Less Technologically Advanced Societies are not necessarily backward or primitive: Assume at your own risk

This illustration by Jeroen Meijer of Jam Visueldenken of Amsterdam, The Netherlands, was created for our team during a workshop to capture the insights from a feasibility study on agritech we had completed for the Dutch government’s sustainable agricultural value chain development at Wageningen University’s Economic Research unit back in mid 2013.

I’m pulling it out again now because I think it helps me communicate the complexity of the human-digital economic ecosystem we see across East Africa, especially as it links the rural and urban, as well as the formal and informal. Today’s blogpost will be based on the case of Kenya.

Together with the assistance of a master’s thesis worker, I began the data collection for my first data set on which my doctoral dissertation would be grounded earlier this year, in the northern hemisphere’s spring. We began with interviewing Finnish startups offering mobile digital services to the mass majority audience in East Africa – agritech, jobs, fintech in a handful of countries in the COMESA.

This blogpost captures one of the findings from the analysis of interviews – 9 finnish startup team members from four startups, and 9 pan African professionals with comparable experiences.

There is an implicit assumption by tech teams, regardless of whether they are entering the African continent from abroad or whether they are simply going next door, eg. Nigeria to Benin, that the team with the more advanced technology ecosystem has an inbuilt advantage over the less developed ecosystem of the target market.

This may indeed have been true in the days of colonization when muskets were the advanced technology that subdued the African warriors. However, it is not up for debate that there indeed has been some leveling of the playing field for African experts who are leading companies into their regional markets, knowing that they possess skills that their clients must pay very well for to access.

Mobile telephony triggered this transformation of the African consumer markets. I first observed this in my HBR 2014a article, viz.,

After all, the emerging affluent African consumer is as connected as the rest of the world, smartphone always in hand.

and a few months later (HBR 2014b), I fleshed it out further, detailing some of the early flows of value in the digital physicial economic ecosystem I saw emerging in sub Saharan Africa. I do not believe that operators from advanced technological economic ecosystems have an imbalanced advantage anymore in Africa. Mobile telephony leveled the playing field in an unexpected way – instead of equalizing the opportunities, it made them more equitable i.e. African startups have soft skills advantages that the developed country startups entering Africa do not have. The playing field levels when the soft skills advantage cancels out the hard skills (technological, procedural, methodological components of knowledge) advantage.

Therefore, you get interviewees mentioning such examples explicitly. Tech teams or technology driven startups could not always understand why they were facing challenges in the intended target market that they did. One interviewee pointed out that tech teams seemed to be more arrogant than necessary, perhaps because of the hype surrounding the mythical power of technology to solve all of Africa’s problems.

This mindset and worldview hampers successful product development and market entry for new-to-team environments and can safely be said to be a problem of the engineering and technology narrative rather than any particular cultural, continental, or linguistic aspect.

When teh startup teams have not been able to humble themselves to find out what their customers want and to serve them well, eliciting delight, then they have faced expensive challenges costing them more money than that which would have been invested in upfront research. However, this approach too does not come with any guarantees as we discovered from the experiences of founders who had the educational and professional background in human centered design and user research. Otoh, their answers hinted at the need for including diversity in your founding team when thinking of global markets. This applies to startups regardless of their country of origin.

Coming back to the illustration above, my current hypothesis – based on the agricultural context visualized as well as the informal trade ecosystem visualized – is that there might be a similar value web that describes the startup ecosystem in Kenya, and visualizing it may help the actors strengthen linkages and niches for a more coherent investment in developing a regional digital economic ecosystem.

For what I am seeing in the social biashara longitudinal project is that its Kenya’s vast population of self employed and entrepreneurial “informal” economic actors whose adoption of digital services, smartphones, social media platform, and of course Mpesa, who are driving the development and design of East Africa’s digital economy due to the sheer scale and size of the segment. Kenya’s informal sectors provide incomes for approximately 80% of the working age population, and, they tend to rely on the prepaid purchase plans of telecoms operators to keep their business going.

This is a complex, adaptive system, and I have written extensively on this in the past, including having our work published in the 2018 Design Research Society Proceedings. And it has sophisticated rules and financial practices that replace the contracts and signatures of the formal economy. They can and have been mapped and evaluated for robustness, over time. The very fact that it is recognizably organized, albeit informally, means its a tougher nut to crack than at first glance, especially when the focus is on comparable technological advantage.

Because the systems do not resemble each other at all, based as they are on opposing sets of metrics, for instance, predictability and calender schedules vs uncertainty and flexibility of time and money, it so happens that the ones visibly advanced looking and shiny assume there is no system i.e. a vacuum exists for them to enter with a product or service or intervention.

It is this which is an advantage the African founded startups have, that is a visceral and experiential understanding of the need to navigate the tsunamis and waves of uncertainty due to inadequate data or forseeability. Unpredictability in network quality and infrastructural systemic issues which cannot be fixed from the application end are the two areas most referenced in the interviews of Finnish teams as the resource heavy factors to be managed for new product development.

On the other hand, African startups who recognize and take advantage of their strengths emphasize the need to understand the market and the end user emphatically. Finnish teams have persisted in the face of daunting challenges and imminent bankruptcy due to the confidence that having team members from Nokia’s mobile divisions have. At least 5 out of 7 Finnish founders interviewed had some work experience at Nokia. They know there’s a fortune at the bottom of the mobile telephony pyramid because they spent it all once before. With each era of evolution of mobile telephony, a similar base of untapped market creation opportunities evolves across the developing world, notably the African continent.

Double digit growth rates of mobile telephony – new subscriptions *and* device sales – only slowed down to single digits in 2018 since 2003 when the introduction of prepaid airtime into Nigeria’s vast but informally employed population triggered the kind of continental transformation – mobile networks span borders in a variety of ways and the trust and reputation of Nokia’s brand equity in Africa helps lowers barriers to adoption of novel technology.

Digital Africa, mobile first and mobile only, is a brave new world.

This entry was posted in Africa, African Consumer Market, Afrique francophone, Airtime, Analysis, Assumption filter, Base of the Pyramid, Biashara Economics, Business Models, Cashless transactions, Consumer Behaviour, Design, East African Community, Ecosystem, Emerging Markets, Frameworks, Indigenous & Traditional, Informal & Flexible, Innovation Planning, Kenya, Marketing, Mobile platform, Perspective, Prepaid Economy & Informal Sector, Research, Rural Economy, Strategy, Sub Saharan Africa, Technology, UCSD, Value and tagged , , , , , , . Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

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