Universities as Business Incubators
Op-Ed, Business Daily, (Africa)
May 4, 2007
Author: Calestous Juma, Professor of the Practice of International Development; Director, Science, Technology, and Globalization Project; Principal Investigator, Agricultural Innovation in Africa
Economic change is largely a result of the conversion of technical knowledge into goods and services through business enterprises. Institutions of higher learning can play a key in this process.
For Africa to promote the development of local technology, it needs to review the incentive structures already in place. There is a range of structures suitable for creating and sustaining enterprises, from taxation regimes and market-based instruments to consumption policies and sources of change in the national system of innovation.
More specifically, the need to reorient universities to play a greater role in the development should take center stage. They can play this role by strengthening their entrepreneurial activities, as well as by supporting national projects, industry and other national centers of excellence.
Take the inspirational case of Zamnet. In 1990 the director of the Computer Centre at the University of Zambia (UNZA) connected a few personal computers to exchange emails within the institution, with Rhodes University in South Africa, and then onwards to the rest of the world. The university network served a wide range of governmental and non-governmental institutions, including development agencies. In 1994 Zambia became the first sub-Saharan country outside South Africa to get onto the Internet.
Zambia benefited from a number of programme such as the Eastern and Southern African Network (ESANET) which focused on promoting connectivity among universities in the region. The lack of human capital forced the University of Zambia to pool all the resources of related projects at the Computer Centre. This created a culture of mutual understanding, trust and a common sense of purpose. Similarly, in-house training of users by experts served to popularize the email system and provide technical knowledge.
The connectivity project at the University of Zambia was successful and highly supported in principle by the government and donors. However, despite high-level interest, it failed to attract any direct support from donors.
Early in 1994, the university decided to establish a campus-based company called Zamnet Communication Systems to link the institution to the internet and provide service to commercial customers. At this point the World Bank expressed an interest in covering 80 per cent of the cost of the first year’s operation. It lent Zamnet the start-up capital, with the condition that the university would offer some shareholding in the unit to the public.
The administration worked with customers and other interest groups and intensified marketing. The university provided most of the manpower and the operational space for four years. The number of commercial accounts grew from 5 to 165 between January and June 1995, and seven months before the lapse of the World Bank loan, Zamnet was generating enough income to buy new equipment.
The commercialisation of Zamnet demonstrated that provision of internet services could be good business even in poor countries. The demand for e-mail and internet services was high. Soon after its launch, the link to South Africa became overloaded and Zamnet installed a VSAT to cope with growing depand for services. Other institutions soon followed. With the experience gained from Zamnet, the national regulator, Zambia Telecommunication Corporation, developed a new unit that specialized in internet service provision.
The economic impact of Zamnet has yet to be fully assessed. However, many of the country’s businesses, government departments and learning institutions and most of the internet cafés and telecentres are connecting through Zamnet. The impact of Zamnet in encouraging enterprise development, and thereby creating employment opportunities and livelihood, is immense.
The case of Zamnet is one of the many examples that show how African countries can use emerging technologies to create new business enterprises. In other words, knowledge-based institutions have an economic function in a knowledge-based economy.
But sustaining such efforts requires a policy environment that supports entrepreneurship on general and university-based businesses in particular. Zamnet’s pioneering example should serve as a source of ideas on how universities can support development goals without undermining their academic missions.
Prof. Juma teaches at Harvard University’s Kennedy School of Government where he directs the Science, Technology and Globalisation Project. He is a fellow of the Royal Society of London and foreign associate of the US National Academy of Sciences.
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