Africa and future of tech-driven world

CONVERGENCE, A KEY WORD in the age of Fourth Industrial Revolution (4IR), may very well mean more of the unforeseen in its implications as the entire world tries to navigate an uncharted tech-driven terrain. Last Friday’s tech outage was reminiscent of the opening chapter of Thomas L. Friedman’s book, “The Lexus and the Olive Tree.” Friedman had attempted to contextualise the idea of globalisation in a quote credited to Douglas Hanson, CEO of Rocky Mountain Internet, Inc., speaking to The Wall Street Journal. “It’s aggravating – we have nothing to do with Russia or Asia. We’re just a little domestic business trying to grow, but we’re being prevented because of the way those governments run their countries.” This, according to Friedman, was after the 1998 market meltdown forced Hanson to postpone a $175 million junk bond issue.

Here, Friedman was focusing on how the global financial system affected the business of a local internet company. He reminisced over what happened on the morning of December 8,1997, when the government of Thailand announced that it was closing 56 of the country’s 58 top finance houses. According to Friedman, “almost overnight, these private banks had been bankrupted by the crash of the Thai currency, the baht.” As if dramatising his experience, Friedman wrote that, the next day, while “driving to an appointment in Bangkok down Asoke Street, Thailand’s equivalent of Wall Street, where most of the bankrupt finance houses were located,” and “slowly passed each one of these fallen firms, my cab driver pointed them out, pronouncing at each one: “Dead! . . . dead! . . . dead! . . . dead! . . . dead!”

His account was rather stunning. “I did not know it at the time – no one did – but these Thai investment houses were the first dominoes in what would prove to be the first global financial crisis of the new era of globalisation – the era that followed the Cold War. The Thai crisis triggered a general flight of capital out of virtually all the Southeast Asian emerging markets, driving down the value of currencies in South Korea, Malaysia and Indonesia. Both global and local investors started scrutinising these economies more closely, found them wanting, and either moved their cash out to safer havens or demanded higher interest rates to compensate for the higher risk. It wasn’t long before one of the most popular sweatshirts around Bangkok was emblazoned with the words “Former Rich.” Within a few months, the Southeast Asian recession began to have an effect on commodity prices around the world. Asia had been an important engine for worldwide economic growth – an engine that consumed huge amounts of raw materials. When that engine started to sputter, the prices of gold, copper, aluminium and, most important, crude oil all started to fall. This fall in worldwide commodity prices turned out to be the mechanism for transmitting the Southeast Asian crisis to Russia. Russia at the time was minding its own business, trying, with the help of the IMF, to climb out of its own self- made economic morass onto a stable growth track.”

The global crisis table is now turning. This time, unlike the experience of Hanson of Rocky Mountain Internet, Inc., the internet is not the victim. Rather, it is the trigger. And, last weekend, it was the disrupter of global economic activities in what was described as “global tech outage” arising from a defective tech update, which has exposed the vulnerability of various business activities and entities that are fully dependent on such tech services. In particular, although CrowdStrike – a US cybersecurity software tech giant, which lays claims to being used by over half of Fortune 500 companies – tried to allay fears and concerns of its users, that it was “not a security incident or cyberattack,” the disruption in its services which crashed Microsoft Windows systems around the globe on Friday has caused a yet-to-be-determined amount of losses to the entire world economy in many different ways. 

A defect in one of its recent content updates that impacted Microsoft’s Windows Operating System has exposed the risk the global economy is exposed to in the course of turning over the control of various enterprises’ organisational data and day-to-day operations to an external ICT company that is in itself vulnerable in many unpredictable ways. On that Friday, a CrowdStrike update was responsible for bringing down a number of IT systems globally,” a Microsoft spokesperson reportedly said in a statement. Victims of what was being explained away by Microsoft have started counting their losses from failed and disrupted operations as businesses worldwide grappled with a major IT outage. Air travels, shipping, logistics, financial services, healthcare services and some media – particularly some TV broadcast services were impacted.

To the dependent service providers, clients and customers, it did not matter whether or not it was a “security incident” or “cyberattack” as air travel was hard hit, with grounded planes, delayed services, congested airports in many countries and uncertainties about the prospects ahead, despite assurances by CrowdStrike’s CEO, George Kurtz, that the “issue has been identified, isolated and a fix has been deployed.” For healthcare, finance, airlines, shipping and logistics, restoring customers’ confidence might take some time. The same can also be surmised in the realm of direct users of CrowdStrike’s services. A thorough forensic assessment of the aftermath of the mistake in a security software update that sparked hours-long global computer systems outages may soon emerge, in which case the extent of vulnerability of the world’s interconnected technologies will become clearer.

While businesses try to figure out how to avoid future blackouts triggered by technology meant to safeguard their systems, it is important to imagine how CrowdStrike will handle feedback and complaints, including possible litigation on losses incurred by users of its technology. Many manufacturers who depend on just-in-time delivery of raw materials under the global supply chain, patients who missed medical appointments, businesses that missed transaction deadlines, airlines that lost patronage and have to compensate frustrated passengers and other commercial services that have to make refunds for services not rendered may not quietly absorb their losses. They are likely to take on the service provider that was responsible for their losses. It is unlikely their respective companies’ insurance companies will be ready to underwrite such losses, arising from backlogs of delayed and cancelled flights, missed medical appointments, missed supply orders and other issues.

The CrowdStrike incident, innocuous as the company may want to present it, provides a good reason to re-examine the world’s increasing dependence on single or few dominant providers of modern tech services. The downside of such a situation is their potential to bring down the entire world economy with them if they fall. It is unimaginable if they can carry the enormity of liability they will cause in the case of a disruption on a greater scale than that of last weekend. Even should the affected businesses decide to embark on litigation, it is unlikely that CrowdStrike will be able to carry the burden. Although African countries might have been minimally affected, the multiplier effects on the continent will nonetheless be significant despite its meagre value and volume within the global economy.

Africa’s vulnerability is further amplified through the transmission effects of events in other parts of the globe, similar to that described in Friedman’s “The Lexus and the Olive Tree.” The world economy is in a loop, in which all countries – inescapably and inevitably – have to become active players. Therefore, threats associated with globalisation become clearer, especially when viewed from the standpoint of developing countries such as in almost all of Africa. Adapting to the new world economy strung together by ICT presents a lot of existential challenges to which Africa needs to adjust in order to navigate its precarious landscape. While it is expected that those entities that are already almost entirely dependent on ICT for driving their operations should make strong case against domination by monopolistic ICT as sole enablers and drivers of economies, Africa should rev up its drive towards digital economy to tap into the enormous benefits in ICT while also guarding against becoming entirely beholden to it and thus being ensnared by it.

Fashioning out alternative convergence paths would therefore become an imperative for Africa as well as for the entire world as other unexpected but high impact disruptive incidents might occur anytime in the future; and these will need to be guarded against. The essence is not only in the interest of the world at large but in the interest of Africa in particular if the continent is to be safeguarded from secular stagnation that may be unleashed upon economically backward countries as a result of the domination of the global economy by “Capitalism without Capital,” leading to “the rise of the intangible economy,” in the words of the title of the book written by Jonathan Haskel and Stian Westlake. 

Last Friday’s ICT outage was a clear warning, enough to elicit a broad policy direction for a continent. Africa has got the needed signal. It needs to act, and do something fast.

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