How increased connectivity is shaping innovation in Africa

Increased connectivity shaping innovation in Africa

While South Africa’s mobile connectivity has long rivaled that of the developed world, remote and underdeveloped areas of the continent lag behind as telecommunications companies struggle to expand cellular coverage.

Partner, Technology Sector Leader for Africa

KPMG in South Africa

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Cape Town, South Africa at night

Forget television. No technology is as desirable – or has such a power to transform even remote communities – as that of cellular connectivity.

While South Africa’s mobile connectivity has long rivaled that of the developed world, remote and underdeveloped areas of the continent lag behind as telecommunications companies struggle to expand cellular coverage. The biggest challenge is the continent’s sheer size: Africa is larger than the United States, China, India and most of Europe combined. Costs, too, pose issues, resulting in high prices from the expense of widespread expansion.

Despite challenges, customers are eager to adopt these technologies, “leapfrogging” over older tech like landline telephones to embrace a digital future. This rapid evolution has positive consequences not only for day-to-day lives, but also for African countries’ economic futures. In countries like Kenya, Nigeria and Ghana where connectivity has increased rapidly over the past decade, we’re seeing a marked increase in entrepreneurial activity, as well as the creation of early-stage innovation hubs.

Cellular solutions to local problems

Creative use of limited resources has long driven local innovation and applications of cellular and internet connectivity are no different – nor are African successes new in this regard. African companies have created the fore-runners to many applications now enjoyed in the developed world.

For example, the South African app Mxit exploded onto the scene in 2004 as the first widespread messaging application that used cellular data to replace expensive SMS messages. It was years before similar applications like WhatsApp were available in North America or Europe.

However, the most well-known story of local ingenuity is that of M-PESA, a mobile payment method that has transformed how people across certain countries in Africa send, receive and save money. Using only feature phones, users send and receive money and make withdrawals from retail outlets. This facilitates the speedy payment of goods, allows migrant workers to send money home to their families and supports a flourishing microfinancing system – all without the need for a bank account. M-PESA payments now represent approximately 30 percent of Kenya’s annual GDP and the app has spread to India, the middle east and parts of eastern Europe.

Evolving access to healthcare and education

Two big problems in African nations are healthcare and education. Technology, driven by increasing connectivity, has a key role to play in addressing both.

We’re seeing government-sponsored solutions in Kenya and Nigeria using mobile phones to help address illiteracy and access to education. By driving connectivity to schools, students are gaining access not only to information through the internet, but also online lectures, textbooks and learning programs on nearly any subject imaginable.

In healthcare, smartphone apps are starting to help patients monitor and manage health issues without easy access to a doctor. Apps like Hello Doctor provide confidential, 24-hour access to a doctor via text or the ability to receive a doctor callback within an hour, while others like Smart Health, Kids Aid and more provide information and resources on subjects ranging from HIV/AIDS and Malaria to emergency first aid, nutrition and pre-natal healthcare.

Given the critical impact of these areas and the overall size of the market, we expect to see digital health and education solutions from many of the companies currently in early-stage incubators and accelerators.

Smartphone access promises further transformation

While most people living outside of major metropolitan areas still use feature phones, low-cost smartphones from China are beginning to transform the market. While these phones put pressure on local cellular networks due to increased bandwidth usage, they’re also driving entrepreneurial interest and activities. Creative individuals and companies are looking at the increasing smartphone use and asking, “How can we take advantage of this trend in our local market?”

While Africa is catching up to the standards of the developed world, there are still plenty of opportunities to accelerate that progress. The solutions being used to solve problems here in Africa may be designed to serve the needs of a unique market, but will clearly have applications and applicability for the wider tech scene.

Cellular connectivity, internet connectivity and smartphones open up a world of possibilities – and African entrepreneurs have the drive and creative mindset needed to push for innovation.

 

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About the author

This blog has been co-authored by Frank Rizzo (Partner & Technology Sector Leader for Africa at KPMG in South Africa) and Mayank Naik (Innovative Startups Lead for KPMG Enterprise and Manager in Technology Advisory at KPMG in South Africa). Their combined experience spans more than 25 years working with large and listed companies, with a focus in the technology sector. As the technology environment continues to quickly evolve globally, Frank and Mayank provide key strategic advice to numerous entrepreneurs and startups, helping them to grow and prepare for the future of technology.

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