Concerted efforts are under way to diversify the Algerian economy, especially since the fall in global oil prices in 2014. The industry, agriculture, tourism and ICT sectors have been prioritised to reach this target, and digitalisation and entrepreneurship should play major roles in their development. “Building entrepreneurial ecosystems is core to the growth of any economy, and Algeria is positioning itself at the forefront of that movement in the MENA region,” Issa Aghabi, head of investments for MENA at the World Bank Group’s International Finance Corporation, told OBG.
As more IT innovations come to market, the country will have to adapt its models and build an ecosystem to assimilate and exploit these technologies. This is expected to positively affect various sectors, including transport and logistics, financial services, industry and manufacturing, health and customer service.
Collaborative and open-source technology development models and data-centric products have become mainstream, while the cloud and internet era has led to globally disruptive change and rapid product innovation during the last decade. Among these are blockchain for distributed data management, unlicensed wireless as a complement to internet connectivity and open-source artificial intelligence (AI) as a service. The sector is dominated by a few large players, such as Google, Amazon, Netflix and Uber, which all aim to continuously challenge their competitors in adjacent markets by rolling out alternative technologies.
It is this specific context – and the leapfrog technologies that emerge from it – that the developers of the Algiers Smart City are seeking to leverage to drive growth. “The Algiers Smart City project is a demonstration of our commitment to develop our city based on the principles of durability, sustainability and innovation,” Fatiha Slimani, the project’s head, told OBG. To that end, Algeria has already made significant progress in developing its ICT infrastructure, highlighted by the large-scale fibre projects undertaken in recent years.
However, the new and aggressive dynamic of the global tech industry transcends ICT infrastructure, as exemplified by the rapid emergence of a robust start-up ecosystem in Algiers. While this only occurred fairly recently, the milieu is already in the process of re-conceiving incubators and early-stage ventures in a variety of sectors. It features projects such as the Algiers Experimental Laboratory and Innovation Hub, as well as technology development initiatives, mostly driven by bottom-up engineering and business approaches. The knock-on benefits of this undertaking are expected to be wide-reaching, with public services, energy, agriculture, transport and other sectors adopting innovations that improve productivity and performance.
Achievements & Opportunities
The country has enjoyed numerous ICT development milestones of late, and a select few examples could outline a roadmap for future development. According to the Post and Telecommunications Regulatory Authority, Algeria had an internet penetration rate of 85.2% at the end of 2017, a significant improvement from 71.2% in 2016, 46.9% in 2015 and 25.6% in 2014. The new rate is well-ahead of that across Africa – where the average is around 50% – and emerging economies elsewhere, and demonstrates Algeria’s potential to position itself as a regional tech leader. “Just as large portions of the developing world used mobile phones to leapfrog landline technology, AI, drones, 3D printing, biotech and other exponential technologies are set to provide the world’s least-developed regions with the opportunity to apply these innovations at a faster and more scaleable rate than in the developed world, with its entrenched legacy infrastructure,” Cameron MacLeod, founder of the Global Civic Innovation Centre, told OBG. The government is working to improve domestic ICT infrastructure by various means, including several fibre-optic construction projects currently undertaken by the state-owned operator Algérie Télécom, as well as submarine cables that will eventually supply high-connectivity bandwidth.
As the country has sought to become a regional leader on technology – particularly regarding internet capability and connectivity – significant public investment has been channelled into the requisite infrastructure, and results are starting to materialise. The Algiers Smart City project reflects local authorities’ efforts to capture and accelerate the technological revolution to improve the quality of life of the city’s residents. Developers aim to unlock this potential by using recent, open-source and locally mastered technologies.
The Algiers Smart City project represents a local continuation of broader ICT measures, including infrastructure investment to boost connectivity and development of a more favourable regulatory framework. Building upon this, the structure of the Algiers Smart City project is expected to create opportunities for local and international stakeholders to engage in various start-up ventures and partnerships. This, in turn, will allow Algiers to tackle some of the most significant obstacles to the emergence of a start-up ecosystem, including new revenue models and alternative means of funding, both of which are essential to smart cities.
Cascading Tech Trap
While many cities around the world are looking to use ICT to improve their operational efficiency and the lives of their residents, technological development is also at the forefront of the challenges facing many cities. Technologies are coming to market at a rapid rate, making it challenging even for industry players to decide which ones to endorse. This is the so-called cascading technology trap, which is amplified for cities. The proliferation and fragmentation of technologies with different market strategies presents a complex mix of choices for urban planners. For example, myriad technologies are available for internet-of-things connectivity applications, with a new protocol coming to market approximately every two years.
Moreover, leading internet and cloud companies driving innovation in IT, like Google and Amazon, develop and deploy technologies in a way that can make it difficult for the rest of the industry to absorb and adopt. Smart cities experience an even greater challenge in doing so, as the rapidity of IT evolution exceeds their ability to assimilate knowledge, plan and implement a technology at scale. This results in strong competition between multiple technology camps and little stability.
The speed and complexity of technological turnover requires sophisticated skills that come at a high cost to those that employ them. Commercial entities have been battling to acquire those rare skill sets, making it more difficult for smart city developers to compete. Cities plan for the long term, and therefore rely on mature technologies and validated business cases, whereas modern technologies have a short lifespan and often do not provide models that have been validated for wide-scale deployment. Determining returns on investment is a time-consuming activity, and the organisational structure of cities, from decision-making cycles to evaluation and deployment, is slow to assimilate complex tools that cut across vertical silos of city functions.
The Algiers Smart City project has therefore had to look carefully at how to implement and modify its most fundamental IT decisions while negotiating the pitfalls of the cascading technology trap. It is seeking to deploy these tools while working with technology players and regulators within the broader ecosystem to ensure harmonisation and scale. “Technology can bring together and orchestrate diverse networks, devices, sensors and other data, and augment it with AI to create new forms of actionable intelligence,” Shervin Bakhtiari, member of the AngelVest Group, told OBG.
Various dimensions have been taken into consideration in the overall decision-making process when it comes to evolving internet-of-things solutions, Industry 4.0 frameworks and upcoming 5G connectivity models. The most fundamental considerations for the various ICT design and architecture choices include:
• Proliferation of connectivity standards, which can be categorised depending on fundamental characteristics and strategically implemented;
• Commoditisation of devices and connectivity, which continue to become more affordable with the development of supporting technologies, and will increase the competitiveness of smart cities;
• Emergence of more efficient wireless technologies, allowing wireless technologies that are low power, low cost and long range;
• Competition and harmonisation of connectivity standards, which will address the challenge of competing and complementary standards;
• Partnerships and alliances among industry players to scale platforms around offered solutions;
• Emergence of new service models, deriving value from innovative applications of data; and
• Extracting value through data sciences, allowing businesses to leverage the data made available through mining and learning, as well as optimising communication channels between those producing and utilising the relevant data. At the macro level the convergence of various trends, including innovations in network and application technologies; scaleable network connectivity; mainstream cloud and big data processing models; and policies encouraging mass adoption throughout the industrial sector, have opened new opportunities for the emergence of smart city applications based on value-added services and functioned as a guiding principle throughout the Algiers Smart City project.
Although the country has had to face up to the same set of challenges that confront many other emerging markets, the Algiers Smart City initiative demonstrates the benefit of approaching development from a less conventional perspective. Players in IT and other contingent sectors are increasingly aware of the opportunities created by adopting an approach to progress predicated on the adoption of leapfrog technologies and experimentation with new development models. However, the foundations for an ambitious and multidimensional project like this are only partially set, and Algeria will need to continue making conventional progress, particularly regarding its regulatory environment and economic policy strategies.
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