Current Situation, Opportunities and Challenges
The African Union launched the Africa Digital Transformation Strategy earlier in the year. One of the objective of the strategy is to consolidate the African market into a Digital Single Market by 2030 where free movement of persons, services and capital is ensured and individuals and businesses can seamlessly access and engage in online activities in line with Africa’s Continental Free Trade Area (AfCFTA).
Africa is generally a consumer market. It is home to 1.2 billion consumers today with a potential to grow to 1.7 billion by 2030. When the rest of the world looks at Africa they see a huge consumer potential, yet Africans still run to the rest of the world for basic commodities that can be produced in our localities.
President Uhuru Kenyatta announced the Buy Kenya Build Kenya policy when announcing the 8-point economic stimulus programme a couple of days ago. He has led by example through wearing the colorful Kenyan-made shirts from Rivatex Ltd. For way too long, Africa has been an importer of second hand clothes, yet we produce some of the highest quality fabric within the continent but we do not sell to each other. Rwanda is challenging the status quo in the apparel industry and the gains are visible.
Reflecting on these realities, the African market has a lot to gain through adoption of Digital Single Market by 2030 or even earlier. The decentralization of the African market system through Digital Single Market allows buyers and sellers to deal with each other using digital technology. When the digital infrastructure is African owned and logistics are right, Africa will be a continent to watch.
China developed their own digital tools and consolidated their digital markets way early. No wonder the rest of the world is running to them, think of Alibaba and other Chinese e-commerce sites. China uses weChat as a social media and financial tool; one can actually pay for their groceries using weChat. They abandoned Facebook, WhatsApp and all other American social media companies to create their own. They are independent in transactions and digital infrastructure; they do not have to rely on others to get their products and services moving, what a big lesson for Africa and a challenge to its young innovators?
Looking at Kenya, we have the benefit of a devolved system of governance. The 47 counties can be viewed as individual or consolidated regional economic blocks; we have a chance to scale up domestic trade and achieve more. When Kitui produces its apparel and Muranga adds value to its Avocados and Mangoes, then the two counties can meet on an e-Commerce platform and do business with each other. The impact of domestic market consolidation is creation of jobs not just in the counties where production happens but also within the value chain.
Thinking about the digital economy, the Kenyan government has been hasty in proposing taxes for this young sector. If we compare Kenya with other developed countries, we can confidently say, we are strangling a baby even before she knows how to breastfeed. Taxes on digital marketplaces are premature and the government should allow the digital economy to grow without additional constraints that our people are already facing in the sector.
Some of the notable constraints in the digital sector include lack of domestic investor appetite for locally made tech solutions as well as weak patent legislation. Many of our young innovators are asked 100 questions by local potential investors yet a similar idea would be funded on second pitch in Silicon Valley. Our Kenyan billionaires and millionaires still believe in the traditional investment models, which may not serve the needs of the new generation, or even the generation of businesses, that will emerge during and after COVID19 crisis.
Immediate Business Opportunities to Explore
Kenya and most African countries suffered the worst locust invasion in decades. This affected food production in most countries and people need to eat. We also lose a large proportion of our agricultural produce through post-harvest losses. While this sounds like a problem, we have an opportunity to add value to our produce before we release them to the market.
For instance, a banana that would have fetched 10 shillings in a local market is potentially able to fetch 100 shillings in the same market if it is processed into banana powder or banana chips. County Governments can collaborate with local investors and farmers to make this happen.
Additionally, we have a growing population of middle class that want’s convenience in how they consume their agricultural produce. They are happy to receive their eggs, milk, sukumawiki, e.t.c from the convenience of a single internet transaction. Better still, if there is a way of breaking the eggs and storing in a bottle so that a middle class consumer does not have to go through the struggle of breaking an eggshell.
The logistics of the latter takes me to the next business opportunity.
E-commerce entails business transactions online. There are three main opportunities in this sector. First, for a vegetables producer in Murang’a to meet the needs of a consumer in Nairobi, they need an online or digital transaction platform. As earlier mentioned, we need to encourage growth of Kenyan or African owned online marketplaces. It is the only way to create jobs for our people and ensure the wealth benefits our economies.
Secondly, a vegetable producer in Murang’a may not harvest and deliver her produce the same day. Therefore, there is an opportunity for a warehouse owner in Thika town to create space for Murang’a farmers to store their produce safely and act as a reliable distribution point to various consumers within Nairobi Metropolis. For those who have closed their industries, they could repurpose their buildings to serve this need.
Thirdly, E-commerce entail financial transactions. For way too long, we have relied on MPESA and other banking products to pay for services. However, I would challenge our young innovators to think of more payment options and a rewards system for loyal customers. It is happening in North America and Europe. The more payment options we have, the more jobs we create for our people and the better for the economy.
Lastly, there is a huge e-commerce potential for people who can do things with their hands. By this I mean, people who did technical courses such as dressmaking, tailoring, bakery, welding, furniture making…mention it. If we master what online market platforms works best in our localities, we have a chance to scale and widen the business opportunities of these hardworking people in the traditionally called Juakali sector.
iii) Gig Economy
If we are to create opportunities for young Kenyans and people in Juakali sector, we have to embrace the Gig Economy. Kenyans have a culture of doing errands and small tasks on their own even when they have the ability to pay someone to do it for them. Perhaps at a lesser opportunity cost. For instance, a busy-employed-family person may spend many hours ironing his clothes or cleaning his house and deny his family quality time, whereas, he would have delegated the ironing role to a young person in the neighborhood and paid them for the period of engagement thus minimizing the fangs of unemployment.
Equally, a busy businessperson in Nairobi may spend late hours balancing company accounts whereas such a task could create a job for a young Kenyan in Busia as long as there is a virtual business platform where that young person can work. One of the Kenyan innovation www.startupsuite.app is helping small businesses to manage their operations from a single online & shared portal, such that people do not have to meet for work to get done.
iv) Knowledge Economy
Kenya is not short of bright people yet we consume most of our knowledge from other jurisdictions. COVID19 presents an opportunity for local researchers and knowledge generators, including indigenous knowledge to develop digital courses and deliver through livestreaming or webinar services.
We acknowledge that most of the livestreaming and webinar service providers are foreign firms. This is a chance for Kenyan youth to move with speed to develop online softwares and affordable online teaching platforms to serve the needs of Kenyan and African market.
Those who want to serve the knowledge economy at a lower scale, can serve in the support activities such as graphic design, web-development (coding and user-interface designs) and digital marketing.
v) Circular Economy
As some of you know, E-commerce entails lots of packaging and most of the packaging materials are recyclable. Therefore, I see an opportunity for Kenyans to engage in environmentally responsible business ventures.
For instance, if I deliver a TV to your home today, the TV packaging can be re-used for another delivery. The systems of how one can make money from it can be benchmarked from one innovation that I co-developed in Denmark, learn more via this link https://unleash.org/solutions/birdeye/
Online learning and Digital divide – How do we bridge the gap?
While the wind of optimism project what the internet or the digital sector can do for us, we have to appreciate the infrastructural challenges within Africa. 51 percent of Africa does not have reliable electricity connection. Without energy, we cannot talk about digital. However, we should soldier on because the rest of the world is already teaching their children online and onboarding their people into the digital economy. We should build our competence at all costs.
Africa and Kenya in particular has vast renewable resources in solar, wind and geothermal energy. Today, I see an opportunity for Kenyans to make solar powered digital products to serve the needs of the yet to be unlocked digital economy.
Additionally, I see an opportunity where we can convert community halls in each county into digital learning hubs. The cost of investment is way preferable than the cost of dramas that politicians continue to serve us every day.
Equally, banks need to move with speed to design loan products that allow low-income earners to own digital devices. The way we developed loans for farm inputs many years ago should inform the process of owning devices like laptops and smart phones.
The President has done a good job in laying visionary agendas; however, the agendas of the future will make more sense if he embraces co-generational leadership. He should engage the energy of the youth in decision-making, not just at cabinet-level but also in all state decision making structures. A collaborative working relationship will help him look into the future with more clarity and know where to put the country’s investments. Furthermore, post-COVID plans belong to the future and it is pragmatic to lay a firm foundation today.