It’s an absolute pleasure to be here this morning, I’m very excited about this opportunity to share some of the thoughts that are on my heart on the topic of ‘Rebuild’ – developing and delivering innovative and scalable solutions to systemic problems in Africa.
What I will be looking at specifically today is the subject of accelerating the digitisation of Africa.
Just a quick introduction; my name is Jacques, happily married to a wonderful wife and we have four kids. From a very young age, I have been drawn to the continent of Africa, the people, and the potential of the continent. I’ve had the pleasure of working in 18 different countries over the last 15 years, delivering digital solutions, both to governments and also private enterprise customers. And during this period I have had the opportunity to meet amazing people – entrepreneurs, young women starting their own businesses, which has really encouraged and motivated me to also invest from my side in developing productive societies in Africa by using technology.
I’m an engineer by training and where we work is at the intersection of using digital and mobile in solving industry-specific needs and requirements or systemic problems. In health care, it means access to quality, cost-effective and accessible health services. In education, it means improving education outcomes for our kids. In agriculture it’s allowing farmers to transact with formal value chains, purchase quality inputs, and get good prices when they sell to their produce. In financial service, it’s really providing access to financial services for those who have never been able to access a banking service or a credit or insurance product. In utilities, it’s access to basic services – clean water and electricity.
So what I would like to share with you today is why we believe that digital and mobile will be key enablers for driving economic growth in Africa. There’s a lot of talk about the fourth industrial revolution, and a lot of people I engage with are quite sceptical – and with good reason. As a continent, we’ve not participated in the first three industrial revolutions. If you look at steam, electricity, the microprocessor personal computing – Africa as a continent has not participated in any of these three revolutions, meaning we have not been able to translate what can be referred to as the technology benefit into economic benefit for the citizens of this continent. The economists refer to this as the challenge of economic diffusion. Now, why would the fourth one be different? Why do we believe that as a continent, we will not only just enjoy the benefits of the fourth industrial revolution, but also actively participate in developing and delivering digital solutions consumed both locally and exported to other regions globally?
One of the key reasons why we’ve not participated in the first three industrial revolutions is because of our inability to invest in the means to deliver the benefit to where it’s required. In the case of steam, not investing in railways. In the case of electricity, not investing in industrial grids to facilitate the distribution of electricity to the household and business level. In the case of microprocessing capability, the inability to provide landline connections to the average household in Africa. The telephone was invented by Alexander Graham Bell in 1867. In 1994, only 1 out of 100 people in Africa had access to a landline. So in more than 120 years, we’ve only been able to get a 1% uptake of the technology benefit that we’ve seen so many other global regions benefiting from.
Now, why do we think this time around it will be different? The key reason is mobile as an enabler. As we speak today, there are more than 880 million mobile phone subscribers in Africa – of that, about 520 million active subscribers. 330 million of these subscribers use their phones to access the internet – that’s just amazing. The power and the means to deliver value to 520 million people on a day-to-day basis. So the first reason is mobile as an enabler, meaning the equivalent of a railroad or electricity distribution grid using mobile networks and their reach to deliver value to the last mile in Africa.
The second reason is that we will be able to leapfrog a lot of legacy business models because we’ve not participated in the first three industrial revolutions. We will now be able to introduce new business models without competing with legacy models. Just to give you one example, our colleagues from Kenya brought us the gift of M-PESA – first deployed in 2007 in Kenya by Safaricom. Today we have more than 56 million people using the M-PESA service every month. So we’ve been able to deliver with mobile capability what the traditional ‘brick and mortar’ banking industry has not been able to deliver. Just to give you an idea, for every 100,000 citizens in Africa, there are about 6 ‘brick and mortar’ banks, about 13 ATM’s – but there are 340 mobile money agents. That’s 56 times more mobile money agents than ‘brick and mortar’ banks where people can access financial services. That is what excites us. That is what motivates us to look for more innovative ways of delivering value to the citizens of Africa.
I’ve touched on the topic of business models, and this, for us, is really where it starts. A business model in our view consists of three components. The first is to create value – so you have a service or solution for a specific need or requirement. Second, you need to deliver the value that you have created to where the need resides. And thirdly, you need to be able to capture value. In other words, you need to monetise the value you deliver to be able to deliver in a sustainable and scalable way. Now unfortunately, in my experience over the last 15 years, many companies in Africa do not have a sustainable and scalable business model. We see a lot of industries having an “extractive” business model – just focussing on the capture of value component. Look at the mining industry. We’re a resource-rich continent. We extract these resources and export them. Look at agriculture. We produce more than 90% of the world’s cacao and yet we only capture 6% of the cacao or chocolate value chain. That needs to change.
A second one, much needed, is the developmental agenda – focussing on the delivery of value. Now, development services are absolutely necessary, but how do we deliver these services in a sustainable and scalable way? How do we move from just delivering value to also creating and capturing value? And this is where we believe that mobile will play a key role in enabling more businesses and entrepreneurs to deliver sustainable and scalable business models; innovative, scalable solutions for systemic problems on the continent.
Let’s make it tangible – just to give you one idea: agriculture. We’ve got about 77 million small scale farmer families in Africa. Only 7% of these farmers participate in a formal value chain; either on the input side – buying quality seed or inputs from input providers, or on the off-taking side – selling to a formal off-taker, processor, or retailer. How can we change this? How can we use mobile to allow these farmers to participate in formal value chains? Let me give you an idea. Agriculture contributes on average between 25-30% of GDP in several Sub-Saharan African countries, yet only 6% of commercial credit is allocated to the agriculture value chain. That is not at a primary production level, it’s on the input – upstream and downstream side of the value chain. Very few, if any commercial banks see a small-scale farmer today as a credit-worthy customer, meaning it’s an unserved segment.
What we’ve done, working with the likes of Safaricom in Kenya – and our colleagues there will be familiar with the product Digifarm, in Tanzania, Connected Farmer in Zambia, Mozambique, Ghana, Nigeria – is to develop a digital marketplace that allows these farmers to choose who they want to buy from; to be able to access quality inputs to improve both productivity (their yields) and their income. It also allows them to choose who they want to sell to. A lot of these farmers are locked into what we call a hyper-local marketplace, so digital now allows them to participate in global value chains and off-taking agreements, exposing their produce to Europe and the US and in doing this, getting a premium for their products.
So this is just one example of how mobile can allow us to deliver sustainable and scalable solutions in addressing systemic problems on the African continent. The thought I want to leave you with, and the challenge I want to put to you is this: does your business tick these three boxes – creating, delivering, and capturing value? Are there ways that you can use mobile to pivot into servicing an un-serviced segment? Maybe you have great products and services, but they are not accessible, or maybe not affordable. Maybe from an ease-of-use point of view, it’s not something that can be consumed. I want to challenge you as a Christ-led business leader, how can you rethink and re-innovate how you do business in Africa in making sure that we develop and deliver sustainable and scalable solutions?
The president of the African Development Bank, Professor Adesina, often says, “We need to be impatient in growing Africa – in taking our products, services and solutions to more markets, to more segments.” Are we investing in the next generation of leaders in our business? Are we investing a percentage of our time in up-skilling and transferring knowledge to those that can potentially make a difference in their societies and communities? This is where I think we can make a difference.
I would like to end with a word of encouragement, a parable that Jesus shared in Matthew 13:24. “The kingdom of heaven is like a man who sowed good seed in his field. But while his men were sleeping, his enemy came and sowed weeds among the wheat and went away. So when the plants sprouted and formed grain, the weeds appeared also. The servants of the owner came to him and said, ‘Sir, did you not sow good seed in your field? Then how does it have weeds in it?’ He replied to them, ‘An enemy has done this.’ The servants asked him, ‘Do you want us to go and pull them out?’ But he said, ‘No, because as you pull out the weeds, you may uproot the wheat with them. Let them grow together until the harvest, and at harvest time I will tell the reapers, ‘First gather the weeds and tie them in bundles to be burned but gather the wheat into my barn.’”
Now I often – and this is just a reflection of my own allocation of time – spend a disproportionate amount of our time in trying to pull out the weeds, in looking for the enemy. We need to trust God to do his part. What he asks of us is to continue to sow good seed, that is our instruction. I’d like to encourage you – and I’ll pray for a conviction – that we continue to sow good seed, that we continue to invest in building sustainable and scalable businesses that focus on developing innovative solutions for all the problems we deal with on a day-to-day basis.
Thank you very much for the opportunity to share some of my thoughts and I pray for a blessed rest of the conference.