A small business owner makes a transaction via their mobile phone; a doctor in a remote village receives blood supplies from a drone; a farmer uses blockchain for agriculture financing; and a family accesses pay-per-use solar for its energy needs. All of these activities are transforming lives for millions of people in emerging markets and driving new opportunities for innovation and investment.
Market liberalisation and the development of mobile phone technologies have propelled the raft of tech opportunities in emerging markets. “It’s brought down costs, driven consumer interest and created a huge market opportunity,” says Sheikh Mohammed Irfan, vice-president of global operations at global blockchain venture fund Bloccelerate. “Today, you don’t have to wait for a Silicon Valley company to enter a market because there’s a move toward localisation, where incredibly smart people in emerging economies are matching technology to the culture and the DNA of people in those markets, such as through Islamic fintech and sharia-compliant banking systems.”
While some services have already emerged to serve the growing middle class, others are being used to address development challenges. Dr Evenson Calixte, special adviser to the president of Haiti, highlights the role played by the 2010 Haiti earthquake in increasing the adoption of mobile money in the country.
“In the wake of the disruption after the disaster, Haitian companies began to offer services that allow customers to use their cell phones as mobile wallets to send and receive money,” he says. “Today, Haitians have a range of services including cash-in, cash-out, peer-to-peer, payment services and mass disbursements.”
Major financial services providers have been receptive to the ongoing technological revolution. “Digital identity and financial inclusion are the most effective ways to drive inclusive growth,” says Carlos Menendez, president of enterprise partnerships at Mastercard. “Acquiring an account helps people receive, store and use their money. A digital receipt can help build credit history, helping people to get home loans, pursue higher education and start or expand a business.”
Digitisation is also at the core of the efforts of many emerging markets to increase access to energy. Mr Calixte reveals the Haitian government is working with international investors and partners to finance renewable microgrids. “A call for tenders to build 51 photovoltaic microgrids is under way. The microgrids will be developed under a public-private partnership mechanism,” he says.
In Africa, M-Kopa is rolling out a pay-as-you go platform providing access to solar power. “More than half a billion off-grid homes in Africa face challenges around health, financial sustainability and education,” says Jesse Moore, CEO and co-founder of M-Kopa.
“Many are located in remote areas, where utilities are expensive or non-existent. Before we started this category, off-grid households spent a relatively large portion of their daily income on dirty, expensive and dangerous fuel sources. It was from this that M-Kopa was born, combining mobile payments with Internet of Everything [IoT]-enabled solar home systems. We’ve opened a path to ownership with a platform for finance, lights, charging, radios, televisions, fridges and more.”
Room for everyone
The boom in tech projects has resulted in partnerships encompassing small-scale entrepreneurs, blue-chip firms and governments. Mr Menendez says Mastercard is involved in several initiatives covering agriculture, micro-entrepreneurs and transport. These include the 2Kuze digital platform that connects smallholder farmers, agents, buyers and banks; the Jaza Duka digital lending and financial education platform for micro-entrepreneurs in partnership with Unilever, which started in Kenya and is expected to extend to additional markets across Africa and Asia-Pacific; and transit system payments in Latin American cities such as Bogotá.
“Many people we can now reach are unused to dealing with large businesses, so we increasingly use partnerships,” says Bruno Witvoet, executive vice-president Africa at Unilever. “In Kenya, our Jaza Duka partnership with Mastercard and the Kenya Commercial Bank provides digital credit and training to 10,000 small stores. Other examples are last-mile distribution with social enterprise Sokowatch, and Mr Green Africa, a recycling operation using app-based systems to work with plastic collectors.”
Technology offers inclusion opportunities not only to consumers, but start-ups and SMEs too.
“Low space needs in the tech world makes it easier for start-ups to share infrastructure costs and be closer to peers and communities,” says Marc Alain Boucicault, founder and CEO of start-up incubator Banj. He reveals that this Haiti-based organisation has partnered with banks, telecommunications companies, angel investors and social media companies to provide a co-working infrastructure, grow a community of developers, provide mentoring services and incubate start-ups locally.
Many governments have taken steps to advance digitisation, seeing it as a means of tackling challenges such as climate change, pollution, poverty and gender inequality.
“Positioning Kenya as a tech hub is important to the country’s economic development, given that ICT’s contribution to GDP in 2018 was 12.3%, which is way higher than the manufacturing sector, which contributed a paltry 8%,” says Bitange Ndemo, chairman of the Kenyan government’s blockchain and artificial intelligence (AI) taskforce. “ICT will likely create more quality jobs than agriculture. This, however, will require the government to invest in capacity building, especially in emerging technologies such as blockchain, AI and IoT.”
There is widespread optimism about the creation of truly digital societies in emerging markets. “In Africa, a young and aspiring population is grasping the opportunity of mobile platforms, so I believe we are at a tipping point,” says Mr Witvoet at Unilever. “We’ll soon see a rapid development of African digital solutions to African problems, with Africa moving from adapting other people’s solutions to developing its own. The results will be transformational for businesses such as ours.”
Mr Irfan agrees. “Smaller economies are well placed to transform as long as they have the right support from governments that aids entrepreneurs," he says. "This means funding, support structures, robust rules and regulations that make it easier to open a business. Governments also need to be more transparent to protect FDI and encourage international investors to come. You have to bring all stakeholders on board to understand what is best.”