Innovate or perish

SHARE   |   Monday, 30 November 2015   |   By Steven Bogatsu
Innovate or perish

FNBB CEO, Steven Bogatsu delivered an incisive and inspiring address at the recent Business Botswana Gala dinner, urging locals to be more innovative, support innovators, use local expertise and ‘Buy Botswana’. This is his address. The BOCCIM annual gala dinner has been running for 29 years now, and this year marks the first ever gala dinner held under the new name, Business Botswana. I would like to take this opportunity to commend Business Botswana for its successful rebranding from BOCCIM as part of its restructuring efforts aimed at broadening its mandate.

The role of Business Botswana

We are fortunate to have Business Botswana which is mandated to advocate for a business environment that makes it easy for people to start and operate business. I wish to commend Business Botswana for constantly demonstrating that the dialogue and cooperation is stronger than discord and conflict. Since its inception in 1971, the organisation has protected the economic interests of the business community and through its philosophy of constructive dialogue; Business Botswana has won the confidence and respect of Government and other stakeholders in Botswana, allowing it to contribute meaningfully to the formation of policy.

Achievements

Business Botswana has, among its many other achievements, initiated the debate on the need for “A Long-Term Vision for Botswana”, and has organised the business sector to be a major player in the formulation of many national economic issues. Some of Business Botswana’s achievements include: The establishment and institutionalisation of the HLCC in 1996; The promotion of the Privatisation Policy for Botswana; Liberalisation/abolition of Exchange Controls; Lowering of both corporate and personal tax from a high of 35% to a low of 15% for manufacturing and 25% as a general tax rate for Botswana; Establishment the National Business Council (NBC); and Raising the profile of the role of the private sector in nation building.

The theme
Before I get onto the agenda of my address, I would like us to share a quick moment of reflection. The theme chosen for the keynote speech in 2014 was “Nurturing a private sector led economy”.  When delivering key note address on this theme, the guest speaker, MTN Group President and Chief Executive Officer, Sifiso Dabengwa urged Business Botswana to pay particular attention to the weaknesses and challenges of the institution as outlined in their Strategic Plan, and to come up with solutions to such performance pitfalls. I would like to believe that the evolution of BOCCIM into Business Botswana was partly to address the challenges Mr Dabengwa articulated.
The theme in 2013 was “Government & Private Sector’s collaboration towards Socio-Economic Development of Botswana”. In his keynote address the then Vice President painted an optimistic picture, asserting that the Government was working on measures to support companies that wish to expand offshore. He also indicated that Botswana Export Credit Insurance (BECI) was tasked to expand its product offering to include export credit and outward investment insurance schemes for local companies. From interactions with some of my customers, I know that progress has been made, and this market diversification has helped companies sustain their businesses during the difficult periods we are experiencing.
Rre Kedikilwe also indicated that the Government is promoting independent power producers and public-private partnerships to help us meet the demand for electricity. It will be amiss to fail to mention that unless these challenges around energy and water are addressed soon, they could reverse all the progress we have made in the past. We are however aware of the initiatives that Government through the Ministry of Minerals, Water and Energy Affairs, has communicated to address these issues.
This year’s theme is a continuation of a thematic thread that Business Botswana has carefully created over the last few years. The ball is again in the private sector’s court with the theme “Leading the private sector to an innovative & sustainable economy”. I want to acknowledge that the private sector is faced with a number of challenges, which have been communicated to various stakeholders including Government directly or indirectly through Business Botswana. So I will not dwell on those tonight but focus my discussion on what we should be doing as private sector to ensure that we develop an innovative and sustainable economy.
But what is an innovative economy?
I was tempted to discuss this topic by delving into textbook definitions of innovations, but decided that it is more appropriate for members of the business community to discuss what is practical. Silicon Valley in the USA was started a couple of years ago. Today young innovators in this Valley are renowned for their disruptive innovations. The Companies in Silicon Valley contribute about $500 billion to the US Economy. Their innovation model has become so successful that they have partnered with world class universities, and countries such as Asia and the EU have diplomatic representatives on innovation based at the Valley. The activities are led by young racksack carrying IT graduates who have transformed San Francisco into an innovation mecca of the world.

More Innovators at work
Successful tech innovators such as Bill Gates, Steve Jobs and Mark Zuckerberg started with a vision and transformed it into reality. Closer to home, Rapelang Rabana has given us the Silicon Cape. Botswana-born Rapelang is the founder and CEO of Yeigo, an innovative Cape Town-based company that developed some of the world’s earliest mobile VoIP applications. Her most recent innovation is ReKindle Learning, a mobile learning application that is set to change the way we transfer knowledge and think about education. The beauty is that today innovation is less restrictive and ever more possible. An app developer needs nothing more than a device and an internet connection to create innovative solutions with potential world-wide appeal. We need to understand how new technologies exponentially impact the business landscape. We need to do some crystal ball gazing and look at how industries are evolving and being transformed, and we need to be ready for these changes, or better still, we need to be ahead of these changes. Innovation is not just about technology, it is more the ability of an organisation to re-invent itself in order to acclimatise to an ever changing complex business environment.
“Within 10 years, 40% of current S&P 500 companies will no longer exist due to an exponential growth of technology,” Peter Diamandis – Co-Founder of Singularity University, a University formed in partnership with Silicon Valley.  Are you one of the companies’ that will be affected? There are many examples of organisations that could not sustain their business models as a result of failure to innovate. For example there is Motorola and Kodak. We have also seen many countries embrace innovation in order to sustain their economies. Countries such as Switzerland and Singapore are at the helm of innovation. This is very apparent from the improvements they have made regarding their competitive scores.

What is currently trending
Digital manufacturing, known as 3-D printing, is allowing anyone, anywhere, to create physical items from digital blueprints. It is ushering in an era of do-it-yourself innovation, and their mantra is “if you can think it, you can print it”. Information technology industry has brought about massive changes to our personal and business lives. Mobile ecosystems have made interconnectivity more efficient and intuitive. Even in the Banking industry we are also experiencing a revolutionary wave with mobile solutions like Mobile Apps, Mobile Money and payment gateways. We live in a world characterised by spontaneity and sharing, driven by technology and innovation here are some examples of that many of which have already arrived in Botswana: a single tweet can reach millions all over the world in a matter of seconds; the world’s largest taxi company, UBER (Valued at US $17 billion), owns no vehicles; the world’s most popular media owner FACEBOOK (Valued at US $294 Billion), creates no content; the most valuable retailer ALIBABA (Valued at US $193 Billion), has no inventory; and the world’s largest accommodation provider Air BnB (Valued at US $10 Billion), owns no real estate.

Challenges and opportunities
One of the biggest challenges that we face as a country is youth unemployment. It is a situation that should worry all of us. In his Keynote address at the recent UB Foundation Gala Dinner, Dr Nkosana Moyo of the Mandela Institute for Development Studies said “all revolutions, from the beginning of time, have been about one thing and one thing only. This one thing is exclusion. When a significant enough number of people find themselves on the outside of a system, a system that excludes them and does not create either opportunity or credible prospects for inclusion within a realistic framework, then the excluded  people will turn their energies and imagination to the destruction of that system”.
Government has spent billions educating the youth and many of them are unemployed. Some of these young people have some of the craziest ideas, but that is what innovation is about, disruptive thinking. Young people should be given a platform to express themselves constructively, otherwise they will find ways of engaging themselves destructively, and it will be to our detriment. Government has set up structures such as Botswana Innovations Hub. And we expect Government to do exactly that. As the business community we should step in and drive the initiatives to the next level. What are we as the private sector doing to ensure that we support this initiative? How many of us have made an effort to understand what the innovation hub does, and how we can support it. We have the capacity to ensure that these young minds feel included in the system.
Let me share some of the initiatives and experiences of young Batswana:
• WorldQueues was born when the creator was stuck in a queue at CIPA. This innovator from Botswana had to relocate to Kenya to gain entrance into the market, because for some reason, best known to us only, we reject our own. The company was contracted by organisations in Kenya and to date up to 60 branches with over 100,000 customers use their product. To date this company has not met its growth objectives in Botswana as many businesses remain unconvinced about their capabilities.
• DITEC PHONES is another Botswana company that designs and manufactures mobile phones. They had to promote their devices in over 10 African countries, and an order was secured in Uganda. I am reliably informed that DITEC devices will be penetrating the Botswana market in December. This is a major milestone for the company as all this effort took 13 years, 12 of which was spent convincing the local market.
• Products Botswana E-Commerce Platform is a virtual market place which was created to put grassroots arts and craft producers directly in touch with global buyers. Another Botswana innovation which provides a payment gateway through VISA and MasterCard and goods picked or delivered by a courier services. Producers are registered all over Botswana through the support of young ICT graduates.

Our role in the financial sector

FNBB strives to be a leader in innovation. We recognise and encourage a culture of innovation. We are proud of our innovation simply called *174# Mobile Transact’ and these are the features: one can purchase pre-paid electricity; make real-time payments to MultiChoice, anytime, anywhere your comfort and convenience, even when roaming; We are negotiating with other service providers, government departments because this solution enables payments of services for all. The *174# Mobile Transact service is open to Mastercard & VISA cardholders irrespective who your bankers are. The user must merely be a beMobile or Mascom subscriber.  And this solution was started here in Botswana, by young Batswana. It went on to win the grand prize of R1m at the FNB Group Awards ceremony in RSA. This product is now being rolled out to other subsidiaries of FNB, and as Batswana we are proud of it. The team is already working on the improvement of this innovation, which will make the current appear antiquated. This is how fast technology moves. There are many other innovations which young Batswana are working on. A virtual POS will enable payment to a plumber at your house immediately after the work has been completed. It works just like a POS (or swiping machine), using cellphones via VISA/MasterCard for immediate payment. Another innovation is called Tender APP, where the whole tender process will be automated, from start to finish. I believe that innovation within the financial services industry, which continues to expand with a number of new entrants such as the mobile network operators, will be the key success factor in the years to come, and FNBB is committed to strive for excellence in this sphere.
Where do we stand?
In the 2014-2015 Global Competitiveness Report, Botswana ranks 74th out of 144 countries. In terms of Business Sophistication, we rank 116th, and in Innovation 102nd out of 144. These are important, if somewhat depressing statistics. When we gather together at a session like this, we can’t help but ponder the contributing factors that lead to these less than satisfactory rankings. Clearly we urgently need to identify our shortcomings and seek solutions to improve our competitive edge as an economy. Without innovation, without new, cutting-edge ideas, products and services, an economy will stagnate and its competitiveness will decline.

The role of the Private Sector
We are all aware that the Botswana Government’s Economic Diversification Drive is key to ensuring sustainable economic growth and a vibrant, globally competitive private sector. The EDD initiative encourages strategic alliances between small, micro and medium size enterprises (SMMEs) on the one hand, and locally-established large companies and foreign companies on the other hand. Through Botswana’s membership of the Southern African Customs Union and the Southern African Development Community, potential business opportunities may also be leveraged from cross-border business linkages established in these regional integration arrangements.

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So what needs to be done?
The theme, “Leading the Private Sector to an Innovative & Sustainable Economy" begs the question: What does the private sector need to do to lead the economy to innovation and sustainability? Firstly, it needs to continue to innovate. We need to nurture creativity within our society, particularly among the youth, and develop conduits for great ideas to be transformed into viable new products and services that add value to the economy. For sustainability, the private sector needs to augment the Government’s EDD programme: Supporting the young people who are very passionate about innovation. This support through BIH which is mandated to champion the innovation agenda for Botswana and to support can be in the form of:

  • Commercialisation phase of the innovations
  • Creating business opportunities in technology and innovations
  • Providing specialised infrastructure and facilities
  • Providing mentorship and guidance

The Private sector can also:
• Review their procurement practices and ensure that their goods are purchased in Botswana. We all have various excuses why we are procuring goods from across the border but we do need to “buy Botswana”
• Procuring services from young Batswana and companies in Botswana. For some odd reason, we believe that investment managers based somewhere in Cape Town, flying into the country periodically provide better advise than our very own well trained young professionals. It is not only investment management; the legal profession leaves me bewildered. The number of so called senior counsel/advocates descending on our shores for both defence and prosecution to argue cases instructed by local attorneys, after 50 years of independence, have we not developed enough to interpret our own laws? Of course this extends to other professions as well.
• The private sector not only needs to lobby for a relevant educational focus, but must also enhance intensive on-the-job training as well as skills pollination through international exchanges.
• Most importantly, we in the private sector should embrace innovation, if we don’t we will be taken over. Are you aware of the innovations taking place in your industry? Right now, someone is working on an innovation that will automate everything that your company is doing. They will be able to do it online, much quicker turnaround. If you can think it, it is being innovated right now as we speak.

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As I conclude, with all the emphasis at my command, I urge my colleagues in the private sector to: Be Supportive of young talent passionate about innovation; Embracing innovation in our businesses; Support local industries by procuring from them and utilising their products and services (It would send such a strong message when we all acquire the Ditech phone when it is launched in Botswana and other products innovated by Batswana); Help create an ICT friendly environment especially in schools, by assisting with the provision of internet etc. By so doing, we will create an ecosystem that will help this economy with import substitution, export orientation, job creation and self-sustenance, all of which will ensure that this economy remains solid, resolute and is sustained for years to come. There is no reason why Botswana cannot be an innovative nation, and if we as the fixed telephone line, Post Office, cash transaction generation ever had doubts; our techno savvy young people certainly have proven that we can. We have examples of many companies in Botswana who have been successful at exports, Nortex, Flotek, Choppies, Funmart, Letshego and many more can.

My last two requests are for Government. Many other economies are surging ahead. Despite conducting benchmarking exercises with Botswana, Rwanda, to quote one example, has been much more successful than Botswana in implementing ICT policies. The implementation of our e-governance systems is not yet where it should be. There is still far too much reliance on the old: on paper, certified copies and rubber stamps, and not enough e-system integration. We as private sector want to help, allow us to assist, and I know that Vice President Masisi is on record calling for this assistance, even through exchange programmes.

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Dual citizenship
Government should also seriously consider dual citizenship for those deserving Batswana and other nationals. We have both Batswana and other nationals who grew up in Botswana, and have made names for themselves elsewhere. They have had to move abroad in order to access bigger markets. Many of them are willing to bring back those skills here, they love Botswana, and we can benefit as a society if they expand their businesses into Botswana.

Business Botswana is well placed to take the lead in these endeavours, and I commend Business Botswana President and CEO for their commitment to the development of an innovative and competitive economy that will sustain into the future.

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In conclusion Director of ceremonies, I want to echo one of the business leaders in the country who said “we have only one economy, one Botswana, let us make a success of it” Lekwalo Mosienyane, Business Botswana President – 39th HLCC meeting, 19th November 2015.