Innovation in Emerging Economies

Innovation in Emerging Economies

  • 1
  • August 4, 2015

Innovation is a hard slog. In our history, people would get burned at the stake for being innovative, for challenging the status quo, for rocking the boat.

Still today, scientists are anxious about publishing their work. Technology providers find it difficult to articulate the value propositions around new technologies, and venture capitalists are sometimes (understandably) overly cautious when it comes to funding innovation.

But every so often a courageous innovator breaks through, conquers the funding, creates a commercial proposition and rocks the world. Advancement only occurs with change, change requires innovation. The establishment needs to be challenged at all levels, for progress to occur.

There can be some philosophical fallibility

Sometimes Innovation can come with controversy. You might have heard of the recent initiative to provide mobile hotspots in a trial set of cities in the United States, whereby homeless people are enabled with mobile hotspot access points, so that passersby can access the cloud on the go. In this scheme the homeless people had a chance to make some token money, as did the scheme providers for sure.

Some organizations referred to the scheme as patronizing and dehumanizing. Personally, I am sure that the homeless could be supported in a more sensitive manner. Nevertheless, as unusual an innovation as it is, in some places homeless people are… 4G hotspots.

Perceptions of Innovation

Living in California, nowadays, I have a one sided view of innovation. I eagerly await the new iWatch2, I am an apps download maniac, and a gadget freak. I believe that I am talking to brethren here, as I am sure many share my same weakness for gadget acquisition.

However it is enough to cast my mind across the ocean to my ICT capacity building centers in Ethiopia to be reminded that, in my other country, innovation is another matter altogether.

For a nomadic tribe member, living off livestock trading, having a mobile phone, and knowing how to use it for business, could mean a huge improvement in profits and hence living standards.

I hasten to add that Ethiopia, is given here as an example, which I know well, but it is indicative of the situation in developing economies generally.

Over in Ethiopia, giving professionals’ access to a regular PC running a regular operating system with office software is a major innovation. Something that, if driven politically, could transform the productivity and the quality of life of the population at large.

Some Challenges in the Developing World

In Ethiopia, ICT penetration is currently at about 5%. Really, what that means, is that the wealthy minority in the capital have access to PCs and internet at home and at work, and most others have access to the technology through the numerous scattered internet cafes.

The thing is, that the access is obviously within reach only of those that are ICT literate, and that is really a great minority.

The Solutions

Other than Education in the form of Action Learning, and language localization, for innovation to be effective it needs to get there. That means that the technology needs to be affordable.

Innovative technology and affordability might seem to be an oxymoron. Generally it is. But it is further exacerbated when governments place outrageous import duties on the goods.

I am sure you all remember the famous $100 laptop from a few years ago. Unfortunately that never made it very far. Now we have the $35 tablet.

This was recently released in India, state subsidized, the genuine cost is of about $60. This could have legs, provided there were enough access points, with stable performance; which there are not, at least in sub Saharan Africa, with a few exceptions.

Wide impact innovations

Some technologies have done very well.

I will not talk much about M-Pesa (in Kiswahili it means mobile money), because it has been talked about so much in these circles, as one of the innovations that actually took off. It was born from Safaricom in Kenya, as an electronic money transfer system through cellphone technology. There were regulatory issues, but it was super successful in Kenya and to a lesser extent in Tanzania, but it failed to succeed so far in South Africa, reasons ranging from regulatory to commercial.

The initial concept of M-Pesa was to create a service which allowed microfinance borrowers to conveniently receive and repay loans using the network of Safaricom airtime resellers.

M-Pesa was re-focused and launched with a different value proposition: sending remittances home across the country and making payments.

M-Pesa is a branchless banking service, meaning that it is designed to enable users to complete basic banking transactions without the need to visit a bank branch.

M-Calc is a web based decision support system that assists farmers and NGOs to optimise on farming practices. This is achieved through assisting in easily setting up farms and getting information on crop management.

M-Calc is aimed at solving several United Nations Millennium Development Goals especially in the developing countries

One technology I would like to bring to your attention is less famous for now, but in my view has had a significant impact. It is called E-soko (in Kiswahili electronic market). It is a private enterprise based in Ghana, but covering much sub Saharan Africa.

Esoko is an agricultural market information platform. It is a response to the explosive growth of cellular services in Africa. Managed on the web and delivered via mobile, individuals, agri-business, government and projects use Esoko to collect and send out market data using simple text messaging. The Esoko platform provides automatic and personalized price alerts, buy and sell offers, bulk SMS messaging, stock counts and SMS polling.

In a nutshell this technology provides farmers with market prices for whatever goods they might be producing. It might seem like a small thing but it’s not. Rural smallholders or livestock herdsmen have been notoriously short changed for centuries, by market middlemen. Despite the role of the middleman is essential in any situation of supply chain and distribution, here the wealth was generally never spread evenly or even fairly.

Giving the producer the power to know what the genuine going rate is creates a level plane of negotiation.

Although generally the farms or the semi-arid grasslands where livestock is reared are far from having mobile coverage, the main markets where the goods are sold generally are well covered by GSM signal, even in the market towns in Eastern rural Ethiopia.

I think this technology is fantastic, and there are many more features and benefits already in the solution and surely more to come. I would like to see Alchemy World work with Esoko in Ethiopia.

 

Conclusion

In summary:

Innovation is a key to economic prosperity; it is a key to poverty alleviation, to raising the levels of human dignity.

However, it needs to be planted on a foundation of distribution, accessibility, and at the right price and tax point. Furthermore it needs to be accompanied by the education required to make good use of it, and the communication in a language understandable for the user.