Key challenges to unlocking growth in Africa

27 October 2014

Innovation and growth are top of mind for African CEOs. More than 30% of them see product and service innovation as the key driver of short-term growth, ahead of increasing market share in new and existing markets and M&A initiatives.

In Africa, the process of growth and innovation often follows a specific pattern compared to other regions in the world. The lack of infrastructure and the difficulties faced by the population in accessing services, even the most basic ones, have led to the emergence of disruptive innovations at the local level. What could have been perceived as weaknesses at first glance have, in many cases, been transformed by local entrepreneurs into business opportunities, opening new markets and developing unrivalled innovation capacity. Africa has become a hub for innovation.

The energy sector is a good example. In sub-Saharan Africa, according to the US Energy Information Administration (IEA), 589 million people did not have access to energy in 2010 (which represents half of the worldwide population). This is specifically due to the lack of infrastructure. The development of new technologies through a decentralised model, with low unit costs, enables progressive investments over time while providing basic energy services to many businesses and households.

Another example of innovative projects in Africa that are based on multi-networks/multi-services approaches is the pay-as-you-go and recharging of mobile phones system developed in Tanzania. In the rural region of Victoria Lake, the low level of electrification (roughly 6%) means that almost half of all mobile phone users must travel 4-18km in order to recharge their devices. Technology developers overcame the problem by offering pay-as-you-go leasing offers to make solar kits available to local micro-entrepreneurs in exchange for a down payment. To recharge mobile phones, the entrepreneur activates the device for several days or several recharges by sending a surcharged SMS to the technology developer. Thanks to this system, entrepreneurs gradually become the owners of the solar kits, whereas technology developers agree to spread their turnover out over time in exchange for a higher overall price and the right to cash in on all of the information collected, including telephone numbers.

What can we learn from this? Primarily, that there is no limit to disruptive innovation in Africa.

As illustrated by the huge success of the first StartupBus Africa (an entrepreneur-run start-up competition gathering entrepreneurs and experts for a four-day bus trip to solve issues through technology), creativity is there and just waiting to be incubated. Secondly, that copying and pasting success stories from more-developed countries will most likely fail. Africa has so many specificities that one can succeed only by understanding the environment at the local level, then thinking out of the box. New business models and technologies have already emerged, and the years to come will most likely show us how innovation can be a growth driver for Africa. To this extent, new entrants from other emerging markets may have an advantage.

Noel Albertus | Advisory Leader, PwC Francophone Africa
Profile | Email | +212 5 22 99 98 17

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Comments

interesting piece! very encouraging

Good read. This will ensure that Africa can be able to deal with its problems in advancing development. incubation centers need to be introduced and equipped to standard. Nonetheless, Africa is the next frontier.

Good read ...africa needs to move foward !

Informative!

Good to know that lack of infrastructure and the difficulties faced by the population in accessing services, even the most basic ones, have led to the emergence of disruptive innovations at the local level.The article is quite informative.

Totally agree with you , there is no limit to disruptive innovation in Africa. great article

Africa is the key to spur economic growth in the world due to its abundance of natural resources.

This is great for entrepreneurs.

This is wonderful.thank you for sharing

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