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Building the future of Africa on the back of the incumbent distributed economy

By Admin

November 15, 2016

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Image source: naijavirals

 

It has been said that Africa is the last frontier in the global economy. With 200 million people between the ages of 15 and 24, Africa has the youngest population in the world1. It is therefore easy to see why smart money should pay attention to these lands of great potential.

At Hamoye2, we are building a smart graph of the world’s knowledge to power innovative solutions for these emerging markets, focusing on education, health and commerce. Our vision is to spark a technology-powered grassroots revolution that will lead to sustainable economic development across the continent.

For several of the countries in Africa, the many obstacles to development are well documented. At the core of the challenges is the general absence of robust institutions, the kind that were responsible for fostering economic development in many other countries around the world. This poor state of economic infrastructure is largely due to the chronic failures of government that have plagued many nations in Africa for decades. Sadly, for many of these countries, the situation is not improving quickly enough. How then can the promise of Africa be attained without first solving the overly complex problems of governance prevalent across the continent? At Hamoye, we see the solution in the already existing economic model that has for decades been the driving force behind the day-to-day existence of many people in the region. We call this, the distributed economy.

Distributed economies consist of small-scale, flexible, entities that are connected together in a synergistic network. They operate differently from centralized and decentralized economic systems which are dominated by large-scale institutions, either government or privately owned, as illustrated by the network diagrams3 below.

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Traditionally, the economic entities in a distributed economy rely on local resources, largely out of necessity as opposed to design. Most pre-industrial economies were organized this way, as the scale of centralized economic infrastructures were limited. As a result, these economic entities typically reflect their local environments and make do with whatever resources are available around them. While most of the developed world have followed different paths, the economic systems across many emerging markets, especially in Africa, have continued to be organized this way. A few examples are noted as follows.

  • In place of big-box retailers and organized franchises found in most developed economies, commerce in most of Africa largely runs through millions of micro-scale and small businesses, some as small as a single person hawking goods on the street or a little stall in a food market.

  • In place of the type of large-scale public schools systems found in advanced economies, privately owned and operated local schools have remained the preferred alternative for most people across Africa. Public schools have remained poorly funded and have continued to deteriorate in quality.

  • As an alternative to effective public transport systems, individually owned and operated commuter transporters have remained the most common way to move people and goods across many African towns and cities. In most places, efforts of local and/or state governments to create mass transit systems have failed again, and again.

  • Electricity is mostly produced at the household level, from portable generators, largely due to inability of central governments, or even the private sector, to provide steady power supply from large scale power plants as is the case in developed countries.

  • Most people access healthcare through privately owned and operated health clinics as government hospitals remain poorly equipped, under staffed and inadequately maintained.

  • Due to largely non-functional or non-existing public water supply system, most households depend on privately dug wells or boreholes.

For decades, the developed world has been largely organized around centralized infrastructures like these ones stated above i.e. mass transit, large scale franchises, big-box retail stores, public schools and healthcare systems, among others. However, in recent years, technology innovations have begun to gradually disrupt these incumbent systems, moving societies in the direction of distributed economies. The two most popular evidence of this are (i) the “sharing economy” and (ii) the “on-demand economy.” At the core of the sharing economy, for instance, is the concept of peer-to-peer sharing of resources and access to goods and services to create efficiencies. Airbnb for example has made it possible for people to rent their spare rooms to strangers, directly going against the very idea that large scale hotel chains are necessary for economic development. Similarly, the developed society’s growing appetite for convenience has fueled an “on-demand economy,” which is embodied by the proliferation of marketplaces that provide instantaneous access to goods and services. Uber is a great example of a company spreading the on-demand economic model all over the world.

As this technology revolution spreads all over the world, disrupting incumbent economic institutions and infrastructures, it is important to realize that the basic ideas behind it have been around in Africa for decades, albeit with massive inefficiencies. While the main objective of technology companies these days is to disrupt incumbents, at Hamoye, we believe that the challenge is different. The incumbents are mostly the micro and small scale businesses, the common people, who have for years created the very social-economic ecosystem – the distributed economies – that have largely managed to survive without much help from central governments or large-scale private sector institutions. We believe these incumbents do not need to be disrupted, instead they should be leveraged. This is because they already provide the building blocks on which sustainable economic growth can be attained if we can figure out how to boost efficiencies.

In conclusion, instead of hoping for Africa to develop the same way the west and the east have, over the past decades, we see a different path for Africa, one that will be fueled by innovations around the existing grassroots resources. The building blocks to transform education, healthcare, banking, agriculture are already in place. We just need to pay attention. At Hamoye, this is precisely what we are doing.

[1] – http://www.un.org/

[2] – Amoye is a Yoruba word meaning “the wise one”

[3] – Wikipedia.org

1 comment

By Olat


November 15, 2016

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