Digitisation the key to East Africa's post-pandemic economic revival

The pandemic has condensed several years of digitisation into one. Today, even the most reluctant businesses - and their customers - have been forced to come online. And there is no turning back.

In the early days of 2020, businesses showed great urgency with enabling remote work for employees cut off from the office due to lockdowns. Businesses were pushed into survival mode, and business continuity was the main priority.

As the pandemic lingered, businesses shifted their efforts toward building greater resilience, especially in aspects such as supply chains that were badly disrupted by the impact of lockdowns.

The true winners from this period of rapid digitisation are the businesses that took advantage of emerging opportunities to establish new revenue streams or reengineer their business models. For example, the retail sector's incredible adoption of online shopping and home delivery helped them build businesses that are arguably better suited to growth in a post-pandemic world.

Key industries embracing digitisation

In light of the immense benefits that can be unlocked through greater digitisation, East African organisations across multiple industries face a once-in-a-lifetime opportunity. Businesses in the manufacturing, pharmaceutical, tourism and agriculture sectors, in particular, can make great gains through digitisation.

With business-to-business spending in the African manufacturing sector predicted to reach $1-trillion by 2050, there is a huge opportunity for digitisation to improve the sector's competitiveness and boost regional economies.

To realise the economic potential of this sector, manufacturers need to build Industry 4.0 capabilities that combine next-generation technologies such as AI and robotic process automation with predictive analytics to gain unprecedented control, predictability and operational efficiency.

For the region's pharmaceutical sector, research and development initiatives hold huge potential for driving economic growth and luring foreign direct investment. However, Africa lags behind the developed world in R&D spend, leaving the continent to import most of its product and service innovations.

Policymakers and industry leaders should consider the opportunities of greater regional investment into R&D and draw on international best practices. For example, 18 of the world's 20 largest vaccine producers run their production facilities using SAP technologies. Local production facilities could draw on learnings from their global peers and avoid costly mistakes to fast-track success.

Travel restrictions during the lockdowns caused the region's tourism sector - which accounted for 8.1% of the region's GDP in 2019 - to suffer massive losses. Only now do we see signs of recovery.

Using digital technologies to remove some of the friction in post-lockdown travel could encourage international arrivals. Innovation in tourism experiences could also turn East Africa into a test case for how countries adapt their tourism sectors to attract the post-pandemic tourist.

As one of the continent's largest and most important sectors, agriculture accounts for up to 60% of employment and 23% of GDP across sub-Saharan Africa. However, much of this sector's economic potential remains untapped.

Some studies estimate that Africa could increase cereal and grain production three-fold and add 20% to global grain and cereal supplies with a few key interventions. These include yield improvements through improved use of fertilisers, better access to weather data, and post-harvest yield-loss reduction.

Four priorities for digitisation

With so much potential for technology to drive improvements in East Africa's key economic sectors, it can be hard to choose a starting point. Based on our work with organisations across the region, the following key priorities could offer the highest-value starting points for digitisation:

Focus on speed

Organisations simply can't spend years considering digital options and then years more implementing solutions. Instead, organisations should simplify decision-making and take steps with urgency, even if those are small steps.

Effective use of cloud technologies, for example, could enable small and large enterprises to test new digital channels and trial new business processes that can be quickly scaled to serve existing and new customers.

Rebuild sustainably

The pandemic and ongoing disruption due to the impact of climate change highlights that we simply cannot return to business-as-usual. Our previous path was not sustainable, and environmental risks and their threat to our economy cannot be ignored.

Our region will experience dire impacts from climate change. Already, data indicates Africa is warming faster than the global average. This bodes ill for our vital agriculture sector, and as the recent locust plague has shown, any disruption to our agricultural sector could pose a danger to regional food security.

Eliminate uncertainty

One of the main outcomes of the pandemic is that organisations realised the importance of predictability in their operating environment and the dangers of uncertainty. For organisations in East Africa, the use of enterprise resource planning solutions can bring a level of clarity and control to decision-makers that is essential to effective leadership.

As organisations drive their post-pandemic recovery, all efforts must be made to leverage technology as a tool to reduce uncertainty while also unlocking new opportunities for gains in efficiency, accuracy, or the development of entirely new business models.

Hardeep Sound is the Regional Sales Director for East Africa at SAP.