At last week’s Africa Business Conference, Zibusiso Mkhwanazi, chief executive of digital agency Avatar, suggested that technological innovation holds much promise for businesses that have the foresight to grasp the opportunity.
“As the Chinese economy grows, becomes more sophisticated and moves into urban areas, the cost of living will rise. What that says to Africa is there is an opportunity. Manufacturing will not be in China forever, but at the same time there are real things we should be thinking about,” he said.
He suggested that, although the potential for comparatively lower production costs in Africa could be exploited, this equally required a rethink — one toward innovation that relied less on Western companies simply using this lower cost base to promote their own profits. “We have a growing Africa and there are potential opportunities, but at the same time, when the competition dies slowly, will Africa be ready? That is the question,” he said.
“The only way Africa will be ready is if we start innovating.” Internet connectivity is an essential element in realising this vision. Mkhwanazi noted that Africa lags significantly in this regard, with undersea cables providing a paltry 0.44 terabits/second connectivity that pales in comparison with the high-speed lines connecting North America to Europe. These lines operate at 170 terabits/second.
“Unfortunately, the way countries in Africa have gone about it is monopolistic, where one company dominates,” he said. This had stifled investment, leading to unfavourable market conditions that don’t offer sufficient returns, which in turn has kept international connectivity costs high. He argued for greater relaxation of the telecoms markets to attract the necessary investment.
“For the economy to grow you have to build it first before investments come in. Just like with any investment it has risk associated with it and you need a good risk appetite from the individual countries.
“That is where your real challenges are. New Partnership for Africa’s Development has already made some commitments about building infrastructure, but how far has it gone and what is the speed of those processes between politicians? Money is an issue, but I don’t think it’s the biggest one on the table.”
Mkhwanazi suggested that the regulatory environment remains one of the biggest challenges for many politicians, particularly as innovation tends to move faster than regulations and they were simply not equipped to respond quickly enough. He added that, particularly in South Africa, there appeared to be a lack of political will to tackle issues of telecommunications and technology.
“The reality is this, it needs political will and it is my feeling government knows that interconnectivity is important, but it is not the first of their priorities,” he said.
“The reason why I say that is because that has been a discussion for a long time. If I look at progress, you can find fibre in metropolitan areas, but interconnecting [the entire country] is still a big problem.
“Hopefully we will get some strong political will because this decision has an impact on everything government does — every service in government will be impacted by this one decision on investing in technology and connecting people.”
He pointed to the success of mobile payment system M-Pesa as an example of how Africa can lead new innovations that the rest of the world has had to follow.