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Imagining Africa 2030

Africa is in need of a new growth model, driven by entrepreneurship and innovation

Africa’s growth over the past 15 years has been impressive, with growth figures above 5% between 2001 and 2014. Globally, the year 2016 has been a year of economic uncertainty and slowdown in many parts of the world. Volatile financial markets, falling commodity prices, a massive refugee crisis, rising inequality and social fragmentation have fueled political populism in many parts of the world. Despite these global challenges, Africa’s economic growth performance has been resilient as the continent clocked an overall GDP growth of around 3.7% in 2016, making it the second fastest growing region in the world. However, with these numbers being lower than in past years, confidence levels in Africa’s growth story have decreased lately. Especially Africa’s commodity exporters have been impacted negatively, highlighting the urgency for a new growth model that is driven by the strength of the real economy, entrepreneurship and innovation.

Africa’s age-old development challenges need a fresh look

Notwithstanding the strong potential for innovation and economic transformation, the African continent still has the lowest levels of human and social development and struggles with age-old problems and large parts of the population living in poverty and facing unemployment and inequality. 48% of Africans live in extreme poverty today; 75% of the continent’s population lives without electricity while 40% lack access to clean drinking water; and 72% of Africa’s youth live on less than USD 2 a day. While achieving food and nutrition security is widely recognized as arguably the greatest development challenge for Africa, securing water security and low carbon energy security are other mega challenges that are intertwined with the food security crisis. In addition, Africa needs to build holistic healthcare ecosystems, create a future ready workforce and financially include majority of its population.

Africa’s challenges are its opportunities

Africa has the potential to develop a new development model, with the continent’s demographic development, its rapid urbanization, and technology change being the three major drivers:

Africa is the continent with the fastest growing population in the world. Today’s 1.2 billion people will grow to 1.7 billion in 2030 and 2.5billion in 2050. Africa will account for 25% of the global population in 2050, of which the majority will be at working ages (15-64 years) – a huge potential to reap the “demographic dividend”. Today, 50% of Africans are below the age of 18.5 years and 19% between 15 and 24 years of age, making Africa the most youthful continent.
Africa is urbanizing at a historically rapid rate: Today, the share of urban residents has increased to 40%; this trend is likely to continue to a level of 56% in 2050. While a lot of challenges are associated with the speed of urbanization, it has the potential to create favorable conditions for spurring economic development. Urban centers can create new economic opportunities and drive service-led growth. Urban areas enable aggregation economies through facilitating a wider range of shared services and infrastructure, greater matching of resources, as well as knowledge sharing, cross-fertilization and innovation.
The absence of established ‘legacy systems’ creates a potential to build new industries and systems "bottom-up" by leveraging technology: The technology boom across the continent has been attracting the attention of investors, innovators, and corporates. With the spread of digital technologies, Africa is getting increasingly connected. Mobile penetration currently stands at 73% across Sub-Saharan Africa, while around 19.3% of Africans use the internet. These figures will increase rapidly in the next few years. The absence of ‘legacy systems’ allows the African continent to position itself as a "breeding ground" for digital innovation. The recent announcement of bringing Senegal’s currency on a Blockchain shows how the continent can “leapfrog” development.

Africa’s 2030 development goals call for a new lens for framing old problems

Securing affordable, nutritious food for 1 billion people in Africa

To feed its growing population, Africa needs to increase its food production by 60 to 70%. Despite its vast agriculture potential Africa spends around USD 30 to USD 50 billion on food imports annually. Lack of self-sufficiency in food production coupled with abject poverty explains the high incidence of malnutrition in the continent. The number of undernourished people in Sub-Saharan Africa (SSA) was estimated at about 218 million in 2014-16. Traditional approaches to increase food production will not be sufficient for achieving food and nutrition security and eradicate hunger. The focus needs to shift from simply ‘growing food’ and increasing smallholder productivity to ‘creating food’. Creating food calls for harnessing the power of technologies to advance alternative solutions like farming on water, vertical urban farming, automated kitchen gardens and lab-based food production. Simultaneously, technology also needs to be leveraged to arrest diversion of food towards biofuel production and the enormous wastage of food.

Securing low carbon energy security and protecting the environment

Poor access to electricity and dependence on biomass for fuel is undermining Africa’s efforts to reduce poverty and protect the environment. Two out of every three people on the continent lack access to electricity. This costs Africa 2-4% of its GDP by undermining economic activities, job creation and investments. Estimates suggest that it will take Africa until 2080 to achieve universal access to electricity and till sometime after the middle of the 22nd century for access to energy for clean cooking.Protecting the environment and Africa’s transition to a low carbon development pathway demands economy-wide de-carbonization to create a resilient climate system which is compatible with climate goals. This calls for leveraging technologies to accelerate adoption of renewable energies, advance low-carbon solutions like carbon capture and storage (CCS) and alternative fuel vehicles and scale efficient energy storage solutions like battery storage, compressed air energy storage and flywheels. 

Managing competing usage of water and the interplay between water, energy and food security

About 66% of Africa is arid or semi-arid and about 40% of people in Sub-Saharan Africa live in a water-scarce environment. Estimates suggest that by 2030, water scarcity can displace up to 700 million people in the continent. Environmental degradation and competing uses of water for agriculture and industry could reduce water availability in cities by as much as two thirds by 2050. With agriculture accounting for over 80% of water consumption in Africa and 95% of the agriculture in Sub-Saharan Africa being rain-fed, the continent needs to urgently manage competing water requirements from various sectors. The continent needs to shift towards adopting solutions that help conserve as well as replenish water supplies. This new lens entails embracing technology-enabled solutions like integrated water management systems, smart agriculture, large-scale desalination powered by renewable energy and capturing atmospheric water. These new age technology driven solutions will help Africa build a ‘circular’ water economy, in which water is increasingly viewed as a renewable resource.

Shifting focus from reactive treatment responses to building holistic healthcare ecosystems

Africa lags behind the rest of the world on all healthcare indicators. Global life expectancy at birth in 2015 was over 71 years while in Africa it was 60 years. Despite having the world’s largest disease burden, Africa is expected to have a shortage of 6 million health workers by 2030. African health systems face numerous challenges including meagre government spending, deep out-of-pocket expenditures, heavy donor dependence and low penetration of private sector healthcare. These factors coupled with systemic poverty has limited emergence of private healthcare initiatives to only a small number of big cities. Africa has thus far focused only on targeted disease-focused healthcare interventions, which account for only 20% of health care outcomes. Horizontal strategies for improving the capacity of broader health systems to affordably diagnose, prevent and treat health problems are critical for Africa. These strategies should focus on how to best fund healthcare and factor in linkages between healthcare and quality drinking water, waste disposal, access to nutritious food and health awareness levels.

Creating a future-ready workforce in a time of changing skill requirements

Globally out of 67 million children who are out of school, 43% live in Africa. Shortage of trained teachers, poor quality of education and high dropout rates driven by poor economic conditions accentuate the perilous state of education in Africa. The World Economic Forum predicts that over a third of today’s key workplace skills will change over the next five years. 85% and 67% of jobs in Ethiopia and South Africa are at risk of being replaced by automation. Technology is changing the way people will work in the future as digitization continues to create a shift towards greater specialization and horizontal collaboration. This will translate to newer and changing demand on education as we know it today. Every year 50% of new graduates coming out of universities in Africa, equivalent to 5 million youth, do not get jobs. With Africa’s population projected to double by 2050, the pressure of unemployment will increase manifold. Education systems in Africa therefore, need to urgently factor in early access to tools and skills focusing on collaboration, communication, creativity and critical thinking to equip and empower students of today to enter the workforce for tomorrow.

Expanding choices for the BoP and reducing their vulnerabilities via financial inclusion

African nations significantly lag behind other emerging economies in terms of financial inclusion. Only 23% of adults in Africa have a bank account. Although SSA’s average ratio of private sector credit to GDP has increased by almost 10 percentage points since 1995 to about 21% in 2014, the figure is still only half the size of that in the Middle East and North Africa. A key hindrance to financial inclusion has been the overdependence on branch expansion for driving banking penetration. This approach has failed due to high transaction costs associated with reaching highly dispersed populations and this has, in turn, stifled innovation. African countries need to trigger a virtuous cycle of savings, investments, incomes and expenditures. For achieving this, the focus needs to shift to a holistic approach that encompasses better segmentation of customers, expansion of choices provided to them through customization, enhancing affordability and deepening penetration via an innovative distribution channels mix.

Technology can solve Africa’s mega challenges at exponential pace

Solving Africa’s mega challenges at a scale needs new thinking. Reaching low income segments of the population requires overcoming barriers related to productivity and underutilization of resources, quality, reach and availability, affordability and viability, motivation, and scale. The last few years have seen a proliferation of innovations to address these challenges that leverage technology. Mobile-based innovations such as M-Pesa, M-Shwari, M-Kesho are addressing financial inclusion and triggering other innovations that use these platforms such as off-grid energy provider MKOPA. Breakthroughs are also happening beyond mobile-based solutions. A wide range of tech disruptions across sectors are emerging: Enterprises like Bankymoon, which last year created the world’s first Blockchain smart metering solution for power and utility grids, or BitPesa, a platform that allows users to trade in a digital currency, are examples of how exponential technologies are trying to solve problems in a non-linear way.

The pace at which these technologies are developing can potentially disrupt the speed of problem solving and demonstrates Moore’s law in action which states that the number of transistors doubles every 18 months.  We are already witnessing the impact these “exponential technologies” can create: While Africa started out with 5% mobile penetration in 2005, 2010 already saw 200 million mobile subscriptions (25%) which increased to 557 million (46%) in 2015 and predictions are that by 2020 we will see 725 million subscribers (54%). Similarly, the number of connected devices globally was 12.5 billion in 2010 and 25 billion in 2015 and is estimated to increase to 50 billion devices in 2020. Soon the most powerful computer in the world will equate to the human brain for computing power. Around 2025 desktops or laptops will equal a mind and by 2030 the world’s most powerful supercomputer will equate to almost a million humans.

Making predictions about the future is not always easy, as even some of the pioneers in history have fail to do so: “The global demand for cars will not exceed 1 million, one reason being the shortage of drivers,” estimated Gottlieb Daimler in 1901. In the same year, Wilbur Wright, a pioneer in aviation, estimated: “It will not be possible for humankind in the next fifty years to take-off in a metal plane.” The rest is history. It is difficult for us to predict how the future will play out – but we are optimistic that we can solve some of Africa’s age old developmental bottlenecks through leveraging best in class technology.

Exponential improvement in the cost-performance of technologies is fueling innovation across the world, building on the core digital building blocks—computing power, storage, and bandwidth—and allowing us to think exponentially. Breakthroughs in performance, miniaturization of technologies and energy efficiency of sensors and batteries as well as compact, low-cost computing power and data storage and advances in providing connectivity are unfolding. In combination with accessible and affordable tools that enable rapid software development and Big Data analytics they have the potential of driving exponential solution development across the African continent.

Intellecap has identified promising technologies that can create exponential change

This research is our take on the potential of emerging technologies for solving development challenges. We have engaged with more than 50 experts, technology pioneers and thought leaders as well as startups and corporate innovators and analyzed more than 100 breakthrough innovations that are currently being explored and tested, using emerging technologies in Africa. Through our consultations with experts, we have shortlisted emerging technologies with potential exponential impact that are already seeing initial applications in Africa. We applied a more narrow definition of technology as hardware and software components used to produce goods and services, rather than the knowledge of techniques or the application or skills to apply those.

Promising Emerging Technologies for Africa
IoT uses an array of sensors to enable capturing of real time data from a wide range of sources including computing devices, mechanical and digital machines, objects, animals and people.
Key Benefits
  • Monitors and manages objects
  • Automates processes and optimizes systems
  • Saves time and reduces costs
  • Increases efficiency and improves quality
Market and investment trends
  • 50 bnconnected devices by2022 from 10 mn in 2010
  • loT market is expected to grow to $7.1 trillion in 2020 from $1.9 tn in 2013
  • 70 deals totaling $846 mn in loT start-ups in Q1 2016
Example use cases
Big data refers to the use of advanced data analytics including predictive analytics for extracting value from voluminous or complex data sets
Key Benefits
  • Enables faster and better
  • Facilitates new solutions development
  • Helps reduce operations costs
  • Helps target new market segments
Market and investment trends
  • 50bnBig Data market will be $53.4 bn in 2017 from $7.2 bn in 2011
  • By 2020, the size of the global data universe will be ai least 44 Zettabytes
  • Big Data startups recived $6.64 bn worth venture capital investment in 2015
Al constitutes advanced algorithms applied to large data sets for observing patterns, gathering insights, problem solving, predicting and real-time decision making
Key Benefits
  • Enable autonomous systems
  • Enhances speed and quality of decisions
  • Improves efficiency and accuracy
Market and investment trends
  • Over 40 deals in Q3 of 2016
  • Google has made 11 acquisitions
  • 2.2 bn bost by 2020
  • Al will drive revenues of over $47 bn in 2020
A Blockchain is a tamper-proof record of transactions distributed across all participants in a Blockchain network. Via digital authentication and verification, the technology removes intermediaries and reduces transaction time and fraud.
Key Benefits
  • Reduces transaction time
  • Remove intermediaries
  • Reduces tampering and fraud
  • Increase trust through shared processes
Market and investment trends
  • Total $1.4 bn invested in start-ups
  • In Q1 2016, blockchain funding overtook bitcoin funding
  • In 2016, investment in blockchin fell by 18%
  • In Q1 2016, there were 39 deals totalling $173 mn in Bitcoin & Blockchin start-ups
Robotics refers to use of robots to automate and standardize quality of work with minimal errors. It covers a large variety of robots including drones.
Key Benefits
  • Improve productivity and efficiency
  • Enhances ability to work in hazardous or inaccessible conditions
  • Improves quality of human supervision
Market and investment trends
  • Global Robotics industry is expected to grow from $28.3 bn in 2015 to $151.7 bn in 2022
  • Consumer drones sales to increase to $2 bn in 2016
  • 42 deals titalling $185 mn in Robotices start-ups including Drone start ups in Q1 2016
  • Monitos and manages objects
3D Printing or additive manufacturing is a process that creates a three dimensional physical objects from a digital design. It can manufacturing highly customized parts, which would otherwise be difficult based on traditional manufacturing
Key Benefits
  • Makes highly complex designs easily
  • Creates highly customize items
  • Reduces wastage in manufacturing processes
  • Can democratize manufacturing
Market and investment trends
  • The global 3D printing market is set to reach $9.6 bn in 2020
  • Medical industry applications are growing fastest at 17.3% at CAGR

We have excluded engineering technologies from the scope of this research and focused on Internet of Things (IoT), Robotics, 3D-printing, Blockchain, Artificial Intelligence (AI) and Big Data as the set of emerging technologies that can create exponential impact in Africa. Our analysis shows that these technologies together can enable a shift from centralized systems to decentralized solutions that enable a peer-to-peer collaborative environment, cutting out intermediaries, increasing system efficiencies and making activities such as searching information, prediction, and monitoring cheaper.

Blockchain

A Blockchain is a tamper-proof record of transactions distributed across all participants in a Blockchain network. Via digital authentication and verification, the technology removes intermediaries and reduces transaction time and fraud. In the financial sector, companies like SWIFT and banks are developing Blockchain projects for payments transactions. The potential of Blockchain however, extends to other areas. Estonia recently partnered with Bitnation to digitize citizen identities using Blockchain. While these are early days, Blockchain has immense potential in Africa given its massive development challenges.

Internet of Things

The Internet of Things (IoT) uses an array of sensors to capture real time data from a range of sources including computing devices, objects and people. It allows users to monitor and manage objects remotely and make data-driven decisions. Lack of actionable data is a major challenge for emerging markets. IoT can help address this challenge. ThingWorx for example, uses sensors to capture data on crop fertility across various parameters and advise farmers on maximizing productivity. Similarly in healthcare, Kaa operates an IoT platform to remotely monitor patient health statistics and predict ailments.

Artificial Intelligence

Artificial Intelligence (AI) comprises of advanced algorithms applied to large data sets for observing patterns, gathering insights, predicting and real-time decision making. AI has been attracting keen interest across sectors. Google is exploring ways of using techniques developed by Deep Mind to improve energy efficiency of its data centers. Lo3 Energy is using AI to distribute power to households via a micro-grid. Ayasdi, is using machine learning to analyze thousands of variables simultaneously to construct and upgrade risk management models that can automatically adjust to changes in the market environment.

Big Data

Big Data refers to the use of advanced data analytics methods including predictive analytics for extracting value from voluminous or complex data sets. The technology facilitates faster and better decisions and development of new solutions. Big Data has been finding growing application across industries. Retail banks in Africa such as Kenya Commercial Bank are using Big Data to enter the microfinance sector by innovating around “alternative” credit scoring models. Organizations like Dignity Health are developing Big Data platforms for clinical, social and behavioral analytics.

Robotics

Robotics refers to use of robots to automate and standardize quality of work with minimal errors. It covers a large variety of robots including drones. It aims to significantly improve safety, efficiency, productivity and reduce time and human effort. Beyond industrial applications, Robotics is finding newer applications in other sectors. Robot for Intelligent Perception and Precision (RIPPA), a solar powered robot is being used to identify and remove weeds individually from farms. Zipline recently began the nationwide delivery of blood and other critical medical supplies using drones in Rwanda, in partnership with the government.

3D Printing

3D Printing or additive manufacturing is a process that creates a three dimensional physical object from a digital design. It can manufacture highly customized parts, which would otherwise be difficult based on traditional manufacturing. It can facilitate democratization of production and high levels of personalization. 3D Printing is finding use in diverse sectors including car manufacturing, healthcare, aeronautics, engineering and consumer goods manufacturing. It holds tremendous potential in Africa, as it promises to boost local manufacturing, reduce imports and create new employment opportunities.