Africa drives innovation

By Alex Kayle for SAP
Johannesburg, 04 Jun 2009

Africa is overtaking the West in terms of innovation technology amid the global economic crisis, says Joseph DiVanna, MD of Maris Strategies.

“There's a lot of innovation happening in Africa because African businesses don't have the same scale of legacy technology to undo, such as the US. African businesses, for instance, are going straight to the new technologies such as chip and PIN.”

DiVanna spoke about companies achieving top line growth in Africa at the SAP World Tour 2009, in Midrand, this week. He explained that local companies are too focused on cutting costs and slashing jobs, when they should rather be looking to IT to drive returns on process and to achieve top line growth.

“The silver lining to the global recession is Africa. While cost savings are very important, business processes and growth are key.”

According to DiVanna, one of the biggest IT trends in Africa is the booming telecommunications industry and he believes this poses huge opportunities for the banking industry.

Silver lining

DiVanna said cellphone banking has skyrocketed in Africa, especially in Kenya with its M-Pesa project. The M-Pesa project is a Kenyan mobile banking initiative spearheaded by Safaricom, a subsidiary of Vodafone and Telkom Kenya. M-Pesa allows cellphone users to transfer money to any cellphone number in Kenya.

“Not only does cellphone banking appeal to the unbanked and people living in informal settlements without access to a bank, but carrying a cellphone instead of real cash is safer in areas with crime.

“Less than 8% of the population in Africa has a formal bank account,” says DiVanna. “There are huge opportunities right now for IT in the banking sector to grow market share in Africa.”

Business opportunities abound

He says solutions designed for US or European companies are not necessarily suitable for African companies, especially small and medium enterprises. He notes that banks need to study the social dynamics of the African market to address their technology and business needs, which go hand-in-hand.

“Banks need to analyse their data. We need to develop African solutions for Africans by Africans. If we look at the dynamics of an informal settlement, they have different technological needs compared to developed regions.”

Global research firm Gartner expects the number of mobile payment users will reach 74.4 million this year, an increase of 70% compared to last year. The firm predicts this market will acquire mainstream status by 2012, with more than 190 million mobile payment users.