Unlocking Prosperity in Kelantan: Lessons from The Prosperity Paradox

Today is Friday, and it is Maulidul Rasul. The weekend has settled over Kelantan, and like many here, I spent part of the day working in the backyard. After Isya’ prayers, while resting quietly in my study room, I reached for a book I had read a few years ago: The Prosperity Paradox by the late Professor Clay Christensen and his colleagues Efosa Ojomo and Karen Dillon.
 
As I turned its pages again, one thought struck me: how might the concept of market-creating innovation apply to Kelantan? For years, I have wondered how this state I call home, rich in culture and faith yet struggling economically, could move towards sustainable prosperity. Could this framework offer us a way forward?
 
The Prosperity Paradox
Christensen’s central idea is deceptively simple. Prosperity does not emerge from aid, subsidies, or infrastructure-first projects. It emerges when entrepreneurs create new markets that serve nonconsumers.
 
He categorises innovation into three types:
a. Efficiency Innovations: These reduce costs and make processes cheaper (for example, automation). They help firms save money but often shrink employment opportunities.
b. Sustaining Innovations: These improve existing products or services for existing markets (such as upgrading smartphones). They maintain competitiveness but do not expand access.
c. Market-Creating Innovations: These transform complicated and expensive products into simple, affordable ones that millions of people can access for the first time. They don’t just make products cheaper, they create whole new industries, jobs, and social institutions.
 
The paradox is that while policymakers often try to build prosperity by strengthening institutions first, history shows that institutions often follow innovation. When new markets emerge, they pull in infrastructure, governance, and resources almost naturally.
 
A Case Study: Celtel in Africa
A striking example comes from Africa. In the 1990s, telecommunication was the privilege of the elite. Landlines were scarce, costly, and inefficient. For most Africans, making a simple phone call was impossible. They were nonconsumers.
 
Mo Ibrahim, the founder of Celtel, recognised this as an opportunity. Instead of expanding landlines, he introduced affordable mobile phones and a prepaid model that allowed people to buy airtime in small increments.
 
This innovation unlocked massive demand. Millions of Africans became first-time phone users. Celtel’s growth pulled in investment for towers, electricity, logistics, and retail networks. It created jobs for vendors, technicians, and service providers. Governments began collecting new tax revenues, and corruption declined as legitimate opportunities multiplied.
 
By the mid-2000s, Africa’s mobile penetration had soared from less than 5% to over 50%. Celtel was eventually sold for $3.4 billion. But more importantly, it demonstrated how a single market-creating innovation could reshape an entire continent’s economic trajectory.
 
How This Relates to Kelantan
Kelantan may seem far removed from Africa’s mobile revolution, but the underlying principle is the same: prosperity is not built by subsidies or top-down aid, it is built by solving nonconsumption.
 
Where are Kelantan’s nonconsumers?
a.     Agriculture and Fisheries
·      Thousands of small farmers and fishermen struggle to sell beyond local markets. They are nonconsumers of efficient, fair, and transparent access to buyers.
·      Opportunity: A digital platform that connects farmers directly to restaurants, exporters, and urban households. Accessible via smartphone or SMS, it could raise incomes and pull in better logistics, warehousing, and cold-chain networks.
 
b.     Islamic Economy and Lifestyle
·      Kelantan’s strong Islamic identity is an underused strength. Across the Muslim world, millions are nonconsumers of authentic halal-certified food, modest fashion, and Islamic fintech due to price or distribution barriers.
·      Opportunity: Build halal and Islamic lifestyle brands from Kelantan that scale nationally and regionally, positioning the state as a halal innovation hub.
 
c.     Youth and Digital Skills
·      Many school leavers and tahfiz graduates remain excluded from high-value employment. They are nonconsumers of affordable, relevant digital training.
·      Opportunity: Low-cost digital hubs in mosques and community centers offering micro-credentials in coding, design, or AI, replicating Zoho’s rural tech hub model in India.
 
d.     Healthcare Access
·      Specialist healthcare is often out of reach locally. Many Kelantanese are nonconsumers of timely, affordable medical care.
·      Opportunity: Telemedicine kiosks connecting patients to urban specialists, supported by mobile diagnostic tools, would expand access while pulling in broadband and healthcare investment.
 
The Pull Effect
If such innovations succeed, they will trigger ripple effects:
·      Infrastructure Growth: Demand for broadband, logistics, and healthcare facilities will attract private investment.
·      Job Creation: From delivery riders to digital trainers, new industries will create opportunities.
·      Institutional Strengthening: Local councils will modernise regulations, and universities will align curricula to new industries.
·      Reduced Outmigration: Youth will find more opportunities at home, slowing Kelantan’s brain drain.
 
This is the essence of the Prosperity Paradox: markets first, institutions follow.
 
The Role of UMK and Policymakers
Universiti Malaysia Kelantan (UMK), with its entrepreneurship mandate, is uniquely positioned to anchor this transformation. It can:
·      Run innovation labs and hackathons to generate market-creating solutions for local problems.
·      Act as a bridge between global knowledge and local communities.
·      Establish a Kelantan Prosperity Research Centre to study and pilot market-creating models.
 
Meanwhile, policymakers can:
·      Launch a Kelantan Innovation Fund supported by public-private capital, zakat, and waqf.
·      Simplify regulations for SMEs and startups.
·      Use state procurement to support local innovators.
 
Together, UMK, government, and private sector can nurture Kelantan’s unique identity as “The Innovation Frontier of Islamic Entrepreneurship.”
 
Conclusion
As I closed The Prosperity Paradox tonight, I found myself thinking back to Kelantan’s challenges with a renewed sense of possibility. The lesson from Celtel and countless other stories is clear: prosperity emerges not from more subsidies or aid, but from innovations that turn nonconsumers into consumers.
 
For Kelantan, this means leveraging our strengths – our culture, our Islamic identity, our youthful energy, and our agricultural bas, to create new markets that generate jobs, strengthen institutions, and inspire hope.
 
It may be Maulidul Rasul today, a time of reflection on guidance, resilience, and renewal. Perhaps it is also a fitting moment to consider how Kelantan, by embracing market-creating innovation, can chart a new path towards prosperity that is not given from outside, but built from within.
 
Prof. Azizi is a senior academic at Malaysian Graduate School of Entrepreneurship and Business (MGSEB), UMK (https://mgseb.umk.edu.my) and former university leader with experience in research policy, academic governance, and innovation strategy. He currently teaches and consults on higher education and entrepreneurship and can be contacted at [email protected].