**1. Introduction**

A global phenomenon that is currently not in dispute is rapid urbanization with estimates suggesting that by 2030, over 60 per cent of the global population will be living in cities, increasingly concentrated in Africa, Asia and Latin America [1]. This inevitably places social and economic strain on the existing urban infrastructure. These strains are placed on physical factors such as deteriorating conditions in the environment, transport efficiency, utilities such as water and energy, as well as economic factors such as unemployment. As a result of this, there is an emerging informal sector, which though unproductive and lacking employee protections, continues to be the place where bulging African youth population finds its livelihood [2].

Digital technologies and internet connectivity are playing a major role in making better cities that they are now considered as a panacea for solving Africa's chronic unemployment [3] and other associated challenges. As a result of this thinking, and to address these and emerging challenges, the smart city concept offers unusual opportunities for diverse countries [4]. Intensified digitization is increasingly becoming integral part of everyday life, more data is being collected and as a result

leading to the accumulation of large amounts of data which is in most cases used in several beneficial application domains. Effective analytics of these data and utilization of the same is a critical factor for success in emerging business and service domains, as well as the smart city domain [5].

The emerging digital phenomenon is disrupting and transforming the informal sector that what seemed impossible a few years back could be possible. Studies [6] from Nigeria, confirm that majority of the informal enterprises could be easily formalized. This chapter is guided by the question: Taking into consideration that connectivity is growing across the continent, could digitalization end the curse of informal enterprises in Africa? The chapter will seek to address the questions: Will the new business models address disrupt and destroy livelihoods?

We attempt to explain the emerging phenomenon of technology, new business models and disruption of informal enterprises through the theory of abundance. That what is happening with technology in SSA is an opportunity for different combinations of existing problems that can be solved with new entrepreneurial openings as countries gear up to develop smarter cities. The chapter therefore makes a number of contributions. First a research that is looking at how informal enterprises can be formalized (something that has troubled policymakers for ages). Second, is theorizing abundance. The basic premise is that the world is big out there with opportunities for everybody such that if you are willing to achieve your goals, simply learn and polish the discipline of your craft [7].

## **2. Literature review**

#### **2.1 Demystifying smart cities**

There is no standardized commonly accepted definition of or set of terminologies for a smart city [4, 8]. Numerous scholars have defined the smart city concept differently, but these conceptual definitions however converge around three broad dimensions namely technology, people and institutions [9]. The three however have a nuanced effect on smartness of the cities. To have an impact, the policy directions and goals of a smart city should be ambitious and transformational [5–7, 10–16]. The focus of the city is to achieve an enriched quality of life for its citizenry whilst deliver tangible benefits by prudently employing the city's natural resources and technology. The chapter adopts the dimensions of a smart city as articulated by Deloitte [4] and is shown in **Figure 1**.

According to Deloitte [4], there are five layers that make up a smart city namely infrastructure, interconnected city systems, ecosystem, people and goals, aspirations and quality of life. In addition to this, according to UNDP [8], digital infrastructure is considered in the form of different supporting digital layers which create different opportunities, as follows:


*Orchestrating Smart Cities, New Disruptive Business Models and Informal Enterprises DOI: http://dx.doi.org/10.5772/intechopen.94075*

#### **Figure 1.**

*Dimensions of a Smart City. Source: Deloitte [4].*


Establishing a smart city is a continuously interactive process that entails a robust, reliable and affordable broadband network coupled with an efficient ecosystem for the internet of things (IoT) and the capacity to utilize the big data that will be generated. Governance and leadership support are very crucial also as they allow harnessing and tapping into the local innovation system [10]; Leadership can also support open data and open science models that would have less reliance on proprietary technology models and prop research collaborations and create further opportunities for innovation [17].

#### **2.2 Disruptive business models**

Disruption of business takes place when the traditional business models face a challenger who changes the game by offering greater value to the customer in a manner that existing firms are not able to match the offer or be able to compete. In other words, "detonation of the status quo" [11]. Technology has enabled

unprecedented development of new business models that have brought greater value as well as increased productivity. For example, the entry of mobile money in Africa had changed business models, brought greater value and enhance efficiency.

Digital disruption in form of platforms has started changing the very nature of what it means to be informal or formal. Digital platforms enable firms with basic business services so that they can concentrate on their core competence. These basic services range from offer advice on how to set prices, customer service training, accounting, sales data, and even collection of sales taxes. Similarly, platforms can handle customer service, payments and returns.

#### **2.3 Informal Enterprises in Africa**

Informal enterprises refer to micro or small firms in the informal economy (unregistered with government, are mostly unregulated, employees have no formal contract and no safety net and pay no taxes to authorities). The informal economy is by far the principle source of employment in Africa and accounts for more than 70 per cent of employment in Sub-Saharan Africa [2, 12]. A large informal economy makes it harder to measure the economic performance hence the reason why many governments want to formalize the sector. In the hope of achieving greater value and efficiency, informal enterprises have widely adopted technology. The informal economy is complex and to paraphrase Dungy and Ndofor (2019) [18], is the, "… the utopian and the dystopian, the connected and disjointed, structure and chaos, legitimate yet illegal, legal yet illegitimate all residing together in one big tent…". Furthermore, informal work brings freedom, flexibility, precarity and vulnerability into the lives of African gig workers [3].

#### **2.4 The state of digital readiness in Africa**

#### *2.4.1 ICT indicators*

Globally, there has been an eightfold growth in the number of individuals using internet over a period of less than twenty years from 495 million to over 4 billion people [19, 20]. This portends well for additional value add products and positioning of technological growth in the continent. Sub-Saharan Africa (SSA) has not been left behind and has seen rapid growth in internet penetration and related technology investment. The International Telecommunications Union (ITU) estimates that sub-Saharan Africans' individual internet usage increased from 2.7% in 2005 to 28.2% in 2019. The trends for the key ICT indicators are shown below in **Figure 2**.

As observed from **Figure 2**, the penetration rate of all ICT indicators has seen positive growth. The increase in internet usage has been accompanied by increased investments in data storage, processing power and innovation ecosystems. In spite this, there are still further opportunities in terms of the population that is not digitized. This has resulted in many large multinational information technology firms viewing Africa as their next frontier of growth [4].

Since 2009, Sub-Saharan Africa (SSA) has witnessed massive investment in digital development and creating enabling conditions but there is still work to be done. With several (TEAMS, SEACOM, EASSy and LION) high-capacity undersea fiber optic connectivity into the continent and boosting capacity to more than 36 Terabits per second, SSA has made tremendous strides. Prior to 2009, the entire continent used a mere 1 Giga Byte per second from satellite. The challenge now lies with last mile coverage.

*Orchestrating Smart Cities, New Disruptive Business Models and Informal Enterprises DOI: http://dx.doi.org/10.5772/intechopen.94075*

#### **Figure 2.**

*Sub Saharan Africa key ICT indicator penetration rate (2013–2019). Source: ITU 2019 [20].*
