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How the Rise of the Intangibles Economy is Disrupting Work in Africa

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Albert G. Zeufack - World Bank
ERF 25th Annual Conference
Knowledge, Research Networks & Development Policy

10-12 March, 2019
Kuwait City, Kuwait

Published in: Government & Nonprofit
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How the Rise of the Intangibles Economy is Disrupting Work in Africa

  1. 1. Albert G. Zeufack Chief Economist, Africa Region The World Bank Plenary 2: THE ROLE OF KNOWLEDGE IN THE PROCESS OF INNOVATION IN THE NEW ECONOMY How the Rise of the Intangibles Economy is Disrupting Work in Africa ERF 25th Anniversary Conference, March 10-13 Kuwait
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  3. 3. 2 SOURCE: WDR 2016 team; http://www.internetlivestats.com/one-second/ (As compiled on May 29, 2015)
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  5. 5. From the WDR 2019: The Changing Nature of Work The New Superstar Firms Trade Intangibles 4 Source: Author’s calculation, based on data from Safaricom, KCB Bank Group, AirBnb, Marriot International Inc., Financial Times. New Superstar Firms: digital platforms operating globally, existing in the cloud
  6. 6. …And Their Growth is Exponential 5 Source: Authors’ analyses based on Walmart Annual Reports, Statista.com, NetEase.com
  7. 7. Changing how people work and the terms on which they work  LESS standard long-term contract  MORE short-term work often via online work platforms  BUT the numbers are still small: total freelancer population is 84 million, or less than 3 percent of the global labor force 6
  8. 8. United States and Canada: 4,500 Genetic Counselors • Master’s degree in Genetics • Relevant certification • Empathy • Critical-thinking skills • Decision-making • Communicate complex findings India: 4 million App Developers • Degree in Computer Science • Experience in programming languages and platforms • Keep up-to-date with new technologies • Work effectively as a team member • Analytical, communication and interpersonal skills China: 100,000 Data Labelers • Proficient in internet use, data processing, Microsoft suites • Attention to detail • Willing to learn • Teamwork Changing the nature of skills needed to succeed: Advanced and Socioemotional Skills in demand Source: Ormond et al. 2018; ifeng.com; Business Insider Intelligence, 2016; career websites.
  9. 9. Mazzucato’s Myths • “Innovation is about R&D” There are very few studies which establish that innovation carried out by small or large firms actually improve their growth performance. Macro models of innovation and growth, both shumpeterian and new-growth theory do not have strong micro-foundations. • “We live in a knowledge economy— just look at the patents” A rise in patents’ number does not necessarily reflect a rise in innovation. It often captures change in patent laws and a rise in strategic reasons why patents are used. Stiglitz: “IPRs: A social Construct?” 8
  10. 10. Maloney’s Paradox • High returns but low investments in developing countries; extensive market failures requiring higher capability governments, but low capacity governments… • What to do about it? 1. Avoid R&D Fundamentalism and focus on complementarities 2. Building firms’ capabilities 3. Building government capabilities to manage innovation 9
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  12. 12. …. It’s Already Happening! How Intangibles (computerized information, innovative property, economic competencies) are disrupting work in Agriculture and Health in Africa
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  14. 14. The end of Farming as usual? •In Nigeria and Kenya, HELLO TRACTOR; 22,000 farmers served to date, with reported 200% increase in yields; •e-Agriculture extension services: more than 1.2 million across the continent now have access to best farming practices from videos on their cell phones. •Blockchain and rural finance and supply chain management 13
  15. 15. Example 1: SoilCares Scanner 14
  16. 16. SoilCares Scanner 15
  17. 17. Example 2: Hello Tractor 16
  18. 18. Examples: Hello Tractor 17
  19. 19. Examples: Hello Tractor 18
  20. 20. Examples: Hello Tractor 19
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  22. 22. Potential impact of disruptive technologies in the AFS by 2030 Disrupting the Agriculture and Food System in Africa Source: WEF 2018. Innovation with a purpose: The role of technology innovation in accelerating food systems transformation
  23. 23. Fast growing DT Agri- entrepreneurs in Africa PromotingValueChain Linkages CreatingEffectiveProduction Systems Internet of Things and Smart Sensors Mobile Service Delivery Big Data and Advanced Analytics Precision Agricultur e Biological-based Crop Protection and Micronutrients for Soil Management Renewable Energy Generation and Storage for Access to Electricity Drone Optimize d- Input Acre Africa Agritech AgroSpaces Apollo Agriculture Farmcrowdy HelloTractor ICT4Dev Kilimo Salama M-Farm Ojay Greene Plan-a-head Sokopepe Institute for Grape and Wine Sciences Aerobotics Aerobotics DroneScan Syecomp InteliSeed AgriProtein Real IPM Wanda Organic Futurepump Illuminum Greenhouses SunCulture Thermogenn Wakati Zenvu s ThirdEye UjuziKilim oo AfriSoft AgroCenta Esoko-Tulaa Farmerline iProcure Kitovu Mobbisurance Oradian Pula Twiga Food WeFarm
  24. 24. In the health industry, Rwanda is reaping the benefits of the digital dividend. The government formed a partnership with Zipline in October 2016 to deliver blood (for transfusions) and vaccines to hospitals and clinics via drones in a timely manner. Over 11 million Rwandans have access to health care not only in its live form but also in digital form. Babylon (a British telemedicine firm) along with the ministries of health, youth, and ICT, launched a mobile-based healthcare scheme. This service provides access to high quality healthcare by mobile phone, including cutting edge artificial intelligence symptom checking and live phone consultations with trained nurses and doctors. Prescriptions can also be sent to the patient’s phone. Disrupting Health Care in Rwanda
  25. 25. WDR 2019 Africa Companion Report: A Research Agenda • Technology as a potential enabler of the future of work in African countries • The challenges and productivity potential of informal enterprises. the adoption of low-skill-biased digital technologies complementary to less sophisticated workers in African countries offers the potential of a poverty-reducing trajectory by enabling low-skilled workers to learn and perform higher-skilled tasks, increasing incomes of informal workers, and creating more job opportunities. • The human capital challenges and productivity potential of a rapidly growing labor force. Digital technologies can compensate for lower skills and be one vehicle (together with “analog complements”) for boosting human capital through their impact especially on the quality of education through schooling and learning by working as well as by supporting better health outcomes, including avoiding stunting and improving child and adult survival. • Potential of risk-sharing social protection policies. DT can be leveraged to increase efficiency, transparency and accountability in tax administration and business support policies to provide a comprehensive set of risk-sharing policies that guarantee a minimum level of support for the poorest. 24
  26. 26. THANK YOU 25
  27. 27. • Innovation can be defined as the ability to use knowledge to develop and apply new ideas that result in changes in the production and organizational structure of the firm. • Schumpeter (1934) defined several of these applications that qualify as innovation: 1. Introduction of a new product or modifications to an existing product 2. A new process or technology in an industry 3. The discovery of a new market 4. Development of new sources of supply of inputs and raw materials 5. Changes in industrial organization 26
  28. 28. Innovation Paradox • First, avoid R&D Fundamentalism. The scope of the NIS in developing economies must be larger and include everything that affects the accumulation of all types of capital—physical, human, and knowledge—and their supporting markets. What looks like an innovation problem, such as a low rate of investment in R&D, may reflect barriers to accumulating other factors, including physical and human capital. Although R&D is an important input for innovation, it requires a set of capabilities that are unlikely to be prevalent in developing countries and its promotion cannot be at the expense of the other investments in the capabilities escalator. • Second, building firms’ capabilities. Firm managerial and technological capabilities are a central complementarity to narrowly defined innovation expenditures, and their cultivation is critical to fomenting a continual process of technological adaptation and quality upgrading. This implies a rebalancing of policy priorities toward management and technology extension instruments and away from a focus mostly or exclusively on promoting R&D. • Third, building government capabilities to manage innovation. the complexity and problems in constructing a functional NIS and building private sector capability are greater in developing countries, whereas government capabilities to manage them are weaker. Innovation policy thus needs an honest balancing of capabilities with tasks, which requires working on a selective set of issues rather than trying to import a full set of institutions and policies from elsewhere. 27
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