"In the era of the social distancing economy, Africa presents the greatest opportunity worldwide"
By Yariv Cohen, Angaza Partner
The implications of a global crisis are always widespread and long-lasting, far more than the immediate results. Every crisis, whether political, financial or health-related, could be a catalyst for innovation, social revolutions, and economic disruptions; Thus, the global Corona crisis is also likely to affect our lives for a long time, until the social-distancing policy is over, the financial markets (hopefully) recover, and we will all embark on the new reality of our lives.
One of the significant changes we can expect is the decline of the “sharing economy”, which has been one of the leading trends in the consumer and the entrepreneurial sectors for over a decade, creating mega-companies such as WeWork, Uber, Airbnb, and many others. Now, their successors seem to be the exact opposite. The “social distancing economy” has entered our lives due to the spread of the Covid-19 virus, but is expected to continue its momentum and gain the status of the new global trend.
The transition between the eras of the sharing and the social-distancing economies brings a unique opportunity for companies, investors, and entrepreneurs across the world, and Africa presents the greatest potential to lead the revolution. The emerging continent has already proven in recent years that it can “leap-frog” economic, social, and technological trends that have been dominating the Western economies for decades, and land straight in the future. Now, Africa can be the force leading the entire world during its first steps towards the new age of the social-distancing economy.
Long live the individual!
At the heart of the sharing economy stands the assumption that for the right incentive, people will be happy to share tools, property and other assets with complete strangers - thus streamlining the distribution of products and assets in society. Our house is empty when we go on vacation? Why not rent it to other vacationers and make some extra money; Instead of holding a private office, one can share an office with thousands of others in a shared workspace; and so on. The examples vary and touch almost every aspect of our lives as consumers.
The spread of the Coronavirus and the world-wide social distancing guidelines demand the exact opposite: Instead of sharing and connecting with strangers, we now have to reduce our interactions to the necessary minimum. Reality proves it’s not so hard. Not interested in getting dressed and going to class? You can get educated online. Instead of going to the office, we discover the benefits of working remotely, and even the gym no longer has exclusivity on a quality Pilates class, now delivered through dedicated home training platforms.
All of these services and technologies already existed, but the Corona crisis is now accelerating their adoption. Now that we have discovered how convenient and inexpensive it is to enjoy these services, it is hard to believe that we will return to our former reality. While companies based on the principles of the sharing economy are likely to be harmed, companies and ventures that will be able to take advantage of the new situation are likely to benefit and prosper.
The “leap-frogging” continent
Every entrepreneur or investor who has been active in Africa in recent years has heard the term “leap-frog” many times. The idea behind the term is simple: just like frogs who can jump over huge elements, so does the African economy, which can jump over trends and technologies that have dominated Western society for years.
Telephone services are a great example. While most houses in Western countries used landline phones for decades and only then switched to cellular phones, Africa simply skipped landline phones and went straight to cellular technology. The same is happening today in the energy sector: While most Western countries will take a long time to switch to off-grid green solutions for electricity, in Africa millions of homes are already connected to various off-grid solar solutions that provide clean, safe and affordable energy.
Now, Africa is facing an opportunity to leap-frog again. The sharing economy has not yet made its mark on the local economy. Africa can leap over it and move straight to the new era, which fits the continent’s characteristics like a glove.
The ultimate starting point
Unlike the sharing economy, the social-distancing economy is based on the assumption that the majority of the public will now choose to reduce time spent in busy places, including office buildings, malls, and shopping centers, and even universities and government offices.
Western countries are built around central services in all sectors including health, government, consumption, and education. There are central places one goes to in order to get the services they require. In Africa, with hundreds of millions living in rural areas that are far away from big cities that possess most of the services, decentralized solutions are a must.
For Western countries built under that central paradigm, the transition will be difficult and long. For Africa, which is already built non-centrally, the transition will be much easier and quicker. The yet-to-be-built malls, shopping centers, and office buildings will be leapfrogged by logistics hubs and smart delivery services that have already begun operating across the continent.
The extensive geographical distribution of the continent (with many remote villages) makes the off-grid solutions ideal, regardless of the coronavirus. In the energy sector, off-grid solar systems make perfect sense (with a nationwide grid being no more than a dream). In the health sector, which is lacking a strong public health service, Telemedicine for the rural communities is an obvious solution. Remote education is very relevant for millions of young people living far away from the cities, and so on.
We are now witnessing one of the most important revolutions of our time, expected to continue to affect our lives for many years after the Corona crisis ends. The rise of the social-distancing economy will accelerate social processes, affect technological developments, change business models, and more. Companies and ventures that will identify the potential early will have a good starting point: those who recognize the inherent potential in Africa will have an even greater advantage.
African governments can also take advantage of the situation and encourage companies and ventures operating in the social-distancing economy: these can solve wide-scale problems, impact the lives of hundreds of millions of people, position Africa as a world leader in the emerging field - and lead the entire world towards the new era.