COVID-19 is SPEEDING up the digital economy in Africa
By Eric M.K Osiakwan; MP, Chanzo Capital
When I postulated the digital economy in Africa in 2013 as a precursor to becoming a fulltime angel investor and subsequently writing about its KINGS in 2016, it never crossed my mind that in 2020 COVID-19 would be the SPEEDING agent. Who could have predicted COVID-19 except Bill Gates who alluded to a viral outbreak in his 2015 TED talk whiles George Bush and Barack Obama were more accurate in prospecting 2020 as the year? However, none of them envisaged the extent of this epidemic which has pretty much collapsed the capital markets and slowed down the economies of many countries with many of us at home – literally trying to survive the pandemic.
African leaders took the major decision to declare a lockdown and, in some cases, daily curfews for fear of the virus spreading and overwhelming the (in some cases non-existent) healthcare systems. While those decisions have being contested in some cases on the basis that the informal sectors of our economies (that earn a daily wage) are going to suffer the most, the bright side of that decision is the need to go online while in self quarantine. The need to go online was helped by the rapid adoption of smart phones in Africa as a result of the reduction in price and supply of handsets some of which are being locally assembled and manufactured by the like of Mara Phones, etc.
My friend Ben Roberts, Chief Technology and Information Office (CTIO) of Liquid Telecom asked in his article last week “Did corona just kickstart the digital economy in Africa?” – my answer is NO because the digital economy has been in Africa but YES, it is being speeded up in ways that no one would have thought off before. The premise of Ben’s article is the sudden growth in bandwidth that he can see on their network from March 15th, 2020 when these lockdowns came into effect. People are home so off course they would have to commute virtually and so suddenly they would have to purchase more bandwidth. This is helped by the reduction in bandwidth price as a result of the huge investments made by the fiber and satellite providers (FSPs), mobile network operators (MNOs) and internet service providers (ISPs) over the last decade. Some of these operators recently moved to uncapping the provision of broadband and in some cases removing the expiration of prepaid broadband purchase. With the benefit of hindsight, it would seem that the operators got the lockdown memo…☺ – maybe Kenya greenlighting Google loom for 4G was it?
In late 2007/8 I was in Kenya working with some colleagues to launch The East African Marine System (TEAMS @ www.teams.co.ke) when in December the election violence pushed us to the curb but like now one of the unintended consequences of that outbreak was the rapid adoption of Mpesa – a mobile money (MOMO) service that was introduced by Safaricom an MNO. Suddenly everyone in Kenya was transacting using Mpesa because not only was cash not available but mobility was restricted. Fast forward to COVID-19 in 2020 we are all on lockdown so access to cash is limited since mobility is restricted so guess what’s happening on the mobile operator’s networks – a surge in MOMO adoption and use.
My personal experience happened yesterday, I needed to get some groceries from the convenience store in my neighborhood and for the first time I was able to pay with MOMO. Two years ago, the same store demanded that I go withdraw the money from a MOMO agent and come pay with cash for my groceries. While time may account for the change in mindset, coupled with the current situation where people have limited access to cash, the store has no choice than to accept MOMO. I noted in my exchanges with the store owner last night that they even take visa and master card on the point of sale (POS) they have installed – suddenly my local convenience store has gone digital and so is the case in other parts of the continent.
The next step for them is to get their inventory online so I can go online order and have them deliver it to my home (which in this case is walking distance) – that makes them a full fledge e-commerce business. Off course I recommended www.hubtel.com to them to use for their online store because it is one of our portfolio companies and their demand is going through the roof due to COVID-19.
With bandwidth and digital payment sorted, lots of small businesses are going online enabling an escalation of e-commence in ways that were not envisaged before. Even though Jumia’s shares are plummeting with the hit taken by the capital markets, grocery delivery companies like www.zulzi.com are experiencing an escalation of demand for their services to the extent that last week they employed one hundred new shoppers and delivery agents in South Africa. Companies like Sokowatch who just raised $14M and COPIA Global who raised $26M last year are all seeing demand on their network.
On Tuesday March 17th 2020 Ghana’s Minister of Education announced at a press conference that students who are home can use online learning platforms like www.ecampus.com.gh – a portfolio company – their traffic went through the roof. Since then the use of the platform has being on the rise necessitating a ramp up in resources and investment for a startup that has struggled to gain traction. Earlier in the year, we partnered with the African Business Centre for Developing Education (ABCDE) led by former Minister of Education, Dr. Ekwow Spio-Garbrah supported by Vivo Energy Ghana to commence a nationwide e-learning programme aimed at encouraging students in second cycle institutions to explore e-learning options to augment the traditional classroom and textbook learning. As if we knew COVID-19 would necessitate an adoption of our platform nationwide as is the case with other platforms worldwide.
Nyaho Medical Centre the leading private hospital in Ghana (on whose board I serve) moved quickly to establish protocols to screen patients who visit the facility for COVID-19 so they can isolate, test and treat them before local transmission kicks in. While that has been very successful, the on-going fear has been the facility being overwhelmed by imported cases even if we could curb local transmission. Our two year partnership with Clear Space Labs to build Serenity – our digital health platform came in handy as our team launched https://serenity.health/covid19/#About – a COVID-19 online self-assessment chatbot that allows one to take an assessment from home before proceeding to a medical facility if necessary. The uptake has been overwhelming.
Is increased disruption a positive consequence?
This morning I jumped on a catch-up call with my friend and fellow investor Ravinder Sikand of Energy Access Ventures and we discussed some of the elements above and then we came to the crucial question “what do you think is going to change post the epidemic?” In addition to the increased digitization discussed above, he is of the view increased disruption of production would also pickup. This has been seen with the delivery of Personal Protective Equipment (PPE) as well as increased recognition for home grown innovation and cooperation. Some examples include, Kenyan university designed ventilator for local conditions or the Safe Hands program launched by a number of Kenyan corporates. To continue riding this wave, policy is needed to increase competitiveness coupled with more recent technology developments like 3D printing and distributed energy will impact the way we develop and implement outcomes that are less susceptible to supply chain shocks.