Turning Africa’s slums into economic powerhouses - CNBC Africa

Turning Africa’s slums into economic powerhouses

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Turning Africa’s slums into economic powerhouses. PHOTO: 2summers.net/friendsofalex.org.za

According to Fernando De Sousa, general manager of the Microsoft Africa Initiatives, slums consist of a large group of diverse cultures and people, living in a compact urban space.

“The compactness of a slum requires a degree of innovation, its actually turning that real congregation of people into an economic powerhouse,” he told CNBC Africa.

According to the United Nations (UN), 85 per cent of new employment opportunities around the world are in the informal economy.

Also, around one billion people around the world are living in slums, with this number expected to reach three billion in the next 50 years.

“At that time, they will represent a third of the world’s population. The economic power of a billion people today in the world living in slums is something we cannot ignore” added De Sousa.

However, slum dwellers face many social, political and economic pressures, particularly in Africa. He believes that innovation therefore becomes a necessary means for the urban poor to survive on a day to day basis.  

“We see innovation in the way that these people think and in the way they look for economic inclusion. Our slum dwellers are already taking and adapting technology to drive innovation.”

(WATCH VIDEO: Exploring the best new technology innovations in Africa)

For instance, since transportation and infrastructure remain major problems within slum areas, making it difficult for people to commute to areas of employment in city centres, a micro-economy within the slums has developed over time.

“What we’ve seen develop over time is this micro-economy.  For example, someone who is not leaving the area will look after other people’s houses to ensure fire-prevention, which they then get paid for.  That in itself is a massively innovative business model,” explained De Sousa.

Also, there is enormous potential to invest in human capital.

“A slum is an amazing place because of the availability of talent in that space. There is potential to invest in human capital because you have your target audience living right there altogether. From a cost perspective, it’s so much easier to reach them,” he said.

The use of mobile technology has therefore become key in this informal economy.

“We have an issue with the power grid, internet access and broadband across the vast expanse of Africa, mostly because it’s not economically viable to take internet into these less densely populated areas. However, a slum is the inverse of this as it’s the one place that can have a single mobile network tower to cover a vast density of people,” explained De Sousa.

He therefore believes a slum area is the ideal place to drive the digital economy.

“You don’t need to have a physical address to be on the web, you can participate in the economy in a virtual way which is so much more effective. I think this is one of the areas of innovation that Africa can potentially lead the world,” he said.

(READ MORE: Africa's mobile subscriptions soon to reach 1 bln mark)

“The ability to provide goods and services online is the way the world is moving forward. Why would we suddenly ignore a very important part of the population and marginalise them when they have the perfect access to the economy through mobile technology.”

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