Is Africa ready to compete globally? If you read the Africa Competitiveness Report 2009 by the World Economic Forum, you get the sense that it isn’t. Although progress is being made, we still hear about the need to address the same issues around infrastructure, health, education, etc.
Malik Fal, MD of Endeavor South Africa, says these are “tangible issues but not the real issue”. And competitiveness is more about creating ‘unique’ value than productivity.
The Africa Competitiveness Report suggests that nations compete and evolve along a continuum, moving from basic factors to efficiency to innovation. Dr Paul Romer, Senior Fellow at Stanford Institute for Economic Policy Research, says: “Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable.”
In the end, it is innovation-driven economies that are best able to raise and sustain the living standards of their people.
Says Fal: “Africa’s mistake has been competing on basic factors like natural resources and cheap labour, which promotes poverty instead of prosperity.”
He strongly believes that if African nations, industries and firms compete on their assets in innovative ways, they can compete head to head globally, and regionally. In the book he co-authored, In the River They Swim: Essays from Around the World on Enterprise Solutions to Poverty, there are several examples of industries across the globe – Cuban
Cigars, Rwandan Coffee, Afghan Dried Fruit and Nuts – providing unique value while operating amid political, social and economic upheavals.
Fal states that economies prosper if the focus is on a pragmatic, strategic approach to create more value on the assets inherent in industries and firms. With the Rwandan Coffee industry, the government augmented and filled gaps to help the industry deliver more value by building roads to and from plantations, as well as improving airport infrastructure. One lesson is that focusing on innovation to deliver more value increases economic growth and can simultaneously deal with the tangible issues, if approached correctly.
There is no better example for the ICT sector in Africa than the mobile industry in Africa. Think how it not only opened economic opportunities to the operators but to an entire ecosystem. At the same time, mobile infrastructure development has incrementally pushed overall infrastructure development, according to Ethan Zuckerman, founder of Geekcorps.
At the World Economic Forum on Africa in June 2009, the African mobile market was recognised as one of the fastest growing in the world. The future isn’t written yet, but already there is diversification in mobile applications, e.g. mobile payment systems, agriculture, health, reporting. The social benefits of mobile phones are being experienced by communities that were formerly disconnected.
This is also translating into a larger market for the ICT sector. The benefit is not only to African firms, but also to global firms that are able to gather more real-time data in developing markets because of the proliferation of mobile phones.
Delivering on unique value also results in sustainability. Even during the economic downturn, the ICT sector in Africa continues to grow. Some, like computer manufacturers, have had to change how that value is delivered.
For example, instead of focusing on the laptop market, many firms have grabbed a hold on the netbook market, which is the fastest growing computer equipment segment globally .
Ory Okolloh, executive director of Ushahidi, emphasises that Africans should be creators of the technology for this mobile revolution, not just its consumers. Fortunately, there exists an ecosystem of diverse stakeholders based on innovation and collaboration that supports this idea.
This ecosystem reflects a strong, intangible asset of the African business culture – the social fabric of community interwoven in all aspects of society. How to leverage this asset to increase a firm’s unique value still poses a challenge for many, though. Verna Allee, president author of the Future of Knowledge, stresses the increasing importance of leveraging the social dimension in the business context to be more competitive. She adds that, “Intangible assets account for 50 to 70 percent of a business’ (economic) value.”
Both Allee and Fal agree that company and industry competitiveness starts with knowing the full value, tangible and intangible, a company brings. Then, developing the space to deliver and leverage that value. The African mobile industry has demonstrated its unique value in many ways. Business models like pre-paid services, started in Africa, are gaining ground in the United States. The key for the African ICT sector to increase its leadership competitively is to continue in the same vein – concentrating on unique value.
In a bid to help companies realise their full value, Allee developed the value network methodology, which helps to map and leverage both the tangible and intangible assets of organisations.
According to Allee, a value network “is any web of relationships that generates tangible and intangible value through complex dynamic exchanges between two or more individuals, groups, or organisations. Any organisation or group of organisations engaged in both tangible and intangible exchanges can be viewed as a value network, whether private industry, government or public sector.”
A value network is structured by the roles people play. Figure 1 (above) illustrates the rich set of value exchanges within the value network of a technology firm.
In the end, African ICT firms will gain competitiveness due to innovation. While basic factors and efficiency augment innovation, innovation finds ways to trump them on the competitive field. In other words, African companies will remain economically viable and competitive if they are able to deliver on their unique value amid the turbulence of the business environment.
