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Digital Economy

This optimism led the Kenyan government in 2007 ty impact. What these niche strategies have in com-
to define business process outsourcing as a central mon is that they are less subject to global competition
pillar in its Vision 2030. The assumption was that Ken- and that they rely on locally embedded resources,
ya had the talent and internet connectivity to copy such as local client connections and untapped labour
India’s success in this business. Similarly, South Afri- pools in local communities.
ca’s business leaders put their hopes in call centres,
which had previously generated many jobs in India Some of these niche models emerged even before
and the Philippines. they became fashionable. In fact, their ability to sur-
vive against the mainstream gave them a competitive
But these hopes turned out to be flawed. Digital edge, allowing them to survive in the long-term. A
businesses are often easy to get into but difficult similar dynamic might be unfolding with today’s tech
to compete in – especially on the global stage. You startup scene in sub-Saharan Africa.
need to be scalable to win client contracts in a high-
ly standardised digital business, such as call centres Alternative models
and tech support. Yet, to succeed with scaling up, It’s still fashionable today to promote tech startups
you also need to be cost competitive and develop a and tech hubs based on models from the global
strong reputation. North. But new, alternative models might be emerg-
ing that might be much more sustainable. For exam-
Kenyan business process outsourcing services ple, studies suggest that African businesses are tradi-
were neither scalable nor competitive. As a result, tionally much more community-focused. Businesses
they soon went out of business. A famous example exist to support communities rather than just to make
was KenCall, a once-hyped Kenya-based call centre a profit. Research shows that while African tech hubs
that could not keep up with global competition. often “fail” to scale up businesses in the Western
sense, they are very effective in providing unique
South African call centres had the scale. But com- growth opportunities and expanding and deepening
petition from the Philippines put enormous pressure community connections.
on them.
Such experiences suggest that concepts of “scalabil-
The current tech startup scene seems to be facing ity” and “growth” may take on a range of meanings in
similar challenges: scalability of new ventures has sub-Saharan Africa, and that the global North should
been a serious issue. This is partly due to poor sup- expand their horizon beyond their narrow conception
port infrastructure and global competition. of these terms to really understand Africa’s economic
potential.
Lessons learnt
In the case of global business services, Kenya and Take-aways
South Africa learned their lesson. Initially, trying to Recent reports may be right that the digital economy
meet global standards and keep up with global rivals carries a lot of potential in helping sub-Saharan Africa
was seen as desirable in the eyes of governments, overcome current economic challenges toward sus-
businesses and the general public. But as competitive tainable growth. But maybe it is not because the dig-
pressure grew, the agenda changed from competing ital economy can drive economic growth in the con-
globally to avoiding global competition, from meeting ventional sense, but because it can expand regional
global standards to focusing on locally specific skills business networks and local communities, making
and resources. them more resilient against global economic threats.

As a result, both economies invested in niche busi- By Stephan Manning
ness segments. For example, Kenyan business pro-
cess outsourcing providers increasingly focused on * Manning is Professor of Strategy and Innovation,
local and regional clients rather than trying to com- University of Sussex, and this article is republished
pete for clients from Europe and North America. courtesy of www.theconversation.com
In the case of South Africa, business services in-
creasingly diversified into more specialised areas,
such as legal process outsourcing, to lower global
competitive pressure.

Also, both economies promoted so-called impact
sourcing, which focuses on hiring and training disad-
vantaged young people from slums and rural areas,
combining employment opportunities with communi-

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