African economy: the limits of ‘leapfrogging’

Kotiogo Ng’usilo vividly remembers the first time he saw a car. It was the 1950s and Mr Ng’usilo, a hunter-gatherer from the Ogiek tribe in Kenya’s Mau forest, thought it was a “moving house”. 

These days, at 86, though he still tries to preserve a hunter-gatherer lifestyle, foraging for honey and secretly bagging the odd hyrax, he has moved with the times. He wears western clothes, buys food at the market and, like his younger relatives, uses a mobile phone. His story about the old days — which he recounts over sacred honey beer — is interrupted by incessant chirruping, not from birds but handsets bringing news to the forest from the city.

The rapid spread of mobile technology in the developing world — especially in Africa, which has lagged behind most of Asia and Latin America in closing the income gap with the west — has given rise to the theory of “leapfrogging”. This has it that, in the words of a World Bank study, countries can make “a quick jump in economic development” by harnessing technological innovation. 

Some see in the power of technology an almost miraculous potential to solve problems that many governments, particularly in Africa, have failed properly to address; poor health, poor schools, lack of roads, lack of electricity and lack of jobs. Last week Alibaba founder Jack Ma announced a $10m “Netpreneur” prize for young African tech entrepreneurs who, Mr Ma said, were “paving the way for a better future”.

Ban Ki-moon, the former UN secretary-general who will sit on the prize’s advisory board, articulated the huge claims being made of technology to help poor countries catch up — and even overtake — their richer peers. “With the rapid development of the global digital economy and the availability of technology,” he said, “the next century belongs to Africa.”

A stallholder and mobile phone subscriber in Mahiu, Kenya ? Reuters

The term “leapfrogging” is often applied to Africa, though it is also used to describe a path supposedly being charted by India, which is said to have skipped straight to a technology-driven economic model without the intensive manufacturing phase that spurred growth in Japan, South Korea and China. As in Africa, India’s tech entrepreneurs are said to be succeeding where the government has failed. The author Gurcharan Das has said India grows at night “when the government sleeps”.

The spread of mobile and digital technology is seen as the key to leapfrogging. According to Miles Morland, a veteran investor in Africa, Nigeria in 2001 had 100,000 working landlines for a population then around 140m. When in that year, MTN, a South African telecoms company, bid $285m for a mobile operating licence, it estimated that no more than 15m Nigerians would ever own a mobile phone. Today, the country has 162m subscribers, according to Jumia, an online retailer.

In sub-Saharan Africa as a whole, GSMA Intelligence estimates there were 444m unique mobile subscribers in 2017, a penetration rate of 44 per cent. That compares with a global average of 66 per cent, though in countries like South Africa and Nigeria, where nearly nine in 10 people subscribe, mobile phones are as common as in the US, according to Pew Research.

Although mobile phone sales have slowed, many of the 50 countries in sub-Saharan Africa are expected gradually to close the gap on the rest of the world as handsets become more affordable. In Ethiopia, Transsion Holdings, a Chinese company, is already manufacturing handsets costing as little as $10 in an industrial park outside Addis Ababa.

“Access to mobile phones is now virtually ubiquitous,” says Precious Lunga, a Zimbabwean neuroscientist who founded Baobab Circle, a health tech company that uses artificial intelligence to give consultations to patients in Kenya and Zimbabwe. “There are places where there’s still no running water, but you can stream a video,” she says.

The spread of smartphones, which count for a third of all handsets in Africa, opens up the transformative possibilities of mobile technology still further, say technology advocates.

In teeming cities such as Lagos in Nigeria or Dar es Salaam in Tanzania, both among the fastest growing in the world, a slice of the urban elite is using ride-hailing apps such as Uber and Taxify and ordering takeaway food and goods online. In Ivory Coast, Standard Chartered has launched its first digital-only retail bank, saying it will use the west African country as a testing ground for digital services worldwide.

Even more important for the leapfrogging argument is the impact that mobile technology is having on the countryside, where six of every 10 Africans live. Starting in Kenya, with the 2007 launch of Mpesa — Safaricom’s mobile money transfer and payment service— much of Africa is experiencing a revolution in financial inclusion. Tens of millions of previously unbanked people like Mr Ng’usilo can now transfer money to relatives or pay for goods by pressing a few buttons on their phone.

The Kenya-born Harvard Kennedy scholar Calestous Juma

“The mobile handset in the hands of an ordinary African has become the symbol of leapfrogging,” Calestous Juma, the Kenya-born former chair of the innovation for economic development executive programme at Harvard’s Kennedy School, wrote shortly before he died last year. “The mobile revolution has given hope to Africans that they too can be dynamic and innovative players in the global economy.”

The spread of mobile money — now used by an estimated 690m people, of which half are African, according to GSMA — forms the digital backbone for a host of other services. In cities and towns, small businesses can advertise online and collect payments by phone. In the countryside, there has been a rapid spread of pay-as-you-go solar-generated power in which customers buy electricity with mobile money for as little as 50 cents a day and panels are deactivated remotely if payments stop.

In the village of Sahabevava in north-east Madagascar, several hours down a bone-jolting road to the nearest town and far from the nearest electricity grid, Lydia Soa, a farmer, is the proud owner of a solar panel. It produces enough power to light her home — good for when the children do homework — power a boombox and, of course, recharge her mobile phone.

Africa accounts for 16 per cent of the world’s population but has only 2.8 per cent of its power generation capacity, according to the World Bank. Only 37 per cent of people in sub-Saharan Africa have access to electricity, leaving some 600m in the dark.

However, according to an industry report, 73m households, mostly in African countries, had access to off-grid solar power by 2017. This rapid spread, which has enabled remote parts of Africa to jump from having no electricity straight to green power, is the quintessence of the leapfrogging argument.

If technology can leapfrog landlines, banking and electricity grids, say enthusiasts, surely it can impact all industries and all areas of life.

Keun Lee, professor of economics at Seoul National University, has studied how technological advances can jump-start development. In the late 1990s, he says, South Korea’s Samsung used the shift to digital television technology to overtake Sony, its Japanese rival, which had dominated the analogue market with its Trinitron range of TVs.

Poor road infrastructure south of Nairobi, Kenya. Remote towns and villages in Africa still suffer from poor access ? AFP

“When a new technology or paradigm emerges, everyone starts on the same line, so latecomers are not behind,” he says. “Forerunners are the last to switch to new technologies,” he adds.

Mr Lee, who advises the Rwandan government on its ambitions to make the tiny central African country a digital hub, says technological shifts give the likes of India, Brazil and some African economies the chance to skip ahead. “African countries used to use kerosene as a source for lighting, but they can bypass grid-based electricity and go straight to solar-based electricity.” 

Few would dispute that, either by piggybacking off technologies developed in the west or through their own innovations such as mobile money, countries in Africa and elsewhere can compress development. Britain took 150 years or more, via an industrial revolution that harnessed water, wind and steam power, to move from an agricultural to an advanced economy. Japan achieved the same transition more quickly and countries such as Singapore, Taiwan, South Korea and China have taken just a couple of generations to leap from poverty to middle- or high-income status.

The leapfroggers’ definition of technology tends to focus on the digital revolution and the power of “shiny new apps”, in Ms Lunga’s phrase, to transform society. However, Robert Gordon, an economist at Northwestern University, says the greatest gains in productivity were made not through the internet and mobile phones, but in technologies that we now take for granted: indoor plumbing, roads and steam power.

If Mr Gordon is right, then skipping over those developments and moving straight to what a World Economic Forum conference held in Rwanda in 2016 called the fourth industrial revolution would see Africa miss out on the most significant gains in productivity — and therefore growth. Indeed, for all the hype about leapfrogging, Africa’s growth rates, particularly in per capita terms, have rarely reached the sustained double-digit levels that transformed lives in north-east Asia.

Bill Gates says lots of the technology that is changing lives in Africa was developed in the past. Yet now it can be adopted in some of the remotest places on earth. “By the time what I call ‘technology’ gets out to the village, the community healthcare worker is doing a simple injection, or you’re swallowing the pill or planting the seed,” he says.

Mr Gates, whose Bill & Melinda Gates Foundation contributes billions of dollars to spreading such advances, says the relative ease of dissemination allows countries to catch up faster, particularly in health. “We have things like vaccines that we do a fairly good job at getting out to every child in the world,” he says.

Hans Rosling, the Swedish health expert, cited Vietnam as the “most drastic” example of compressing development. “Vietnam today has the same health as the United States in 1980, and the same economic level as the United States in 1880,” he said.

Some leapfrogging claims smack of “solutionism”, the idea that technology can fix even the most intractable of problems. Africa, according to sceptics, demonstrates equally the limitations of technological solutions in the absence of good government and basic infrastructure.

Developments in agriculture and health show both the potential and the shortcoming of technology.

Take farming, which employs more than half of Africa’s adult population. Across the continent, tech-based solutions are addressing a crisis of low productivity. In Ghana, Cocoa Link delivers information to farmers via text message, dispensing practical advice and market prices. In Kenya, Twiga Foods, an online marketplace, uses technology to disintermediate thousands of wholesalers and ensure a transparent market for farmers. Grant Brooke, Twiga’s chief executive, says the greater certainty provided by mobile-based technology can help farmers raise yields. 

Recharging phones via solar power in South Sudan ? Reuters

Yet flashy apps cannot hide a basic truth. African farming yields are stuck in the 19th century. The majority of farms have no irrigation, no government help with seed or fertiliser, no access to market and hazy ownership rights. Farmers do not bother to grow crops that, in the absence of refrigeration, would rot before they reach the consumer. Only 44 per cent of rural Kenyans and 32 per cent of Ethiopians live within 2km of an all-season road, a metric that former Prime Minister Meles Zenawi considered more critical than GDP in determining development. 

Health is another example. Around the continent, technologists are seeking to solve a basic problem: lack of decent, affordable public healthcare. Babyl Health Rwanda, the subsidiary of Babylon, a UK creator of a “doctor in your pocket” app, offers online consultations to villagers who live miles from the nearest clinic. Ms Lunga, whose Baobab Circle offers tele-consultations to hypertension and diabetes patients, argues that technology can fill a gap. 

“There are not enough doctors, there are not enough nurses,” she says. “That’s when you need AI to leapfrog that.”

Yet, as with agriculture, innovations in healthcare smack of patching up failed systems. Many African governments are too poor, too badly organised or too busy lining their own pockets to provide decent healthcare for their people. If there is leapfrogging in health, it is when Africa’s wealthy skip over their own dilapidated systems to get treatment abroad.

“No one can suggest that great technology is in any way a substitute for good governance,” says Mr Gates. “I certainly don’t think giving everyone computers helps their malaria or solves the problem of the teacher not being there or not having a schoolroom,” he says.

Calestous Juma, the professor who was passionate about the power of technology to transform African lives, argued that leapfrogging cannot overcome bad leadership. He warned of “a faulty narrative that assumes Africa can leap into the service economy without first building a manufacturing base”. 

Although it was right to see “technological innovation as an essential driver of economic growth, and as the key to moving beyond the vagaries of commodity exports”, innovation depended on industrial development to build infrastructure and capacity. “That”, he wrote, “cannot be leapfrogged”.

Sources: FT | JIC Media