Serving the Next Billion: How Information Can Drive New Opportunities in Africa

1. Serving the Next Billion: How Information Can Drive New Opportunities in Africa Dr. Mark Dean IBM Fellow and V.P. Almanden Research Center May 2008 Almaden Institute

2. Background • History of IBM being in Africa • Direct Engagements • Current state • Natural Resources • Infrastructure • Education and Skills • mPresence • Wireless Infrastructure • Personal and Business Transactions • Delivering Content and Services May 2008 Almaden Institute

3. IBM in Africa • Established presence in Africa for over 55 years • Increasing corporate investment to target growth across the African markets in 2008 • Hiring staff • Building capacity and infrastructure • Expanding into new markets • GIO 3.0 Africa Initiatives • BlueGene Supercomputer • Makocha Minds mentorship program • Shared services for NGO back-office • Africa Innovation Initiatives • Micro-financing Hub • Software Lab • Country Specific Initiatives (eSkills Council, Lauguage Translation, …) May 2008 Almaden Institute

4. Direct Engagements May 2008 Almaden Institute

5. Background • History of IBM being in Africa • Direct Engagements • Current state • Natural Resources • Infrastructure • Education and Skills • mPresence • Wireless Infrastructure • Personal and Business Transactions • Delivering Content and Services May 2008 Almaden Institute

6. Africa: Behind the Headlines Youth, entrepreneurial heritage, language and natural resources set the stage for rapid development and economic opportunity in Africa: • Stable, open governments have emerged in many regions • Growth in sub-Saharan Africa (SSA) remains strong at 5-6% for the fourth consecutive year and it’s projected to continue into next year • Africans do not expect – and do not want – the world to “do it” for them. They need help and assistance, but what they seek most is enablement, not charity May 2008 Almaden Institute

7. Moving Up the Value Chain Africa’s raw materials are extracted, exported and refined overseas and the finished goods are marked up and sold for hefty profits all over the world • A strong desire exists within Africa to move from being consumers / suppliers to producing societies • African nations can parlay the value in their natural resources into diversified economies, infrastructure and more value-added business: • Rwanda: Coffee Beans to Designer Coffee Roasts • Botswana: Rough Diamonds to Diamond Cutting • Uganda: Cotton to Textiles • Ghana: Cocoa Beans to Designer Chocolates • Opportunities • Develop processing capabilities for raw materials • Reinvest profits from commodity boom into infrastructure for high-value products and services industries May 2008 Almaden Institute

8. Informal Economies • Large informal sectors usually indicate onerous regulatory environments and harsh taxation policies • Informal economies are important and vital to growth, yet few models and incentives exist for businesses to transition • Entrepreneurs will deliberately choose to operate “off the books” because the benefits of being informal outweigh those of being formal Opportunities • Innovative co-operative models for informal players to aggregate and create economies of scale and attract institutional investments • Access to infrastructure and other incentives that encourage registration in a the “legal informal,” sector • Advocate policy reform In some African nations, unregulated economic activity constitutes as much as 40%-70% of the gross domestic product May 2008 Almaden Institute

9. Movement • African cities account for 60% of the region’s GDP and are important centers for education, employment, and trade (Source: UNCHS 2001b) • Significant growth in urban areas • 38% of Africa’s population live in urban areas (297 million) • By 2030, expected growth, approximately 54% of Africa’s projected population will live in urban areas (1405 million) (Source: UNCHS 2001a) • Infrastructure impacts economics • $1,000 estimated cost to ship a container from the U.S. to Tanzania • $10,000 estimated cost to ship a container from Tanzania to Burundi (Maps: 2008 Google – Imagery, 2008 TerraMetrics, NASA, Map data 2008 AND, Europa Technologies) May 2008 Almaden Institute

10. Infrastructure • Africa’s ICT infrastructure investment totaled $8 billion in 2005; development of lower cost broadband access for landlocked countries is critical • Opportunities like 2010 FIFA World Cup are driving physical infrastructure investment • Chinese firms building out roads, bridges, stadiums and schools to support their interests in natural resources in the region The foundations for business, especially the knowledge economy, are still lacking throughout many regions of Africa Opportunities • Cost effective and collaborative partnerships for infrastructure development • Linking economic strategies to infrastructure investment plans May 2008 Almaden Institute

11. Skills Development Africa’s youth are the key to future economic development, but as a resource they currently are not being cultivated to full potential • Most non-profit groups concentrate funding on basic education, creating even more demand for higher learning but less capacity at the university level • Inconsistent or nonexistent partnerships betweenAfrican education system and the private sector is limiting growth in the talent pool • Technology and entrepreneurial skills developmentcan be fostered with assistance from the private sector Opportunities • Mentoring/Internships • Distance learning • Curriculum development • Sponsored training programs May 2008 Almaden Institute

12. Background • History of IBM being in Africa • Direct Engagements • Current state • Natural Resources • Infrastructure • Education and Skills • mPresence • Wireless Infrastructure • Personal and Business Transactions • Delivering Content and Services May 2008 Almaden Institute

13. Wireless Infrastructure • Lack of legacy infrastructure is fuelling multiple “leapfrog” opportunities • The many challenges unique to Africa – huge geographic distances, widely dispersed populations, little existing telecommunications infrastructure – have conspired to create a wireless hotbed • African use of mobile phones has been far more innovative than in Europe, largely because the specific needs of Africa require innovation • Mobile device as an electronic wallet • Opportunities • Identity, Address & Location • Healthcare & Disease Management • News, Entertainment, Democratic Participation • Financial Transactions & Banking Services May 2008 Almaden Institute

14. Personal and Business Transactions • Airtime is being used as a commodity, where mobile minutes have become a type of currency that is traded and bartered • Cell phone services have been developed that allow Africans to send money by text message to friends, family or business partners • Farmers in South Africa with mobile access to market prices realize 30% greater profits than those who don’t Photo: Shaul Schwarz, New York Times, April 13, 2008 • Opportunities • Supporting Entrepreneurial Activity • Transaction and Payments • Market Pricing Photo: http://www.pbs.org/wnet/africa/photoscope/index.html May 2008 Almaden Institute

15. Remote Public Services Africa’s single most important resource for participation in the global economy is its people and opportunity lies in helping them be informed and healthy • Doctors in the public health system are able to monitor and manage the care of HIV/AIDs patients • New opportunities are emerging for the government to play a role as content provider and strategic partner in democratic and economic reform through e-Government activities • The Cheetah Generation, in particular, is eager to learn and apply their skills to building a brighter economic future for Africa • Opportunities • Healthcare & Disease Management • Democratic Process & Informed Society • Educational Content & Delivery May 2008 Almaden Institute

16. Delivering the Right Content for the Context • Mobile technology as an innovation platform for service applications • Hybrid networks leveraged to provide local content in local languages • Providing services to low income consumers • Impacting sectors such as • Agriculture: local market prices • Health: emergency and rescue systems • Community information: governance and dissemination of public information • Education: standardized content and delivery May 2008 Almaden Institute

17. Thank you May 2008 Almaden Institute

18. Abstract • “Open for business. Africa is poised to join – and change – the global economic landscape” is a bold statement made in IBM’s Africa: A Global Innovation Outlook Report. Although the popular media tends to focus on the political strife and instability that arise in some of the African nations, many African nations are positioning themselves for development and self-reliance in the global economy. This, in turn, affords challenges and opportunities around global integration and socioeconomic change of societies with a different perspective from developed nations. This presentation provides background on the economic, skills and resource readiness of the African nations with a focus on technology and information opportunities in an area of the world poised for change. May 2008 Almaden Institute