Existing Opportunities for Internet-Enabled Development in Africa

By Dan Tuttle, Senior Consultant, Dalberg Global Development Advisors

Existing Opportunities for Internet-Enabled Development in Africa

Access to the Internet propels both business growth and economic development, a fact that has been well documented, most recently in our Impact of the Internet report. Yet conversations on information and communication technologies for development (ICT4D) in Africa frequently focus on SMS programs,mobile money, or the need for better infrastructure. These elements are important, but this limited focus has led many to overlook exciting ways the Internet is transforming Africa now.

The focus on SMS and mobile is unsurprising in light of Africa’s direct-to-mobile phenomenon: the demand for Internet connectivity across Africa is largely being met through low-bandwidth applications on feature phones. Similarly, focusing on infrastructure and other factors that will drive the growth of a robust Internet economy in the long term is justified. There will certainly be significant growth in sub-Saharan Africa as mobile money converges with Internet-enabled pay systems, consumers embrace eCommerce, and the middle class continues to expand. But this will take time. Reliable, inexpensive broadband, for example, remains years away in many countries.

In the meantime, low-bandwidth applications have produced bright spots of impact in development sectors – impact that could be scaled up by donors and investors today. A recent report by Dalberg in collaboration with Google, the Impact of the Internet in Africa, discusses the impact of existing programs and where donors and investors can amplify success. People hoping to capitalize on Internet connectivity in Africa for development or business need not wait for widespread broadband or consumer adoption of e-commerce. Based on an analysis of surveys of 1,300 organizations and interviews with 75 experts in Ghana, Kenya, Nigeria, and Senegal, the Impact of the Internet report identifies several examples of small-scale solutions ripe for expansion now.

In the seven sectors examined – agriculture, education and labor, energy, financial inclusion, governance, health, and small and medium enterprise – the current low-bandwidth applications are often pilots driven by donors; few business models have been scaled. These pilots supply opportunities, particularly for the business-minded, to build on and expand the reach of ideas that work.

One striking opportunity is the potential cost savings to businesses from implementing online enterprise systems (Internet-enabled back end databases). These systems are common in IT departments across the United States, but few donors invest in bringing that cost efficiency to the developing world. Perhaps servers are not flashy investments, or perhaps funders are not willing to build the computing skills required across an entire organization to switch from paper-based to computer-based systems. Our findings in The Impact of the Internet in Africa suggest they would be wise to reconsider.

Take Kenya’s National Health Insurance Fund, which digitized its claims processing: administrative costs nearly halved, and processing accelerated by a factor of six. Its administrative costs are now approximately one-third of collections, compared to 60% of collections in 2006. That frees a lot of money across its 31 branches and 45 satellite offices to be used on primary care.

Other applications provide low-bandwidth services with obvious development impact. In Nigeria, nearly one in four people are unemployed in a formal workforce of 60 million people. Jobberman, started in 2009, is a job site that provides job listings and recruitment services to companies and CV and career advice for job seekers. It has 700,000 registered users and gets 9 million hits per month, having filled 50% of the 80,000 jobs that have listed on its site while freeing up companies to focus on doing business rather than endlessly recruiting. This solution is perfect for a country with lots of talent and a low share of formal employment, where search costs are a significant burden on both companies and job seekers.

Similarly attractive companies emerged in agriculture, where an Internet-linked supply chain management service from Virtual City both improved farmer income by ten percent and decreased shrinkage along food supply chains.

Technology incubators and talented young programmers are present in each of the countries studied (Ghana, Kenya, Nigeria, and Senegal), suggesting that this trend toward innovation for development will continue. Open data from governments will provide additional fodder for this ecosystem. Moreover, investors are beginning to recognize that these small companies are providing heavily demanded services in both urban and rural areas. After proving its model, Virtual City received a capital infusion from the Acumen Fund and Nokia. Jobberman has also received $1.8 million from Tiger Global.

The Impact of the Internet in Africa report indicates that the Internet’s social impact is being realized and is ready for expansion. Donors should consider investments in Internet-enabled efficiency, while investors should continue searching for Internet-enabled pilot programs that could, with a little capital and the right business model, become growing companies that sustainably and positively impact the lives of the world’s poor.

Dan Tuttle is a Senior Consultant at Dalberg Global Development Advisors, and a member of the team from Dalberg and Dalberg Research that produced the Impact of the Internet report. For more on the Impact of the Internet in Africa, including usage trends, case studies, country profiles, and sector-by-sector analyses, we encourage you to read the full report.

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