I was fortunate enough to be moderating an event in Nairobi last week co-hosted by KEPSA and UNCTAD where the chief guest was the chairman of Alibaba, Jack Ma. I reflected on how this visit has in many ways single-handedly reset the China-Africa narrative. As I listened to Jack recount how he had raised $60,000 (Sh6.23 million) in 1999 to set up Alibaba in his apartment and then reflected on the fact that today Alibaba is valued at $377 billion (Sh39.13 trillion), I went back to Joseph Schumpeter.
Schumpeter spoke of creative destruction (German: schöpferische Zerstörung), sometimes known as Schumpeter’s gale, which is a concept in economics that speaks to a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one”
And what is clear to me is that a new economy is emerging wherever I look and the velocity [and even violence] of its emergence is plain breathtaking. Look at something like Netflix which disrupted Blockbuster, look at Amazon which started by selling books and now sells just about everything.
I also learnt that 29 per cent of UK retail sales are now transacted on-line and the direction of travel remains on-line.
When Jack Ma was asked about the infrastructure deficit in Kenya, he said this [turning to Bob Collymore]
”But your internet is fast!”
And what he was saying was look at this new information highway because it is a disruption and an infrastructure all of its own. More importantly, Kenya has embraced the internet economy. Soon every Kenyan will own a smartphone. Mobile money is a Kenyan phenomenon. Sportspesa came out of nowhere. The ingredients for baking a high velocity internet economy are all in place. Whether the rate cap law is reversed or not is now by the by. The digital disruption is upon us. Physical branches will increasingly be liabilities and no longer assets on the balance sheet. Millions of Kenyans will have bank accounts but never ever set foot in a branch. It is going to be increasingly all about algorithms and algorithmic banking and large scale artificial intelligence. All these shopping malls [unless they are a compelling proposition] will soon look and feel like legacy assets. There is no reason why on-line sales should not reach the UK average of 29 per cent within 24 months. Think about that. We should be pronouncing the last rites.
Just like Jack Ma created $377 billion (Sh39.13 trillion) of value out of nowhere, there will be entrepreneurs who will ride this new economy and who are going to create fabulous fortunes. This is that moment when you have to have your wits and antennae about you because the risk of becoming obsolete is sky-high.
Vinod Khosla said ”the Future is not seen in the rear view mirror”
He was not wrong.