“Africa is a digital continent”. It’s a headline we keep reading, as if it was meant to confound clichéd views of African poverty. In fact, in 2020, mobile technologies and services already accounted for 8 percent of GDP in sub-Saharan Africa. Many major digital companies have been established on the continent in recent years.
Kizito Odhiambo, CEO of one such startup, links his company’s rise to a rather bigger picture. As he puts it, “I firmly believe that Africa can feed itself — I even think that Africa could feed the world. The continent has everything it needs to do it.” Odhiambo thus uses the famous image of a continent that is truly rich in raw materials and young people, a potential that simply needs to be tapped — today, through modern, digital technology.
But Odhiambo’s advertising promise is more than a gimmick. To understand why, we need to take a look at the political economy of Africa.
It is no coincidence that Odhiambo’s vision for Africa’s future is the economically unprofitable role of global food supplier. The majority of the population of sub-Saharan Africa does not live from wage labor, but from handicrafts as smallholders. No wonder his German-Kenyan flagship has been dedicated to exactly this clientele. With the AgriBORA app — the name is made up of the Greek word for “field” and Swahili for “best” — Odhiambo connects smallholder farmers and updates them on the weather forecast, among other things. This enables them to determine the best time for sowing and harvesting. The app uses data from the European Space Agency (ESA), which is also investing in the startup itself.
The eight million Kenyans who make a living from growing grains, fruit, maize, potatoes and cassava not only need weather data, but also loans to buy more seeds, machinery or fertiliser. No wonder: subsistence farmers, as the name suggests, produce mainly for themselves and their personal consumption, not for the (global) market and for money. And where there is no business, sub-Saharan African countries have no interest in creating or maintaining the necessary infrastructure for credit activity. This is where the app breaks new ground and offers a digital marketplace: for borrowers and banks, for buying and selling, and for providing up-to-date market and financing data.
It is not entirely correct to say that there was no market before. The product was indeed sold, but with six to nine middlemen along the way. These intermediaries between farmers and sales markets are now being eliminated by their digital competitors. AgriBORA undertakes the entire value chain. In this way, digitalized trading capital acts as a great simplifier and replaces analog intermediary competition with low application fees. AgriBORA can afford to offer this because it eliminates players who were previously taking some of the profits and opens up new business areas.
AgriBORA is neither the only nor the most successful application of African origin. In 2007, Vodafone launched M-PESA together with Safaricom, which is the largest mobile operator in Kenya. “M” in the compound neologism means mobile, while “pesa” means cash in Kiswahili. The app is now used by sixty million people, half of whom are in Kenya. So it’s safe to say that the payment service has a monopoly in the East African country. The other thirty million users are spread across Tanzania, the Democratic Republic of Congo, Mozambique, Ghana and Egypt.
It’s obvious why digital payments are catching on so quickly. In Kenya, only half the people have their own bank accounts, but most Kenyans have their own phone number. “If you have a mobile phone, you have a bank account,” Kenyan economist James Shikwati told SWR2 television. Kiosks across Kenya act as bank branches and allow top-up or withdrawals. Funds are assigned directly to the registered phone number. This means that the credit allocated to a number is also independent of the theft of the mobile phone. And the app is designed in such a way that even people who cannot read or write can use it.
Agricultural and banking applications are technical solutions to the circulation of money and capital, but they are no guarantee of economic progress. This April 29th, of Germany FAZ newspaper wrote the following about Africa: “If you look at the development of the last 40 years, a depressing picture emerges. Africa’s share of the world economy has not changed since 1980 — and the International Monetary Fund predicts almost no increase in the coming years: Africa’s share of global GDP is expected to be 5.4 percent in 2028.”
Many African countries, known to be “rich in natural resources”, derive a significant part of their income not from the strength of their economy, but from the sale of their resources. South Africa mainly exports ores, metals, coal and gold, but also—at least to a small extent—manufactured finished goods such as vehicles. In Nigeria, the dominance of raw materials is even more pronounced. More than 90 percent of goods exports are represented by “fossil fuels”. Natural resources, rare earths and fossil fuels are still the mainstays of Africa’s economy.
The abundant raw materials, especially rare earths and metals, necessary for the production of semiconductors (and thus for smartphones and server farms) are exported raw and have not yet created business cycles in African countries. Export revenue comes from the power of disposition in the land, not the productivity of the economy. As such, African states are not objects of their economies, but merely suppliers for value-added production taking place elsewhere. The export of raw materials in general, and thus the export of the material basis of digitization, constitute what we might call the non-capitalist basis of African capitalism.
This is the bitter truth of the political economy of digitization in Africa. The continent provides the material base for the digital technologies produced in the Global North, while millions of Africans are the cheap human material for extracting raw materials. Prices and terms for the export of raw materials are largely dictated by the industrialized countries. This extremely one-sided “business model” has no potential to overcome poverty, which is not caused by the lack of bank accounts, but by Africa’s economic role in the world market. The apps are not a way out of poverty on the continent, but a way to deal with its consequences.