Month: December 2013

Can Africans afford smart technology?

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This has been an interesting year for me.  I have been fortunate to travel to various countries on the African continent.  I have had time to reflect on this and here are my thoughts.

My expectation on the continent was to discover very little technology.  This is not true.  I was astounded to see that in some countries the speed and diversity of access to internet and array of smart technology was excellent.  The technology is available but the access of the technology to the general population is limited.

If you have the opportunity to visit a country such as Angola the harsh realities of living there sink in.  There are currently more than 176 land mine fields.  This is a legacy of their civil war that only ended just over a decade ago.  The effect of this is inability of the agriculture sector to produce large scale commercial farms.  Almost all of the food is imported.  In addition, the country has an array of natural resources, mainly diamonds and oil.  The result is the emergence of a super-rich class who have made money from the oil industry.  This is however only a fraction of the population.  When you move around Luanda, the capital of Angola, there are more than a million people living in one of the largest squatter camps in the world.  This is by itself anomalous.  Luanda is the most expensive city in the world.  I did not believe it until I was there.  It is definitely more expensive than New York or London.  There are suburbs in the city (such as Talatona), modern and well appointed, surrounded by squalor.  The average Luandan struggles to survive and even many of those who have employment live in shacks.  A rental income for a 2 bedroom apartment is in excess of USD7,500 per month.  A single tomato costs USD2.50.

The impact of this is that buying smart technology is not really an option for the mass population.  Possibly a small group of people can afford this, so having the technology available is to a large degree pointless.

The basis of living changes from country to country as the economies are different, but the story is the same.  Malawi is struggling with massive corruption and interest rates above 30%.  Small businesses struggle to flourish and economic growth is difficult.  People are employed, but the day to day living of the average Malawian excludes luxury purchases. Smartphones are simply out of the reach of Joe average in Malawi.

Cell-phones are however pervasive across the continent; these are predominantly functional phones.  Smartphone penetration in the market is limited and I think this reflects the recent sales reports from the major manufacturers that show that they are not meeting sales targets.  Smartphone penetration is approaching a point where growth in sales will probably reflect growth in economic value terms, linked to GDP.

I keep wondering if this is unlikely to change.  I would think that at the moment there are really only 2 ways for this to improve.  Rapid economic growth or a rapid reduction in smart technology prices.

I personally do not think rapid economic growth is likely in the next 5 years.  My rationale for this is the skill level of many Africans.  In essence those that are educated are employed.  When you look at the availability of education in the African countries it is extremely limited and is really only available for those who can currently afford it.  This means that unless there is a shift in government policies not enough Africans will get educated to transform the economic landscape. Economies will remain driven by minerals, resources and agriculture.  The exception is the banking sector with the banks entering the markets and I believe influencing the development of the economies on a large scale.

Simply put, there are not enough tertiary training institutes of quality to create skills that are competitive on an international scale.  There are not enough engineers, IT professionals, accounting professionals and professionals who work in government to bring about social services for the populations they service.

This then leaves a reduction in prices.  Will prices come down?  Maybe a simpler device with less features and longer battery life?  Looking at the manufacturers who produce devices, this seems unlikely, but maybe I am not seeing something.  What do you think?