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Africa: Frontier of Innovation and Growth

June 27, 2011 |
Africa's rapid growth and extreme market conditions may well be changing the traditional notions of what innovation is and where it can come from.
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Last April, M.I.T. held a business conference on campus titled “Africa 2.0: Achieving Growth Through Innovation.” In the keynote speech, Dr. Ngozi Okonjo-Iweala, managing director of the World Bank, announced to a packed room, “Africa is now the new frontier.”

When it comes to the discussion of emerging markets, the conversation is normally dominated by talk of China, India and Brazil.  However, many African countries are demanding a place in the discussion, and the continent’s rapid growth and extreme market conditions may well be changing the traditional notions of what innovation is and where it can come from. 

The International Monetary Fund forecasts that in the next five years, Africa will have seven out of the ten fastest-growing economies in the world. In addition, consumer spending in Africa is growing two to threetimesfaster than in developed countries.  In the next ten years, this consumer market is expected to grow to $1.4 trillion, according to the McKinsey Global Institute. This growth is giving rise to an exploding technology sector that seems to know no boundaries.

In the past five years, the information and communication technology sector in Sub-Saharan Africa experienced an annual compounded growth rate of 40%, the fastest globally. And in the last decade, telecommunication companies added over 300 million African cell phone subscribers, more than the entire population of the United States.

At last year’s diplomacy briefing series on Sub-Saharan Africa, Judith McHale, the State Department’s Under Secretary for Public Diplomacy and Public Affairs, described the pace of technology innovation in Africa:

“One of the interesting things about new technology is because so many countries in Africa have come late to the development, they’ve actually leap-frogged, and the applications that they’ve developed for mobile telephony, for one, are far more advanced than many of the things you’ll see in the [United States], which is why I always say we not only have to talk to people, but we have to listen. And we have to learn.”

Tech-inspired entrepreneurs and businesses are innovating to keep up with growing demands and needs of Africa’s increasingly tech-enabled markets.

“Kenya’s advantage in the mobile payment space, South Africa’s social networks and web apps, Somalia’s mobile information system, and Ghana’s up-and-coming tech sector are all compelling stories on where innovation in both African business and African tech are taking us,” explained Erik Hersman, founder of iHub, a technology innovation center in Nairobi, Kenya

“If you come from a different continent, African innovation might not look like the innovation you are used to seeing but that doesn’t mean it’s not there.”

However, despite this enormous growth, many African countries are lacking investment and solid networks for its entrepreneurs to grow their ideas beyond micro-enterprises into larger, more stable businesses.

In attempt to capitalize on this knowledge of local market demands, efforts to harness and formalize African born ideas are currently underway. The World Bank's African Incubation Network has grown to more than forty “business incubators” across twenty African countries. And global technology companies like Google, Microsoft, Nokia and IBM, have also recently established incubation and innovation centers in hopes of launching the next big idea.

As African economies surge forward connecting even the margins of the continent to new technologies and business opportunities, stories of innovation and breakthrough will emerge from all levels of African markets. And these stories will not only challenge the traditional rules of innovation, but they should also make us rethink Africa’s development and its place in the discussion.