[LIFT] Africa Soon Able to Compete on Innovation with China?

By February 20, 2014
innovation in Africa

In a few years’ time Africa’s potential for innovation could well supplant that of China.

“There are many things that Africa today has in common with the China of ten years ago”. These are the words of Porter Erisman, former Vice President at Chinese e-commerce giant alibaba.com, who opened a session entitled ‘Markets Becoming Conversations, Finally!’ at the LIFT International conference which took place in Geneva in early February. Erisman recounted the story of Alibaba, recalling the issues and challenges of getting e-commerce up and running in the booming China of the 2000s. At that time just 1% of the Chinese population was using the Internet, very few people had bank accounts and the logistical infrastructure was very patchy. Erisman made the link between China then and the current situation in Africa, where entrepreneurs are facing the same problems.  In such circumstances, buyers and sellers need to build communities, he argued.

The challenges of e-commerce in emerging countries

"In 1999, shopping malls in the United States were wonderful places. They were a genuine attraction and you got the feeling of having a real day out there. In China things were very different: the shopping experience was a more difficult one. There were no information labels on clothes, you certainly couldn’t exchange any items once bought, and you had to bargain all the time,” remembers Erisman Porter. So at that time the idea which the founder of Alibaba was pursuing seemed out of place, but now, 14 years later, The Economist is predicting that the company could potentially be one of the most profitable in the world. “When I arrived in China it was very difficult to buy a product online. There was no trust in the purchasing process,” explained the former Alibaba man. So the team had to work to bring a human feel to e-commerce. “We integrated chat software into the website so that buyers and sellers could get to know each other before making a transaction, and little by little a community developed.  That was a real revolution!” he told the audience. In this way the company’s Taobao platform created a genuine social experience, and customers were asked to give their opinion on each transaction. Moreover links between e-merchants and consumers were strongly encouraged. “The Taobao platform is all about consumers’ human experience,” explained Erisman. And well before Groupon saw the light of day, communities in China were already getting together to negotiate group prices with suppliers.

The socio-economic impact of e-commerce in emerging countries

As well as generating social links and creating jobs, Alibaba has succeeded in responding to the special traits of Chinese culture. In a country where everyday transactions are not 100% safe – which is also the case in Africa today, Erisman pointed out – Alibaba launched Alipay, an online payment escrow service that enables buyers and sellers to have their money kept in the hands of a trusted third party until their deal is completed. Today Alipay is one of the largest funds in China and helps small businesses to grow by making micro-loans. “E-commerce plays an extremely important role in developing the market in emerging countries. It can contribute a huge amount. Africa should be following China’s example; it’s now Africa’s turn to respond to the challenge,” stressed Porter Erisman. Meanwhile Isaac Nortey, an e-commerce entrepreneur from Ghana whose company RetailTower was a finalist at the SeedstarsWorld 2014 global startup competition held in Geneva recently, pointed out that the priorities are logistics, delivery and payment, explaining: “In Africa, everything happens in the street. So as regards logistics for imported goods we have to set up the warehousing.  For delivery, we go through relay points because the situation is still very complex. And when it comes to payment, in a country where most transactions are still done in cash, we’ve opted for mobile payments.” Nortey left the audience with a clear message: “Things are changing in Africa. And I and my fellow young entrepreneurs are on the road to a real revolution!”

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