ICTworks

The future of digital development: who’s building it?

This is Yar Zar Min Htoo and his cousin Michael Lwin. Six years ago they decided they wanted to use technology to help their country, Myanmar. They had no idea what they were doing. They flailed around for a while. But then they built a maternal health app called May May.

May May came out in 2014 just as Myanmar’s connectivity revolution was starting. Today the app is going great. It’s already got 100,000 active users and Yar Zar and Mike’s company Koe Koe Tech is getting ready to roll it out in Bangladesh and Vietnam.

The development community wants to promote digital development. But in thinking about how to do this, it’s important to ask: who is actually doing digital development? And what’s the role of aid agencies and their traditional implementers?

The Growth of Local Tech Ecosystems

You see, there are already Yar Zars and Mikes all over the developing world. In many of the countries that we care about there are already vibrant local tech ecosystems. In some of them there are already socially impactful startups like Koe Koe Tech. In all of them, there definitely could be.

The talent pool is growing. Look at the impact of a startup like Andela. It’s already trained more than 600 developers in Africa to the standard where they can work remotely for companies like Viacom and GitHub.

Even in places where tech seems really early, local ecosystems can be built. Rapidly. When I moved to Myanmar six years ago, the country had rates of mobile and internet penetration lower than even North Korea. People laughed when I said I was going to organize the country’s first-ever hackathon.

But Phandeeyar – the tech hub that I created – set about building the ecosystem as fast as the new telcos were rolling out their networks, and as quickly as the Myanmar people were snapping up $23 smartphones. Myanmar now has a thriving tech ecosystem.

The great thing about tech hubs is that they are magnets for engaging a broad range of players. Politicians want to replicate them elsewhere. Business leaders want to be a part of them. Mentors sign up to help. And they are ideally positioned to crowd in a diverse range of investors, funders, and local and international companies.

Perhaps most importantly, tech hubs are a powerful platform for creating opportunities to build socially impactful startups and for providing these startups with the support they need to succeed.

What should be the role of development community?

I think the key question is: how can the development community find better ways to

• Support those who are already doing this work,
• Further back those who are building local ecosystems, and
• Inspire more of the talent within those ecosystems to tackle development challenges.

This requires a shift in mindset, and a shift in the way of doing business.

Products and Companies, not Projects and Partners

That maternal health app May May isn’t a “development project”. It’s a product. And Koe Koe Tech isn’t a “local partner”. It’s a company. It’s a company with nearly 50 staff, a business model and a plan to scale. Internationally.

Startups don’t want to be written into some implementer’s proposal and maybe get some heavily conditional sub-grant in 12 months time. Startups need investment now.

“Africa is one of the toughest capital raising environments, and the time and effort spent on it has ‘killed’ many great teams and ideas”. Ido Sum, TLcom Capital LLP

There’s increasing amounts of venture capital going into developing countries. But these numbers are still paltry and frontier market VCs generally focus on companies that replicate and adapt proven models. And there’s still plenty of market failure.

This is especially the case for three types of companies, which are important in developing countries:

• Market innovators – companies that are pioneering new models,
• Market makers – companies that are solving problems faced by all companies in a market,
• Bottom of the pyramid startups – companies focused primarily on lower income markets.
  

Unfortunately, if we’re honest, aid money isn’t great at funding these three types of companies. It’s often too late or too slow. It comes with too many strings or it distorts priorities or crowds out private money. So what’s the answer?

New Funding Mechanisms + Better Support

Part of the answer is that it’s important to develop new funding mechanisms. They need to be faster, more flexible, more tolerant of risk. Ideally they would be focused on areas where private capital is slow. Yes this is risky. But it’s also where really significant impact is possible.

The community also needs to work more directly with the people who are most invested in finding solutions to these problems. We need to do even more to fast track the growth of these local ecosystems and to inspire the talent within them to tackle development challenges.

As we talk about all the exciting ways in which tech could accelerate change and development, let’s also spend time figuring out better ways to support those who are best positioned to build long term solutions to these challenges.

David Madden is the Founder & President of Phandeeyar: Myanmar Innovation Lab. He is currently serving as an Entrepreneur-in-Residence at Omidyar Network. He gave this talk at the USAID Digital Development Forum.