How to utilise knowledge in wealth creation

How is wealth created? I asked a group of prospective entrepreneurs this question last year and their responses were as follows: Through inheritance, buying a piece of land and selling it at some later date, importing goods and selling locally, and seeking tenders to supply goods or services. They were all wrong.

Creating wealth involves some form of conversion or transformation of something with less value into something with greater value. Land does not create wealth unless you do farming on it to produce wheat.

Others who may not have anything to do with land will transform the wheat into flour, others will convert flour into cake as others develop new ways of making cake.

Wealth creation therefore is a continuous process and has what economists call a multiplier effect. Advanced countries use knowledge to create new transformations through research and development (R&D).

Their wealth is protected by intellectual property (IP) rights and the rule of law.


In "Patents and Wealth of Nations’’, Stephen Haber says “the world’s wealthy countries grew rich because they had well-developed systems of private property.

"Clearly defined and impartially enforced property rights were crucial to economic development; they facilitated trade, trade allowed individuals and business enterprises to specialize, specialization made individuals and business enterprises more productive, and more productive firms and individuals in the aggregate raised national income.

"Innovation and economic growth, in short, emerged out of property systems that allowed economies to operate as a web of contracts.”

In 2012, the government through the Ministry of Information and Communications dreamt of developing local research capacity through collaboration with IBM.

As a result, we signed a memorandum to share IP on a 50/50 basis. By 2014, we had reneged on the deal.

On January 9, 2017, IBM announced that it had broken the US patent record with 8,088 patents granted to its 2,700 inventors in 2016.

On average, the company was granted more than 22 patents per day. The Press release showed that the company’s “2016 patent output covers a diverse range of inventions in artificial intelligence (AI) and cognitive computing, cognitive health, cloud, cybersecurity and other strategic growth areas for the company.”

IBM’s Middle East and Africa (MEA) region where Africa hosts two research labs in Nairobi and Johannesburg contributed 42 patents. There is chance that some of these patents will be commercialized and generate a lot of wealth. Unfortunately, for reneging on the partnership, Kenya will not share in this wealth.

Abdigani Diriye, a research manager at IBM lab in Kenya, was one of the patent contributors. His financial inclusion innovation will help organisations use social evaluation mechanisms to determine creditworthiness of persons.

Financial institutions often use credit-scoring methods that often discriminate against thousands of people without credible records.

He has 12 new innovations in the pipeline for 2017. In contrast, local research institutions hardly ever talk of new innovations anymore.

How then do we create wealth from knowledge if the research community takes a back seat? We need partnerships. In 2013, IBM created Project Lucy (named after the earliest known human descendant, whose remains were discovered in Ethiopia about 40 years ago) out of Watson, arguably the first cognitive computing system.

The project was brought to Africa as part of a “10-year, $100 million initiative to address the fast-growing continent’s greatest business and societal challenges… IBM researchers in Africa, together with their business and academic partners, will use Watson and related cognitive technologies to learn and discover insights from Big Data and develop commercially viable solutions to Africa’s grand challenges in healthcare, education, water and sanitation, human mobility and agriculture.”

We have no choice but to leverage the computing capacity and begin to solve many of the problems we have through crunching numbers.

There is hidden treasure in Big Data analytics if we flip our problems into an opportunity.

Some of the innovations that can be readily applicable locally include navigation systems that take into account the driver’s cognitive state, hearing aid device that can distinguish and filter voices and sounds, and a system to create levels of permission and trust for inbound communications such as e-mails.

In the next five years, they predict that the following five areas will be the source of more patents: more AI research into the brain black box would reveal new solutions for mental illness; new hyperimaging technology and AI will help us see broadly beyond the domain of visible light; Internet of things; nanotechnology; and Smart sensors.

In the 21st century, more wealth is created from knowledge and IBM has demonstrated that through collaboration, Africa too can contribute some patents to the world.

The writer is an associate professor at the University of Nairobi’s School of Business.