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Big data and development: “The second half of the chess board”

Wolfgang Fengler's picture

Do you think Fortune 500 CEOs care about Africa? In the past, frankly, with the exception of oil and gas giants, they didn’t. But this is changing… and fast.

This week, IBM is opening its Africa innovation hub in Nairobi. To demonstrate the significance of the occasion, IBM has brought along all its senior team, led by CEO Ginni Rometty (named #1 most powerful woman in business by Forbes in 2012). Like other ICT companies, IBM wants to ride the wave of Africa’s ICT revolution. In this area, Africa has not only been catching up with the West, but is in fact overtaking it in areas such as mobile money.

Data – The next frontier of Development

Wolfgang Fengler's picture

How is the digital tide taking care of the digital divide? Do you remember the digital divide? At the start of the new millennium, there was global concern that poor countries, especially in Africa, would be twice left out: economically and also technologically. Fortunately, the digital divide never became a global challenge. In fact, it is closing faster than anyone had imagined. In some parts of the developing world there are even budding signs of possible digital overtaking.

Kenya is one of few African countries driving in the fast lane. Over the past decade, it has experienced a sweeping “digital tide”. Today, Kenya will cross the 30 million threshold of active cell phone numbers, up 29,000 from 12 years ago! Almost everyone can now afford to buy a phone, which sell for as little as Ksh 500 (or US$5) on the flourishing second hand market.

How Kenya became a world leader for mobile money

Wolfgang Fengler's picture

What if anyone owning a cell-phone, whether rich or poor, also had access to financial services with the ability to save and send money safely, no matter where they are located?  This is not science fiction; in fact it is already happening in Kenya, which has become the world’s market leader in mobile money.

Today, Kenya has more cell-phone subscriptions than adult citizens and more than 80 percent of those with a cell phone also use “mobile money” (or “M-PESA” which is very different from “mobile banking” as Michael Joseph–the former Safaricom CEO, and the man behind that revolution—can explain passionately!).  

Internet access is also increasing rapidly, even though many are complaining about poor service by some operators. Within the next two years, Kenya could become one of the most connected, and modern economies in the developing world, and a unique case among the world’s poorer countries, that have an average annual income of below US$ 1000 per capita (see figure).

Learning from a Kenyan revolution

Wolfgang Fengler's picture

Who would have thought, 20 years ago, that a poor African country would become a powerhouse of global innovation in Information and Communication Technology (ICT)? Definitely not me! As student on a long road trip through Africa in 1990, I often struggled to make expensive calls home to Europe. Making an international call typically involved finding an Indian-African merchant, who was one of the few people with a phone that could connect you to other parts of the world, in theory. In practice, I often waited for at least an hour and, when I was lucky enough to get through, paid the equivalent of what today would be about 600 Shillings per minute.

Now zoom back to today and look at the abundance of mobile devices, even in the poorest parts of Africa, and incredibly low calling rates. This year Kenyans could call the US from their cell phones for as little as 3 Shillings per minute! Something extremely remarkable must have happened. In describing the transformation of the telecom industry over the last 10-15 years in Africa, especially in Kenya, the term “revolution” is not an exaggeration.

Since 2000, the Kenyan ICT sector has grown on average 20 percent each year, outperforming every other sector by a wide margin (the second best performer was hotels and restaurants which grew at 8 percent). The ICT sector has been driving growth in Kenya: without it, instead of the 3.7 percent average growth it achieved, the economy would have seen lackluster growth of 2.8 percent (barely enough to keep up with population growth).