Africa goes digital – IMF F&D

In rebuilding after COVID-19, authorities must invest in innovative technology to overcome obstacles to inclusive development.
Africa has enjoyed strong economic growth for most of the 21st century, mainly due to strong global demand for commodities. But the “Africa Rising” narrative that accompanied this growth is primarily a GDP growth story, which is too one-dimensional. Indeed, Africa’s economic growth has failed to generate many good jobs, once again postponing the benefits of the demographic dividend of a large working-age population. Since there are fewer older and younger people in need of support than there are people of working age, the dividend is supposed to free up resources that can be dedicated to inclusive development.
Christina Duarte
Instead, African policymaking continued its nearly half-century-old belief that achieving “development” is limited to managing poverty; in other words, equating the task of development with poverty reduction. The shift from the industrialization agenda of the post-independence period to one of poverty reduction is one of the main reasons for the continent’s economic malaise. As expressed by the African Innovation Summit (2018), the development agenda shifted from socio-economic transformation to the lowest common denominator: poverty management.
To generate economic growth that leads to sustainable development, Africa must focus on retaining and creating wealth, better managing its resources, fostering inclusion, moving up global value chains, diversifying its economies, optimizing the energy mix and placing the human capital at the center of policy formulation. For this to happen, African policy must encourage investment in research, development and innovation (R&D&I) to reboot the continent’s economic structures and catch up technologically with the rest of the world. Innovation and the accompanying digital information technology have become a necessary component of any effort to address challenges such as food security, education, health, energy and competitiveness. The world is driven by innovation: unless African policymakers harness the potential benefits of R&D&I, the global gap will continue to grow. The problem is that there is talk and debate about innovation, but no strategy is developed.
An opportunity to go digital
It is here, paradoxically, that the COVID-19 pandemic, despite all the economic and social devastation it has caused, provides an opportunity for African countries to innovate and digitalise. African countries will have to rebuild their economies. They shouldn’t just repair them; They should remake them, with digitalization at the forefront.
So far, civil societies appear to be more prepared than policymakers to embrace digital technology. Without government help, the digital technology industry has grown in Africa, through incubators and startups, technology centers and data centers. Information and communications technology (ICT) activities are spreading across the continent and young Africans are responding with digital technology to the challenges posed by COVID-19. For example, at an ICT center in Kenya, FabLab created Msafari, a people-tracking app that can track the spread of infections. A similar application, Wiqaytna6, was developed in Morocco. In Rwanda, the government is demonstrating what enlightened policies can achieve. The country has invested heavily in digital infrastructure: 90 percent of the country has broadband Internet access and 75 percent of the population has cell phones. Early in the pandemic, Rwanda leveraged that technological prowess to develop real-time digital maps to track the spread of COVID-19, expanded telemedicine to reduce clinic visits and created chatbots to update people about the disease.
These are promising initiatives, but digitalization is not widespread in Africa. Rwanda is the exception. Only 28 percent of Africans use the internet, a digital divide that prevents the continent from fully harnessing the ability of digital technology to mitigate some of the worst effects of the pandemic.
This slow diffusion of Internet technology also makes it difficult for the continent to overcome obstacles to sustainable development. To deliver transformative growth, digitalization cannot be left primarily to civil society and the private sector. The socioeconomic divide in Africa fuels the digital divide, and vice versa. Policymakers must aggressively step up digitalization to unlock structural transformation.
Digital divide
When assessing the digital divide, it is important to remember that the issue goes beyond Internet access. How Internet use benefits the user is also a factor. The goal of digitalization should not just be greater consumption; should improve the resilience of civil societies, which requires a clear regulatory framework and an educated population.
In Africa, there is not only a lack of Internet connectivity. So are other basics, such as electricity, literacy, financial inclusion and regulations. The result is that people cannot use the digital solutions available. Furthermore, a good portion of the African population still struggles with life-threatening issues such as conflict and food insecurity, making daily survival their only goal. Millions of Africans not only find themselves on the wrong side of the digital divide, but they also find themselves on the wrong side of many divisions: they lack basic health services and public necessities such as electricity, clean water, education and healthcare. COVID-19 has exacerbated their plight because lockdowns and social distancing have made many public services accessible only online. The terrible truth is that these hundreds of millions of people have been left behind and unless African policymakers realize that access to digital technologies is a fundamental tool for socioeconomic inclusion, progress will be limited to those who have electricity and telecommunications services, further isolating the vast majority without such access. The gap will widen.
The profound disruptions generated by the pandemic have opened subtle opportunities to remake society. These are times that test the vision and leadership of policymakers. As McKinsey & Company (2020) noted, “the COVID-19 crisis contains the seeds of a large-scale reimagining of Africa’s economic structure, service delivery systems, and social contract. The crisis is accelerating trends such as digitalization, market consolidation and regional cooperation, and is creating important new opportunities, for example, the promotion of local industry, the formalization of small businesses and the improvement of urban infrastructure.”
As Africa rebuilds from the disruptions caused by COVID-19, it must not return to pre-pandemic reality.
The time is now. As Africa rebuilds from the disruptions caused by COVID-19, it must not return to pre-pandemic reality; must build a better reality that recognizes the need for innovation, particularly digital technologies. This is the prerequisite for victory over its myriad development challenges, such as poverty, health, productivity, competitiveness, economic diversification, food security, climate change and governance.
Receptive to change
Changes have occurred in Africa over the past five years, suggesting that the continent may be receptive to building better rather than just rebuilding. Liu (2019) identified three major African initiatives that indicate such receptivity to change:
The African Continental Free Trade Area (AfCFTA), which aims to create a single market with a combined GDP exceeding $3.4 trillion and including more than one billion people;
The South African government’s World Economic Forum (WEF) new Center for the Fourth Industrial Revolution, for dialogue and cooperation on the challenges and opportunities presented by advanced technologies;
WEF’s Africa Growth Platform, which aims to help companies grow and compete internationally, leveraging African business activity, 13 percent higher in its early stage than the global average.
These ongoing initiatives could be a game-changer and bring to life the vertical dimension of digitalization.
So far, change has been almost only bottom-up. More than 600 technology centers (places designed to help start-ups) have sprung up across the continent. Three have achieved international recognition: Lagos in Nigeria, Nairobi in Kenya and Cape Town in South Africa. These technology hubs are home to thousands of startups, incubators, technology parks and innovation centers driven by the private sector and young people who, despite adversity, are aware of how self-employment is linked to innovation.
Lack of public policy
Things are less promising from above. According to a 2018 WEF report, 22 of 25 countries analyzed did not have public policies focused on an ecosystem for innovation.
Investing in broad-based digitalization, from a geographical and sectoral point of view, is crucial not only to address socio-economic problems but also to meet peace and security challenges. And stimulates economic growth. A study by the International Telecommunication Union found that 10 percent higher mobile broadband penetration would generate a 2.5 percent increase in Africa’s GDP per capita.
But digital solutions cannot be achieved in a vacuum. Policymakers must make the implementation of digital technologies an element of an innovation ecosystem, and there is no time to waste. Well-calibrated regulatory frameworks, infrastructure investment, digital skills and financial inclusion must be prioritized.
Most research shows that digital technologies are essential to address socioeconomic challenges. They are often described as the only ingredient Africa needs to leapfrog towards sustainable and inclusive economic development. From an economic point of view, better information and communication technology democratizes crucial information for production and market agents, resulting in more efficient value chains and more affordable products and services. And the most vulnerable people will benefit.
However, the mass adoption of digital technologies also means that policymakers must be aware of and address the complex legal and ethical impact of technology on society, including privacy, data and tax evasion. This is especially true in Africa, where weak institutions may not be strong enough to defend the rights and interests of their people against those of the market.
The opinions expressed in articles and other materials are those of the authors; They do not necessarily represent the views of the IMF and its Executive Board, nor the policy of the IMF.