Sunday, April 15, 2012

Is ICT4D going to change Africa? or is it ICT4B

From Wikipedia: "Information and communication technologies for development (ICT4D) is a general term referring to the application of Information and Communication Technologies (ICTs) within the fields of socioeconomic development, international development and human rights."

ICT4D seems to be the new model for many organizations involved with disadvantaged populations anywhere in the world. Recently 170 delegates from 35 countries met in Kigali-Rwanda for the ICT4D conference organized by the Catholic Relief Services (CRS). Until now it was uncommon to see a humanitarian NGO like CRS organizing a technology conference. I must recognize that it was a very well organized conference and that I saw many interesting ICT4D projects presented. It is clear that ICT can improve the efficiency and effectiveness of humanitarian agencies.

In general there is no question that access to ICT can significantly impact development, particularly in regions where there was no effective communication before. When mobile technology appeared in developed countries, it was a "nice to have", just another communication tool after post-mail, telegraph, fax, land-line phones, email, etc. and its impact was mostly marginal. It provided more flexibility in communication. For those regions the real value came more from smart phones providing mobile access to Internet.

For developing countries, and in particular for Africa, mobile phone penetration has a much more significant impact. The lack of effective communications infrastructure has traditionally been one of the biggest obstacles to economic growth in Africa. Mobile technology is now finally providing access to communication where there was NO communication before, in rural areas in particular.  This is one of the reasons why the speed of mobile technology penetration in Africa has been one of the fastest technology market penetration ever soaring from 2% at the turn of the century to more than 50% today.

The question is: will we see a major impact from it? By major impact I mean will ICT4D have an impact that will finally move the African economy out of poverty to prosperous communities.

The answer is not obvious. My concern, expressed in preceding blog postings, is that over the past forty years Western aid has not been correlated with a significant improvement in the African people’s standard of living and it is not evident that by leveraging ICT4D Western philanthropy will dramatically change that verdict.

The answer may be somewhere else. Africa is a continent of small and medium enterprises (SMEs), only 20 African companies have revenues of at least $3 billion. SMEs are the heart of Africa's economy, they generate 74% of the employment. Until now in Africa SMEs had little or no access to ICT for reasons I explained in another blog post. As a result, their productivity is way below market average when compared with SMEs using ICT for the management of their business.

This is probably where ICT can produce the major impact I spoke about. Studies have showed that access to ICT can increase SMEs productivity in developing countries by a significant factor, sometimes  10 or more. If we can provide easy, affordable access to ICT solutions for the millions of SMEs in Africa, this may have a major economic impact on the continent.

First of all, Africa needs good business managers. While this should be addressed through education, ICT can provide access to business management best practices embedded in business management software. In addition the C of ICT can broaden the SME market for a very low cost. Internet access is becoming more affordable in Africa through a significant increase in broadband Internet cables installations. It can reduce the cost for SMEs to do business with their customers, suppliers, partners.

But the model of use of ICT in SMEs in Africa will be different than in developed countries. They will access the applications and information needed to manage their business as cloud services from mobile devices through Internet. I can already hear many of you saying that Africa is not ready for it, that the infrastructure is not in place. Instead of arguing, I'd rather like to look at the glass half full through a real example.

Usahibu is a Kenya based company delivering accounting solutions for SMEs as a Software as a Service (SaaS). Here are the reasons why I want to highlight that solution:
1) It is based on the mobile-Internet-cloud model that I described. The fact that there are no serious cloud service provider in Africa yet was not a hurdle. The solution is running from servers based in London, UK.
2) It is priced at an affordable 1000KES (12 USD) per month. No need for large upfront investments, neither in hardware or software, neither in IT skills to manage the system. They offer a free training seminar. What SME in Africa cannot afford that price? Subscription takes less than 5 minutes and you can start using it.
3) It was developed in Africa for Africans, which I always said is the only way to develop appropriate solutions for Africa. They will not be developed in Silicon Valley. It was developed specifically for the legislation and workflows present in Kenya. And all payments are done though Mpesa, the local mobile money, not credit cards!

This is not a lonely example, here are some more: African Liberty Card and Esoko in Ghana (running from servers in London, UK),  D-Tree International in Tanzania.

One problem in Africa is the informal private sector representing 40% of the GDP. For those SMEs we must ensure that the benefits of ICT exceeds the benefit" of staying in the informal market, meaning mainly that they don't pay taxes. Governments are trying to force those SMEs to register with variable success. Maybe instead of forcing them to register with no obvious benefits for them, government could offer them SaaS solutions in exchange for their registration. Why not offering them an accounting SaaS that can automatically do their tax return, saving them the need for an accountant? Just my $0.02... In addition, in doing so, the government can get a "real time" view of the business in their country providing them with valuable information. This will require some privacy protection for SMEs and using the data in aggregation only.

If more affordable SaaS solutions for African SMEs can be developed (this in itself is a major business opportunity for software vendors), they could become competitive, see a significant increase in their revenues, generating more employment and leading to the growth of an African middle class. This in turn will provide governments with the tax base needed for their development. This is the best way for them to free themselves from international assistance and being able to take control of their development.

So maybe in addition to ICT4D, we should bet on ICT4B, i.e. ICT for Business.

Seeya later alligator...

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