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This article was published on April 27, 2013

For tech to develop in emerging economies, the first obstacle is trust

For tech to develop in emerging economies, the first obstacle is trust
Matthew Carpenter-Arevalo
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Matthew Carpenter-Arevalo

Matthew Carpenter-Arévalo is a former Google and Twitter manager. His boutique digital agency, Centrico Digital, is based out of Quito, Ecua Matthew Carpenter-Arévalo is a former Google and Twitter manager. His boutique digital agency, Centrico Digital, is based out of Quito, Ecuador. You can find him on twitter as @ecuamatt.

In February I found myself seeking air-conditioned sanctuary in the Dar Es Salaam offices of Kinu, a co-working space and business accelerator, talking with Co-Founder and Community Manager John Paul Barretto. In a stream of conscience verse reflecting his holistic thinking on the subject, John Paul outlined the numerous challenges facing the development of a tech. industry in Tanzania.

Riding the wave of global awareness for the need to stay competitive, Tanzania has taken some positive steps forwards, including government investments in a fibreoptic backbone as well as strategic initiatives around promoting start-ups.

Still, there are hindrances to the overall development of the ecosystem, including under-developed infrastructure, limitations of the education system, lack of protection for intellectual property, all of which found their place within JP’s analysis of the problem. Indeed, when buildings are literally falling apart as a result of poor oversight and regulatory enforcement, one might be forgiven for feeling slightly pessimistic about Tanzania getting the formula right to develop a strong tech scene, and yet John Paul continues to be cautiously optimistic.

Of all the obstacles, the biggest stumbling block, (according to JP) is one that is entirely within the tech community’s capabilities to solve. In one word, that issue is trust.

Fast forward a few months and I’ve returned to my adopted country of Ecuador with the objective of helping to develop a thriving tech scene. Ecuador’s socialist government has prioritized the tech sector, even going so far as to create an entirely new city focused on the development of knowledge industries.

I’m sitting in a dimly-lit bar where waiters dressed as cowboys serve overweight cat-sized beers that are extra-potent at Quito’s 2800 meter altitude. Across from me is Ivan Lasso, a Spanish-Ecuadorian veteran of the country’s tech scene and an at editor at Genbeta, a Spanish tech blog.

“The main problem,” he tells me, prompting a sensation of deja vu that could easily be mistaken for altitude sickness, “is trust. No-one wants to talk about their ideas for fear that the person sitting next to them will steal them.”

The distrust that haunts both the Tanzanian and Ecuadorian tech scenes is not without precedent. In many emerging economies capitalism has slowly developed out of the shadows of communism, feudalism or dictator-style mashup economies, and its current incarnations haven’t entirely shaken themselves of the dusty vestiges of the past.

Thrust into a constant state of either too much or too little regulation, entrepreneurs in emerging economies are keenly aware of how the success of one enterprise often leads to a copy-cat setting up shop across the street. The legacy then of the offline local markets stalls the development of industries that are primarily online and focused on regional or global markets.

Though many governments are trying to align the stars to develop the next Silicon Valley so as to not be left behind by the onslaught of the modern equivalent of the industrial revolution, these governments are quickly discovering that only so much can be orchestrated through top-down intervention.Indeed, their top down efforts need to create the conditions to encourage grass-roots efforts to surge upwards.

Aside from the required infrastructure, labor conditions and ease of doing business, etc., there needs to be a community which in turn creates a culture and eventually leads to a self-supporting ecosystem.

Similar to the emergence of wine industries outside of traditional markets, local competitors must begin to see each other as collaborators whose ability to succeed is dependent on each other’s success.

Just as the first California wine to win a blind-tasting in France in 1976 created legitimacy for all wine producers in Northern California and created hope for producers in places such as Chile, Argentina and Australia, the success of one tech entrepreneur in an emerging market can lead to a new valuation for all who follow.

With seed funds, angel investors and late-stage venture capitalists flocking to all corners of the earth looking for both proven models applied in new markets and new innovative web services yet to grace the mature markets, the mantra of “if you build it they will come” continues to hold true.

Indeed, now is the time: in countries such as Ecuador mobile penetration is over 100%, meaning there are more cellphones than people, not to mention toilets.

In Tanzania the ubiquity of platforms such as M-Pesa have given millions of poor people access to financial services for the first time and created the potential for entering the online marketplace.  With exponential growth continuing and transaction costs remarkably low, opportunity abounds for young tech. entrepreneurs eager to experience the benefits of being  first-movers in what will eventually become mature industries.

To get there, however, local tech entrepreneurs need to share skills, ideas, know-how, and market knowledge. They need to create competition for each other and in doing so provoke each others’ creative and innovative juices.

In other words, they need to import not only the can-do attitude of Silicon Valley, but also the culture of cross pollination that continues to beckon aspiring entrepreneurs from across the country and the world.

In the cases of Ecuador and Tanzania, the early pioneers have seen the transformative power of low-cost devices and ubiquitous connectivity.

Motivated by the possibility of changing the fate of their nations and, to quote Mohammad Yunnus, consigning poverty to museums, these entrepreneurs face a unique challenge in shepherding the benefits of technology into their countries.That challenge is to begin to question the assumptions that have until now underpinned much entrepreneurial activity in their local markets.

Marshall McLuhan wrote that “we shape our tools and then they shape us.” In the case of Tanzania and Ecuador and many emerging economies, the order will first need to be reversed or re-phrased. First we will need to transform ourselves by ushering in a new era of competitive collaboration. Only then can we create the tools which can change not only who we are but who we are capable of becoming.

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