Africa Needs Market-Creating Innovation
Africa’s economic growth over the last 25 years has been accompanied by soaring inequality, which the COVID-19 pandemic threatens to worsen. Developing innovative products for the continent's poorer "nonconsumers" will provide a more predictable, inclusive, and sustainable path to prosperity for hundreds of millions of people.
LOMÉ/BOSTON – Eradicating poverty and boosting prosperity in Africa starts in the boardroom. And it requires African business leaders to use their positions to foster more inclusive economic growth that benefits all stakeholders – customers, employees, suppliers, and communities – rather than focusing on short-term profits that fail to lift up vulnerable communities.
But expanding the economic pie will require the continent’s business leaders to take a fundamentally different approach to innovation and growth. To generate shared prosperity, African corporate boards must focus on building new markets in Africa, for Africans. That means emphasizing market-creating innovations.
As many observers have pointed out, the Nobel laureate economist Milton Friedman’s famous dictum that a firm’s only social purpose is to maximize shareholder value is no longer tenable, given soaring levels of inequality. In Sub-Saharan Africa, for example, more than 230 million people suffer from chronic undernutrition.