The key to Africa's development? It could be the Internet of Things

Late in 2016 Senegal’s Banque Regionale De Marches announced the launch of the eCFA Franc; a cryptocurrency for the countries of the West African Monetary Union – Senegal, Cote d’Ivoire, Benin, Burkina Faso, Mali, Niger, Togo and Guinea-Bissau. This and similar innovations mark the coming of age of a new generation of applications – an Internet of Intelligent Things – that could provide a new infrastructure for economic development across Africa.

The Internet of Things is a network of physical devices, vehicles, buildings and other items. They are equipped with electronics, software, sensors and network connectivity so they can collect and exchange data. There’s wide enthusiasm about spectacular innovations such as Intelligent refrigerators and driverless cars. But a quieter revolution is underway in everyday systems and facilities, such as financial services.

There are particular possibilities here for Africa. The potential for the continent’s economic growth is well established. There’s also an abundance of opportunity for digital innovation. This was clear from a recent continent wide entrepreneurship competition organised by the University of Cape Town’s Graduate School of Business.

More broadly, the new Internet of Things has the potential to compensate for Africa’s legacies of underdevelopment. The key here is the development of the blockchain from a fringe concept into a mainstream digital innovation.

The blockchain, mostly known as the technology that underpins digital currency Bitcoin, is an almost incorruptible digital ledger of transactions, agreements and contracts that is distributed across thousands of computers, worldwide.

It has the potential to be both foundation and springboard for a new developmental infrastructure.

New blockchain platforms such as Ethereum are supporting the development of distributed applications. These “DApps” can provide accessible ways to use the blockchain. They act like “autonomous agents” – little brains that receive and process information, make decisions and take actions. These new capabilities will have widespread implications when linked to cryptocurrencies through “smart contacts” that are also securely recorded in the blockchain.

DApps provide a practical and affordable means of making Things intelligent and able to interact directly with other Things. They can be programmed to take data-informed actions without human intervention.

These innovations will have particular benefits across Africa. Economic growth is underpinned and enabled by appropriate financial services. Early internet-based innovations such as Kenya’s M-PESA have clearly demonstrated the appetite for accessible, Internet-financial services. But many small and medium businesses are still restricted. Their owners usually can’t access standard loan financing. Banks will not extend credit facilities without traditional title deeds to land and buildings, or a conventional payslip.

Don and Alex Tapscott have shown in their recent book that the new blockchain can be “the ledger of everything”. A house can become an intelligent entity registered on a secure, distributed database once it’s tagged with a geospatial reference and sensors that monitor its continuing existence.

The owner of the asset can, through an Ethereum-based smart contract, secure a loan to expand a start-up enterprise. Intermediary arrangements become unnecessary. Economist Hernando de Soto has suggested this could create “a revolution in property rights”.

Property and financing aren’t the only areas where the new Internet of Intelligent Things has the potential to compensate for Africa’s legacies of underdevelopment.

Economic growth also depends on affordable and reliable services like water and energy. Water is an increasingly scarce resource in many parts of Africa. This is particularly true in cities. Rapid population increases are making old precepts of urban planning redundant.

Technology can help. Autonomous agents positioned across all aspects of water reticulation systems can monitor supplies of potable, storm and waste water. These “little brains” can take appropriate actions to detect and report damage and leakage and close off supply lines. Smart devices can also monitor water quality to detect health hazards. They can regulate and charge for water consumption.

Similarly, for the supply of energy, smart devices are already being deployed across conventional and ageing power grids in other parts of the world. In Australia, for instance, intelligent monitors detect when an individual pole is in trouble. They then report the fault and call out a repair crew. They can also communicate with other poles to redirect the supply and preserve the grid’s integrity.

In parallel with conventional supply systems, new digital technologies can enable full integration with renewable sources of energy and the intelligent management of supply at the household level. The new blockchain is designed for secure peer-to-peer transactions combined with incorruptible contracts between multiple parties. Individual households can manage their own supply and demand to incorporate self-generated energy. A house equipped with a simple windmill and a roof made up of photovoltaic tiles could sell surplus power to a neighbour in need. They could also buy from another house to meet a shortfall.
Such microgrids are already in development. The combination of ubiquitous and affordable bandwidth and low cost autonomous agents could bring affordable energy to communities that have never enjoyed reliable electricity supply.

A new infrastructure built up in this way could be a springboard for economic development – from small enterprises that would have the resources to take innovations to scale, to significant household efficiencies and increases in consumer purchasing power. As has been the pattern with previous digital technologies, costs of production will fall dramatically as the global market for intelligent things explodes. That which seems extraordinary today will be everyday tomorrow.

So what’s standing in the way?

It’s not the technology that’s holding Africa back from embracing the Internet of Things. Rather, it’s the established interests in play. These include state enterprises and near-monopolies that are heavily invested in conventional systems, local patronage networks and conventional banks, and the failure of political vision.

What’s needed is effective public policy and business to ensure that the potential of this next wave of digital innovation is realised. Government and civil society innovators need to be directing much of their attention here.

This is why the West African Monetary Union’s cryptocurrency initiative is encouraging. It’s a step towards the future that Don and Alex Tapscott envision; a move towards an Internet that’s driven by the falling costs of bargaining, policing, and enforcing social and commercial agreements.

In this new space integrity, security, collaboration, the privacy of all transactions will be the name of the game. So too will the creation and distribution of value. And that’s great news for Africa.