Economies are platforms that facilitate problem-solving and the exchange of value. Business is about solving problems by selling solutions that are worth their price. Entrepreneurs earn their stripes by accurately identifying needs in society and providing desirable solutions. Innovators capitalise on their ability to creatively avail products and services that people find convenient and attractive enough to pay for. This process of developing solutions that satisfy the wants of society is an overly-simplified illustration of supply-side economics.
The theme of the 2019 Pwani Innovation Week is ‘the digital economy’. Amidst the talk of spurring innovation, there are explicit imperatives for innovators to focus on user needs and sustainable financial models. This is to ensure that we drive innovation that brings lasting impact into the economy.
Contributing to the digital economy through innovation happens through enabling society to circulate value by providing effective solutions to relevant problems. A successful innovation creates income for the innovator, for those it employs, and for those that use it in their work. It also distributes value by providing products worth spending money on, which then creates tax points that raise funds for government spending. By addressing diverse user needs, innovations can unlock value at many different levels; each of which can function as a launching point for other innovations and as revenue for the innovation’s financial sustainability.
Innovations as impact multipliers
Impact is measured at the people end. Satisfying users is good, creating employment is great, and helping people access other innovative products is excellent. Any innovation that seeks to impact needs to keep this end in mind. Finding a market gap means sensitivity to the contextual circumstances of the targeted users. It means designing an innovation that works with what exists to expand what is possible.
M-Pesa’s success story has been retold ad nauseum—we hardly need a reminder of impact that we feel every day. Through it we deposit, withdraw, pay, save, lend, borrow, buy, and sell across borders, increasing the range and number of products and users that can be accessed. M-Pesa is a multiplier that enables other digital economy innovations to add value to the every day lives of diverse sets of people.
Admittedly, we do tend to conceive of innovation as capturing revenue through a clever app or network that changes the operation of traditional business. In the digital economy, disruptive innovations are all the rage. This is fair enough—Uber is the world’s largest taxi service provider and Airbnb the largest hotel service provider, yet they do not own taxis or hotels.
These monoliths provide income for millions of taxi drivers and hoteliers and service millions of users who might otherwise have not been able to afford the service. They also generate a lot of revenue and have pushed traditional taxis and hoteliers to step up their service delivery. Uber and Airbnb’s biggest successes are, arguably, that they enable millions to willingly spend billions on services that are deemed to be worth every cent.
Partnering to increase Africa’s digital economy capacity
Digital economy innovations can inspire transformation throughout society. We target increased prosperity and wealth distribution at the coast, in the country, and across the continent. One crucial step in that direction is enabling digital economy innovation, through such Initiatives such as Pwani Innovation Week and the upcoming BlueHack. The primary goal of both initiatives is building capacity for both the development of digital innovations and their utilisation at the grassroots.
Capacity building is itself a multiplier that Africa needs to remain invested in especially at the grassroots. If we do not get the next PayGo or Twiga foods, we can have new tools and methods that augment their use among Africa’s 1.2 billion people. We build Africa by partnering our current capacity—our technology, infrastructure, people, skills and resources—with our shared idea of prosperity.
This synergy between what exists and what we can do with it is the most important partnership in the digital economy. It births innovation, and we are excited to see Kenya’s coastal youth carry this conviction into the coming decade.