NDEMO: Digital platforms, copycat solutions create jobs, money-making opportunities - Daily Nation

Digital platforms, copycat solutions create jobs, money-making opportunities

Monday April 16 2018

By BITANGE NDEMO
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Last week I had the privilege of attending the Euromoney East African Conference held at the Radisson Blu. The theme of the conference was “Fostering a thriving fintech ecosystem”.

I wasn’t among the invited guests but due to exigencies of work, ICT Cabinet Secretary Joseph Mucheru, who was scheduled to give a keynote interview, asked me to represent him instead.

As such I came in at the tail end of the conference. The ushers took me straight to the front seat and introduced me to the interviewer, Christopher Garnett, senior external adviser for the Euromoney Conferences.

I had never met Mr Garnett, a robust and extemporaneous British conferences denizen.

We couldn’t talk loudly, since there was a session going on, but through whispers, we exchanged pleasantries.

He was kind enough to share the list of questions he was to ask me.

GREATER PRODUCTIVITY

Come question time, he did not follow the script. For a moment, he threw me off balance by his guerrilla questions but I managed to gather my thoughts to respond to his impromptu questions as I acclimatised to what was turning out to be an adversarial interaction.

Once he was through with his random questions on entrepreneurship, he eyeballed the question paper then posed: How important is digital, information and communication technology innovation?

I responded by explaining how ICTs had brought greater productivity and inclusivity. He was unconvinced, insisting instead that I explain exactly the impact especially on employment.

My attempt to elaborate how platforms like Airbnb and Uber have created jobs didn’t do any good as he quickly dismissed them as exploitative and paying peanuts to locals.

Before I could comprehensively respond, he’d already started to ask his next question. It was obvious to me that he wanted to have the last word on this.

Like many “do-good” economists who have obviously read books such as Lords of Poverty, Confessions of an Economic Hit Man, Disaster Capitalism, and The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World, he had made wrong assumptions about how global platforms exploit international workers while taking huge profits home.

THE BIG PICTURE

This neoliberal economic thought tends to put more emphasis on individual liberties and sometimes narrowly defines success in a manner that ignores the big picture.

Whilst the Uber taxi drivers may be earning less-than-stellar profits, multiple other benefits accrue to countries, including Uber-like copycat solutions applied to other transport modes like motor bikes or trucks that, though not as big, employ a sizeable number of employees with profits remaining in the country.

In Kenya, for example, the concept behind Uber has been extended to fast-growing Sendy for motorbikes and Lorry for trucks.

Even the “exploited” worker benefits too from the emerging models of lending based on credit scoring. Many of the Chap Chap Uber drivers had never owned a vehicle before and no bank would have considered them for credit.

But these new technology-driven lending models have enabled greater inclusivity and productivity for their customers.

Prior to the e-hailing taxi services, a taxi could be literary metres away from the customer but the two would never meet. Many taxi customers kept contact numbers of the taxis they knew.

This model was expensive and unproductive as customers waited for hours for their taxi to arrive.

Similarly, Airbnb has enabled the creation of new jobs that, though menial, are better than doing nothing. This concept too is stimulating development of new applications. Multiple medium-sized fintechs exist in Kenya employing thousands of people.

Since I did not have enough time to elaborate on the importance of ICT innovation at the conference, let me elaborate more in this column.

Many of the newly industrialised economies of Asia grew rapidly against the backdrop of reverse engineering. Eventually, some of them gained the confidence to conduct research and innovate on their own.

Economists, however, in their evaluation of these global shared economy models dismiss them, just as Garnett did.

CONTINENTAL DIGITAL MARKET

In his second question, Garnett wanted me to shed some light on Smart Africa and a single digital market of over a billion people, an initiative that was conceived in Rwanda to specifically put ICT at the centre of the continent’s socioeconomic development agenda, improve access to ICT, especially broadband, improve accountability, leverage ICTs to create efficiency and openness, put the private sector first, and leverage ICT to promote sustainable development.

I thought he wanted a general policy response but he pushed me to provide examples of progress and identify the KPI benchmarks on the road to this goal.

I could easily have given all the KPIs for Kenya but his question was about Africa, a tricky question that forced me to admit that many countries are still struggling to realise some of these objectives. Garnett is not new to Africa, as I learnt later. He perhaps knows well that some of Africa’s continent-wide initiatives fail.

But it was a question that didn’t surprise me, as I have encountered some know-it-alls who tend to regard Africa as a single country.

Some countries with internal strife have not even started to plan and some have deliberately frustrated the expansion of broadband for fear that it enables people to undermine the government.

Notable suspects like South Africa, Kenya, Rwanda, Ghana and Nigeria have made tremendous progress in not just policy but to actualise some of these goals on the ground.

The Transform Africa Summit is to review the status of this initiative in Kigali on May 7-10 under the theme “Accelerating Africa’s Single Digital Market”.

TECH FIRMS' DOMINANCE

His next question centred on the growing dominance of tech companies in terms of market capitalisation. For example, he noted before the 2008 financial crisis, only one tech company was among the top 10.

Today he said there are seven highly valued tech companies in the global economy among the top 10 largest organisations, representing 80 per cent of those companies' combined market cap.

In my response, I said that this was bound to happen considering that the fourth industrial revolution will largely be driven by digital transformation and these top companies are readying themselves to drive the future with emerging technologies such as blockchain, artificial intelligence, Internet of Things and many others that will facilitate unprecedented gains in productivity.

Our minds seemed to have converged on this but we sharply differed in his last question.

He wanted to hear my views on the following: Q1/2018 has seen a confluence of data concerns, regulatory threats, a stock market wobble or two, and a pedestrian fatality involving a driverless car. Is this random background noise or an inflexion point in acceptance of the tech revolution?

Without a doubt, I responded that this was all noise, explaining that no entrepreneurial idea comes fully formed. Virtually all the inventions go through iterations before we get it right if we ever.

As part of the my strategy to avoid such questions as data concerns that have made Facebook founder Zuckerberg to appear before the US Congress, I wavered into explaining the development of Ford cars in their formative stages.

Before Ford got to Model T that seemed to work efficiently, many people had died in some of the contraptions they had created but the company managers were resilient.

As such, I said, we must give time for driverless cars to function, as I will be delighted to read a newspaper on my way to work as the car finds its way to my workplace.

LIFELONG LEARNING

He quickly cut me short and said I should employ a driver. I wanted to tell him that such populist statements hinder innovation but I didn’t. But I now realise that he could very well be an unwitting ideologue for atavism.

Technology has always created more jobs than the ones it destroys. The difference is that humanity has to embrace lifelong learning to adjust to environmental changes.

It must not be cast in stone that you will always be a lawyer if you trained as one.

If technology creates opportunities for environmental experts, then we need to retrain and align ourselves with opportunities that exist. After all horse carriage owners resisted the advent of motor vehicles for more than 20 years until cities began to ban them because of manure and dead animals left in the road.

I enjoyed the interview and I wish we had more time to respond even to the more controversial issues of our time.

The writer is an associate professor at the University of Nairobi’s School of Business. Twitter: @bantigito