News · Published 12 October 2020
A decade ago, African agricultural vendors had to use phones, emails and interprovincial bus drivers to place orders. Now they can order fresh produce from farmers using an app on their smartphones. And they can easily trace all agents in the supply chain. This is not just a win for consumers but also for farmers. Farmers can now easily manage quantity, quality and customer satisfaction at fairer prices than they previously got from the early morning hustle and bustle of haggling with middlemen.
This is the offering that companies like Twiga – a mobile-based application – bring to the market in Kenya, connecting small and medium-sized vendors in Nairobi to farmers to secure fresh fruit and vegetable produce.
Tech-empowered agricultural solutions have the potential to revolutionise African agriculture and increase gains to its agricultural value chain, enhancing the lives of African farmers, over 50% of the continent’s population.
Over the past two decades, Africa has benefited from the application of information and communication technologies (ICTs) to economic and social issues. Across the continent, dozens of technology hubs and incubators fostering local ICT4D (ICT for development) entrepreneurship have sprung up. For many of these (think Impact Hub Accra; Khayelitsha Bandwidth Barn, Cape Town; and Swahilipot, Mombasa, etc), the focus has largely been on improving connectivity, growing network coverage, boosting the adoption of devices and providing access for many, including the so-called bottom of the pyramid (BoP) with innovative applications aimed especially at integrating informal micro and small-scale entrepreneurs into more established formal financial and business networks.
Innovations such as mobile money, ride-sharing applications and tech-empowered trading platforms are praised for their contributions towards reduced transaction costs, creating jobs and increasing efficiency and incomes for previously excluded economic actors.
Take Safaricom’s M-Pesa, for instance. Pre-Covid-19, some 96% of Kenyan households outside Nairobi had at least one M-Pesa account. Now that figure should be higher considering that cash is no longer king, nor hygienic. The rapid expansion of mobile money services has contributed to an estimated 2% reduction in extreme poverty in Kenya, some 190,000 people, particularly among female-headed households where some 185,000 women have been able to move from subsistence farming into business or sales occupation. Nationwide, no fewer than 25 million Kenyans use M-Pesa through which they transacted $28-billion in 2015 alone, an equivalent of 44% of the country’s GDP.
ICT innovations have been instrumental in increasing productivity gains. Take agriculture, for example. In Africa, many agriculture mobile applications have flooded the market offering economic gains through the reduced transaction costs associated with information access and proliferation, and improved communication.
To its credit, Agritech has played a significant role in providing necessary extension services – which had declined rapidly during the era of structural adjustment a few decades ago – and improved operational and cost efficiency in farming by connecting buyers and sellers through mobile applications much easier than before. Twiga is an example of such.
Considering that about 23% of Africa’s GDP comes from agriculture and that some 1.2 billion lives depend on the sector, the transformational capabilities of ICT-enabled economies will be instrumental in the African growth narrative if properly managed.
But it is not all rosy. There are other sides to technology-powered solutions. For instance, many have raised questions about the increasing casualisation and informalisation of African labour, and whether integration into global markets has created genuine opportunities for inclusion in the economic benefits of global markets.
For Africa, the limited organisational power of workers to defend their interests within global linkages, and the predisposition to focus on the quantity of employment created while muddying queries of work quality nuances the understanding of how newer technologies provide economic inclusion.
Research on Kenya’s entry into the globalised IT sector, for instance, shows that the benefits of global connections do not automatically accrue to African workers. Despite immense connectivity from the undersea cables, Kenyan firms have struggled to attract work due to experiential shortcomings, the power of global market forces, and other soft infrastructure deficits, not least the reduced gains that come from being a last mover.
Nevertheless, Kenya’s experience and how it has dealt with this should be instructive to other entrants on the continent seeking to reap greater benefits from digital connectivity. What this shows is that technology cannot simply substitute for institutional capacity. It serves, mainly, to complement good development policy.
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While ICT has acted as an enabler for income, access and jobs, it has also become a data-gathering and R&D platform for many corporations, generating a new kind of value from the data itself. In the ICT4D world, African domestic economies cannot simply be data gatherers and feeders. ICT has not only altered the way we work, learn, play and live but also exposes who we are and our habits and patterns. Its reach is impressive but terrifying, and who controls that information is key to the future stability of African economies.
There is a need for African leadership to focus on long-term value capture, and for domestic firms to be able to participate in the ownership, use, regulation and capitalisation of African data to understand its markets, and the pain points to achieving growth, among others. What this tells us is that knowledge is the real source of value in the global economy, and “data”, according to Cisco, “is the new oil and much much more”. This is because, “unlike oil, data is constantly being created and growing exponentially, while oil is a finite resource. Additionally, oil is destroyed after use, while data can and should be used again.”
There are significantly greater rewards for Africa if our development policy is attuned to ensuring that the efficiency gains and commercial advantages attributed to the digital economy are effectively captured and reinvested within the local economy.
Protection is needed for people in the gig economy – contractors – with no access to basic protections like a minimum wage and unemployment insurance. More questions are needed about the policy tools, linkages and alliances most beneficial to guaranteeing that African workers reap their share of the economic gains.
In preparation for implementation of the free trade pact AfCFTA, and the post-Covid-19 world, there is no better antidote for underdevelopment than laser-focused strategic policymaking. This should enable technological leapfrogging and upgrading to higher-value sectors but also make an effort to get the basics right by instituting appropriate governance frameworks where needed.
African leaders – in the public, private and civil sectors – ought to look beyond the hype and consider the side-effects, albeit unintended, that may debilitate the sustainability of desired income gains from ICT.
It is difficult to determine an exact template for what such engagements should look like as each solution will differ. But some general guidelines will centre on the need to build and upgrade institutions, laws and policies to focus Africa’s policy and governance incentives on scalable, and inclusive, private sector growth and employment-creation initiatives.
All this necessitates strong leadership. It involves assiduous activism by governments for their countries and their best national interests, and not expecting others to do something they would not do themselves – as has been Africa’s general narrative around growth and development.
In the age of artificial intelligence and every other kind of data-powered intelligence, Africa has the potential to solve some of its biggest issues faster and on a bigger scale. To create decent employment and more economically prosperous societies, African leaders must make some tough and hard choices around what the parameters of global engagement should be. Success in this regard will involve particular attention to the role of interests, economic pressures and global power relations in influencing the interactions between global investors and African entrepreneurs and workers, and not just “zero-costing data” for instance.
But this will happen only if we are active participants in understanding and defining the rules of play around the use, storage and harnessing of technological innovations.
The key? Collaboration and interaction among the key economic sectors – and agents – in African countries.
This article was originally published by The Daily Maverick.