Predictive analytics presents opportunities for risk-taking in Africa

Predictive analytics presents opportunities for risk-taking in Africa

September 26, 2018    

Prof Bitange Ndemo, renowned ICT champion, shares some thoughts on data, blockchain, innovation and entrepreneurship.

You have written about the dangers of data colonisation – especially in Africa. What do you think is preventing Africans from benefiting from the application of the data that is being collected? 

I’m going to be forthright and say that we need to build a data culture. We’ve refused to build analytical capability, and there are only two universities in Africa that offer degrees in data science.

We’ve been slow in technology adoption because we spend too much time asking questions about the internet and wondering how it will work. The Americans were the ones with the tech companies – Facebook, Twitter, Instagram, etc., until the Chinese woke up and said, “We also need to do this!”

By doing this, they amassed so much data that Europe woke up and developed GDPR [the European Union’s General Data Protection Regulation]. As Africans, we haven’t woken up to the likely impact of these technologies that are gathering data about us. We haven’t started to question the implications of the data we are surrendering, and that is why we are at the cusp of being colonised!

Do you see this changing?

I’ve been in Cape Town and Stellenbosch, attending the two main conferences on AI on the continent, and I’m happy with the discourse that is taking place around what we are going to do. We need to understand this topic because there is no artificial intelligence without data.

Previously the auditor-general in government would have asked what happened with the books of account? But that is like asking the question after the horses have left the stable. With data you can ask what happened and why, but you can take it a step further and ask, “what will happen?”

We need to get to cognitive analytics and ask what will happen, when and how. It is only recently that African meteorologists have got closer to telling us what we want to hear – predictive rainfall. They’ve reached this level because the tools are available to them.

Can we extend this intelligence to farmers and tell them, “Don’t plant this season, there won’t be any rain”? We should be asking more questions about health and education.

Once people understand what data can do, they can colonise the world.

Critics have argued that despite hype about blockchain, there are few examples of successful application. What is your response to that comment, and where do you think blockchain is likely to be most successful in Kenya?

I call that nonsense! Blockchain is the third wave after the internet and mobility [mobile phone technology], and it’s going to create so much impact. In Kenya, we’re seeing that you can streamline the supply chain. One of the biggest problems in Africa is that farmers lack visibility as to where their produce is going. In areas where there is high unemployment, farming would be much more attractive if this kind of visibility existed.

History repeats itself. America used to have the same problem until they built the Chicago Board of Trade, an exchange which really helped the US farmers. We haven’t done the same thing, but we have a company called Twiga Foods, which has already done this so well.

Two immediate applications for blockchain are logistics and tracing/tracking (for example of medication where there are many counterfeits). The taskforce is creating the roadmap and government needs to provide the infrastructure. This infrastructure relates to trust and identity – from registration to passports, taxation and criminal monitoring, etc.

We’re helping the state build identity and trust, and this will enable the private sector to build its own blocks. We will move very fast – see what India has done with biometric identity.

Which innovations or companies (in the data and tech innovations space in Africa) are you watching with keen interest?

In Kenya, there are two companies that I’m watching – Twiga Foods and Victory Farms.

You watch the trend. Facebook is the world’s largest media company, but it has none of its own content, it just created a platform. Alibaba is the world’s largest retailer, but it holds no inventory. Airbnb is the largest hospitality company, but it has no property; and Uber is the largest transport company, but it doesn’t have vehicles.

What is about to become the largest financial institution without…, the largest insurer without…, etc.?

I spoke to a strategy team of Equity Bank, and straight away they launched a financial company with no office. Ninety percent of loans in Kenya now go through mobile, and increasingly banks are asking what is the point of having a branch network?

Something happened recently in South Africa – Discovery got the licence for a digital bank. It is the most disruptive thing you are going to see there! They have data about individuals, they know their health and how they spend.

By the time the large banks (which have heavily invested in branch networks) turn around, Discovery will have gone too far. They are looking to become an Alibaba – the largest retailer without inventory. Maybe they will ask other banks to come onto their platform, and they will become the largest bank without the capital.

People who say blockchain is just a passing fad will be shocked in the next two to three years.

Are entrepreneurs born or made? 

There are many studies that show entrepreneurs are not born; you can learn to become an entrepreneur. If you are with one for long enough, you will become like an entrepreneur. It is, however, difficult to teach creativity, and we are all different in terms of willingness to take risks.

When it comes to entrepreneurship, success is often a factor of how much risk we are prepared to take. As an example, the members of a SACCO that my wife belongs to wanted to buy property, and they asked me for advice. I suggested that they take a loan to cover 30% of the cost of the property as they had saved approximately 70% and rental fees would cover loan repayments.

Two women left the group because they were afraid of the risks of borrowing the money. Some people don’t have the same capacity to take risk.

During your time as the Permanent Secretary for ICT was there one specific thing that enabled Kenya to advance in terms of digital development; and if you had to advise the government of an African country that lags in the ICT space, what would you suggest they address first?

I mentioned risk-taking earlier. I was able to take risks because I had a job at the university and so I knew if I was fired, I could go back to my old job. As an example, with the introduction of M-Pesa, nobody wanted to take responsibility. I wrote a letter saying I would do so. Nobody in the public sector wants to take risk on behalf of the entire nation.

When you are sitting in that office, people bring you ideas, and the safest thing is to take a decision that doesn’t cause you any trouble. But look at Lee Kwan Yew (the former Prime Minister of Singapore). He took a lot of risks.

These days there is much more data, and you could analyse it to help you make decisions. If you are in agriculture, you could guarantee the crops for next year because you could predict rainfall, for example. Predictive data analytics can help people take more risk than they’ve taken before.

Africa in 30 years’ time – what do you see (especially in terms of the digital world)?

  • We have the greatest opportunities in the world because we have the most problems. People in Silicon Valley are hunting for problems to solve. Take a problem like poverty, we are getting very close to understanding what causes it and what the solutions are.
  • We don’t have legacy problems either, so we don’t have to dismantle something first. If we want to lay cables, we do so because there is nothing in the ground already.
  • We have a population dividend. The average age of a Kenyan is 18, the average age of a European is 50. We must build massive capacity with these young people. They don’t have to die crossing the Mediterranean to find work. With all this connectivity, we could do the work, but we aren’t exploiting this opportunity. Young boys in a remote part of Kenya are running factories with IOT. People don’t understand how IOT can be exploited to provide jobs for young people. With 3D printing, Europeans could hold the IP and design for vehicles (for example) but they could be produced in Africa. Especially if they don’t have the young people to work in factories.
  • We can feed the world, as we have 60% of the arable land in the world. Brazil is exporting its beef to the Middle East; we’re just a few hours away, but we haven’t fully exploited the opportunity to produce food for that region. There is so much we can do!

Bitange Ndemo is an Associate Professor of Entrepreneurship at the University of Nairobi and a board member of Safaricom, Research ICT Africa and the M-Pesa Foundation. He also chairs the Blockchain and AI Taskforce established in Kenya in early 2018. He is credited with spearheading numerous transformative initiatives during his time as the former Permanent Secretary for ICT in Kenya.


insight2impact (i2ifacility) was funded by Bill & Melinda Gates Foundation in partnership with Mastercard FoundationThe programme was established and driven by Cenfri and Finmark Trust.

 

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