Building the economy through businesses enabled by technology must be a deliberate effort by all players in the ecosystems
Technology is a broad term and mostly misunderstood as solely applicable to software or writing code. But, giving a definition, I would say that Technology is anything that makes life easy. It can be used to complete various daily tasks and as such, can be seen as products or services that simplify our everyday life.
Technology can be applied in our everyday tasks, in communication, transportation, learning, manufacturing, scaling businesses and so much more.
The application of technology often involves the interplay between tools, materials, and systems that results in improved products and services. Therefore, we ought to look at technology as a business enabler and not just the product. This means a lot of businesses (not otherwise regarded as tech businesses) can be transformed, optimised and scaled to serve more people with technology.
No gain arguing that many businesses use technology to remain competitive; they create new products and services using technology, and also use technology to deliver those products and services to their customers on time and within budget.
Tech Across Eras
Technology is dynamic and it keeps on improving because our needs, demands and applications keep changing with time. The world is in the Fourth Industrial Revolution and technology has played an active role in each revolution era.
The First Industrial Revolution leveraged water and steam power to mechanise production. The invention of the steam engine created a new type of energy that powered all processes thanks to the development of railroads. This led to the acceleration of economic, human and material exchanges. Companies with large sums of capital had the potential of using these expensive technological tools to gain a competitive edge; small businesses had less potential because they could not afford expensive manufacturing or processing tools.
The Second Industrial Revolution saw the mass production of steel, the synthesis of petroleum products – oil and gas, electric power generation and distribution. Advancements in manufacturing enabled the widespread adoption of new technological systems such as the telegraph, rail networks, gas supply, water supply and sewage systems, which had hitherto been concentrated around a few select cities. For example, the enormous expansion of rail and telegraph lines allowed unprecedented movement of people and ideas, which resulted in a new wave of globalisation. It became easy for entrepreneurs to set up businesses in regions they would previously not have been able to reach or operate in favourably.
Technological advancement created a new economic environment which ushered in the Third Industrial Revolution. This era was characterised by the digitisation of the manufacturing sector. With advances in computing power, production capacity was accelerated and improved through automation and robots. With a new communication system, the internet, information sharing became the norm. This has led to a different work environment, and has helped entrepreneurs and small businesses gain a position in highly competitive markets.
Now a Fourth Industrial Revolution is building on the Third; a digital revolution characterised by a fusion of technologies blurring the lines between the physical, digital, and biological spheres. The Fourth Industrial Revolution is all about interconnection. The applications are already enormous: predictive maintenance, improved decision-making in real-time, anticipating inventory based on production, improved coordination among jobs, etc.
The tech businesses of the future are not businesses who write code or build applications; they are businesses that will leverage heavily on technology to function optimally while reaching the most customers in record time.
Technology will be used to extend human abilities in life and business. This makes people the most crucial part of any technological system. How then can we drive tech adoption in a way that builds and improves our economy? – Through the entrepreneurs.
Entrepreneurs spur economic growth – new products and services created by these entrepreneurs can produce a cascading effect, where it stimulates related businesses in various sectors, thereby furthering economic development.
A few IT companies existed in India around the 90s. As they expanded, numerous support businesses were established – call centers, network maintenance companies, hardware providers, etc.
More recently, alumni from Jumia and Konga have created successful businesses like Cregital, Accountinghub, PrepClass, Farmcrowdy and Supermartng. This shows that the more tech businesses succeed, the more the likelihood of other tech businesses being conceived from those that worked in these successful companies.
Entrepreneurs are important because they improve standards of living and create wealth. They help drive change with innovation, where new and improved products enable new markets to be developed.
New and improved products, services or tech from entrepreneurs enable new markets to be developed and new wealth created, due to increased employment and high earnings. This is evident in the employment created by the telco recharge card seller stands and kiosks as well as agent banking.
All these contribute to higher national income in the form of higher tax revenue which translates into increased government spending. This revenue can be used by the government to invest in struggling sectors and more importantly, human capital.
How can we aid entrepreneurs?
- Training and Mentoring: The most entrepreneurial nations are not those with the most entrepreneurs, but those with the best entrepreneurs. The quality of entrepreneurs who are able to create innovative sustainable businesses that generate high revenue and jobs can be improved through training, coaching and mentoring.
- Infrastructure: Infrastructure is made up of the physical, institutional, organisational structures that support economic activity. These come in the form of power, workspaces and affordable offices, reliable internet, good road network, business and skill acquisition centres, etc. More effort and resources have to be put into building infrastructure that will sustain and support these entrepreneurs and small businesses.
- Funding: Ask any Nigerian entrepreneur about his or her greatest challenge, and the response might likely be capital. Finance/cash flow is the lifeblood of every company, and for SMEs it is very important. To tackle the problem, we need to start, create and grow entrepreneurship funds. Access to low-risk capital through banks and private institutions will definitely encourage more entrepreneurs to start and scale innovative business.
- Policy: China’s explosive economic growth over the past 25 years is due largely to removing ownership, bureaucratic, and financial limits on the entrepreneurial drive of the Chinese people. The government needs to do more in reducing the barriers to entry and success for entrepreneurs. Policies crafted specifically for entrepreneurs and SMEs need to be put in place to ensure that the chances of innovative businesses surviving long-term will be increased.
This is why at Tony Elumelu Foundation, we do our best to support our entrepreneurs with all these and more, through advocacy and partnerships with key organisations who share the vision.
Building the economy through businesses enabled by technology must be a deliberate effort from the entrepreneurs, the private sector, ecosystem players and the government. We cannot wish good businesses, or a great economy into being without working on the points stated above. And as Victor Asemota always says – “Hope is not a strategy”.
Uwem is the Director of Fund Operations at Ingressive Capital, a venture capital firm focused on funding the next generation of African innovators. Uwem is also the Lagos Chapter Director of Silicon Valley-based startup Grind. He drives ‘The Afropreneur Network’, an initiative dedicated to growing the African Entrepreneur and also sits on the Advisory Boards of the South By SouthWest (SXSW) Accelerator, Injini (Africa’s EdTech Incubator) and the Lagos Ambassador for Startup bootcamp.