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AFRICAN DISRUPTORS

For Africa, There Can Be No Development Without Disruptors

Okendo Lewis-Gayle, Harvard Kennedy School '17
Efosa Ojomo, Harvard Business School '15

June 28, 2016

The economic slowdown, precipitated by the plunge in commodity prices, has brought to the forefront lingering questions about the continent’s future: Is Africa’s population boom more of a curse than a blessing? Can its economies generate the jobs necessary to employ a workforce projected to reach 830 million people by 2050? Will its leaders deliver the education and infrastructure required to unleash the productivity of its people?

Consider this: the daily electricity consumption of New York City (population 8.5 mil) is more than the combined usage of all sub-Saharan African countries (population 973 mil) excluding South Africa. In fact, Africa’s circumstances are so dire that, as Fred Swaniker, founder of the African Leadership University, puts it, “even if Africa builds 200 new Harvard-sized universities each year for the next 15 years, it still will not close its prevailing skills gap.” Understandably, sober analyses like these have led many to question whether Africa can fulfill the sanguine predictions of the “Africa Rising” narrative.

Yet these analyses are anchored in linear projections and fail to recognize that for entrepreneurs like Fred Swaniker, who are pursuing disruptive innovations, Africa presents vast opportunity. We call these entrepreneurs “disruptors.” Disruptors don’t aim to create better products that compete with traditional offerings in the market. Instead, by leveraging technology and innovative business models, disruptors transform complex and expensive products into simpler and more affordable ones. In so doing, they exponentially grow consumer markets and invalidate assumptions of linear projections. This explains how, in just five years, M-pesa, a mobile money platform, made it possible for 19 million previously-unbanked Kenyans to gain access to financial services. In contrast, it took Kenya’s traditional banking sector 115 years to establish a network of 1,045 bank branches and 1,500 ATMs.

Africa is home to millions of “necessity entrepreneurs,” but disruptors are different. At scale, disruptors have exponential impact, and are central to Africa’s success in the 21st century. They bypass seemingly intractable inefficiencies in governance and subpar infrastructure, thus creating new markets for millions of people. There can be no sustainable development in Africa without disruptors. In this article, we will highlight African disruptors building companies in the energy, agriculture, and education fields. We conclude with a recommendation on how investors and policy makers can support this special class of entrepreneurs.

Just look at how Elizabeth Nyeko, recently recognized as a Top 10 Female Innovator by the World Economic Forum, is addressing Uganda’s energy shortage. Approximately 625 million Africans lack access to reliable power, so Elizabeth co-founded Mandulis Energy. Her company turns the widely available biomass waste in Uganda into electricity, saving manufacturers on average 30% in utility costs. Since its founding, Mandulis has successfully piloted a 32kw off-grid plant and is currently building a 20MW plant — a model Elizabeth aims to replicate across the continent.

Would life be easier if manufacturers could rely on inexpensive electricity from a national grid? Absolutely. But this is not the reality of Uganda’s current energy market. So while others wait for government action, disruptors like Elizabeth transform an obstacle into an opportunity.

Another example from the agriculture sector is MoringaConnect, a Ghanaian company co-founded by Kwami Williams, an MIT trained engineer. MoringaConnect empowers Ghanaian farmers, helping them plant and harvest Moringa trees. With their patented processing machine, MoringaConnect converts the seeds and leaves into high-value cosmetic oils and nutritious powder. The company is able to increase farmers’ incomes by a factor of 10x. Today, MoringaConnect has 1,600 farmers in its network (thousands more are on a waiting list), has planted 250,000 trees, and counts Birchbox as a customer. They recently raised $400,000 to grow their operations and launch Africa’s largest organic certified nucleus farm and build a metric ton/month capacity production facility. Just over three years old, the company is on track to reach revenues of $1 million in 2016.

Finally, we end with Fred Swaniker, a disruptive entrepreneur in the education space. Swaniker is the founder of the African Leadership University (ALU), a school he hopes will transform higher education in Africa. ALU leverages technology to gain access to the most relevant lectures from the best professors in the world and provides a topnotch education at a fraction of the cost and in less time to its students. Through this innovation, ALU can more easily scale its impact especially when compared with traditional higher education where schools must construct buildings and hire local teacher. Considering Africa’s 1.1 billion people are expected to more than double in size to 2.5 billion by 2050, Swaniker’s innovation is not simply a nice to have, it is a necessity.

African governments, however, do not get a free pass. For societies to reach their full potential, governments must be responsive, transparent, and must ultimately work for the sole benefit of their people. But it is important to note that developed countries did not establish their business-friendly institutions and infrastructure in an orderly and sequential fashion. As Henry Ford observed speaking of his innovation — the Model T, “This car blazed the way for the motor industry and started the movement for good roads everywhere.” It was the success of disruptors in developed economies which informed government policies and shaped the consensus that responsive and transparent institutions are critical to economic development.

It is this belief — that disruptors are critical to development — which is fueling the efforts of the Harambe Entrepreneur Alliance (HEA) to establish an endowment aimed at nurturing the next generation of African disruptors. In partnership with leading universities, corporations and investors, HEA is developing an entrepreneurial ecosystem to drive a wave of disruptive innovations across Africa.

If Africa is to seize the opportunities of the 21st century, linear thinking will not suffice; in fact, it simply cannot. Mathematically, it is impossible. To answer lingering questions about its future, Africa needs disruptive business models and unapologetic supporters of its disruptors- the visionaries that will enable the continent to exceed the sanguine predictions of “Africa Rising.”