Wednesday 16 August 2017

How to Encourage Innovation in Africa

How to Encourage Innovation in Africa
(The Wall Street Journal 03/15/17)
Khanyi Dhlomo, founder and chief executive of Ndalo Media

Ndalo Media founder Khanyi Dhlomo and Mara Group founder Ashish Thakkar on where the potential is and what’s blocking it

How is innovation in Africa different from innovation in Silicon Valley? And how can innovation in Africa be encouraged? Dan Keeler, frontier-markets editor of The Wall Street Journal, discussed those questions with Khanyi Dhlomo, founder and chief executive of Ndalo Media, a publisher based in South Africa, and Ashish Thakkar, founder of Mara Group, a pan-African investment group with operations in banking, real estate, infrastructure and technology. Edited excerpts follow.

MR. KEELER: What about innovation in Africa? Khanyi, what sort of things are you seeing that are inspiring you?

MS. DHLOMO:There’s a lot of innovation happening in Africa. But it’s not necessarily sexy in sort of the globally expected way. Much of the innovation is around solving problems and meeting real human needs.

For example, Fyodor Biotechnologies has created malaria testing kits designed for the African market. You can use them at home and they are urine-based. The company is producing about two million of them now.

MR. KEELER: And those tests are, like $2 each, correct?

MS. DHLOMO: Exactly, they’re about $2 each. So I think for investors and for entrepreneurs to succeed in Africa, whether they are African or not, is to look at what are the needs that people have? Where are the struggles? Where’s the pain? And create around that. Rather than taking products that are successful elsewhere and pushing them onto the market.

MR. KEELER: Are you saying that Africa needs to deal with things like malaria and basic needs before you can do the sort of big, leapfrogging innovation?

MS. DHLOMO: Because of some of the disadvantages that the continent faces, I think the real good work, the profitable and meaningful work, is coming from innovations that are aimed at really changing lives.

And it’s not just about malaria, it’s also about education. In South Africa, there’s a company called Rethaka Trading that’s incorporating solar energy into school bags for schoolchildren in rural areas. During the day, the bags are charged with solar energy. In the evenings, the same bags provide light for children to do homework in rural areas without electricity.

So that’s an amazing innovation. And it’s not necessarily about disease, it’s about education and moving the continent forward. But it’s not necessarily the kind of innovation that would come out of Silicon Valley, because those are not challenges that they deal with.

But the intellect, the creativity, is comparable.

MR. THAKKAR: We’re actually creating real innovative solutions which are changing lives, which are being used on a day-to-day basis by our people across the continent. And I think we’re seeing we’re literally at the tip of the iceberg on this.

The fact that we’re going to have, as a continent, 700 million smartphones within five years is going to be game changing. From edu-tech to health-tech to ag-tech, all of these things are not going to be luxuries, they’re going to be norms. And I think that’s what’s going to change things.

When you think about commerce, the fact that by 2025, Africa’s going to be spending $75 billion on online shopping just shows you the potential. Traditional retail is going to be disrupted. Lagos, 20 million people, how many shopping malls does it have? It’s going to be disrupted. But in order for it to work, we’ve got to focus on the enabling ecosystem.

Enabling innovation
MR. KEELER: Let’s talk about that enabling environment. What does that actually look like?

MS. DHLOMO: For me, the biggest enabler for African success is actually not necessarily external, in terms of money coming in. It’s in Africans working together to unite markets and make it easier to trade between countries. There’s huge potential there.

MR. KEELER: Talk a bit more about the environment that propagates innovation, that fosters it, Ashish.

MR. THAKKAR: It’s several different things. There’s access to capital, but in the form of debt, but also in the form of equity, it’s still lacking. When you think about public policy, when you talk about breaking down borders, the East African community has been a fantastic example of how regional integration has happened pretty quickly, and it’s actually really working and happening.

But is there such a huge demand that’s being called upon from within inter-Africa trade? In my opinion, not yet. Yes, there is a demand, but is it really to that extent that we have to find a solution now?

When entrepreneurial demand actually insists on something happening, it happens. The African Union passport is a fantastic example. These were really entrepreneurs very frustrated with the fact that if you’re a British or an American citizen, you can travel around our continent easier than you can as a fellow African citizen. It’s mad.

Now that’s happening. Many initiatives of that nature, when there’s a serious demand being pushed by the mass, things will happen.

MS. DHLOMO: For far too long, Africa’s been subjected to valid but external evaluations of competitiveness and entrepreneurship and innovation. And I think that people who understand the continent better, who live it and who understand where some of those supposedly negative aspects of doing business in Africa are coming from, should start putting together reputable indices and analyses of what’s happening in Africa. That will just send out a much more informed and sympathetic view on doing business on the continent.

MR. KEELER: So it’s almost like a little bit of self-confidence. More self-confidence will help innovators to say, we can really do this, we can make these changes from within.

MS. DHLOMO: Confidence, but also a genuine understanding of the dynamics of doing business in the different countries on the continent.

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