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Message from Ambassador D. Bruce Wharton

In 2012, the global app economy accounted for 18 percent of the combined app services and handset market

We estimate that by 2016 the contribution of the app economy will rise to 33 percent of the combined market, equivalent to half of the handset market.

Remarks by Ambassador D. Bruce Wharton at the ZITF Business Conference in Bulawayo; Zimbabwe

April 23, 2014

Thank you very much for inviting me to speak at the Zimbabwe International Trade Fair.

All of us who care about Zimbabwe and its future – and that certainly includes the U.S. Government – recognize how important it is to get this great nation’s economy going again.

The essential basis for a growing economy is confidence.  Confidence that government policies will be predictable and implemented consistently; confidence that private property and intellectual property will be protected; confidence that courts will treat all people fairly in accordance with the law.  Without confidence in these and other basic governance processes, domestic and foreign businesses are reluctant to invest.

But, while the politicians are working out the details, businesses and citizens need to get moving.  Usually, when I hear people talking about the elements of economic revival in Zimbabwe, four main sectors are mentioned:  agriculture, mining, tourism, and manufacturing. 

These are, of course, the traditional sources of Zimbabwe’s growth, and each remains important.  My mission today, however, is to make the case that there’s another industry, one whose global growth has surpassed any other in the last decade, and one in which Zimbabwe is uniquely situated to take advantage.  That industry is information, communications and technology, ICT.

Africa has the greatest ICT growth potential of any continent, and Zimbabwe is far and away the nation in Africa best able to lead and profit from that growth.  No other nation in Africa has the same powerful combination of intellectual capital, infrastructure and language capability that Zimbabwe has.  Further, I believe that Zimbabwe has the potential to be a global player in ICT as well as a regional leader.    

Let me begin by describing the ICT economy and opportunities:

  • The global app economy was worth $53 billion in 2012, and was expected to rise to $68 billion in 2013. [1]
  • In June 2011, the global video game market was valued at $65 billion. [2]

In the past few years the mobile industry has experienced a powerful upheaval sparked by the launch of smartphones and the creation of the app ecosystem. The “mobile app economy” represents the fastest growing area in the mobile value chain today and will continue to do so in the foreseeable future.

This value migration from hardware to software is profound. In 2012, the global app economy accounted for 18 percent of the combined app services and handset market. We estimate that by 2016 the contribution of the app economy will rise to 33 percent of the combined market, equivalent to half of the handset market. 

African markets and opportunities are even more dramatic:

  • In just the past five years, Africa’s mobile phone market has expanded to become larger than either the EU or the United States with some 650 million subscribers. At the same time, Internet bandwidth has grown 20-fold as hundreds of thousands of kilometers of new cables have been laid across the continent to serve an increasing number of its 1 billion citizens.[3]
  • Africa is rapidly becoming an ICT leader. Innovations that began in Africa – like dual SIM card mobile phones or using mobile phones for remittance payments – are now spreading across the continent and beyond.1
  • Information and communication technology could help Africa overcome infrastructure inadequacies, satisfy rising consumer demand, boost regional trade and diversify economies, ending reliance on raw materials. [4]  In addition to using ICT to support existing industries, Zimbabwean can create apps, computer games, computer-generated graphics for use by movie studios around the world, or they could set up English-language call centers, or produce analysis and data management for international financial organizations.  All of this is value addition of the highest, purest order and most definitely something that Zimbabweans can do today.
  • Kenya's iHub started in 2010 with backing from Hivos, Google and Omidyar Network as a meeting place for entrepreneurs and investors. It has spawned around 50 companies.2  Remember that, I’ll come back to it.
  • Today, Africa’s iGDP (which measures the Internet’s contribution to overall GDP) remains low, at 1.1 percent—just over half the levels seen in other emerging economies.[5]  That’s a huge opportunity for Zimbabwe.
  • By 2025, Africa’s iGDP should grow to at least 5 to 6 percent, matching that of leading economies such as Sweden, Taiwan, and the United Kingdom.  
  • According to the latest report on African internet trends from browser service Opera Mini, Zimbabwe is the country with the highest representation of local content domains (with four of its top ten most frequented websites being local.)  This trend suggests that the Zimbabwean mobile broadband user is a huge consumer of local content, something which startups should explore as an opportunity. [6]

So, those are the opportunities.  While Zimbabwe’s traditional industries have a lot of international competition these days, I believe that your unique combination of intellectual capital, infrastructure and language abilities make you unbeatable in the ICT economy.  And, I see a number of ways in which ICT could strengthen your existing economic activities, whether agriculture, mining, tourism or manufacturing.  What about an app that allows boutiques in New York to order small runs of custom-made, high-value fashions?  Or, how about Zimbabwe-based, on-line tour operators who customize travel for different levels of tourists?

So, what is required to see this industry take off here?

According to eTransform Africa, the experiences so far offer many useful lessons.  For example[7]:

  • Deployment of ICTs and the development of applications must be rooted in the realities of local circumstance and diversity.
  • Governments have an important part to play in creating the enabling environment in which innovations and investments can flourish while serving as a lead client in adopting new innovations and technologies.
  • Effective use of ICTs will require cross-sectoral collaboration and a multi-stakeholder approach, based on open data and open innovation.
  • Most innovative ICT applications in Africa have been the result of pilot programs. The report says now is the time for rigorous evaluation, replication and scaling-up of best practices.

When my staff and I talk to young entrepreneurs in Zimbabwe, their number one concern is how to access capital.  Clear, transparent, predictable policies will help Zimbabwe to attract the kind of investors and partners that these entrepreneurs need to launch their businesses.

And, what is the United States doing?

As I said at the beginning of my remarks, the United States cares about Zimbabwe and wants it to prosper.  So, we are doing what we can to help Zimbabweans explore and begin to take advantage of the incredible opportunity that ICT offers.

Remember iHub, the Kenya tech incubator I mentioned earlier?  Well, we are seeking to replicate that success as one of three sponsors of the first technology hub in Zimbabwe, Hypercube.

  • Hypercube is providing the technology, connectivity, tools, and guidance that will help ordinary Zimbabweans launch new enterprises.  It can also help to bridge the gap between potential investors and entrepreneurs.
  • To date, Hypercube has already hosted website development, animation, and open source workshops, as well as events aimed at educating entrepreneurs about intellectual property rights, crowd-funding, and attracting media attention for their venture.
  • In the future, Hypercube aims to be a fully-fledged innovation center encompassing an incubator, accelerator program, workshop space for hardware development, access to 3-D printers, electronics and tools, as well as an animation and computer gaming studio
  • We are also sponsoring something called “Startup Weekend Harare” next month, a 54 hour event where developers, designers, marketers, product managers, and startup enthusiasts come together to share ideas, form teams, build products, and launch startups.  We are bringing American social entrepreneur Fahad Hassan, one of Forbes’ “most influential young people” to Zimbabwe to serve as a mentor for that event.  We are doing this because we know that Zimbabweans can launch new products, build new enterprises, and contribute to Zimbabwe’s economic development through ICT entrepreneurship.

 

We are also offering opportunities for young Zimbabwean to participate in President Obama’s Young African Leadership Initiative.  This year, 30 young Zimbabwean entrepreneurs will participate in the Washington Fellowship experience that offers exposure, internships, training, and the chance to access capital for start-up enterprises here in Zimbabwe.

  • In recruiting for YALI, we met a student at the National University of Science and Technology who has developed new ways to provide free WiFi on university campuses and in combis. 
  • And, we met other Zimbabweans pioneering new systems for e-commerce, developing online games for African audiences, creating mobile e-wallets, and launching apps that will improve digital distribution for Zimbabwean authors.
  • With talent like that, the imperative is to support it.  That’s just what we’re doing.

We are also working with Zimbabwean organizations to strengthen entrepreneurship and business development skills among youth.  As part of this program, we are partnering with a microfinance institution to expand access to credit for young entrepreneurs as well as providing mentorship opportunities to new micro-entrepreneurs. 

So, what can Zimbabwe do to boost this new and powerful economic opportunity?  First, Zimbabwe must develop and implement transparent, consistent, fiscally responsible policies and rebuild confidence in the nation’s economic and banking systems.  The elements of these policies are not mysterious; they are what the governments of Zimbabwe’s neighbors do to attract investors, protect national interests, and grow the economy. 

Finally, let me offer a few perspectives on start-ups, SMEs and realizing success through failure.

First, understand that SMEs are the backbone of American business.  They are:[8]

99.7 percent of U.S. employer firms,

98 percent of firms exporting goods,

63 percent of net new private-sector jobs,

48.5 percent of private-sector employ­ment,

46 percent of private-sector output,

42 percent of private-sector payroll,

37 percent of high-tech employment, and

33 percent of exporting value.

Second, understand that about half of new businesses survive five years or more and about one-third survive 10 years or more.  As one would expect the probability of survival increases with a firm’s age.  Survival rates have changed little over time.

Third, understand that most small businesses are financed through owner savings; loans from family, friends, and commercial lenders; bonds; stocks; ownership stakes; and other ar­rangements.

Fourth, understand that small business tend to be much more innovative:  small busi­nesses produced 16 times more patents per employee than large patenting firms. Research also shows that increasing the number of employees correlates with increased innovation while increasing sales does not.[9]

Finally, understand that 75 percent of all start-ups, and 90 percent of all products fail.  Without someone’s failure somewhere, there’d be no Apple, no Microsoft, and no Google.  Failure helps to define need and opportunity, so cannot be viewed only as a negative.  Successful businesses around the world started with risks, and companies that continue to innovate continue to take risks.  We are not all risk takers, but we all need to acknowledge the benefits that can accrue from risk and support a business ecosystem in which there is room for the risk of failure, and the corresponding benefits of success.

In closing, let me say that I remain optimistic about Zimbabwe’s future.  There are simply too many well-educated, creative, hardworking people in this great country not to be optimistic about the future.  I know there is important work ahead to revive traditional economic activities here, but I hope at least one or two of you will seriously consider what you might do to help Zimbabwe become a leader in regional and international ICT.  I know that the opportunity is huge and that Zimbabweans can take advantage of it.  I also know that, in terms of value addition and moving away from the vulnerabilities of a commodity-based market, nothing can beat ICT. 

Thank you for your time and attention, and for your commitment to building a strong and prosperous Zimbabwe.

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