How cloud can power entrepreneurship in Africa

DerekTaken as a whole, the African continent is one of the fastest-growing economies in the world. Averaging 5% growth each year, Africa’s economy has become more market-oriented, with a rapidly growing private sector. But if it is going to continue on this growth path, it is going to have to create jobs at an unprecedented rate.

At the same time, Africa also faces mass urbanisation. The world’s urban population is exploding, growing from 3.5 billion today to perhaps 6.3 billion by 2050. As urbanisation expands, Africa’s cities will need to become centres of economic, social and technological change to meet the needs of this vast body of city-dwellers.

To put not too fine a point on it, the challenges for African governments are immense. They are going to have to get seriously innovative when it comes to service delivery, cut spending in some areas to be able to deliver these services, and increase jobs.

In the face of challenges of this magnitude, it sounds too easy to say that we can fix everything with a dose of technology. Technology alone can’t do that. But we as a continent certainly do have an enormous opportunity to harness technologies like cloud computing, mobility, social media and big data technologies to get cities working better, create a new wave of entrepreneurship and give millions of people the chance to make a living by helping solve these challenges.

The important thing to realise about cloud computing is that it is not only fundamentally changing the way business operates. It is also driving a new wave of job creation opportunities. According to the Economist Intelligence Unit (EIU), the world needs to create more than half a billion jobs for people joining the global workforce by 2020. By harnessing Africa’s natural entrepreneurial spirit – which is alive and well – the cloud could boost small and medium businesses and stimulate job creation.

I’ve said it before, and I’ll say it again: Africa is a Disneyland for entrepreneurs! I firmly believe that the challenges on the continent are massive opportunities for entrepreneurs to create jobs and improve people’s lives. One of the clearest opportunities being created by the cloud is in the technology space, where more than 600 million cellphone-using Africans are hungry for local content, apps and services. Here, the cloud is offering African entrepreneurs immense opportunities to explore new business models and create ‘home-grown’ feature-rich mobile apps, be it for social, finance, investment or business or even sports.

We’re already seeing the rise of a new breed of entrepreneur who is using easily-accessible cloud services to run small businesses that cater directly to the needs of their communities – selling pre-paid electricity and airtime, or running their spaza shop more effectively.

Jeff Weiner, CEO of LinkedIn, says cloud “makes it easier and cheaper than ever for anyone anywhere to be an entrepreneur and to have access to all the best infrastructure of innovation. And despite all of our challenges, it is happening here in America.” Replace the word “America” with “Africa”, and you start to see the potential.

Why is the cloud so good for small business? Simply, it slashes costs out of the process. In the past, if you wanted to start a business, you needed money to hire people, market yourself, and pay for office space. Thanks to cloud computing, you can now get a new venture off the ground for literally a few dollars. Even with patchy broadband access and high data costs, the cloud is providing an easy entry point to markets and platforms for entrepreneurs and small businesses across all sectors.

Cloud also has a real role to play in solving the urbanisation and growth challenges we as a continent face. We’ve already seen how it drives both business agility and IT cost efficiencies for enterprises. The Sand Hill Group estimates that the cloud will save US businesses $625 billion in 5 years, while McKinsey Global Institute forecasted that big data could help US retailers increase operating margins by 60%, reduce product development and assembly costs by up to 50% and increase productivity and profit for any company by 5%. That clearly suggests Africa can use cloud and big data to improve its cost efficiencies in retail and manufacturing to expand consumer markets.

Cash-strapped city managers across Africa are also starting to sit up and take notice of the ways that cloud and big data can help address urbanisation and sustainability challenges. Analysis of traffic congestion data can eliminate causes of accidents and gridlock, as shown by Singapore and the city of Edmonton in Canada. This can save huge amounts of money in lost productivity and fuel costs alone.

It can also enable smart transportation ecosystems to resolve global gridlock. And since growth in the automotive sector creates even more jobs in its supply chains, smart transportation could actually employ new people migrating to cities.

And for cities struggling to keep the lights on, analysis of cloud-based data for smart grid management can determine how to distribute energy resources with on demand pricing based on usage patterns.

We’ve only just begun to scratch the surface of what cloud computing can do in Africa. But I have no doubt that it’s going to play an important role in our future as a continent.

By Derek Kudsee, COO at SAP Africa