Posts Tagged ‘disruption’

Time to acknowledge the social cost of mobile and apps driven disruption

Abandoned makeshift recharge cards stand (Source: Punch Newspaper, Nigeria)

From Lagos, Nigeria comes this moving human interest story that looks at the downside of modern technology and it’s impact on livelihoods. For those who must hustle to make a living, send the kids to school, or put food on the table, smartphone driven digitization of the services they used to provide are disrupting their incomes.

“On the negative side, it has seriously affected our business with about 40% drop in passenger traffic. There is nobody among us (cab drivers) that would say he’s not feeling the pain.”

Whether its Uber and Taxify grabbing customers from traditional taxis, or the ease of an online purchase of airtime eating into Mama’s recharge card sales, the long awaited and much hyped transformation of African economies by ICT is arriving at a much higher cost than noted anywhere in media, or in research reports on mobiles for “social good.”

Literate youth quick to pick up new skills have no choice but to adapt and adopt. Its the older traders, the taxi drivers, the less literate, the long established service providers in the urban informal economy who are shouldering the brunt of this disruption.

“Even the prices charged by ‘those phone things’ are not realistic. I just pity the people who are rushing to them. A time is coming that they would increase their fares. And by that time, people wouldn’t be able to do anything about it, because they would have killed the competition. They just want to destroy the taxi business, which many of us are using to take care of our families,” Baba Ayo added.

Whose responsibility is this anyway?

Disruption is what every techno bling startup seeks, blaring it in their press releases, as they launch an app for this and that. What falls by the wayside is consideration of the social cost of this disruption – much more expensive in developing countries like Nigeria where there is no social safety net, no welfare department, and certainly no old-age pension for those whose livelihoods are lost to look forward to.

“I have been selling recharge vouchers for about 10 years and I can tell you that the situation has never been this bad. It’s as if someone commanded people to stop buying airtime. I accused some of my customers of patronising other people, and some of them said they usually top-up their phones online whenever they run out of airtime,” she explained.

The entrepreneurial will adapt, or move on to other services that apps have not yet replaced. The article is illustrated with photographs of abandoned recharge seller’s makeshift stalls as the line of business fades away in the big city.

But who will think of all the rest who may not have the energy or youth to start over, and whose responsibility is it to ensure that technological progress is not exclusive?

This post is a reminder to us all of the tradeoff we make when we choose to innovate or disrupt in societies where the margin between hunger and full belly is as slim as this year’s latest smartphone model.

Absolute Numbers 2007-2017: The “Developing” World Now Dominates the Internet

Source: http://tmenguy.free.fr/TechBlog/?p=161

Traditionally, the data on ICT usage across the world tends to be presented proportionally – per capita usage, or penetration in the form of percentage of population. This made sense 10 years ago, when the world had just begun to notice the rapid growth of mobile phone adoption in developing regions. The typical example shown above was extremely popular – many of you will recognize it – Africa was outstripping the world in phone sales, and the prepaid business model had opened the floodgates.

At this time, however, devices were still at the feature phone stage, and Nokia owned the market. Voice and SMS were the real time communication disruptors, and smartphones only just entered the public consciousness. Internet penetration was still in the future.

Recently, however, I came across current data on internet usage presented in absolute numbers – shown above – of people online. The difference is rather stark, when compared to the proportional representation – see below.

Not only are the next two billion online, but the absolute numbers re-order the regions in a very different way. Asia leads the world online, and even Africa ranks higher than North America. Here’s the same data presented, by region, as a pie chart.

The distortion created by proportional or per capita presented skews the true landscape of the actual human beings who are using the internet. Ten years ago, this might have made sense given the passive content consumption nature of much of the early world wide web.

Today, given the dominance of social media, and the frictionless ability for anyone to share their thoughts, their photos, or their music video, its the absolute numbers that actually make a difference. There is more content available in Mandarin than in English, though we may not know it, and there are more Africans talking to each other every morning than there are North Americans.

I’ll be following up with more writing on the implications of this historic decade in human history – between 2007 and 2017, the long awaited next billion not only came online, but began showing us how to disrupt everything from cross border payments, to cryptocurrency adoption. They are my hope for a more peaceful, inclusive, and sustainable future for our grandchildren.

How the African movable assets bill can unleash innovation opportunities for the rural economy

Somewhere in Kenya, 4th June 2012 (Photo: Niti Bhan)

As Kenya joins Zambia and Zimbabwe in ratifying a Movable Property Security Rights Act, there’s a sense that the floodgates to innovation in access to finance might be taking place in rural Africa, south of the Sahara and north of South Africa.

Kenya’s law also goes beyond the cows and goats and allows a borrower to collateralise future receivables arising from contractual relationships.

How it ends up being implemented will set the stage for the next big disruption in financial inclusion. In the meantime, let’s take a closer look at the opportunity space for innovation in the informal and rural economy that dominates these operating environments.

 

1. A whole new bank, designed to meet the needs of rural Africa

Last night, a tweet by Charles Onyango-Obbo struck me forcibly, and reminded me of our Banking the Unbanked proposal crafted for ICICI back in January of 2007.

The very fact that contemporary thoughtleaders in the Kenyan banking industry are unable to take the concept of livestock as collateral for loans seriously, taken together with the deeply embedded assumptions of the formal economy’s financial structure leaves the door wide open to disruption.

It would not be too difficult to conceptualize a rural, co-operative bank custom designed for the local operating environment. In Kenya, where the mobile platform provides clear evidence of the viability, feasibility, and desirability of innovative financial tools and services that work for irregular income streams and provide the flexibility, reciprocity, and negotiability inherent in the cooperative local economies, such a bank could change the social and economic development landscape overnight.

In fact, one could conceivably foresee this “bank for rural Africa” scaling far beyond Kenya’s borders.

 

2. Insurance sector must respond to banking disruption

The domino effect of disruption in the banking sector should kickstart the stagnant insurance industry that has been ineffectually attempting to scale outside of the formal economy’s neatly defined boundaries. Bankers willing to take livestock as collateral for loans will therefore require insurance on their movable asset as a surety against the risk of disease, or drought.

Current products tend to emerge from the international aid industry, seeking to insure smallholder farmers against the shock of losing their livestock to climate related disasters such as prolonged drought, or an epidemic of illness. There is a dearth of relevant and appropriately designed insurance products from the private sector targeting the needs of the rural economy. For all the talk of African urbanization, even the most optimistic projections show that East Africa’s rural population will continue to dominate.

Thus, this an opportunity ripe for the plucking, given the right mix of product, pricing, and promotional messaging.

 

3. Disrupting assumptions of Poverty and Purchasing Power

Whether it is Kenya’s significant non profit sector or the nascent consumer oriented markets, the redrawn lines defining assets, collateral, and the floodgates of access to finance will require a complete overhaul in the way the population is segmented and measured.

Once these hundreds of movable assets have been valued, insured, and registered officially, even the most reluctant banker must now count the pastoralist among his wealthiest local clientele, able to draw a line of credit against his true wealth to the tune of thousands of dollars without feeling the pinch.

 

4. Triggering a rural investment and consumption boom

From mabati for a new roof and simti for the backyard wall, to the latest model smartphone or pickup truck, the concurrent boom in investments and consumption provides an ample playing ground for new products and services tailored for the contextual needs upcountry. Finally, Farmer Joe can install that solar powered irrigation pump for his orange groves in time to reap the next big harvest. And Mama Mercy can think of building up a nest egg of investments faster from the income provided by her farmyard animals.

Kagio Produce Market, Kenya, April 2013 (photo: Niti Bhan)

This might turn out to mean upgrading to a breed of high yield milch cows or being able to provide them with better quality feeds and medicines, but the financial bridge that a well designed strategy leveraging this movable assets bill and it’s timely implementation could mean the difference between the brass ring or treading water.

 

5. Trade and Commerce will open new markets

Given that the Kenyan Movable Property Security Rights Act 2017 goes beyond livestock to include other stores of wealth and value creation, there will be an undeniable impact on regional and cross border trade. No trader will give up the opportunity to leverage their existing inventory if it qualifies for additional credit that can be plowed back into the business.

On the road to Bungoma, Western Kenya, February 2016 (Photo: Niti Bhan)

Trader’s mindset and the documented biashara growth strategies already in evidence point clearly to the productive economic use of this access to finance rather than passive consumption alone. As their business grows, they will require a whole slew of tools and services tailored to their needs. This could be as simple as a basic book keeping app or as complex as customized commodity (assets, livestock, non perishable foodstuffs, grains and cereals) exchange platforms that integrate the disruptive new services percolating through the entire ecosystem.

 

In conclusion

These few steps outlined above are only the beginning of laying the foundation for disrupting the current social and economic development trajectory of small town and rural Kenya. I see immense potential for both direct to consumer as well as business to business segments for forward looking organizations seeking a foothold in the burgeoning East African markets.

We, at Emerging Futures Lab, would be pleased to offer you customized white papers on the opportunities for new products, services, and even business models, based on this emerging financial environment recently signed into law by President Kenyatta. Contact us for an exploratory conversation on the scope and scale of your particular industry’s needs. Our experienced team can help you maximize these opportunities from concept design and prototyping all the way through to path to market strategies.