Eric Schmidt, Google’s executive chairman and former CEO, recently toured sub-Saharan. Given the often unfair and inaccurate portrayal of Africa in the Western media, a lot of what he experienced came as a surprise to him. Richard Seymour provide the gist of his observations on the continent.
Google and companies like it are remarkable in that they have turned centuries of business wisdom on its head in little more than a decade. Most businesses need a viable model before approaching investors. Google, Facebook and Twitter, to take the three most striking examples, are all businesses who established themselves as industry leaders before they had a business model to work from. It was recently announced that Google’s revenues for 2012 reached $50bn for the first time. Astonishing growth for a company in only its 15th year. Its success has been built on the willingness to innovate, to try new ideas and to not be afraid to fail.
Through TomorrowVentures, a venture capital firm he founded, Schmidt has already invested in a mobile app platform for Africa that expands the capabilities of low-end smartphones and standard feature phones, that are limited to calls and texts. Schmidt was clear on the problems facing the region but left feeling positive, and pleasantly surprised, about much of what he saw. “After a week of business meetings in the cities of sub-Saharan Africa, we can surely say three things are new for the continent,” said Schmidt.
“The leadership in Africa from the 1970s and 1980 is in decline, replaced by younger and more democratic leaders. A huge youth demographic boom is under way, with a majority of the population under 25, or even under 20. Mobile phones are everywhere, and the internet in Africa will be primarily a mobile one.” Of course, the picture was varied, but where Schmidt saw problems, he saw communication technology’s ability to solve them
Free flow of information
Modern communications technology has had a startling revolutionary impact on the societies it has touched. The democratising of information has given rise to what has been called the Google Generation: a stratum of young people who have grown up with technology that their parents are still often uncertain with.
Many states react with suspicion to this change and try to restrict access to the internet. Schmidt, however, clearly believes that a free internet benefits the state in the long run.
“Connectivity is much more important for security than many analysts think,” advises Schmidt. “Societies who are not connected lack opposing viewpoints and are much more subject to easy radicalisation. The virtue of having more connectivity is that people will have more choices, and more choices lead to a better understanding of the value of going to school, the need to treat women equally, the choice to not demonise others, etc.” In mentioning women, he hit upon a human resource that all evidence shows needs to be used if a society as a whole is to progress. Social networks are sometimes derided for the banality of the content regularly posted on them. What is less appreciated is that Google, Facebook, Twitter and other services have continued the liberating force of the printing press and made the free flow of ideas an intuitive behaviour in humans – a simple and, at the point of use, free matter.
It is thought that one reason the European industrial revolution took place in Britain is that ideas were allowed to move freely, whereas in France, the state sought to control which ideas became eligible for exploitation – a long, bureaucratic process which stifled innovation. So any technology that frees the entrepreneurs and inventors of Africa can only be good for everyone. In his review of his trip, Schmidt singles out some countries for praise. He was particularly impressed, it seems, with Kenya’s embracing of technology as an important part of its future economy:
“Nairobi has emerged as a serious tech hub and may become the African leader.” He recognised Kenya’s stable government and strong legal system as having played a role in releasing the creativity of Kenya’s tech entrepreneurs. His attention was drawn especially to the companies seeking solutions to the challenge of further supplying the demand for mobile banking, a technology which appears to have the potential to transform the lives of even the poorest, more far-flung Africans, more than any other innovation.
He visited iHub, a base for a community of thousands of innovators to develop their ideas. About 1,000 apps are launched out of iHub every year, and it gave rise to at least 40 tech companies including, most notably, the mobile banking system which so impressed Schmidt, M-Pesa.
“If they manage to get through the upcoming March elections,” he says, “without significant conflict, they will grow quickly.”
Jewel with a terrible past
The World Bank’s annual Ease of Doing Business report regularly scores Rwanda as a rising star of the continent and Schmidt was himself duly impressed.
“Rwanda is a jewel with a terrible past. High economic growth and the development of a significant middle class is threatened by the withdrawal of aid due to UN complaints over the Congo. Rwanda feels like Singapore, an island inside of Africa whose small size allows great focus and a dynamic, stable government.”
It is interesting that he should have remarked positively on Rwanda’s relative small size. Other underdeveloped economies that are experiencing rapid growth depend largely on huge populations as a type of natural resource. The majority of Rwandans still subsist on agriculture, which suffers from lack of investment to the point that although conditions favour the industry, the country being a net exporter of food, it does not produce enough to feed itself, nor does it have oil or minerals to sell.
Despite this, a government report claims that in just five years one millon Rwandans have been lifted from poverty. Improvements in healthcare, education and investment in infrastructure have transformed the economy and, so soon after a genocide that killed more quickly than the Nazis, its image around the world. All of the above has been made possible by a stable government that has encouraged foreign investment and tourists to flow in, offsetting Schmidt’s concern at the possible withdrawal of aid.
This gives hope to smaller African countries who may not yet feel a full part of the ‘coming of Africa’, though it is still, sadly, a rare success story.
He was, though, made keenly aware of the challenges that lie ahead for some other parts of sub-Saharan Africa, not least of all in theworld’s newest country, South Sudan. “In a country where every issue is an urgent one, mobile networks can unify a poor country with isolated villages, significant flooding in the rainy season, and the constant threat of attacks from rebels from the north.” He spoke of the Sentinel Project, which he described as ‘courageous’, that aims, by means of satellite communications, to bring evidence of atrocities in the region to the outside world in the hope of encouraging a rapid response to human rights abuses. The geopolitics of the region were too important for Schmidt to ignore.
“Chad is a poor petro-state, with a long history of conflict and one pipeline and one fibre link. Africa has submarine fibre cables on the western and eastern sides. Landlocked countries are at the mercy of their neighbours, and all have learned that competition with multiple fibre connections from differing borders dramatically reduces costs.” Countries like Chad, on a more positive note, are at least in a position to be able to learn from the experiences of others who have been through the process of connecting their citizens to the internet.
“Chad, like some others, has determined that future spectrum should not be auctioned as that only increases the eventual mobile costs, and are simply allocating it to a set of competitive carriers.” He did note, ruefully, however, that less than 1% of Chad has electricity.
Nigeria the biggest surprise
That Nigeria is emerging as a major economic force is well known in Africa, but Schmidt’s shock at the progress and potential of the West African nation is indicative of the image problem so much of the continent has to overcome.
“Nigeria, known as a land of oil corruption and the ubiquitous 419 email scams, is the biggest surprise to a first-time visitor. Nigerians are entrepreneurial, stylish, educated, and have the belief that their country can emerge as the next Brazil.”
It would be easy to imagine that oil exports have driven Nigeria’s impressive growth, and, of course, there is some truth to that. However, we see in Nigeria just how liberating to an African country’s entrepreneurial spirit a stable democracy can be. As Schmidt point out:
“With 170m citizens, and a record-breaking 11 years of civilian-elected government, the compound growth and the shared memory of real internal conflict almost guarantees their short-term success. Future growth of Nigeria should help with its international image problem, as the real story of its success gets out.”
And ‘getting out’ it is beginning to. The continent of Africa is in the process of being connected to the rest of the world by high-speed, submarine fibre-optic cables. However, extending connectivity from coastal landing points is a slow and costly task. Schmidt is adamant that national governments should press ahead with expanding broadband connectivity and bemoaned the delay in rolling out high-capacity 3G and 4G mobile services, themselves the best option for isolated rural communities.
“The emergent model of the African internet is a set of competitive fibre suppliers to the capital, a set of fibre rings owned by local telcos, and 3G and 4G networks. Some of the countries are late with licensing plans for 3G and 4G, a costly delay for countries that have very little residential broadband.”
He made the point that capacity building in each country’s energy infrastructure is necessary for greater connectivity. Though solar can help with the charging of mobile handsets, more reliable access to electricity is needed.
“Many of these countries have telecommunications as a major contributor to their GPD (about 12% for Côte d’Ivoire) and even Somalia,” he noted, “which we did not visit this time, has a profitable competitive telecommunications industry. The most profitable legal industry in that country.”
Clearly, Schmidt was not just taken on a tour of Africa’s success stories. Despite the many reasons to be positive, his enthusiasm was tempered by the obstacles which remain. “Many Africans will be last, unfortunately, to be connected to the rest of us. For them, the best short-term outcome will be feature phones (inexpensive voice and SMS phones) and a private network of microSD cards that can be traded behind oppressive authorities to get information in and out of trapped, occupied and remote locations.”
However, even such basic technology as that which allows short messages to be sent instantly can be all it takes to begin a revolution. Not a bloody one, but an emancipating, technological, democratic one.
“Information is power,” he asserted. “And more information means more choices. Documenting abuses, getting pressure from outside to fix real problems, and solving illiteracy are just a few functions of even the most limited of feature phones.”
Schmidt left Africa in no doubt of the potential in the continent for growth and upon whom its future depends.
“The demographic dividend in Africa of young people is their greatest hope, in my opinion,” he said. “Today high rates of unemployment show an economy underperforming to its true potential. This new generation expects more, and will use mobile computing to get it.”
There was little that was revelatory in Eric Schmidt’s thoughts on Africa that anyone familiar with the continent will not already know. What was interesting, however, was that the chief executive of one of the most dynamic, innovative and successful companies in the world has clearly turned its gaze to Africa and sees in it what many lone voices have been telling anyone who would listen: Africa is a continent of vast creative wealth waiting to be realised.
Some of his comments will have come as a surprise to many who read them, but coming from him they carry weight with a whole new generation of people for whom Africa is more and more just a ‘click’ away. “Optimism is appropriate for Africa,” said Schmidt, catching the mood of many who can see for themselves the direction the continent is going, “as the people we met will do much more with less than we can imagine, and the devices and systems built in the first world will be used in the most creative ways in the emerging new world of Africa.” n Laying the fibre-optic cable at Mombasa: it took 18 months to reach the Kenyan coast from the Middle East.
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