By Jephthah Acheampong
From the 18th to 19th centuries, the First Industrial Revolution which used water and steam power to mechanize production occurred. Africa missed it. Between 1870 and 1914, the Second which used electric power to create mass production occurred. Africa missed it. During the 1980s, the Third used electronics and information technology to automate production. Africa missed that one too. Since the middle of the last century, the Fourth Industrial Revolution which is often categorized as the digital revolution is building on the Third, where a fusion of technologies is blurring the lines between the physical, digital, and biological spheres. For the very first time, Africa is taking part of a revolution that is bringing with it the promise of dramatic changes in the way people live and work, and perhaps even the way people think. Unlike the preceding revolutions, the Fourth can help Africa participate in the globalized economy and improve the quality of life for many. With this revolution comes emerging technologies such a mobile connectivity, artificial intelligence, next-generation robotics, and 3D printing that can be utilized to drastically innovate supply chains and factory floors. Africa now has the potential to be at the forefront of this exciting change.
In the recent Stern in Africa Business Forum where leaders from various industries convened to share insights on the Forum’s theme: “The Tipping Point: Accelerating Africa’s Agenda,” innovation seemed to at the forefront of each panel. As Keynote Speaker Samuel Alemayehu, Head of Africa & Managing Director at Cambridge Industries Ltd. shared, there are two kinds of innovations on the African continent; (1) Designing for extreme affordability and (2) Designing for extreme survival. One of the most romanticized examples pertaining to Alemayehu’s point is microloans accessibility. In many African economies, microloans have been the most prescribed financial empowerment tool for low-income groups to attain the immediate capital needed to launch a business or to cater for their families. This scenario is analogous to designing for extreme affordability because most entrepreneurs have been innovating around poverty for many years. On the other hand, designing for extreme survival means taking Keynote Speaker Child Liberty’s approach to co-founding Liberty & Justice by directly tackling poverty. As Africa’s first Fair Trade Certified apparel manufacturer, he and his team set out to build a factory that employs a robust women workforce, where a 51% to 49% factory ownership split is enforced. This empowers their employees to feel apart of the company’s vision.
Based on my experiences serving on the African continent, there’s definitely room for both forms of innovation. Africa is the only continent that will experience exponential population growth in the coming decades and unemployment may be the greatest problem the continent faces as a result. Similar to Lu Ka Yew’s approach of taking Singapore From Third World to First World, Africa too can surpass this ongoing problem by using microloans to catapult the widespread networks of small businesses, which are the real creator of good jobs as opposed to corporate giants who are slowly becoming reliant on automation. It’s evident Child’s approach to tackling poverty may be unconventional however, as Keynote Speaker Bisili Bokoko echoed, “to be an entrepreneur serving African markets, you really don’t know what’s next but you have to trust the process. It’s easier to do business now because we are in an economy of generosity. We are in the economy of sharing…” In a new study by McKinsey & Company, titled Dance of the lions and dragons, nearly a quarter African-based Chinese enterprises recovered their initial investment within 12 months, while 50% reported it took them three years or less. Most attribute this success to right timing and their level of expertise, which may definitely be true. However, it will also be sophomoric to overlook three important factors discussed at the forum and projected to play a role in Africa’s economic growth in the next decades: Manufacturing, Infrastructure, and Governance.
Manufacturing in Africa
In the most recent presidential campaign in Ghana, one promise seemed to be at the forefront; One District, One Factory. In this promise, President Nana Addo Dankwa Akufo-Addo gave the assurance that each of the 216 districts across the country would get a factory within the first four years of his government. It comes as no surprise that the country’s Foreign Direct Investment inflows hit 1.3 billion dollars in September 2017, as recorded by the Ghana Investment Promotion Centre (GIPC). As Liberty shared during his keynote address, “it’s important to really consider manufacturing when doing work on the continent because it’s an investment that will be really difficult for outsiders to make.” Unfortunately, simple commodities such as matches are not manufactured anywhere on the continent however, almost every single household, if not all, own a pack. Microscopically assessing, Angola’s agro-processing is likely to play a particularly significant role, accounting for 48.2% of the manufacturing sector and in Ivory Coast and Ghana, over 2 million small-scale farms produce nearly 60% of the world’s supply of cocoa. Yet, only 3% of Africans are employed in manufacturing, as compared to 15% in Beijing, China.
According to the latest Africa Agriculture Status Report, the continent’s food market may be worth more than $1 trillion each year by 2030 as imports are substituted with high-value locally-produced food. Although this creates an immensely lucrative opportunity for entrepreneurs in the manufacturing sector, most African economies – such as Nigeria – are still fixated on the availability of mineral reserves and oil. This level of thinking is what led Nigeria’s economic expansion to being ephemeral, unsustainable, and extremely unequal, thus resulting in one of the worst recessions on the continent. In 2014 alone, 30% of China’s GDP came from manufacturing, according to the World Bank. By comparison, Nigeria’s share stood at just 9%, Kenya 12%, and Zambia 8%. As summed up by Joe Kraus, one of the leaders of the dot.com boom of the late 1990s, the availability of new manufacturing technologies, which diversify production and multiple markets for local producers, makes the shift to a decentralised economy easier than ever. Until we choose to re-construct our wealth creation model by marrying emerging technologies of the Fourth Industrial Revolution with our manufacturing sectors, poverty levels will only continue to rise as we approach a population of 2.5 billion by 2050.
Infrastructure in Africa
Entrepreneurs can help mitigate poverty when they can leverage already built infrastructure on the ground. However, for African entrepreneurs to be more productive, it’s imperative to increase innovation, apply the latest technologies to implementations, and focus on more value-added products and services. This is where smart introduction of mechanization will be needed, combined with a significant effort in training and skills development. In most African economies, there’s evidently an influx of foreign business women and men bringing in their own workforce; this is seemingly the new face of globalization. As a result, a continent where 200 million people are aged between 15 and 24 end up being displaced from the workforce primarily due to the infrastructure gap across universities. As Speaker Amini Kajunju – Director of Strategic Partnerships at Africa Integras – shared, “there’s currently a $48 billion-dollar gap in providing the appropriate infrastructure in African universities.” Without infrastructure, it becomes incredibly difficult to retain quality teachers. The lack of quality teachers further results in students focusing on scholarly development, as opposed to learning the practical skills needed to excel in the labor force. Foreign companies will be more willing to do business and hiring Africa’s youth once innovators can show predictability in bridging the infrastructure gap.
On the other hand, when we observe countries such as Ethiopia which is on a mission to be a middle-income economy by 2025, China is supplying much-needed infrastructure projects, such as power, roads and bridges, enhancing intra-African trade. Although this is commendable, one integral area in which Africa could benefit from foreign country cooperation and lessons is in the area of knowledge transfer. The jobs and skills gap in Africa is wide and only growing wider as its population explodes. For Africa to take advantage of this potential demographic dividend, encouraging foreign investors to focus on working with universities to bridge the jobs and skills gap is a worthy start. Today, mobile connections are widespread across Africa, making virtual and mobile training techniques a great entry point needed to overcome the lack of immediate training infrastructure. Also, vocational training with a key focus on artisan skillsets is essential because it fosters global commerce, thanks to policies such as The African Growth and Opportunity Act (AGOA). The main objective of AGOA is to help facilitate the integration of Sub-Saharan Africa into the global economy. Across all industries, there is clear evidence that the technologies that underpin the Fourth Industrial Revolution coupled with the right policies in place are slowly having a major impact on development.
Governance in Africa
When it comes to Africa, entrepreneurs can choose to be dispassionate about politics but cannot afford to be dispassionate about governance. In many countries across Africa, corruption and poverty results from poor governance. Organizations such as Transparency International are working to address this issue by giving voice to the victims and witnesses of corruption. They also work with governments, businesses and citizens to stop the abuse of power, bribery, and secret deals. Despite their commendable efforts, entrepreneurs such as Alemayehu continue to face roadblocks when doing business on the continent due to failed intellectual properties. This is not foreign to many. As he shared, “Africa is a continent that has to live in the limits of the reality of its implementations so we often see a lot of bandages versus cure on the continent.” Therefore to catapult innovation on the African continent, it’s imperative to think as Policy Entrepreneurs. According to Oby Ezekwesili, a Nigerian Chartered Accountant, “Policy Entrepreneurship is using your knowledge of the sector that you are operating in as a basis to engage governments on why it needs to play certain roles and also giving them an incentive to pursue that role.” Businesses fail to be competitive due to poor governance; Foreign Direct Investment slowly begins to dwindle, and tariffs continue to elevate. It’s no surprise Africa’s richest man – Aliko Dangote – shared in an interview that “we cannot get things right unless there is good cooperation between politicians and the businessmen.”
As briefly mentioned earlier, Africa’s population is set to double by 2050 as the continent’s problems with poverty, joblessness and health issues mount. We, as Africans, will be in a more frightful situation than we are already unless we stop doing business as usual. Above all, it is important that African governments, businesses, labour unions and communities work together to develop economic clusters. As Bokoko shared, “…there are two reasons people go into business; to fulfill people’s dreams or to remove people’s frustration.” When it comes to doing business in Africa, the entrepreneurs who start on their own and refuse to develop the policy entrepreneurship mindset will have a hard battle to fight and will also need to have deep pockets to drive consistent innovation regardless of their reasoning. The promising thing is as the physical, digital, and biological worlds continue to converge, new technologies and platforms will increasingly enable citizens to engage with governments, voice their opinions, coordinate their efforts, and even circumvent the supervision of public authorities. Simultaneously, governments will gain new technological powers to increase their control over populations, based on pervasive surveillance systems and the ability to control digital infrastructure.
Africa currently boasts about 1.2 billion people. To foster a paradigm shift in innovation across the continent is no small task, however nothing is impossible. As Alemayehu posed to participants, “‘Why is it so hard to innovate from the bottom of the pyramid?’ Because they have limitations.” To succeed in fostering innovation, one must work for the majority. Additionally, it’s imperative to first understand the societal structures evident because a one size fits all approach is simply a waste of time when launching a business in Africa. This exercise guides entrepreneurs in designing products and services that will not only be needed but will also better shape development. Steven Grin – CEO of Lateral Capital – shared on the Venture capital panel that, “11-13% of the population in Africa are receiving 1/100 of VC capital….even when South Africa’s Venture capitalists look up, they don’t see Africa, they see Europe.” This creates room for another topic subtly touched upon during the forum; Impact Investing. Impact investing is investing that aims to generate specific beneficial, social, or environmental effects in addition to financial gain. As policy entrepreneurs embark on launching a business in Africa, this form of investing is something to highly consider. The winner of the Fourth Industrial Revolution is not yet determined; it could very much be Africa provided we choose to abide by the closing remarks of Founder Adeola Adejobi, which is to connect with like-minded people, to create breakthrough products and services, and to invest in Africa as a collective.
Jephthah Acheampong a contributor to ZNews Africa.
He is a Social Entrepreneur, Connector, and Writer. As a social entrepreneur, he is the founder of Blossom Academy, Africa’s first Data Science talent accelerator that trains and connects unemployed graduates in Ghana to the world’s most influential institutions operating on the African continent.
Jeph often writes as a millennial voice on a wide range of topics including business, entrepreneurship, and philosophy. He is passionate about the role entrepreneurship and innovation play in shaping the African continent.
Learn more at: www.jacheampong.com
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