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Megatrends are transforming the African economy

March 26, 2014 • Opinion, Top Stories

We live in a networked world in which, like it or not, we are all connected to communities that keep us informed and can help us learn, share and consume more efficiently. Organisations are now inextricably tied into a networked economy, as they are connected more than ever before to digital communities of existing – as well as potential – sellers, buyers and suppliers.

Derek Kudsee, COO of SAP Africa (image: file)

Derek Kudsee, COO of SAP Africa (image: file)

The unrelenting march towards this connected, inter-enterprise operating model is being enabled and perpetuated by specific technology megatrends which include mobility, the convergence of user-friendly enterprise applications, the burgeoning presence and reach of social media channels and cloud computing. The latter is particularly pertinent in Africa as the connected business community in the cloud is able to drive down the cost of doing business, expose local business to global customers and enable small business and entrepreneurship by removing traditional barriers to customer acquisition (no marketing costs; cheap procurement and order fulfillment as well as possibilities for social brand development that can compete with the largest brands).

During 2014 and beyond, megatrends such as these will clearly have a transformative impact on the global economy in general as well as Africa’s economy in particular. Derek Kudsee, COO of SAP Africa, highlighted some of these trends:

Youth playing pivotal role in Africa’s future

The youth of the African continent are playing a key role in the economy of the region, as half of Africa’s population will be under 24 years old by 2050. Young people are the engine driving society’s adoption of technology and today’s youth are the most connected generation in humanity’s history. A vast amount of the modern technologies and communication tools that have become commonplace today, the likes of Facebook (started life on the Harvard University campus), Mxit, BBM and file-sharing websites (made popular by sites such as Napster)are the results of innumerable social interactions between young people..

Along with the injection of huge numbers of youthful workers into the regional economy, comes the growth and gradual stabilisation of Africa’s middle class. By 2030, Africa’s new middle class will number more than 300 million people, translating into huge spending potential, as well big potential for business ideas that. Effectively leveraged this can shape the continent’s future according to Kudsee.

The power of ever-increasing mobility and social networking

Also destined for yet another boom on the continent is mobile business, since there will be an estimated one billion mobile devices in Africa by 2016. This steep rise in mobility adoption (there are more mobile devices than toothbrushes on the continent with many Africans owning two to three devices) also has a marked effect on the adoption rates of social networking sites. The clear majority of Twitter users on the African continent (68%) will be relying on the popular microblog platform as their primary source of national news, for instance.

Popular networks such as Twitter and Facebook, which many people use to run their personal and social lives, have a number of things in common: They are all built on a shared cloud-based technology infrastructure, meaning that there is no need to download software or worry about upgrades, as users simply require a web-enabled device to access a shared experience from anywhere where there is connectivity.

In addition, these networks are all generating powerful communities of peers, merchants, financial institutions and experts with whom people can efficiently connect, learn and engage. Lastly, these networks all deliver unique capabilities that take the form of best practices or class-leading experiences such as Amazon’s one-click shopping experience or Google search.

These technologies are reshaping the world we live in, changing the manner in which we collaborate, work, educate ourselves (Regenesys Business School), make purchases (Kalahari.com) and transfer money, especially to unbanked individuals through platforms such as the mobile money solution M-Pesa. Simply put, technology will be a key determining factor in how society will be organised in future.

The power of technology was showcased by unstoppable social networks in the Arab Spring last year. Thanks to the mass outreach abilities and speed of communication networks, social activists gained a larger degree of agility during their demonstrations and other street operations. They were also able to organise, debate, plan, broadcast and collaborate online at levels that were impossible a few years previously.

Businesses need to adapt to capitalise on new business opportunities

Enterprising, forward-thinking businesses are moving adroitly to capitalise upon these opportunities enabled by network dynamics, because they recognize they can no longer be competitive on their own. For instance, the arrival of in-memory technology systems such as SAP’s HANA platform dramatically slashes the time and cost of data processing. Furthermore, technologies like this have made it possible to perform predictive analysis on ever-increasing data volumes in real time, allowing companies to identify new business opportunities or illuminate previously hidden risks.

This trend is very much playing out on the African continent. As a result, these organisations are leaning out their inventories, reducing costly infrastructure, outsourcing processes such as Mobile Business Intelligence and predictive analytics and have also stretched their supply chains. These factors contribute to making these organisations increasingly dependent upon their external partners. In this context, the sharing of information and co-coordinating processes with these partners has become more critical than ever.

“There’s no getting away from the networked economy. A business cannot achieve its cost, revenue and cash flow goals in isolation without being able to efficiently engage with customers and collaborate with their supply chain. Many companies are beginning to recognise that they can gain powerful new insights and enable new processes by being connected to a community of their partners and peers. Benefits like these are unattainable with isolated on-premise applications and low-scale point-to-point integration models,” concluded Kudsee.

Derek Kudsee, COO of SAP Africa

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