A GROWING number of African organisations are increasingly embracing the drive towards the next wave of innovation in the global digital platform economy.
This is part of the findings of a study by world-renowned platform economy expert Sangeet Paul Choudary Stanbic Bank Zimbabwe’s parent company, Standard Bank’s corporate and investment banking (CIB) digital unit.
The Stanbic Bank Zimbabwe parent company, partnered Choudary to launch the paper, titled ‘Can Africa take the platform economy forward?’, which analyses the challenges facing the continent’s platform economy, the path it is likely to follow, and the untapped opportunities for long-established organisations.
The paper, launched digitally, was authored by Choudary and Standard Bank CIB digital’s Jonathan Lamb and Kent Marais.
“Despite several unique challenges across the continent, the platform economy is gaining traction in Africa as consumers and businesses grow more accustomed to online services,” said the bank in a media brief.
Embodied by the likes of Amazon and Uber, the platform economy refers to value-creating interactions facilitated by digital intermediaries. Africa’s sophisticated mobile-money market is one of the best-known examples of platform innovation on the continent, which is fast developing alternative infrastructures in response to the dearth of continent-wide traditional digital infrastructure, it said.
“As its platform economy takes root, Africa may well draw on the experiences of both India and China, whereby governments work to develop standards and create basic digital capabilities such as identity management, while private companies build out the necessary financial and logistics infrastructure,” it said.
At the same time, opportunities exist for traditional African organisations to drive new innovations and develop new operating models in the platform economy.
With their extensive networks and ecosystems of clients and partner organisations, companies that are already deeply entrenched in the African market are well placed to facilitate the growth of the business-to-business sharing economy, in which companies drive efficiencies by sharing services, processes and digital assets, said Standard Bank.
“Banking groups are among those that could seize this opportunity,” says Kent Marais, head of CIB digital channels, Standard Bank.
“For example, a financial services organisation can provide a digital platform that facilitates value-creating interactions between ecosystem participants — clients and other partner organisations”.
In such a scenario, the bank said a corporate banking client that has developed a robust risk-management function could consider taking on the role of a capability provider that on-sells this service to other businesses in the ecosystem.
It said platform owners themselves can also on-sell some of their own digital capabilities, which they have built up over the years and invested heavily in. For instance, a telecommunications company with a mobile-money platform could provide credit-scoring services to ecommerce platforms keen on offering instalment-based payment options to boost sales.
By participating in the platform economy, organisations have an opportunity to better serve their clients while also generating new revenue streams.
“Globally, the current health and economic crisis sparked by the Covid-19 pandemic has brought platform operating models to the fore, and the digital infrastructure providers behind them — cloud providers such as Microsoft, Amazon and Google — are playing a crucial role,” says Sangeet Paul Choudary.
“But the crisis has also resulted in a stalling of big-tech regulations,” he adds. “Against this backdrop, there needs to be a focus on ensuring that we leverage platforms to develop solutions to humanitarian problems, and to ensure that organisations are more efficient and able to withstand this shock and the period that will follow.”
As the Covid-19 pandemic weighs heavily on the African and global economy, it is clear that platform companies are faring better than most, said the bank. It urged African organisations to consider how they can participate in this segment of the market through building and owning platforms themselves or participating in them, or both. This includes ensuring that organisations are agile and able to adapt their services while also accessing new revenue streams.