
My clients are exporting and distributing cosmetics, skin care products, cell phones, solar panels and energy efficiency to Kenya, Tanzania and Nigeria and purchasing commodities from these areas in two-way trade. Orders are received on WhatsApp and payments are received via M-Pesa.. Microfinancing from both sides, the export and import side makes this possible. Microfinancing can be linked to Export Credit Agency guaranties and credit insurance to successfully sell innovative products to the rural poor in Africa directly and through their villages. The express bus system is used as an expedited means of logistics and delivery. The poor have assets. It is called land. These assets can be used to generate working capital whereby solar energy can be purchased and sold. This was done in Peru. The Peruvians defeated the Shining Path guerrilla movement. It is a model for the rest of the world.
Of course, red tape and corruption are the usual suspects in interfering with progress.
Education, Terrorism and U.S. Competitiveness: A Tale of Two Cities
The most often used line in speeches is “It was the Spring of hope and the summer of our discontent,” from “A Tale of Two Cities” by Charles Dickens. The most used line by U.S. politicians today is “If you are not part of the solution, you are part of the problem.” This line was first written by Eldridge Cleaver in “Soul on Ice.” It takes riveting lines to capture the popular interest, the popular imagination. Here is mine: The economies of the inner cities of America and Europe today have the same problems and solutions as apply to developing countries. The same socioeconomic solutions that apply to developing countries that face terrorism, apply to inner cities that face violence. The solution is the democratization of finance.
The hottest topic in the business press today is the democratization of finance. Not a day goes by without an article on P2P or Peer to Peer Lending, mobile banking, crowdfunding or some other emanation or attempt to democratize the process of financing entrepreneurs, the bearers of new ideas. Despite the growing recognition of the new processes of financing business formation and sustainability, there is widespread ignorance of how existing techniques and methodologies can be transformative in the process of democratizing financing. I have closely examined this issue and have written an 11 chapter manual on this process. I summarize some key findings below:
Economic transformation and job creation occur as a result of the logistics, the efficacy of delivering working capital to the credit worthy entrepreneur. It is critical to converting startups in emerging markets to sustainable businesses. Hernando de Soto points out that the poor have assets. Prevalent biases and obstructive legal constraints have to be removed or modified before the assets of the “poor” can be mobilized. To paraphrase de Soto, the “informal economy”
is viewed with contempt by many Arabs and by Western development experts who prefer well-intended charity projects like providing mosquito nets and nutritional supplements. Apparently it is not only the road to hell which is paved with good intentions. The road to terrorism is paved with the same brush. The experience in Peru evidences that the poor have assets but often the assets of the poor are in the shadows. Mohamed Bouazizi who caused the “Arab Spring” was trying to register his company, to emerge from the shadows of the Tunisian economy, to buy a truck in order to expand his produce business. He is a human sacrifice at the altar of a failed economic regime.
Hernando de Soto has lectured widely in the countries of the Arab Spring. He has lectured governments and business associations and leaders in
Economic development and job creation. In so doing he told the attendees at a recent conference on Tunisia, “you don’t have the legal infrastructure for economic development.” The response from one attendee, a business leader, was “We’ve always been for entrepreneurs. Your prophet chased the merchants out of the temple. Our prophet was a merchant.”
Peru reduced by 75% the red tape blocking access to economic activity. As per de Soto, the solution involves imagination, a hefty dose of capital injected from the bottom up, and government leadership to build, streamline and fortify the laws and structures that let capitalism flourish. It can take 12 years to get a mortgage in Egypt. It can take years to register title in Tunisia. That’s if no one holds you in disdain.
The inner cities of the U.S. are developing economies. Just as the solutions to creating jobs and the economic development of countries are based on the democratization of finance, the same is true of the inner cities of the U.S. and Europe.
One of the little understood yet most potent job creators in an economy is the export credit agency (ECA). Job creation and economic development are closely tied to ECAs. The shear ignorance of the role that export credit agencies play in economic development is now an existential threat to the export credit agency of the U.S., its Export-Import Bank (Ex-Im Bank). It is also an existential threat to U.S. competitiveness. Brent Scowcroft and Zbigniew Brzezinski point out in their book “America and the World,” an interview by David Ignatius, that ignorance is the greatest threat to U.S. global competitiveness, to America’s role in the world, to U.S. innovation.
In this political year, the role of Ex-Im Bank is being redefined. All are in agreement that this role must change from that of the dispenser of corporate welfare to something else.
I would like to suggest what that “something else” can be. It is a more democratic financial institution. The Ex-Im bank is a stand alone, self-supporting U.S. federal government agency. It is an export credit agency or ECA. Every major country has one. In the case of the U.S., the linking of private donations, credit unions and its ECA, is the solution to the development and job creation in its inner cities.
The manual entitled “Doing Well by Doing Good,” is a primer for politicians and economic development “experts” in how to achieve transformative change in every economy.
I think technology especially the mobile phone will do wonders in Africa. However, disrupting industries in some sectors remains a challenge and demands a lot of patience. The environment and culture in most countries are not yet embracing and nurturing start ups. Our start up http://www.myjobo.com which is the first website to seriously start challenging the job advertising industry dominated by newspapers has faced a lot of hurdles although the start up interests go beyond job advertising. Myjobo.com (http://www.myjobo.com) is also focusing on pushing the Jobonology philosophy that not all you will get formal employment and hence they need to get appropriate skills that match the needs of the market as well as when they are not employed. The future of social enterprise is bright in Africa but it requires twice as much handwork as you need in Silicon Valley as you are dealing with complex environments.
Nonsense! It is simply a matter of linking microcredit to global trade opportunities via trade finance. Pontificator scare tolerated until they wander into the area where I have spent my life and passion, trade finance.
Microcredit and global trade may have done wonders for Bangladesh and Singapore, but have led to wide-scale insecurity for poor communities globally. One might begin reading about the relationship between microcredit, cash crops, and farmer suicides in India, for instance. Or for those more academically inclined, and excellent set of articles in the January 2015 edition of the American Economic Journal: Applied Economics (links below). Rather than preach technology-finance-trade memes from Uncle Sam’s soapbox, look at the global evidence.
I am with Samer on this one. Well said. Introduce credit to unbanked homeowners and you generate homeless people.
Excellent paper from Peter Smoor, Swaziland, called “Pap and Inyama on the menu” looks at the refusal of most urban home owners in Maseru, Lesotho, to accept title deeds to their properties.
The main reason was that if they got a title deed, the banks would lend them money and the rest of the extended family knows it. They pressure the title deed holder to expand the house with a loan. If the owner loses their job they lose the house. If they have no title deed, they cannot lose their home. Although Maseru is technically a Chief’s land, in practice Basotho Chief’s never kick someone off their plots. The Chief grants the plot and the recipient cannot lose it. Unless they get a bank loan.
Why is the energy discussion in Africa always centred on Point of Use applications. It assumes our growth model (energy wise) will always be reliant on an off grid path. This diminishes all evidence of increasing power purchasing parity, increasing grid lines and connections as well as a restrictive assessment of per capita electricity demand.
Solar is great but its base load availability and space constrictions do not favour its application in this part of the world - and I would know I’m a Kenyan. 😊
What we need is to ramp up efforts not to adapt to the western world but to start looking into the future and re assess what energy access is in the 21st Century. We need UNIVERSAL LOW COST CARBON NEUTRAL RELIABLE ELECTRICTY.
I’d like to see anyone counter my position that this can only be achieved from nuclear energy. and not just nuclear energy but nuclear energy powered by Thorium using molten salts. There are 8 existing projects mining the element in SSA and plenty more will come. The science is close to commercial feasibility using modular units. The developed world is seriously exploring it so why aren’t we in that race.
Africa will only remain a third world region if continues to apply third world thinking to the problems of tomorrow.
John Fullerton of the Capital Institute has advanced the concept that we need to change capitalism in order to save the world. I would suggest, Baden on 40+ years of practicing the art of trade finance, that the manner in which trade is financed has road locked the transfer of technological innovation from the developed to the emerging world. The moral compass of this transfer has been corrupted. The insolated world has been deprived of the full realization of its “organic” power resources because of this.
At the same time, the powerful cultural connection of the immigrant community in the U.S. Has been deprived of the full realization of the opportunities that could ensue from its cultural global connection. Banks don’t lend to inner city immigrants or immigrant ghettos which are poor in circumstance but rich in opportunity.
Credit unions and small community banks do.
This is the larger issue as I have pointed out in the Strategic Management Forum of LinkedIn.
If the transfer of technological innovation is logistically clogged by financing, it will affect the transfer of any technology. We must exploit the cultural connection, not impede it. This must be guided by integrity and what Tim Cook calls customer happiness. In the long arc of things, Cook said, you are only relevant if people love you.“Culture, Peter Drucker said, eats strategy for breakfast. Many are hungry and live in the dark. Let’s have breakfast, in the sun!
It almost feels as if Africa is trying to leapfrog by a trick and a pony! I once asked my father who is a Nigerian Barrister at Law… how come Nigerians have all these degrees but the country and the continent is so behind everything and continues to be the case after decades of independence. Here is what i’ve come to learn is the big problem, not just for Africans, but the entire global Africa diaspora. Vivek Wahdwa of the Singularity University said on a CNN documentary as to why there are no blacks in Silicon Valley… ” You guys don’t work together ” Simple!
If any of the readers here who I construe are mainly academics has read Malcom Gladwell’s Outliers, there is a part in the book that explains why Korean Airplanes were crashing frequently. They found out it was mainly because younger pilots in the cockpit were not able to instruct elder pilots, simply because of their cultural traditions of respect. Once they found this out, they corrected the problem and now have much safer airlines. Africa is stuck with plenty of anachronisms that impedes its progress, based on obsessions with culture and religion. Then the idea the continent is leapfrogging because everyone has mobile phones is laughable! Why? Because all that tells me, is Africans are mainly consumers of technology and not innovators. If we were, we would understand fundamentally we need to fix the continental grid problem like yesterday, lay landline fibre optics as a top priority to offer ubiquitous broadband in every home and village.
China’s government just announced only two weeks ago, they will now invest $320 billion in Broadband. Why are they doing that if everyone in China already has mobile phone connectivity? What this means is China can empower technological innovation throughout the country as people need to use desktops and laptops and not consumer mobile phones to innovate and develop high end technologies rapidly. I cannot imagine developing our platform technologies rapidly, through a crappy mobile device. Mobile devices are mainly for consumption and not innovation, which is what Africa desperately needs at the micro level.
Therefore, as the world advances and innovates through robotics and artificial intelligence, Africa is still trying to figure out its power grid and hasn’t even got a clue about implementing widespread broadband throughout the continent. This is going to be another fatal mistake within only 15 years of the Turing Test. I cannot imagine a human being having a conversation with an insect.
We are taking a very big risk by so called leapfrogging, instead of laying a solid and coherent foundation for Africa like all other continents on this planet. I urge academics reading this to go influence politicians, CEOs and law makers in Africa before its too late. Not understanding how technology disrupts everything will lead to significant unintended consequences. Not understanding gun powder, industrialisation, basic record keeping and the printing press five centuries ago, lead to costly consequences in Africa.
Data now suggests Africa will be worth $30 trillion as an economy by 2050, what percentage of that value will be directly African in a competitive global marketplace as it should be? You get the picture.
Having lived in Nigeria for a couple of years and worked in 20 Africa countries I can say that generalisations are usually wrong (!) so we have to be a little more perspicacious if we want to tease out critical issues.
The biggest impediment in Africa to all forms of development is the question of land ownership. People can get access to land but will not invest much in it because they cannot own it. The result is that where land can be acquired, upgraded and sold, which is to say, in town, there is huge pressure on prices. This is because money gained in rural areas (agriculture) is better invested in cities (ramping up the prices) than in rural areas where the investment is substantially at risk all the time.
I feel you have misunderstood the meaning of ‘broadband relative to handsets. The broadband is no cable or fibre-optics, it is wireless broadband - 5G and all that. The reason even South Africa is choked half to death on telecoms and internet is because they allowed, as all British former colonies allowed, a monopoly to emerge on communication backbones. Telkom holds the rights to internet traffic and they charge an arm and a leg for it because of a lack of competition.
When it comes to other aspects of monopoly, Africa has a very large number of state organs that do not have to compete. How then can rational decisions be made? Remember when Uganda Airlines had 2200 staff and one aircraft, which crashed in Italy? That kind of create poverty. China is leapfrogging be going straight to 5G wireless, not installing legacy cable and fibre.
Africans practically invented cell phone banking - out of necessity - using a disrupting technology - being able to send prepaid airtime to a remove device so they could make calls. That quickly evolved into a form of cell phone money, and later, Mpeso which has real money. Now it is popular all over.
I see nothing wrong with Africans being obsessed with culture and religion. Many non-Africans are obsessed with counter-culture and their own philosophies. So what?
The origin of wealth is agriculture. Africa will one day be the world’s breadbasket.
It is not simply a question of technological leapfrogging. The way financing works in the U.S., does not facilitate trading with Africa. My Nigerian born customer who lives a mile away from my home requires financing in order to sell solar technologies to his village in Nigeria where his father is the village chief. The cultural connection between U.S. communities and foreign trade opportunities, when perceived, is not capitalized on. The methodology of trade finance which I have practiced for 40+ years, impedes the transfer of technology among the culturally connected despite the opportunities for the improvement of the wellbeing of communities at both ends.
Your categorization of the readers of this blog as “mainly academics” additionally contributes to ignorance rather than education. I am a retired international banker, former military officer and professor and practitioner of international business, trade and logistics. I would suggest that you are as uninformed about the solution to Africa’s problems as are the academics reading this blog. Perhaps if you had listened more closely to your father. Honor thy father and thy mother.
It is not Mpeso, it is M-pesa, provided by Vodafone which is not a native African company. Having land, growing crops and having access to mobile banking and mobile payments is not a leapfrog in financing. Financing provided in developed countries is an impediment to the transfer of technology to emerging markets, including Africa. What professors do not teach and what students at Stanford or anywhere else in the U.S. do not learn is the logistics of international trade finance. They would otherwise know that the way trade is financed now is a roadblock to economic development. I am working on a solution.
Thanks for the correction for M-pesa. I am not sure who the ad hom above that is for. If I was an academic I might be offended. Why bother saying it?
I operated a private manufacturing company in Africa for 30 years. I found that the finance options are more plentiful than the items worth trading - just my experience.
Vodacom (not Vodafone) is ‘quite African’ in management and staff and operates a remarkable level of service in many countries, with them frequently leading into new areas.
The thing which the population of DRC did when Vodacom enabled prepaid value transfers was very inventive. You could buy a chicken using airtime. People do not care where tools are invented, they care what they can do. Was M-pesa set up first by M-Cel?
Trade finance is another tool. People - farmers - may use it in ways you did not foresee (if it is a really good, flexible tool). Innovative use of an existing tool is what to watch for.
Good luck with your solutions. In my experience a regional currency like CFA is a huge advantage. If there was only one, hard, currency in Africa many trade problems would evaporate. Region by region they should solve that one.
I respect your response to my comment. Broadband in this context whether it’s through fibre optics cable or 5G wireless should allow unlimited internet access to enable the African populace to be productive and compete effectively. Mobile data usage is extremely prohibitive even in South Africa as I understand it. For instance, Mark Zuckerberg is trying to provide a kind of limited access to the internet at low cost through his Internet.org program. The problem with that is it limits the scope of what a user can do and see behind his walled garden.
Also, because mobile connectivity is expensive in Africa, that also limits what the average user could be capable of doing by comparison to fast speed braodband in europe, america and parts of asia. If you data mine African internet usage, you will find most people spend most of their time on facebook! That may be because its the cheapest way to explore the web in FB’s ecosystem. The founder of IrokoTV said recently, most of his current site usage is from outside the continent, even though he’d like it to be from within the continent but this is not happening because users cannot afford to consume videos extensively through their mobile phones.
So as long as we don’t have broadband at low cost, however it is delivered, I fail to see how Africa will compete with the rest of the world at scale. Fairplay we may have a few inventions here and there like M-Pesa, but it’s not the same proliferation where we need to compete in a fast changing world. Look at it another way… Jumia, M-Pesa and Konga if you go check are not authentic African innovations. Rocket Internet owns Jumia and a string of startups across Africa, m-pesa I found out is actually a Vodaphone UK invention if I’m correct and Konga’s majority share is owned by naspers in South Africa. What I’m implying is there is a risk of technological colonization.
Re Agriculture: Indeed Africa is capable of feeding the entire world, however it will be easier for Amazon to enter the African market when it sees fit using drone technology to deliver african produce. By the same token, its easy for Uber to dominate the market for driverless cars in Africa and I can go on and on. Did you see a report that suggested the American University of Nigeria generated more than 50% of internet traffic in Nigeria? or the bulk of it. Why? because they have 24 carte blanche broadband wireless! Nigerians and Africans are indeed enterprising, however like it or not, it’s not the same by comparison to India, never mind the United States. Indians run Silicon Valley and invested $3 billion dollars in startups last year alone. Its extremely hard for African startups to raise money in Africa because we still don’t understand the full merits of technology and that is a fact period!
M-Pesa is a regional play, albeit a good one and they did not invent their technology. So as harsh as this may sound, we need to organise ourselves by understanding our errors so we can correct them and invent solutions that also help change the world. By the way, cellphone telephone banking was initially invented in South Africa… I know this because I lived in Cape Town from 2000 to 2004. One last thing about farming and agriculture is the potential disruption of this sector by robots any time soon. How are we going to find jobs for 122 million young Africans by 2020 according to the African Development Bank? Once robots start picking and organising all those crops, we are going to have another huge problem.
My point is that the sewer of corruption that the political and financial systems have become in the developed world, impede the logistics, the provision of trade finance to the developing world. This has precluded the efficient and effective transfer of technological innovation.
This occurs despite the cultural connection of those who live in ghettos in the developed world, to those who live in poverty in the developing world.
Financing the trade opportunities of these communities through credit unions that work with ECAs and ECIs, is the solution.
I would like to tease out the difference between an innovation - something that happens which was not foreseen - and those who follow later and make it a commercial project like M-Pesa.
What happened in the DRC was the innovation - use of a pre-paid calling service to conduct inter-person commercial transactions where neither party was able to turn the accumulated credit into cash. That was unexpected. The commercial implementation of it by outside who found the idea independently or found the idea wise, were multipliers.
That is a form of cellphone banking before there was a bank involved. Real banking such as FNB and Standard Bank text-based telephone banking - wasn’t that around in the 90’s? I recall being able to do a number of things in Swaziland from a land line that was equally accessible from a cell phone.
M-Pesa and the “innovation” you describe relative to the DRC are connected. Mobile banking relies on debiting or crediting funds to and from an account. Whether the funds are with a bank or credit union or other financial institution is consequential only in the sense that hackers have an easier time accessing certain bank accounts and private information with some “secure” platforms than others. Applepay for example offers the security of your unique identity in purchasing something with your fingerprint as identification. Although your Smartphone used to make a purchase, does not contain your bank information, it is linked to your bank account by token.
Since the invention of Nostro Vostro accounting, all transfers of money are linked in one form or another, to bank accounts. The term “draft” for example is a demand for payment. It is a demand which ultimately refers to a debit and credit to…bank accounts. The innovation would be genuine if it had occurred in the 12th century.
It became possible in the DRC to accumulate cash, to settle transactions via cellphone. The funds originated and were credited to an account. They came from an account. If someone created a method of converting the ether into cash, I would have to admit that we are indeed dealing with an “innovation.” Otherwise, cellphones are just a means of communicating money between accounts.
Great Article! I feel technology will do wonders in Africa. However, disrupting industries in some sectors remains a challenge and demands a lot of patience. The environment and culture in most countries are not yet embracing and nurturing start ups. Our start up Find Zambia Jobs: https://findzambiajobs.com, one of the best job boards in Zambia and one of the first recruitment companies to seriously start challenging the job advertising industry has faced a lot of challenges although the start up interests go beyond job advertising. The future of social enterprise is bright in Africa but it requires twice as much handwork as you need in Silicon Valley as you are dealing with complex environments.
COMMENTS
BY Damodaran V K
ON April 26, 2015 05:23 PM
Timely interventions for a deserving region. But, a model was initiated in East Africa in Kenya first by UNIDO. Energy Kiosks. Well, taking it to higher level is needed and done now. vkd.
BY Philip Holden
ON May 1, 2015 02:14 AM
I have no association with this company but you should check out two companies Biolite and Wonderbag - just Google them.
Biolite is a fantastic company innovating stoves that can run cleanly on wood and generate electricity.
Wonderbag is an insulated bag that reduces the need for fuel by using residual heat in slow cooking.
Both these improve living standards economically, improve health and safety, help build enterprise and self-sufficiency and increase opportunities for education.
BY Samer Abdelnour
ON May 1, 2015 04:59 AM
Darkness into light? Stove saviours? Energy infrastructure and distribution should be afforded the same evangelical zeal associated with technologies and business models. Hydroelectric power (e.g. Ethiopia, Sudan) or natural gas (e.g. Nigeria) have great potential for energy poor and rural peoples. Let’s add to the list: 6) commitment to state capacity, and 7) concern for energy access and energy justice.
BY Philip Holden
ON May 1, 2015 07:10 AM
Yes. Literally “power in the hands of the people”.
BY Crispin Pemberton-Pigott
ON May 1, 2015 08:08 AM
Agree with your sentiments, Samer. Why should ‘solutions’ be off the radar in order to be off the grid. In South Africa, Eskom is practical about this: They admit there are places that will not be on the grid in the foreseeable future so they offer connections to off-grid energy packages for a price that is part of their total system. In other words, subsidised.
It is a solution that is not ‘for the poor’ it is just part of the total offering to the community. Some people will be off grid for a long time to come.
For ideas on how to bring rural electrification please see the Terra Watt Prize by National Geographic which ran a year ago. That was an interesting competition. It was specifically aimed at locating solutions to rural lighting and small power needs for groups. Some of the entries were rural electrification companies that specialise in microgrid solutions.
Kerosene-powered TEGs are coming too. Kerosene can be burned extremely cleanly and can be replaced with bio-kerosene (bio-paraffin), same as biodiesel. The Biolite stoves use a TEG.
The big future is thermoacoustic generators (TACs), if you ask me. They out-perform solar 2:1 per $ and TEGs by far more than that. They are far more compact, plus they can run at night. They can already replace alternators on vehicles, powered by the exhaust heat, in the 5 kW range.
BY Ona Akemu
ON May 1, 2015 08:12 AM
After carefully reading this article, I felt that Mr. Romisher’s claims are somewhat exaggerated. Perhaps, I should remind Mr. Romisher that (across most of Sub-Saharan Africa):
1. Poor electricity infrastructure is not a technological problem. It is usually a problem rooted in state capacity and local political economy: basically, how local elite share the spoils of the political game—spoils which include control of energy infrastructure.
2. Transition to solar energy? “Just as cell phones displaced landlines,...solar energy will bring electricity to the masses, displacing kerosene…” Em, no. Mobile telephony did not displace landlines. There were practically no landlines in the first place. In my native country Nigeria (population 160mln), for instance, there were fewer than 150,000 landlines before the advent of mobile telephony. The mobile phone industry built its infrastructure from scratch. Can one say the same about solar energy providers? Don’t they need to use existing electricity infrastructure?
3. About urban centres. Any effort to improve electricity supply in countries like mine cannot ignore the large urban centres. It is one thing to provide lighting for off-grid rural dwellers, but quite another to do so in urban centres, which have (often dilapidated) electricity distribution systems.
Instead of touting one-size-fits-all technological panaceas, we should be more sophisticated in mapping out the problem domain. Different technologies may be more appropriate in different countries. Moreover, any sustainable solution cannot obviate questions of local political economy, regardless of the availability of cheap solar energy.
BY Crispin Pemberton-Pigott
ON May 1, 2015 08:27 AM
You are right, Ona. I used to live in Ibadan and there are times when solar is hopeless.
The innovations in thermoacoustics are likely to create a whole new playing field. Solar PV is not cheap enough and is made only in a few countries. TAGs are medium level technology and are far more tolerant of being overheated. TEGs have soldered connections.
TAGs can operate at night, Imagine if in Kandahar of Ulaanbaatar the poor townships were supplying 500 MW into the local grid? We should find transformative technologies. Before cell phones, it was difficult to organise a meeting in most countries.
BY William Laraque
ON May 2, 2015 11:47 AM
The paramount consideration in economic development is not technological innovation. It is financial empowerment. Hernandez de Soto proved this in Peru. He tried to apply the same techniques in Egypt that were used to transform the Peruvian economy. Peru is the only country which has defeated a terrorist movement, the Shining Path, with economics. To paraphrase de Soto, transformative economic change occurs when capital is applied to the lowest economic rung of the economic ladder of a country. The regulatory and politic climate must simultaneously constitute an ecosystem of empowerment of opportunity, income and wealth, mohamed el Erian’s trifecta of inequality. This also constitutes the unenaliable rights described by the Declaration of Independence (of the U.S.).
BY Frannie Léautier
ON May 3, 2015 01:40 AM
I was born and raised in Tanzania and studied using a kerosene lit lamp much like the one Gesper used in this story. We had one wind-up telephone for the whole town of 30,000 people and 100,000 people in the surrounding villages. Today, almost every household has a cellphone. Having seen the revolution in the telephony area and how quickly that happened and having witnessed the innovation in the use of mobile platforms that followed as well—where there may soon not be a need for credit cards and cash as they would be replaced by mobile money—I am a believer in technological leapfrogging. The beauty of the type of technological leapfrogging represented by distributed systems (power, communication, finance) is that they also lead to financial access and financial empowerment, as well as securing property rights (cadastre linked to mobile platforms that allow fast verification of ownership) and many other possibilities. In the place I grew up, today solar panels are used to run small sewing machines, hatcheries, and to refrigerate vegetables and fruit. Pay-as-you-go technology and systems that link use to affordability allow massive change at a fast pace. The key issue is to keep adapting the technology until the failure rates are reduced and the flexibility of use possibilities are increased. For Africa which is blessed with many sunny days, such innovations in the solar power space, are not only relevant but they are imperative. Thank you for the wonderful article and the comments in this blog.
BY William Laraque
ON May 3, 2015 02:29 AM
One of my clients, in NY, takes orders for cosmetics and other products from Tanzania via WhatsApp. He delivers from his warehouse in Nairobi using the express bus system as a sort of Fedex, UPS or DHL. He is paid via M-Pesa.
The problem is not technological leapfrogging. It is financial leapfrogging. My client who is originally from Nigeria and is located in NY, uses the credit union system to sell capital goods to Nigeria. How? U.S. Credit unions have an MOU with U.S. Ex-Im Bank. With the Export Letter of Credit insurance program and guaranty programs of Ex-Im, (or Small Business Administration) a credit union customer is provided the means to export capital goods.
The opportunity is provided by the cultural link between the previously low income resident in the U.S. and the financially empowered buyer in Nigeria. The problem is that no one is teaching, is imparting the “deep knowledge” of how international trade, renewable energy and energy efficiency can benefit the intensely sunny world. This is what is required. This is the effort I lead. The U.S. government (I am a former get employee) and U.S. universities (I am a former college professor) do a mediocre job of teaching our “underserved counities about international trade.
The problem is ignorance. The solutions are education, organization and of course, leadership (I am a former U.S. Marine major).
BY RENETH MANO - Harare, Zimbabwe
ON May 5, 2015 01:02 PM
Technology flows to markets with effective demand ie people with money to buy the gadgets. Poor people dont have money.
Mobile cellphone spread very quickly to improve connectivity among African people across geographic spaces. But improved communication has not significantly increased incomes and reduced poverty and food insecurity among the African peoples at the bottom of the pyramid. In Southern Africa majority of cellphone using urban and rural poor living on less than $1.50 per day do NOT have money to juice-up and do business on mobile payment system. The African middle class already with access to conventional savings and loan products from commercial banks are the ones benefitting materially from mobile technology as another option for checking banking accounts, and scouring for better investment opportunities for their positive monthly savings, and accessing best credit plan available for them. The poor at the bottom of the pyramid are not rendered bankable nor creditworthy merely because they now have mobile phones
On the same vain, one can equally critique the hype about solar technology electrifying rural Africa. I sincerely wish solar technology would become theprimary source of energy in my village I grew up and still call home. I have seen small pilot projects heavily subsidized through development assistance or soft capital that have proven very difficult to scale-up and meaningfully commercialize by targeting the rural population. Who is benefitting then from solar technology if its not the rural poor? It is someone like me in African urban areas living in a grid connected house and has the option to utilize solar energy or gasoline powered generator or kerosine lamps or candles to light-up my urban house to insulate myself against frequent electricity blackouts from an overloaded Southern African grid.
As the cost of solar installation decreases relative to cost of grid-supplied hydropower, I will increase usage of solar energy from present 60% to 100% in urban areas. Private solar-prenuers are estblishing more and more retail outlets in urban areas for selling imported solar products primarily to urban residents with higher disposable incomes than the rural population. Very few private business are establishing outlets in the off-grid rural areas because effective demand is limited among the rural poor. Solar energy is lighting-up urban Africa already lit-up from the grid because the African middleclass urban population is taking up solar energy in its optimal mix of energy solutions in the face of frequent blackouts due to an overburdened hydro-electricity power supply grid. By the time solar energy is cheap enough for the African rural poor at the bottom of the pyramid, remaining African forest would be so depleted that price of firewood ( cheapest source of energy in the African village) would be beyond the reach of the villager. As long as there is an abundance of freely available trees in the African woodlands, solar energy and rural electrification will continue to privillage for the rural elites and not the primary energy source for the average low-income rural family. Unless price of solar energy tecnology were to fall relative to the best of best avaialble substitute ie firewood and kerosine light
I share the enthusiasm about solar technology
BY Crispin Pemberton-Pigott
ON May 5, 2015 01:44 PM
Reneth - what an interesting contribution with several important perspectives that bear directly on the future of technology adoption. Thanks.
My experiences as a manufacturer of rural production equipment, selling into the same off-grid populations is as follows.
Rural families have ‘representatives’ in towns who generate income and sent it home. This remittance is often in the form of goods that are unaffordable for the rural poor. Migrants are the major source of economic levelling. The rural people are largely poor, yes, and they are there, but they are connected, many of them. They don’t get their material goods by buying them, the goods are sourced and funded by the urban employed within the extended family. School fees are often paid for by this mechanism. A well-employed person is cursed with the burden of raise and schooling a multitude.
Thus I found that the buyers of rural production technologies are from town, buy they do, but not use it. It is for unemployed people at home to make a business. My ‘customers’ are not my real customers. Because training is essential, I have to find a way round that by offering training to whoever shows up, not only for ‘buyers’. The users, not the buyers, show up fro training.
The cost of not having a cell phone is very high. While the nuclear family view often dominates Western thought about rural Africa, that is simply not how people live. One cell phone per village is enough if it is shared and paid for by the whole group. In the Sahel it will be the Hajis who have one first.
One person will run a business selling talk time. In Ulaanbaatar one can see a single person sitting by the road on a chair with a small table and what looks like a regular phone. It is connected to the cell network and people use it and pay a small amount per minute. In RSA they are called cell phone spazas. Access to cell phone communication at a price is WAY better than trying to use a telegram at a post office miles away by bus. Cell phone penetration in urban areas is individually oriented. But in rural areas the dynamics are really different. People are far more cooperative, and expect to pay to use someone’s device.
It is also often the case that a cheap phone is provided by the urban worker and money is sent home to use it by the urban family. This is very common in the DRC, for example. Vodacom was I think the first to offer this, within their customer base, in the 90’s. It quickly became popular. The rural phone calls the urban phone and hangs up after 1 or 2 rings (depending on the pre-arranged signal) The urban person calls back and again hangs up after a coded number of rings. That is free ‘communication’ paid for by the network. When they really need to talk, the urban prepaid account sends money to the rural account.
Looking at this from the outside, one does not see these interactions - one just sees a single rural cell phone in a community that ‘needs a lot more but they are too poor to afford them.’ This view is the result of the difference between the works of a social scientist and an anthropologist. A survey of income and assets does not provide a picture of what people are doing with the assets they have access to. An anthropologist brings the whole picture. It is not typically Western, and why should it be? Canadians rent skis, and cars, and movies, and post hole diggers - because they are too poor to buy their own! Heh heh.
My conclusion is that cell phones made and are making a far greater contribution to the economy that meets the eye, mostly by increasing the amount of communication and lowering the cost to individual poor families. It is heaven today compared with rural Swaziland or Malawi in the 1970’s. The reason M-Pesa (Kenya) is so popular is because it makes trade coordination and remittances so easy. Ditto the DRCongo. It brought ‘banking’ to a great many people who were never going to have an account - and still don’t.
BY William Laraque
ON May 5, 2015 02:13 PM
My clients are exporting and distributing cosmetics, skin care products, cell phones, solar panels and energy efficiency to Kenya, Tanzania and Nigeria and purchasing commodities from these areas in two-way trade. Orders are received on WhatsApp and payments are received via M-Pesa.. Microfinancing from both sides, the export and import side makes this possible. Microfinancing can be linked to Export Credit Agency guaranties and credit insurance to successfully sell innovative products to the rural poor in Africa directly and through their villages. The express bus system is used as an expedited means of logistics and delivery. The poor have assets. It is called land. These assets can be used to generate working capital whereby solar energy can be purchased and sold. This was done in Peru. The Peruvians defeated the Shining Path guerrilla movement. It is a model for the rest of the world.
Of course, red tape and corruption are the usual suspects in interfering with progress.
BY William Laraque
ON May 6, 2015 03:36 AM
Education, Terrorism and U.S. Competitiveness: A Tale of Two Cities
The most often used line in speeches is “It was the Spring of hope and the summer of our discontent,” from “A Tale of Two Cities” by Charles Dickens. The most used line by U.S. politicians today is “If you are not part of the solution, you are part of the problem.” This line was first written by Eldridge Cleaver in “Soul on Ice.” It takes riveting lines to capture the popular interest, the popular imagination. Here is mine: The economies of the inner cities of America and Europe today have the same problems and solutions as apply to developing countries. The same socioeconomic solutions that apply to developing countries that face terrorism, apply to inner cities that face violence. The solution is the democratization of finance.
The hottest topic in the business press today is the democratization of finance. Not a day goes by without an article on P2P or Peer to Peer Lending, mobile banking, crowdfunding or some other emanation or attempt to democratize the process of financing entrepreneurs, the bearers of new ideas. Despite the growing recognition of the new processes of financing business formation and sustainability, there is widespread ignorance of how existing techniques and methodologies can be transformative in the process of democratizing financing. I have closely examined this issue and have written an 11 chapter manual on this process. I summarize some key findings below:
Economic transformation and job creation occur as a result of the logistics, the efficacy of delivering working capital to the credit worthy entrepreneur. It is critical to converting startups in emerging markets to sustainable businesses. Hernando de Soto points out that the poor have assets. Prevalent biases and obstructive legal constraints have to be removed or modified before the assets of the “poor” can be mobilized. To paraphrase de Soto, the “informal economy”
is viewed with contempt by many Arabs and by Western development experts who prefer well-intended charity projects like providing mosquito nets and nutritional supplements. Apparently it is not only the road to hell which is paved with good intentions. The road to terrorism is paved with the same brush. The experience in Peru evidences that the poor have assets but often the assets of the poor are in the shadows. Mohamed Bouazizi who caused the “Arab Spring” was trying to register his company, to emerge from the shadows of the Tunisian economy, to buy a truck in order to expand his produce business. He is a human sacrifice at the altar of a failed economic regime.
Hernando de Soto has lectured widely in the countries of the Arab Spring. He has lectured governments and business associations and leaders in
Economic development and job creation. In so doing he told the attendees at a recent conference on Tunisia, “you don’t have the legal infrastructure for economic development.” The response from one attendee, a business leader, was “We’ve always been for entrepreneurs. Your prophet chased the merchants out of the temple. Our prophet was a merchant.”
Peru reduced by 75% the red tape blocking access to economic activity. As per de Soto, the solution involves imagination, a hefty dose of capital injected from the bottom up, and government leadership to build, streamline and fortify the laws and structures that let capitalism flourish. It can take 12 years to get a mortgage in Egypt. It can take years to register title in Tunisia. That’s if no one holds you in disdain.
The inner cities of the U.S. are developing economies. Just as the solutions to creating jobs and the economic development of countries are based on the democratization of finance, the same is true of the inner cities of the U.S. and Europe.
One of the little understood yet most potent job creators in an economy is the export credit agency (ECA). Job creation and economic development are closely tied to ECAs. The shear ignorance of the role that export credit agencies play in economic development is now an existential threat to the export credit agency of the U.S., its Export-Import Bank (Ex-Im Bank). It is also an existential threat to U.S. competitiveness. Brent Scowcroft and Zbigniew Brzezinski point out in their book “America and the World,” an interview by David Ignatius, that ignorance is the greatest threat to U.S. global competitiveness, to America’s role in the world, to U.S. innovation.
In this political year, the role of Ex-Im Bank is being redefined. All are in agreement that this role must change from that of the dispenser of corporate welfare to something else.
I would like to suggest what that “something else” can be. It is a more democratic financial institution. The Ex-Im bank is a stand alone, self-supporting U.S. federal government agency. It is an export credit agency or ECA. Every major country has one. In the case of the U.S., the linking of private donations, credit unions and its ECA, is the solution to the development and job creation in its inner cities.
The manual entitled “Doing Well by Doing Good,” is a primer for politicians and economic development “experts” in how to achieve transformative change in every economy.
BY Voster Beteku
ON May 23, 2015 04:03 AM
I think technology especially the mobile phone will do wonders in Africa. However, disrupting industries in some sectors remains a challenge and demands a lot of patience. The environment and culture in most countries are not yet embracing and nurturing start ups. Our start up http://www.myjobo.com which is the first website to seriously start challenging the job advertising industry dominated by newspapers has faced a lot of hurdles although the start up interests go beyond job advertising. Myjobo.com (http://www.myjobo.com) is also focusing on pushing the Jobonology philosophy that not all you will get formal employment and hence they need to get appropriate skills that match the needs of the market as well as when they are not employed. The future of social enterprise is bright in Africa but it requires twice as much handwork as you need in Silicon Valley as you are dealing with complex environments.
BY William Laraque
ON May 23, 2015 04:34 AM
Nonsense! It is simply a matter of linking microcredit to global trade opportunities via trade finance. Pontificator scare tolerated until they wander into the area where I have spent my life and passion, trade finance.
BY Samer Abdelnour
ON May 23, 2015 05:23 AM
Microcredit and global trade may have done wonders for Bangladesh and Singapore, but have led to wide-scale insecurity for poor communities globally. One might begin reading about the relationship between microcredit, cash crops, and farmer suicides in India, for instance. Or for those more academically inclined, and excellent set of articles in the January 2015 edition of the American Economic Journal: Applied Economics (links below). Rather than preach technology-finance-trade memes from Uncle Sam’s soapbox, look at the global evidence.
http://www.businessinsider.com/hundreds-of-suicides-in-india-linked-to-microfinance-organizations-2012-2?IR=T
https://muse.jhu.edu/login?auth=0&type=summary&url;=/journals/journal_of_developing_areas/v048/48.4.sadanandan.pdf
https://www.aeaweb.org/articles.php?doi=10.1257/app.7.1
BY Crispin Pemberton-Pigott
ON May 23, 2015 07:15 AM
I am with Samer on this one. Well said. Introduce credit to unbanked homeowners and you generate homeless people.
Excellent paper from Peter Smoor, Swaziland, called “Pap and Inyama on the menu” looks at the refusal of most urban home owners in Maseru, Lesotho, to accept title deeds to their properties.
The main reason was that if they got a title deed, the banks would lend them money and the rest of the extended family knows it. They pressure the title deed holder to expand the house with a loan. If the owner loses their job they lose the house. If they have no title deed, they cannot lose their home. Although Maseru is technically a Chief’s land, in practice Basotho Chief’s never kick someone off their plots. The Chief grants the plot and the recipient cannot lose it. Unless they get a bank loan.
BY Nathan Peter Maina Gachugi
ON May 29, 2015 02:32 AM
Why is the energy discussion in Africa always centred on Point of Use applications. It assumes our growth model (energy wise) will always be reliant on an off grid path. This diminishes all evidence of increasing power purchasing parity, increasing grid lines and connections as well as a restrictive assessment of per capita electricity demand.
Solar is great but its base load availability and space constrictions do not favour its application in this part of the world - and I would know I’m a Kenyan. 😊
What we need is to ramp up efforts not to adapt to the western world but to start looking into the future and re assess what energy access is in the 21st Century. We need UNIVERSAL LOW COST CARBON NEUTRAL RELIABLE ELECTRICTY.
I’d like to see anyone counter my position that this can only be achieved from nuclear energy. and not just nuclear energy but nuclear energy powered by Thorium using molten salts. There are 8 existing projects mining the element in SSA and plenty more will come. The science is close to commercial feasibility using modular units. The developed world is seriously exploring it so why aren’t we in that race.
Africa will only remain a third world region if continues to apply third world thinking to the problems of tomorrow.
My two cents.
BY William Laraque
ON May 29, 2015 03:33 AM
John Fullerton of the Capital Institute has advanced the concept that we need to change capitalism in order to save the world. I would suggest, Baden on 40+ years of practicing the art of trade finance, that the manner in which trade is financed has road locked the transfer of technological innovation from the developed to the emerging world. The moral compass of this transfer has been corrupted. The insolated world has been deprived of the full realization of its “organic” power resources because of this.
At the same time, the powerful cultural connection of the immigrant community in the U.S. Has been deprived of the full realization of the opportunities that could ensue from its cultural global connection. Banks don’t lend to inner city immigrants or immigrant ghettos which are poor in circumstance but rich in opportunity.
Credit unions and small community banks do.
This is the larger issue as I have pointed out in the Strategic Management Forum of LinkedIn.
If the transfer of technological innovation is logistically clogged by financing, it will affect the transfer of any technology. We must exploit the cultural connection, not impede it. This must be guided by integrity and what Tim Cook calls customer happiness. In the long arc of things, Cook said, you are only relevant if people love you.“Culture, Peter Drucker said, eats strategy for breakfast. Many are hungry and live in the dark. Let’s have breakfast, in the sun!
BY Robert Haastrup-Timmi
ON May 29, 2015 01:13 PM
It almost feels as if Africa is trying to leapfrog by a trick and a pony! I once asked my father who is a Nigerian Barrister at Law… how come Nigerians have all these degrees but the country and the continent is so behind everything and continues to be the case after decades of independence. Here is what i’ve come to learn is the big problem, not just for Africans, but the entire global Africa diaspora. Vivek Wahdwa of the Singularity University said on a CNN documentary as to why there are no blacks in Silicon Valley… ” You guys don’t work together ” Simple!
If any of the readers here who I construe are mainly academics has read Malcom Gladwell’s Outliers, there is a part in the book that explains why Korean Airplanes were crashing frequently. They found out it was mainly because younger pilots in the cockpit were not able to instruct elder pilots, simply because of their cultural traditions of respect. Once they found this out, they corrected the problem and now have much safer airlines. Africa is stuck with plenty of anachronisms that impedes its progress, based on obsessions with culture and religion. Then the idea the continent is leapfrogging because everyone has mobile phones is laughable! Why? Because all that tells me, is Africans are mainly consumers of technology and not innovators. If we were, we would understand fundamentally we need to fix the continental grid problem like yesterday, lay landline fibre optics as a top priority to offer ubiquitous broadband in every home and village.
China’s government just announced only two weeks ago, they will now invest $320 billion in Broadband. Why are they doing that if everyone in China already has mobile phone connectivity? What this means is China can empower technological innovation throughout the country as people need to use desktops and laptops and not consumer mobile phones to innovate and develop high end technologies rapidly. I cannot imagine developing our platform technologies rapidly, through a crappy mobile device. Mobile devices are mainly for consumption and not innovation, which is what Africa desperately needs at the micro level.
Therefore, as the world advances and innovates through robotics and artificial intelligence, Africa is still trying to figure out its power grid and hasn’t even got a clue about implementing widespread broadband throughout the continent. This is going to be another fatal mistake within only 15 years of the Turing Test. I cannot imagine a human being having a conversation with an insect.
We are taking a very big risk by so called leapfrogging, instead of laying a solid and coherent foundation for Africa like all other continents on this planet. I urge academics reading this to go influence politicians, CEOs and law makers in Africa before its too late. Not understanding how technology disrupts everything will lead to significant unintended consequences. Not understanding gun powder, industrialisation, basic record keeping and the printing press five centuries ago, lead to costly consequences in Africa.
Data now suggests Africa will be worth $30 trillion as an economy by 2050, what percentage of that value will be directly African in a competitive global marketplace as it should be? You get the picture.
BY Crispin Pemberton-Pigott
ON May 29, 2015 02:18 PM
Robert H-T
Having lived in Nigeria for a couple of years and worked in 20 Africa countries I can say that generalisations are usually wrong (!) so we have to be a little more perspicacious if we want to tease out critical issues.
The biggest impediment in Africa to all forms of development is the question of land ownership. People can get access to land but will not invest much in it because they cannot own it. The result is that where land can be acquired, upgraded and sold, which is to say, in town, there is huge pressure on prices. This is because money gained in rural areas (agriculture) is better invested in cities (ramping up the prices) than in rural areas where the investment is substantially at risk all the time.
I feel you have misunderstood the meaning of ‘broadband relative to handsets. The broadband is no cable or fibre-optics, it is wireless broadband - 5G and all that. The reason even South Africa is choked half to death on telecoms and internet is because they allowed, as all British former colonies allowed, a monopoly to emerge on communication backbones. Telkom holds the rights to internet traffic and they charge an arm and a leg for it because of a lack of competition.
When it comes to other aspects of monopoly, Africa has a very large number of state organs that do not have to compete. How then can rational decisions be made? Remember when Uganda Airlines had 2200 staff and one aircraft, which crashed in Italy? That kind of create poverty. China is leapfrogging be going straight to 5G wireless, not installing legacy cable and fibre.
Africans practically invented cell phone banking - out of necessity - using a disrupting technology - being able to send prepaid airtime to a remove device so they could make calls. That quickly evolved into a form of cell phone money, and later, Mpeso which has real money. Now it is popular all over.
I see nothing wrong with Africans being obsessed with culture and religion. Many non-Africans are obsessed with counter-culture and their own philosophies. So what?
The origin of wealth is agriculture. Africa will one day be the world’s breadbasket.
BY William Laraque
ON May 29, 2015 02:20 PM
It is not simply a question of technological leapfrogging. The way financing works in the U.S., does not facilitate trading with Africa. My Nigerian born customer who lives a mile away from my home requires financing in order to sell solar technologies to his village in Nigeria where his father is the village chief. The cultural connection between U.S. communities and foreign trade opportunities, when perceived, is not capitalized on. The methodology of trade finance which I have practiced for 40+ years, impedes the transfer of technology among the culturally connected despite the opportunities for the improvement of the wellbeing of communities at both ends.
Your categorization of the readers of this blog as “mainly academics” additionally contributes to ignorance rather than education. I am a retired international banker, former military officer and professor and practitioner of international business, trade and logistics. I would suggest that you are as uninformed about the solution to Africa’s problems as are the academics reading this blog. Perhaps if you had listened more closely to your father. Honor thy father and thy mother.
BY William Laraque
ON May 29, 2015 02:34 PM
It is not Mpeso, it is M-pesa, provided by Vodafone which is not a native African company. Having land, growing crops and having access to mobile banking and mobile payments is not a leapfrog in financing. Financing provided in developed countries is an impediment to the transfer of technology to emerging markets, including Africa. What professors do not teach and what students at Stanford or anywhere else in the U.S. do not learn is the logistics of international trade finance. They would otherwise know that the way trade is financed now is a roadblock to economic development. I am working on a solution.
BY Crispin Pemberton-Pigott
ON May 29, 2015 03:29 PM
William
Thanks for the correction for M-pesa. I am not sure who the ad hom above that is for. If I was an academic I might be offended. Why bother saying it?
I operated a private manufacturing company in Africa for 30 years. I found that the finance options are more plentiful than the items worth trading - just my experience.
Vodacom (not Vodafone) is ‘quite African’ in management and staff and operates a remarkable level of service in many countries, with them frequently leading into new areas.
The thing which the population of DRC did when Vodacom enabled prepaid value transfers was very inventive. You could buy a chicken using airtime. People do not care where tools are invented, they care what they can do. Was M-pesa set up first by M-Cel?
Trade finance is another tool. People - farmers - may use it in ways you did not foresee (if it is a really good, flexible tool). Innovative use of an existing tool is what to watch for.
Good luck with your solutions. In my experience a regional currency like CFA is a huge advantage. If there was only one, hard, currency in Africa many trade problems would evaporate. Region by region they should solve that one.
BY Robert Haastrup-Timmi
ON May 29, 2015 04:48 PM
Crispin P-Pigott
I respect your response to my comment. Broadband in this context whether it’s through fibre optics cable or 5G wireless should allow unlimited internet access to enable the African populace to be productive and compete effectively. Mobile data usage is extremely prohibitive even in South Africa as I understand it. For instance, Mark Zuckerberg is trying to provide a kind of limited access to the internet at low cost through his Internet.org program. The problem with that is it limits the scope of what a user can do and see behind his walled garden.
Also, because mobile connectivity is expensive in Africa, that also limits what the average user could be capable of doing by comparison to fast speed braodband in europe, america and parts of asia. If you data mine African internet usage, you will find most people spend most of their time on facebook! That may be because its the cheapest way to explore the web in FB’s ecosystem. The founder of IrokoTV said recently, most of his current site usage is from outside the continent, even though he’d like it to be from within the continent but this is not happening because users cannot afford to consume videos extensively through their mobile phones.
So as long as we don’t have broadband at low cost, however it is delivered, I fail to see how Africa will compete with the rest of the world at scale. Fairplay we may have a few inventions here and there like M-Pesa, but it’s not the same proliferation where we need to compete in a fast changing world. Look at it another way… Jumia, M-Pesa and Konga if you go check are not authentic African innovations. Rocket Internet owns Jumia and a string of startups across Africa, m-pesa I found out is actually a Vodaphone UK invention if I’m correct and Konga’s majority share is owned by naspers in South Africa. What I’m implying is there is a risk of technological colonization.
Re Agriculture: Indeed Africa is capable of feeding the entire world, however it will be easier for Amazon to enter the African market when it sees fit using drone technology to deliver african produce. By the same token, its easy for Uber to dominate the market for driverless cars in Africa and I can go on and on. Did you see a report that suggested the American University of Nigeria generated more than 50% of internet traffic in Nigeria? or the bulk of it. Why? because they have 24 carte blanche broadband wireless! Nigerians and Africans are indeed enterprising, however like it or not, it’s not the same by comparison to India, never mind the United States. Indians run Silicon Valley and invested $3 billion dollars in startups last year alone. Its extremely hard for African startups to raise money in Africa because we still don’t understand the full merits of technology and that is a fact period!
M-Pesa is a regional play, albeit a good one and they did not invent their technology. So as harsh as this may sound, we need to organise ourselves by understanding our errors so we can correct them and invent solutions that also help change the world. By the way, cellphone telephone banking was initially invented in South Africa… I know this because I lived in Cape Town from 2000 to 2004. One last thing about farming and agriculture is the potential disruption of this sector by robots any time soon. How are we going to find jobs for 122 million young Africans by 2020 according to the African Development Bank? Once robots start picking and organising all those crops, we are going to have another huge problem.
BY William Laraque
ON May 30, 2015 05:19 AM
My point is that the sewer of corruption that the political and financial systems have become in the developed world, impede the logistics, the provision of trade finance to the developing world. This has precluded the efficient and effective transfer of technological innovation.
This occurs despite the cultural connection of those who live in ghettos in the developed world, to those who live in poverty in the developing world.
Financing the trade opportunities of these communities through credit unions that work with ECAs and ECIs, is the solution.
BY Crispin Pemberton-Pigott
ON May 31, 2015 10:09 PM
I would like to tease out the difference between an innovation - something that happens which was not foreseen - and those who follow later and make it a commercial project like M-Pesa.
What happened in the DRC was the innovation - use of a pre-paid calling service to conduct inter-person commercial transactions where neither party was able to turn the accumulated credit into cash. That was unexpected. The commercial implementation of it by outside who found the idea independently or found the idea wise, were multipliers.
That is a form of cellphone banking before there was a bank involved. Real banking such as FNB and Standard Bank text-based telephone banking - wasn’t that around in the 90’s? I recall being able to do a number of things in Swaziland from a land line that was equally accessible from a cell phone.
BY William Laraque
ON June 1, 2015 03:02 AM
M-Pesa and the “innovation” you describe relative to the DRC are connected. Mobile banking relies on debiting or crediting funds to and from an account. Whether the funds are with a bank or credit union or other financial institution is consequential only in the sense that hackers have an easier time accessing certain bank accounts and private information with some “secure” platforms than others. Applepay for example offers the security of your unique identity in purchasing something with your fingerprint as identification. Although your Smartphone used to make a purchase, does not contain your bank information, it is linked to your bank account by token.
Since the invention of Nostro Vostro accounting, all transfers of money are linked in one form or another, to bank accounts. The term “draft” for example is a demand for payment. It is a demand which ultimately refers to a debit and credit to…bank accounts. The innovation would be genuine if it had occurred in the 12th century.
It became possible in the DRC to accumulate cash, to settle transactions via cellphone. The funds originated and were credited to an account. They came from an account. If someone created a method of converting the ether into cash, I would have to admit that we are indeed dealing with an “innovation.” Otherwise, cellphones are just a means of communicating money between accounts.
BY Marisa
ON October 20, 2015 05:46 AM
I really like what you guys tend to be up too. This kind of clever work and exposure!
Keep up the superb works guys I’ve added you guys to blogroll.
BY Gerald Mumpuku
ON June 29, 2021 08:04 AM
Great Article! I feel technology will do wonders in Africa. However, disrupting industries in some sectors remains a challenge and demands a lot of patience. The environment and culture in most countries are not yet embracing and nurturing start ups. Our start up Find Zambia Jobs: https://findzambiajobs.com, one of the best job boards in Zambia and one of the first recruitment companies to seriously start challenging the job advertising industry has faced a lot of challenges although the start up interests go beyond job advertising. The future of social enterprise is bright in Africa but it requires twice as much handwork as you need in Silicon Valley as you are dealing with complex environments.