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Innovative spirit: How Africa is turning obstacles into opportunities

 

 

As recently as seven years ago, millions of Kenyans were struggling to access basic financial services. Without bank accounts, they were unable to transfer money or receive microcredits. Then, a locally developed mobile payment system called M-Pesa was introduced, allowing people without bank accounts to transfer funds as quickly and easily as sending a text message. Today, more than two-thirds of Kenya’s population use M-Pesa to make and receive payments and an estimated 43 per cent of the country’s GDP flows through the system.
This speedy adoption of mobile payments captures the enterprising spirit of African innovation. It reflects the resourcefulness with which people in Africa find local solutions to local issues. It also shows how Africa’s challenges are opportunities in disguise and how the continent can leapfrog development stages without paying for their replacement. Mobile phones, for example, were rapidly adopted in Africa because of the lack of fixed telecom infrastructure. And solar panels are being adopted faster than in other parts of the world, because kerosene is so expensive that the payback time for investments in solar power is months rather than years.

Africa is also embracing new business models that tap into the vitality of the continent’s communities. Philips, for example, teamed up with Inyenyeri, a Rwandan NGO, to give families access to an innovative cookstove. Crucially, the cookstove is given away for free and families pay for the stove by harvesting twigs, leaves and grass. This biomass is compressed into fuel pellets, half of which are returned to the family for personal use and half of which are sold by the NGO. The cookstove is produced in Africa, is highly energy efficient and, because it is smoke free, it is significantly healthier than other cooking methods.

 

This example proves the power of partnerships, without which many African innovations would not come to fruition. Solar-powered light centers, for example, increase the social activity and productivity of communities by generating light after sundown. These communities, however, are often unable to invest in a light centre, so the roll out of this technology is done through NGOs and governments. Sometimes these light centers are used to power medical equipment such as an ultrasound, or refrigerators that store vaccines. This type of co-operation ensures that innovation generates both financial and social value.

 

For innovation to really succeed in Africa, other factors need to be addressed too. There is a lack of prototyping equipment and workshops, so local innovators depend on Europe or China, making the process costly and cumbersome. And while there are good patent laws in place, there are still too many counterfeit versions of successful products. Also, international firms should source locally and work with local distributors, whenever possible. And governments should focus their development money on stimulating entrepreneurship and innovation.

 

While millions of people still live on less than $2.50 a day in Africa, the continent has the opportunity to leapfrog into a brighter future by creating local solutions for finance, healthcare and energy that could become globally relevant. M-Pesa, for example, has already been rolled out in other African countries, India, Afghanistan and Eastern Europe. Perhaps sooner than we think, African innovations will help the rest of the world to create lasting social and economic value.

Frans van Houten

CEO and Chairman

Dutch-born Frans van Houten started his career at Phillips in 1986 in marketing and sales. He became CEO of Airvision, an in-flight entertainment startup in the United States in 1992, and was appointed Vice President of international sales and operations of Philips’ Kommunikations Industrie in Germany in 1993. In 1996, Frans joined Philips’ Consumer Electronics division, leading the Asia Pacific, Middle East and Africa region from Singapore.

 

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