An era of disruptive innovation

According to the CIA, 25 per cent of the world’s population is under the age of 15. In Uganda, the average age is between 15 and 16. These youths will never know a world where the internet does not exist and many may never use a landline phone. Disruptive innovation is any innovation that creates a new market and usually renders a previous market null and void. Africa is a prime location for this type of innovation and African entrepreneurs are taking advantage of the opportunity. Innovation today In Kenya, M-PESA has become the business case for innovations that show that Africa cannot only innovate but show the ‘developed’ world how to do it. At its core M-PESA allows users to send and receive money through their mobile phones but the Kenyan population transformed this innovation for an entirely new set of uses. Today in Kenya customers use M-PESA to pay bills such as utilities and for groceries as well as pay workers such as maids. The system has become so engrained in the Kenyan economy that in 2013 the Central Bank of Kenya announced that $1.4 billion was transferred each month through M-PESA. That comes to approximately 38 per cent of the nation’s monthly gross domestic product. M-PESA not only helped provide security for many of the ‘unbanked’ population but it also scared many of the traditional banks. People who had little access to bank branches or credit for loans, found another avenue to get bank services. In 2009, two American computer science engineers created a mobile application that allowed people to send text messages over their data networks, rather than via the normal mobile service. Within three years ‘WhatsApp’ had 200 million users around the world. What started as a pet project ignored the immense opportunity for people to communicate via text messages over long distances. In 2014, their total investment, including seed funding from venture capital, was $51 million. Their application now has 50 million active monthly users, 700 million photos are shared each day, and the messaging system handles more than 10 billion messages each day, according The Guardian. Seeing the potential, Facebook acquired the application for $14 billion. Numerous companies have decimated industries and given the world services they didn’t know they needed. Industries previously thought of as essential have simply been overtaken by small start-ups like Netflix (DVD rentals), Amazon (bookstores), and Skype (international phone calls). What this means for Africa Africa has more arable land than any other continent, yet people continue to starve due to drought and lack of food. A recent World Investment Report asserts that ‘the continent is endowed with 733 million hectares of arable land’. As the world’s population continues to grow and its insatiable hunger increases, Africa is in a prime position to innovate new markets in agriculture. Advances in genetically modified foods will allow higher yields, large food produce and immense export opportunities. African youth need to consider that perhaps creating a job is better than having one. One cannot be sure of what the demands of the future will bring, but one can be sure that the current naysayers are nothing more than that, naysayers. Mobile phones exploded on the continent when multilaterals and foreign governments pushed governments to invest in landlines. In Rwanda, in the early-2000s, there existed a mobile innovation called ‘Tuvugane’ where people sold units of calls to passerby. Mobile phone companies soon caught on and lowered their rates. Innovate for the sake of innovating Market competition is pushed by innovation but, more importantly, consumer demand is pushed by accessing options. This will not be a call for a specific innovation but rather a call for all innovation for the sake of innovation. As one of the greatest innovators of recent time, Steve Jobs, said when asked if he did market research before creating the iPad, “None. It’s not the consumers’ job to know what they want.” The writer is an economist based in Copenhagen, Denmark Twitter: @adamkyam

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An era of disruptive innovation