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Innovation and ICT to build tomorrow’s Africa


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Both innovation and new technologies, have an important role to built tomorrows´Africa by overcoming traditional infrastructural constraints (communications but also transport constraints) and reducing business costs.

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Innovation and ICT to build tomorrow’s Africa

  1. 1. Africa Forum, Paris 5 June, 2009 “ Innovation and ICTs to build tomorrow’s Africa” Laura Recuero Virto Economist OECD Development Centre
  2. 2. African innovation is building tomorrow’s Africa Key issues <ul><li>Attainment of the Millennium Development Objectives </li></ul><ul><li>Creation of new business models </li></ul><ul><li>Establishment of simplified public Financial Management Information Systems </li></ul><ul><li>Attraction of large volumes of investment, extending reach to poorest populations </li></ul>ICTs contribute to Africa’s development by overcoming traditional infrastructural constraints and reducing business costs African innovation to build tomorrow’s Africa
  3. 3. Innovation ICTs and the Millennium Development Goals phoner~1.gif Best Practice Innovation in ICTs is enabling many African to access basic services for the first time and hence, to increase countries’ performance on the Millennium Development Goals for 2015 <ul><li>The Pan-African e-Network initiative </li></ul>
  4. 4. Innovation Bringing people and markets together in agriculture Source : Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in Niger, Jenny Aker, 2008, African Economic Outlook 2009, OECD Development Center, 2009. phoner~1.gif Bakin Birgi (Monday) Zinder (Thursday) Tanout (Friday) Niamey (Sunday) 65 km ~ 3 hours 20 km ~ 1 hour 750 km ~ not accessible Home market <ul><li>Esoko collects price information on crops in local markets and distributes it using SMS and internet to farmers and buyers in 10 West and Central African countries </li></ul> 2 mins  2 mins Farmer in Niger
  5. 5. Demographic bank branches Demographic cash machines Mobile phones Innovation Mobile payments for migrants The key success of mobile payments is the size of their distribution networks % Source : Wireless Intelligence (2008), Beck, Demirguc-Kunt and Martinez Peria (2005) Size of distribution networks
  6. 6. Innovation Mobile payments drop transaction costs Source : World Bank (2008), OECD Development Center 2009 Transactions costs in Africa (% for USD 200) <ul><li>Transaction costs for domestic transfers have been cut by 10 times in Kenya with mobile-payments </li></ul><ul><ul><li> To send 9 €, Western Union asks a commission of 50 %, M-Pesa mobile service requests 5 % </li></ul></ul><ul><ul><li> M-Pesa has won over 5 million users in less than two years </li></ul></ul>12 % 10 %
  7. 7. Innovation <ul><li>On paperless trade </li></ul><ul><ul><li>In Ethiopia, with the EU CP3 group the time between the initial transmission of data from the exporter to the permission from the importer will be minutes rather than 30 days </li></ul></ul><ul><ul><li>In Senegal, the local company Gainde2000 provides full end-to-end secure paperless customs </li></ul></ul>European importers are going paperless from January 2011  African countries must convert to e-trade to continue exporting to Europe E-trade: The reform not to miss <ul><li>On health requirements of importing countries </li></ul><ul><ul><li>Radio tracking systems for cows in Botswana, Namibia and Kenya avoid the spread of diseases </li></ul></ul>
  8. 8. Innovation E-trade: Sub-Saharan Africa can benefit the most Sub-Saharan Africa is currently the worse in terms of cost and time in trade activities Import and exports Source: World Bank 2009
  9. 9. Innovation E-Government for donor support United Nations E-Government Readiness Indicator (2008) Source: United Nations (2008), “The United Nations E-Government Survey 2008: From E-Government to Connected Governance,” United Nations Press <ul><li>Aid Management Systems (AMS) are found in Ethiopia, Egypt, Rwanda, Sudan, Tanzania and Zambia </li></ul><ul><li>Cape Verde’s government exchanges with citizens are paperless </li></ul><ul><li>South Africa, Kenya and Rwanda implement e-taxation with positive impacts on revenue collection </li></ul>Sub-Saharan Africa is lagging behind in e-governance  governments’ ICT skills , ICT infrastructure access and online presence
  10. 10. Investment Innovation in ICTs enables to reach the poor Africa’s Exponential Growth in Mobile Telephony Source : OECD Development Centre, based on Wireless Intelligence, 2009. Africa is the fastest growing mobile market in the world  Today, 4 out of 10 Africans have a mobile phone line; by 2012 they will 6 out of 10 Source : Wireless Intelligence (www., 08, African Economic Outlook 2009
  11. 11. Innovation Reaching the poor through new business models Trickling down the Global Income Pyramid Postpaid 1.3 billion people with US$1/day 1.4 billion people with US$2/day 1.5 billion people with US$4-40/day 0.8 billion >US$40/day 2 billion mobile users in 2005 3 billion mobile users in 2007 4 billion mobile users in 2008 1.3 billion people with US$4/day Microfinance Prepaid Micropaid Phone Sharing By 2012, there will be 6,1 billion mobile subscribers reaching ever lower income populations Source: New Growth Markets, Nokia Siemens Networks, 2008, Wireless Intelligence, 2009 6.1 billion mobile users in 2012
  12. 12. Innovation Africa pioneer in networks without boundaries Source : African Economic Outlook 2009 Africa is the first continent in the world to implement a service where any user in a foreign country to receive and send calls and messages at local rates Zain MTN Safaricom - Vodacom - MTN Forthcoming Networks without boundaries
  13. 13. Impact of the crisis on ICT investment commitments Source : World Bank, 2009, African Economic Outlook 2009 <ul><li>Like in the burst in 2000-2001, ICT investment will be less affected by the crisis in Africa than other regions </li></ul><ul><li>Big deals in late 2008 and early 2009 </li></ul><ul><li>About half of ICT investments are from the South: Kuwait, China, India, Egypt and South Africa </li></ul><ul><li>User mobile phone consumption still increases in Africa </li></ul>Investment ICTs are resilient to the global financial crisis in Africa With private investments resilient to the crisis, new business models should multiply despite the crisis %
  14. 14. Investment Connecting Africa to the world in 2009-10 Source : World Bank Group 2008, (Steven Song), African Economic Outlook 2009 SAT3 THE MISSING LINK As of March 2009 How to further reach the poor
  15. 15. Investment Connecting Africa to the world in 2009-10 Source : World Bank Group 2008, (Steven Song), African Economic Outlook 2009 MULTIPLE SOLUTIONS AT LEAST ONE LINK How to further reach the poor  Wholesale prices will start decreasing between 4 to 10 times from June 2009!
  16. 16. Investment Connecting Africa to the world in 2009-10 Business climate has room for improvement While it is legitimate to raise taxes through mobile phone revenues in countries with on average 70 % of informal labour force, private investment has not to be neglected for this strategy to be sustainable Contribution of taxation on mobile operators (% of government revenues) Perceived ICT regulatory environment Source: Esselaar, S., Gillwald, A. and C. Stork (2007), “Towards an Africa e-Index: Telecommunications Sector Performance in 16 African Countries,” Research ICT Africa, GSM World, 2006, “Taxation and Growth of Mobile Services in Sub-Saharan Africa”.
  17. 17. Investment Connecting Africa to the world in 2009-10 Will Africa ever be connected to Internet? Urgent need to attract private investment and knowhow to fixed-line operators if Africa is to be connected to high speed internet  many fixed-line operators are close to bankruptcy in Sub-Saharan Africa! In Africa, there are extremely few fixed lines.. % Source: International Telecommunications Union 2009, African Economic Outlook 2009
  18. 18. Policy recommendations 1 The role of governments ICTs in Africa are at the innovation frontier, combining state-of-art technologies with African reality through incremental innovations <ul><li>This has been possible through ICT investment , and still more can be done to </li></ul><ul><li>move forward in delivering value added services to the poorest population : </li></ul><ul><ul><li>Inland high capacity networks need to be supported </li></ul></ul><ul><ul><li>Wholesale price drops have to be passed on to consumers </li></ul></ul><ul><ul><ul><li>Connect Africa Summit </li></ul></ul></ul><ul><ul><li>Private investment and knowhow has to attracted to the fixed-line </li></ul></ul>
  19. 19. Policy recommendations 2 The role of donors and NGOs <ul><ul><li>ICT and Innovation are not fully integrated in broader development strategies: </li></ul></ul><ul><ul><li>Donor targets, Poverty Reduction Strategy Papers </li></ul></ul><ul><ul><li>and Millennium Development Goals </li></ul></ul><ul><li>Donors and NGOs have a key role in.. </li></ul><ul><li>Complementing private initiatives in the provision of access to basic services </li></ul><ul><li>Raising awareness on regulatory bottlenecks to.. </li></ul><ul><ul><li>drop user prices in the short run </li></ul></ul><ul><ul><li>continue attracting private investment </li></ul></ul><ul><ul><li>allow the growth of mobile payments </li></ul></ul><ul><li>Raising awareness on financing bottlenecks to provide service to all , not only to urban population in profitable areas </li></ul>