What innovation and technological disruption really means for Africa

Confrontations between Uber drivers and local taxi drivers in South Africa.
Confrontations between Uber drivers and local taxi drivers in South Africa.
Image: AP Photo/Schalk van Zuydam
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A new study by Massachusetts Institute of Technology researchers Daron Acemoglu and Pascual Restrepo estimates “large and robust negative effects of robots on employment and wages” in the United States.

The study appears to contradict the authors’ 2016 study, which concluded that a rise in automation lowers the cost of production using labor, “and thus discourages further automation and encourages the faster creation of new complex tasks.”

But in an attempt to calm public anxiety over technological disruption among those often derided as technophobes, Satyajit Das argues that the world economy has reached “peak technology”. He suggests that 85% of the economic benefits of technology has already been reaching and is projected to reach 95% by 2038.

The latest MIT study has far-reaching implications, not only for the United States, but also for emerging economies. Of particular interest are African countries that are positioning themselves to harness the power of the so-called Fourth Industrial Revolution as advocated by the president of the World Economic Forum, Dr. Klaus Schwab.

Of the technological revolutions, automation is probably the one that invokes the most social anxiety, as noted in a study by Northwestern University economic historian Joel Mokyr and his co-authors. Concern over the impact of automation is likely to be acute in regions such as Africa where youth unemployment remains a major threat to political stability.

The specter of economic populism that is haunting Europe and America is partly rooted in perceptions of unemployment and inequality arising from how businesses deployed technology in the last few decades.

Africa will not be spared from the sweep of such populism and opposition to new technology.

As I argue in Innovation and Its Enemies: Why People Resist New Technologies, people don’t resist technologies simply because they are new. They resist those technologies that are embedded in business models that lead to loss of livelihoods, identity, meaning, or sense of purpose.

Technology and the embedded business models are more likely to be accepted if they promote shared benefits and economic inclusion. They will face opposition if they are perceived to lead to loss of livelihoods, identity, personal health safety, community relations, and connections to the environment. Of these, livelihoods are often the primary trigger for concern. Though the others are equally important, they are often invoked to bolster the opposition.

M-Pesa and Uber

Two African examples illustrate this point and allude to ways to promote economic inclusion. The first is the iconic adoption of mobile phones and the derivative mobile money transfer services such as M-Pesa, which has gone global. The second is the controversies surrounding the adoption of Uber, especially in Kenya and South Africa.

Mobile phones were initially considered a threat to state-owned land line monopolies. State officials showed early widespread objections to their introduction. Some feared the loss of state revenue, while others were concerned about the erosion of state power, especially over surveillance. The resistance was accompanied by claims that mobile phones caused brain cancer. The safety concerns still persist around the world and are extended to the risks of mobile phone towers.

Yet mobile phones were adopted readily in Kenya. The rapid adoption was facilitated by an inclusive business model. It involved access to low-cost handsets, offered a prepayment approach, and provided for the creation of new business opportunities for venders. The introduction of mobile money transfer services expanded businesses through the creation of transaction kiosks across the country.

Mobile technology started as a service but ended up becoming the infrastructure upon which new businesses such as M-Pesa were founded, a service that has inspired variants around the world. The industry, especially through smartphones, has become a hotbed for creativity and a source of inspiration for young innovators and entrepreneurs.

The entry of Uber tells a different story. The initial perception was of instant disruption. Taxi drivers in Kenya have at times responded by physically attacking Uber drivers. For them the loss of livelihoods was real and immediate. Their fear of loss was heightened by the fact that consumers may prefer Uber, a process that would facilitate the demise of their businesses.

The way forward for Uber entails searching for technological inclusion. There are several ways by which this can be pursued. The first is for Uber and local taxi services to find ways to share the market. This could be done through joint ventures.

Such compromises are not new. Café au lait was invented to reduce business tensions between coffee and milk traders. Such an approach is not usually favored by those pursuing a winner-take-all business model. But it is a basis for fostering inclusion and promoting technology adoption.

The second option is to promote greater market competition through the use of similar technologies. New local entrants are emerging in Kenya and South Africa, but they have an uphill battle competing with the well-established Uber brand.

Access to new technologies might hold the key to such inclusion. Kenya’s Safaricom, for example, has launched Little Cab using its strong mobile technology base to compete with Uber. South Africa, which has been slow to adopt mobile money technology, is finding it harder to compete. Striking taxi drivers have called on the government to restrict Uber’s operations.

Finally, helping riders and drivers to overcome their constraints promotes inclusion. When Uber realized that Kenyan riders were reluctant to pay using their bank accounts, it allowed them to pay cash. Uber is also helping drivers in Kenya, South Africa and Nigeria to acquire their own cars.

Other approaches include new app-based rider services. South Africa VW, for example, has launched such a service in Rwanda. South Africa VW plans to expand its service to Kenya and other African countries.

The examples of mobile phones and Uber underscore the importance of inclusion in promoting the adoption of new technologies.

It is often argued that while new technologies may destroy jobs, it also creates new ones. Historically this has been true and will continue to happen. But when it comes to automation, it is important to note three key differences between historical trends, especially those informed by the Industrial Revolution in England two centuries ago, and contemporary developments.

First, robots and automation will rapidly invade every conceivable human activity. Their spread is a global phenomenon, and no region of world will be able isolate itself from their diffusion. Countries such as China that built their industrial base on the backs of cheap labor are at the forefront of adopting industrial robots.

Second, the pace of technological change is discernibly exponential, and disruptions often occur soon after new technologies are introduced. Uber is less than a decade old but its tumultuous entry is already being felt worldwide. More disruptions are expected in the sector, especially through the introduction of driverless cars despite current concerns over safety.

Third, the argument that displaced workers can be retrained to do new tasks no longer holds universally true. Robots are learning to perform new tasks faster than we can train old workers. We are entering the age where the robot will make other robots faster than humans can reproduce themselves.

The key to inclusion might be broader access to the same disruptive technologies.

Of particular importance is access to emerging technologies through engineering education and open technology platforms that expand Africa’s opportunities to create new businesses. This shared future will make resistance to innovation a less attractive option.

Professor Calestous Juma is Professor of the Practice of International Development at Harvard Kennedy School and co-chairs the High-Level Panel on Emerging Technologies of the African Union. He is author of Innovation and Its Enemies: Why People Resist New Technology. Twitter @Calestous