Is Africa the New Engine of Innovation?
To keep growing its technology sector, the UAE must look beyond its own borders. Africa is the best place to start.
By Xische Editorial, June 16, 2019
Source: ProStockStudio/Shutterstock
There’s a tremendous shift under way in the Middle East and North Africa (MENA), and it doesn’t have anything to do with politics. It’s all about technology and the economic potential of millions of people. On the heels of the successful acquisition of two Dubai-based technology companies, the region is developing its own knowledge ecosystem complete with local applications and solutions. The result is a shift towards all things technology, with impressive growth potential beyond the region’s borders.
During Ramadan this year, Amazon and Alibaba competed for customers as shopping moved from malls to online. According to the Wall Street Journal, online sales doubled this year during Ramadan. The previous two years also saw massive increases in online sales. This was partly spurred by Amazon’s 2017 acquisition of Souq.com, a Dubai-based online retailer. Souq.com revolutionised online shopping by providing a technological solution for the shipment of goods. Many major cities across MENA lack physical mailing addresses and clearly defined road names similar to what you’d find in Western cities.
By cracking the delivery system, Souq.com unlocked online shopping for the region and now the sector is booming. Online sales have grown 22% since 2017 to suprpasse $80bn in 2018. According to industry observers, the Middle East market is growing faster than any other market in the world. What does this mean for the growth of the region’s knowledge economy? More specifically, how can Dubai continue to grow its knowledge economy and find areas for expansion?
For the first time in decades, GDP growth in emerging markets is starting to outpace the West. Technology flows across borders and consumers in Nigeria or Germany use the same innovations. But users still have different needs based on their location. Souq.com’s ability to find a solution to home delivery is one example of how needs change based on geography.
Dubai is the unofficial capital of emerging markets. Thanks to its aviation footprint and open approach to business, the emirate is home to more than 200 nationalities. People from virtually every corner of the world filter through every day for business or tourism. With its willingness to invest in the technology sector, Dubai is able to find the best talent and support the latest innovations. It is no surprise that the largest technology acquisitions in the history of the Middle East were of Dubai-based companies.
To keep growing its technology sector, the UAE must look beyond its own borders. Africa is the best place to start. The UAE has traditionally close links with East Africa. Centuries of shared religion, culture, and trade have brought the populous area close to the UAE’s orbit. For many African countries, Emirates is their unofficial carrier due to the sheer number of flights the Dubai-based airline operates.
As one of the most populated continents with a rapidly growing youth sector, Africa holds enormous potential for future knowledge economies. The continent is innovating, fast. The mobile payments sector, for example, is one of the most innovative technology spaces anywhere. As more Africans use smartphones, they are turning to digital wallets to safeguard their money and facilitate daily transactions. The opportunities for Dubai-based companies to invest and support the next big digital finance application in Africa can’t be understated.
Even more promising are efforts to create large free trade zones across the continent. The recent ratification of the African Continental Free Trade Area Agreement, which aims to eliminate tariffs between African Union member states, is a step in the right direction. When the agreement comes into effect it will create a market of 1.2bn people with a combined GDP of more than $2.2tn.
What Africa needs is foreign direct investment in terms of real capital and the development of technology infrastructure. Enter the UAE. With capital to invest and knowledge expertise to export, the emirate can be at the forefront of African tech. It can incubate African startups and entrepreneurs while exporting capital to help grow economies.
The result with be the next great innovation - whether it be an application, a platform, or an entirely new approach to a longstanding problem. In any case, the UAE and African markets stand to benefit enormously from a deepening of relations and the shared goal of building the best knowledge economy.
