ICT, INNOVATION AND PRO-POOR ECONOMIC AND SOCIAL OPPORTUNITIES IN AFRICA

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1 ICT, INNOVATION AND PRO-POOR ECONOMIC AND SOCIAL OPPORTUNITIES IN AFRICA Hannes Toivanen, Jukka Hyvönen, Elikana Ngogo, VTT Edward Mutafungwa, Aalto University VTT Innovation Studies Seminar 28th Feb 2012 African Local Innovation Ecosystem (ALOIECO) New perspectives on local innovation ecosystems in Africa Key issues: Dynamics of rural African innovation ecosystems (Iringa, Tanzania) Policy learning: Relevant intervention logic for ICT44D / STI4D devcooperation; Foresight: Near-market and long-perspective ICT technologies How does ICT create pro-poor entrepreneurial opportunities in Africa? Extended observational field mission in Iringa, Tanzania In cooperation with Aalto University, Dpt of Networking and Communications Research commissioned by the Ministry for Foreign Affairs 2 1

learning: Relevant intervention logic for ICT44D / STI4D devcooperation; Foresight: Near-market and long-perspective ICT technologies How does ICT create pro-poor entrepreneurial opportunities in

2 ICT & Development Mobile telephony has positive impact on economic growth and this effect is twice as large in developing countries compared with developed countries (Waverman et al 2005) Between , 10 mobile phones per 100 population added 0.59 percent units to per capita GDP (Waverman et al 2005) Macro-economic evidence is more or less clear, but not without problems: Inherent unreliability for developing country data; Remains investment focussed; Does not provide guidance on pro-poor or inclusive strategies, and thereby falls short of connecting ICT with development. 3 ICT & Development Source: Heeks

59 percent units to per capita GDP (Waverman et al 2005) Macro-economic evidence is more or less clear, but not without problems: Inherent unreliability for

3 Standard ICT4D impact models Key channels for ICT to advance development (Aker & Mbiti 2010): Enhanced access and use of information (search cost) Improve firm s productivity by allowing better managent of value chains Creation of local ICT-related jobs in rural and urban areas Enhanced communication among social networks reduces exposer to risks (natural disasters, political violence, etc.) Enhanced delivery of services (financial, health, education, etc) via m- and e-delivery plantforms. We have relatively solid (theoretical and empirical) understanding of userbenefits and impacts, though not in monetary figures. We have scant evidence of how ICT boosts jobs and entrepreneurial opportunities, and much less on how such impacts are or can be pro-poor? 5 We like to regard ICT as a development booster, but evidence and justification for ICT4D continues to Be narrowly (economically) framed Be investment driven Be technology and expert driven Lack connection with the overall sustainability of the projects Fail to identify which technologies / technology interfaces have most potent pro-poor impacts lack the grass-root perspective on poverty? 6 3

) Enhanced delivery of services (financial, health, education, etc) via m- and e-delivery plantforms.

4 Pro-poor ICT, Micro-entrepreneurship opportunities and skills How ICT creates social and economic opportunities for microentrepreneuros (& generate pro-poor impacts)? Micro-entrepreneurial opportunities on local level; Pro-poor connections of technology and business models; Impact and outcomes scenarios: Social & economic upward mobility of the poor Improved fit between technology and actual local needs (local ICT innovation ecosystem) Sustainability (decreased dependency on donor-programming) Empowerement (skills enhancement, status, self-esteem) Freedom (A. Sen) 7 Skills hiearachy for micro-entrepreneurship Category name Examples Organizational technology capabilities Multinational or national companies Operators, e.g. Vodafone; Telecom tower service companies e.g. SINCRO; Global or national high tech research and development Micro-technoentrepreneurs Microentrepreneurs Internet cafés (e.g. IringaNet); Phone repair; Computer repair; SIM-card vendors; Phone vendors; Computer vendors; Ability to locally assemble and repair hardware; Ability to create and repair software; Ability to retail Internet access No inherent technical capabilities Opportunities for the local poor 8 4

between technology and actual local needs (local ICT innovation ecosystem) Sustainability (decreased dependency on donor-programming) Empowerement (skills enhancement, status, self-esteem) Freedom (A.

5 IringaNET Internet Cafe Est. 2003, now 16 computers and WIFI hot-spot, market leader in Iringa Comes from entrepreneurial background, has schooling and international connections Launched with help of Zimbanet, DRS, but refused financial loan with interest on religious grounds Self-taught with computers, can handle basic maintenance and fixing Service and price negotiation with ISPs a constant activity (moving from cable to satellite and back, waiting for fibre optic) Advocates internet and its use by businesses ( 9 Phone repair Kalengele GSM Mobile Phone Repair B. 1960, no terminal school degree Only one employee, children help when needed Uses phone-repair kit to fix common issues and for software upgrades (Especially Nokia, but other brands too) Upward movement through series of micro-entrepreneurships ( fish selling, taxi, food shop, mining products) In the late 1990s, took over a mobile phone repair shop from a friend without repair skills Gradual upgrade of tools & skills, including apprenticeship in Dar es Salaam Trained 3 children in the trade (including daughters) and invested in their IT-education. Trained other people as well. Constant challenge to upgrade repair skills to keep pace with changing phone generations 10 5

financial loan with interest on religious grounds Self-taught with computers, can handle basic maintenance and fixing Service and price negotiation with ISPs a constant activity (moving from cable to

6 SIM-Card & Phone Vendors Mr. M. is SIM-card vendor with little formal schooling, doesn t have address or know how to use computers Wants to save money to open phone vendor shop Works for Airtel operator, who provided 1 week training, sales table, chair and street spot Business is completely owned and controlled by the operator 3-IN-ONE is both SIM-card and phone vendor, owned by entrepreneur with employees Sells all operators, multiple phone brands Has other lines of business as well 11 Key observations Informal economy is critical for creating and capturing pro-poor effects Current frameworks to evaluate economic and social impact are inadequate African national and local ICT innovation ecosystems have particular strong local social and economic impact, which is manifest in the key roles played by local micro- and micro-techno-entrepreneurs Skills-based pro-poor approach in local ICT innovation ecosystem is highly potential approach African ICT innovation ecosystems have unique characteristics that need to be fully appreciated when pursuing ICT or innovation activities. ICT ecosystem is narrow, social and cultural factors Persistent challenges in local level: Affordability, Access to electricity, Complexity, Social norms, lack of skills & training 12 6

week training, sales table, chair and street spot Business is completely owned and controlled by the operator 3-IN-ONE is both SIM-card and phone vendor, owned by entrepreneur with employees Sells

7 Tentative Key Recommendations Enhance the use of technology foresight and roadmapping to identify where technologies have most potent local pro-poor impacts. Broad scenario mapping or general technology trends do not adequately identify which technology segments provide concrete pro-poor opportunities at local level, and more emphasis is needed to assess the impact of new or near-market technologies on local micro-entrepreneurial opportunities. The impact framework for ICT and innovation is heavily focussed on investments and economic impacts. Further conceptual work and experimentation is needed to connect ICT4D programming to concrete development objectives, such as empowerment, education, renewal of economic structures, micro-entrepreneurial strategies, etc. Local innovation ecosystem approach. Need to elaborate concrete local, micro-level mechanisms and practices by which ICT and innovations are pro-poor and effectively address the MDG goals. 13 Thank you Slides will become available at:

the impact of new or near-market technologies on local micro-entrepreneurial opportunities. The impact framework for ICT and innovation is heavily focussed on investments and economic impacts.

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