Archive for April, 2012

Interpreting Context

I was reading an interesting article about IBM’s proclamation that Africa is the next growth frontier and it got me thinking about what that means exactly. The article claims that IBM’s strategy calls for increased investment in the region to reach an objective of US$ 1 billion per year by 2015. It does not take a genius to see the potential of Africa but as I have always thought, leveraging the potential comes with significant challenges that most of these corporations need to either adjust to or simply find better ways of going about it. I am optimistic about the prospects for Africa but I am always pragmatic enough not to shout it at the top of the hills.

Pragmatism, I would have to insist ,has little reflection on the hope that represents the current state of affairs in the continent. Major wars are gradually being resolved and most post-conflict countries (Angola, Mozambique, Rwanda) are holding their own. In that regard then the necessary foundational requirement for any grass roots development going forward is either being laid down or gradually taking hold. However, most people who are optimistic about Africa would mostly accept that Africans are increasingly becoming more involved in what happens to them. More importantly, it is the nature of this involvement and where it is geared towards that is bother encouraging and very interesting to observe.

The financial sector in the continent is increasingly being advanced and expanded by indigenous banks which are increasingly looking beyond their regional boundaries. Examples of such banks include (off the top of my head) Equity, KCB and EcoBank. Equity and KCB have only recently started venturing beyond their comfort zones (geopolitically speaking). However, EcoBank is far ahead in this apparent strategy to see Africa (Sub-Sahara Africa in any case) as a single market. While political realities in the East Africa region and the wider Eastern Africa region have made the expansion of KCB and Equity a worthwhile venture, they still remain in the early stages of their respective strategy. However, the interesting angle of the situation is how these indigenous banks operate: you are more likely to find an Equity bank branch in the most unlikely places than a branch of a multinational, non-indigenous bank. The experience in these two banks is remarkably different, if you bother to notice the difference.

Given the experiences in the financial sector and in the telecommunications sector in Africa, then it is important to keep in mind that while Africa may indeed be the next growth frontier, that growth comes with its own unique challenges that need to be dealt with. In identifying the potential of Africa and investing it, then the IBMs and Google of this world are doing what their corporate mandate demands of them. How much of these investments are mere façades for finding new markets as opposed to a real investment in the continued development of locally relevant technologies and processes remains to be seen.

The use of telecommunications in the financial industry has long since been a no brainer but the third world requires a more different approach from what exists in the west and the other developed nations. Whereas they would have a huge network of ATMs spread all over the country to serve their customers, the oft quoted MPESA transforms your mobile phone into an ATM in your pocket scenario. It is hoped that MPESA is one of those prove of concept ideas that shows the true potential of a mobile phone. A mobile phone centric revolution holds a greater potential than the corresponding idea of delivering computers since the latter would require an inordinate amount of power to say the list and far too prone to various problems that clearly plagued the developing countries: chief on the list – dust.

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