Wildcats & Black Sheep Apps Aren’t a Magic Solution to Underdevelopment in Africa

“Africa is a digital continent.” It’s a title that we keep reading, as if it were meant to confound clichéd views of African poverty. In fact, in 2020, mobile technologies and services already accounted for 8 percent of GDP across sub-Saharan Africa. Several major digital companies have been founded on the continent in recent years.

Kizito Odhiambo, CEO of one of these start-ups, associates the rise of his company with 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 so.” Odhiambo thus uses the famous image of a continent that is actually rich in terms of raw materials and young people, a potential that just needs to be realized — today, through modern, digital technology.

But Odhiambo’s advertising promise is little more than a ruse. To understand why, we need to take a look at Africa’s political economy.

Digital Technology Made in Africa

It is no coincidence that Odhiambo’s vision for the future of Africa is the economically unprofitable role of the global supplier of food. The majority of the population of sub-Saharan Africa does not live from wage labor, but from subsistence farming as smallholders. No wonder that his German-Kenyan flagship start-up has dedicated itself to precisely this clientele. With his app AgriBORA — the name is made up of the Greek word for “field” and Swahili for “better” — Odhiambo connects smallholder farmers and informs them about 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 start-up itself.

The eight million Kenyans who live from growing grain, fruit, maize, potatoes, and manioc not only need weather data, but also loans to buy more seeds, machinery, or fertilizer. No wonder: subsistence farmers, as the name suggests, primarily produce for themselves and their own personal consumption and not for the (world) market and for money. And where there is no business, the countries of sub-Saharan Africa have no interest in creating or maintaining the necessary infrastructure for the credit business. 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. Produce was indeed sold, but with six to nine intermediaries along the way. These middlemen between farmers and sales markets are now being eliminated by their digital competitors. AgriBORA takes over the entire value chain. In this way, digitalized trading capital acts as a great simplifier and displaces the analogue intermediary competition with low app fees. AgriBORA can afford to offer this because it eliminates players who previously took some of the earnings and opens up new areas of business.

“If You Own a Cell Phone, You are Bankable”

AgriBORA is neither the only nor the most successful app of African origin. Back in 2007, Vodafone launched M-PESA together with Safaricom, which is Kenya’s largest mobile-phone company. The “M” in the compound neologism stands for mobile, while “pesa” means cash in Kiswahili. The app is now used by sixty million people, half of whom are in Kenya. It is therefore 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 the Congo, Mozambique, Ghana, and Egypt.

It is obvious why digital payments are catching on so quickly. In Kenya, only half of people have their own bank accounts, but most Kenyans do have their own phone number. “If you own a cell phone, you are bankable,” Kenyan economist James Shikwati told broadcaster SWR2. Kiosks throughout Kenya take on the function of bank branches and allow money to be topped up or withdrawn. The money is assigned directly to the telephone number that is registered. This means that the credit allocated to a number is also independent of the theft of the cell phone. And the app is designed in such a way that even people who cannot read or write are able to use it.

Agricultural and banking apps are technical solutions for the circulation of money and capital, but they are no guarantee of economic progress. This April 29, Germany’s FAZ newspaper wrote the following about Africa: “If you look at the development of the past 40 years, a sobering picture emerges. Africa’s share of the global economy has not changed since 1980 — and the International Monetary Fund forecasts hardly any increase in the coming years: Africa’s share of global GDP is expected to be 5.4 percent in 2028.”

Selling the House

Many African countries, known to be “rich in natural resources,” derive a considerable part of their income not from the strength of their own 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 — industrial finished goods such as vehicles. In Nigeria, the dominance of raw materials is even more pronounced. Over 90 percent of goods exports are accounted for by “mineral fuels.” Natural resources, rare earths ,and fossil fuels are still the central pillars of Africa’s economy.

Africa’s exports are predominantly unprocessed. (Author’s graph based on data in FAZ, April 29, 2024)

The abundant raw materials, especially rare earths and metals, that are necessary for semiconductor production (and thus for smartphones and server farms) are exported unprocessed and have not yet created economic cycles in African countries. The export revenues are derived from the power of disposal over land and not from the productivity of the economy. Accordingly, the African states are not the subject of their economies, but merely suppliers for the value-added production that takes place elsewhere. The export of raw materials in general, and thus also the export of the material basis of digitalization, form what we could call the uncapitalist basis of African capitalism.

This is the bitter truth of the political economy of digitalization in Africa. The continent provides the material basis for the digital technologies produced in the Global North, while millions of Africans form the cheap human material for the extraction of raw materials. Prices and conditions for the export of raw materials are largely dictated by the industrialized countries. This extremely one-sided “business model” has no potential for overcoming poverty, which is not caused by a lack of bank accounts, but by Africa’s economic role in the global market. The apps are not a way out of poverty on the continent, but a way of coping with its effects.