Africa is Prepared for the Fourth Industrial Revolution
Africa has been left out in several industrial revolutions and it cannot afford to fall behind on yet another! The First industrial revolution focused on mechanization of production through the use of water and steam power and in turn led to the Second industrial revolution, where the focus was on electricity and how it propelled mass production. The Third industrial revolution on which the present is built on, accomplished automated production through the use of electronics and Information Technology (IT). We are now in the Fourth industrial revolution (4IR) era where cutting-edge technologies are being invented that are changing the way people do work, how industries perform tasks and generally how economies are moving. Some of the biggest drivers of the 4IR include: 3D printing, big data, Internet of Things (IoT), robotics, blockchain technology and artificial intelligence (AI).
Emerging technologies such as blockchain, big data, robotics, and IoT are disrupting industries and jobs in most developed countries. In developing countries, on the other hand, these technologies are challenging the traditional approaches of going about ‘age old problems’ in sectors such as agriculture, financial sectors, healthcare, education, water, and energy.
There have been several debates on whether Africa is prepared for the 4IR where opponents identify Africa’s challenges related to governance, infrastructure, energy and education, as the biggest impediments to achieving the 4IR. It is however important to note that emerging technologies are solving for these exact problems in the region showcasing Africa’s preparedness for this new era. As opposed to the last three revolutions that heavily relied on infrastructure, the 4IR relies on the fusion of technologies that blurs the lines between the physical, digital, and biological spheres. Given that Africa has been using innovative technologies to leapfrog economic development in several sectors, its ability to build on and integrate the existing technology will determine whether Africa will be part of or even champion the 4IR.
Big Data is already transforming the African agriculture sector by providing data-supported decisions to ensure modernization of the sector and value chain optimization.
Access to quality data is crucial in the agriculture sector to guide and support decisions such as production methods, value chain optimization as well as storage methods to avoid food wastage and losses. There are about 500 million smallholder farmers across Africa who produce around 80% of the continent’s food. This group could benefit enormously from reliable data that would help them make informed decisions to ensure that they get more value from their produce.
Mobile penetration in the region is increasing and this provides an opportunity for data mining where farmers, for example, can monitor their farms and record rainfall, fertilizer use, crop varieties they sow and yields they produce and share their results with scientists. This data, once analyzed, can provide insights to policymakers and government to improve agriculture in the region. This is already happening in the continent where the World Bank’s Open Data Impact Map has listed over 38 organizations and startups that are using Big Data to provide information on how farmers can either grow or sell their produce.
Farmerline, based in Ghana, is an SMS-based service that provides small-scale farmers with up-to-date agricultural information and advice. Farmerline gathers open data from Ghanian Ministry of Food and Agriculture and other sources on weather and market process and then repackages the information into outbound text and voice SMS messages, servicing over 5000 farmers in Ghana and available in nine different local languages. In turn, the farmers gain immediate knowledge of competitive pricing and if not larger, steadier yields due to the agronomic tips and support — helping farmers increase crop yield and encouraged new farming practices. Farmerline is also using drones to a wide range of studies like crop monitoring, disease prevention and disaster mitigation to further monitor and analyze data and interpret findings to boost crop yield and improve sustainability along the value chain.
Kenyan-based M-Farm also used big data to provide information on weather and crop prices. M-Farm analyzes ten years of historic data from Famine Early Warning System dataset on agroclimatology. Its query-based model estimates present and future wholesale commodities prices, and makes it that information instantaneously available to individual farmers nationwide. Madagascar’s Rural E-Market, also uses data to not only provide estimates of price ranges to farmers, but also utilizes geospatial data to allow vendors to track their produce and consumers to choose location of their vendors. In doing so, Rural eMarket seeks to benefit both farmers and consumers, and add a factor of accountability and transparency to the marketplace.
Blockchain technology is helping achieve financial inclusion in the region, especially among SMEs and the informal sector, whose lack of proper documentation and data negatively affects their credit-worthiness.
SMEs cover more than 95% of all firms in Sub-Saharan Africa while informal sector Africa’s informal sector accounts for over 70% of total employment in sub-Saharan Africa and comprises ~38% of the region’s GDP. SMEs and informal sector is therefore extremely vital for the region’s economic growth but most of these entities are face financial exclusion due to their lack of documentation and data, which negatively affects their credit-worthiness.
Emerging technologies, such as blockchain technology, are helping solve for this problem in the region. In Kenya, Twiga Foods, a business-to-business logistics platform for kiosks and food stalls in Africa, formed a collaboration with IBM scientists in Nairobi to build and test a blockchain-based micro finance lending platform. IBM leverages data from Twiga Foods and applies machine learning and AI to develop a credit score that provides lenders confidence to provide micro-loans to small businesses. Once credit score is determined, IBM uses a blockchain based on the Hyperledger Fabric to manage the entire lending process from application to receiving offers to accepting the terms to repayment. This technology can be scaled to enable farmers, SMEs and the informal economy by creating financial profiles from these entities to allow them to access credit, asset financing, insurance and other services.
Not only are the SMEs and informal sector financially excluded, most individuals in the continent have no access to financial services as savings. Informal savings groups are vital for the continent’s economy, where in Kenya for example, collective savings accounting for 46% of Kenya’s GDP. Chamas, as they are called in Kenya, allows urban and rural dwellers to pool their savings and redistribute it among themselves in a “merry-go-round” format. Given its informality, Chamas’ main challenge lies in its poor record-keeping system, which is mostly paper records. These records are susceptible to loss, misplacement, duplication, and manipulation. Other challenges include: unpaid loans, member mistrust, lack of transparency and accountability. Startups such as ChamaPesa, are using emerging tech as Blockchain technology to revolutionize the region’s informal savings sector by improving Chama’s bookkeeping systems, governance and ensures its transparency — allowing them to grow, scale and even challenge banks.
IoT is addressing the energy gap in the region through smart and micro grids that achieve reliability, availability and efficiency in Africa’s energy industry.
Africa has the lowest electrification rate in the world at just 43%, which translates to 590 million people in the region do not have access to electricity. Where there is electricity, power outages are frequent with as many as 32.7 power outages per month, in one country alone, resulting in significant economic damage. The region would mainly benefit from ‘leapfrogging’ and establishing a digitized grid “Smart Grids” and micro-grids making extensive use of IoT and smart-grid applications. These alternative grid systems present a great opportunity to achieve reliability, availability and efficiency in the energy industry — something that Africa needs to address.
M-KOPA is solving for the large energy divide in Kenya by supplying households with solar home systems and electricity on flexible payment terms. It leverages mobile technology, Internet of Things (IoT) enabled devices, and Microsoft’s Azure Machine Learning to understand consumer behavior and provide continuous improvement to its product range. M-KOPA remotely controls the equipment, monitors its performance, troubleshoots issues and proactively intervenes to prevent system outages. Its “pay-as-you-go” model enables its users to pay via mobile payment at US$0.50 per day. M-KOPA, founded in 2012, is one of the largest PAYG solar providers and has connected over 600,000 homes with solar home systems. M-KOPA is aiming to reach one million homes in East Africa by the end of 2019, and recently raised over $55 million in debt financing from a consortium of commercial lenders.
Africa has a high level of mobile technology adoption but lags behind in tech creation. The growing IT skills gap in the region as well as a lack of funding for most home-grown tech startups, if not addressed, will hurt the region’s efforts to being part or champion the 4IR.
With more than 60% of its population under the age of 25, Sub-Saharan Africa is already the world’s youngest region today — and, by 2030, will be home to more than one-quarter of the world’s total under-25 population. African governments NEED to therefore prioritize on their education systems to ensure that they are instilling the right skills that matches the growing trend towards 4IR adoption in the region. I was surprised to discover that public universities in Kenya, teach C++ in paper; while other universities in developed countries offer first year students Python programming classes in their first year. Public-private partnerships in this space would be vital to ensure that the growing youthful population has the right skills to keep Africa ahead in this industrial revolution.
Startups are vital to ensure that Africa is part of the 4IR. Beyond the skills gap, a funding gap in the tech startup space threatens the growth and expansion of home-grown startups using innovative solutions to solve for problems in the region. A Village Capital report indicated that 90% of Fintech Investment in East Africa goes to American and European founders, while home-grown startups either took long to secure funding or ended up with no funding at all. Home-grown startups often find it hard to raise capital because the majority of capital is international with a Silicon-Valley venture capital style that mainly favors foreigners and local founders who have studied abroad. Beyond creating favorable environments for investment in their countries, African governments need to become more involved in the local startup ecosystems. China’s approach to becoming the next technological powerhouse through its state-backed startup push provides several learning lessons that African governments can use to ensure that homegrown startups are properly funded and supported.