The term arbitrage traditionally refers to taking advantage of the price differential (the gap) between two or more markets. One example is how search engine marketers use arbitrage to make money off of Google Adwords with keyword buying and landing pages. Another is when traders take advantage of differences in exchange rates on currencies in two separate markets.
Is there technology arbitrage in Africa?
Tucked away in a blog post on Calestous Juma talking about the future of African communications, Ethan Zuckerman states:
“The spread of connection infrastructure into Africa now points to the need for devices that can access the internet, content to be delivered and applications. These, in turn, point to the need for institutions, laws and policies to regulate this space, which are currently lagging far behind the technology.“
We all like to discuss the technology gap in Africa, which is this space between those who have access to technology and can use it (the West) and those who do not (Africa). Does this create the environment to take advantage of technology arbitrage?
From a certain perspective that can all seem very bleak and depressing. From another, it smells like opportunity.
This time and knowledge lag between government “institutions, laws and policies” that Calestous Juma and Ethan are discussing is just the sort of gap that allows arbitrage to happen. You should be able to turn the lack of technology in one place, or at least information, compared to the other to your advantage.
Put another way, when a government is too slow, inefficient and technologically incompetent to keep up with the rest of the world, what happens?
I think we see the answer in a number of places already, not all of them savory. We see this in business executives who corner a market, like we’ve seen with Safaricom in Kenya, or the notorious 419 scammers in Nigeria. We read about it when Egyptian youth use Twitter to broadcast police brutality, or when Zimbabweans send MMS images of completed ballot counts from voting precincts in advance of those trying to perpetrate fraud.
Two main groups seem to take advantage of this: businesses and activists.
The natural inclination of the market is to leverage these gaps and inefficiencies, to create opportunities out of the void, that technology can often overcome. The best businesses in our current era are built to do this as are the activist groups with the greatest impact.
[Authors note: I’ve made up this term “technology arbitrage”, but I couldn’t think of a better way to describe what I’ve been thinking about. Speaking of which, I’ve been muddling this over in my head for a week and just wanted to air it out to hear other’s thoughts.]
September 17, 2009 at 11:52 am
I think ‘technology arbitrage’ is a great articulation and agree that it almost certainly represents a tremendous opportunity.
September 17, 2009 at 7:31 pm
Of course there is opportunity where government policy does not keep up with technology. Here is one I noticed when I was lost in Abuja backstreets: Arbitrage Nigerian Telecom Rates: Commercialize Question Box
September 19, 2009 at 7:28 am
Interesting concept!
My take is that while there is significant uptake on the use of technology, in places like Nigeria, it is still used be an extremely small proportion of its 150 million people, and when used at all for the simplest of tasks – email, reading newspapers (and increasingly blogs).
The lag in governance is glaring, but the complete abscense of an online present by most arms of government is just as glaring. This morning the Nigerian Police reports that there is a fake Nigerian Police website out there…! I rest my case!
Read end of this article http://www.thisdayonline.com/nview.php?id=154872
With increase in bandwidth there is a huge opportunity for good and evil…who get in there first?
September 19, 2009 at 4:44 pm
i’m not to clear on what you mean by technology arbitrage – but what i do now is that there is significant opportunity for arbitrage for various web services that are available online but due to payment lack of local payment solutions and local alternatives – from online shopping, to simple services as online storage and hosting – im sure many hosting solutions are mainly wrappers around international hosting services. same goes with services such as amazons EC2 and S3 -all this are opportunities for local arbitrage. Over time i’m sure more advanced services will be come available such as content caching and CDNs .
September 29, 2009 at 11:44 pm
I think this is a great argument! and I do believe that countries with more driven, knowledgable governments could make technologies more accessible to their people.
My only question is do you really think government is completely &always going to be accountable for the lack of technological support in a country? I mean I’m sure there is some area they fell short in at some point, but I think there are other factors that inhibit growth in these areas sometimes (like lack of investors, or technology dumping).