First Innovation, then Regulation

First Innovation, then Regulation – What we can learn from Africa

“You can not innovate under regulation. You have to take risks”, says Bitange Ndemo, former Permanent Secretary in the Ministry of Information and Communication in Kenya. He knows. During his time in government, from 2005 to 2013, the transformation of the Kenyan ICT sector has been forged: undersea submarine cables, the Open Data initiative, the evolution of tech hubs such as iHub and mLab, and – most famously – the emergence of mobile banks.

“If there is regulation, there won’t be any innovation” …

… Ndemo told me in Nairobi last week. He is regarded as the enabler of M-Pesa, today the world market leader and most famous mobile bank in the world. M-Pesa has more than 19 million customer alone in Kenya where more than half of the country’s money transactions are done via mobile phones. When Mark Zuckerberg, founder of Facebook, arrived in Kenya in September, he posted to his 78 million follower, “Just landed in Nairobi! I’m here … to learn about mobile money – where Kenya is the world leader.”

Access to the world

For hundreds of millions of people in Africa, mobile phones have brought access to communication and  mobile money has brought access to the money economy. Both are a basic requirement to do business. These accesses have contributed to lift millions of people out of poverty. But no development expert had indicated these solutions a decade and a half ago. How could he or she? Successful innovations are never the outcome of a plan. They emerge out of the interplay of many different factors – technology, people, relationships, experiences, failures, and, as Ndemo told us, a favorable political environment. Thus, you couldn’t have had an appropriate regulation for mobile banks before you knew what a mobile bank actually is. That is what Europe can learn from Africa today – not to ring-fence vested interests through tangled regulations.