Technological disruption is no longer news to any industry. Terms such as artificial intelligence, machine learning, cloud computing, robotics, 3D printing, and the Internet of Things (IoT) are increasingly becoming commonplace.
These disruptive technologies, asserts a new study, can transform Africa if duly utilised. However, concerns linger that Africa may not be entirely prepared to reap the benefits of the so-called Fourth Industrial revolution (4IR).
In a recent Brookings Institution study he co-authored with senior fellow Landry Signé, former Central Bank governor Prof Ndung’u, now an executive director at the African economic research consortium, says that so far, “it does not appear that Africa has yet claimed the 21st century, as it still lags behind improvements in ICT sector that have been largely driven by expanding mobile digital financial services.
Yet it is not all doom and gloom for Africa. The region had nearly half of global mobile money accounts in 2018 and will see the fastest growth in mobile money through 2025. Mobile technologies and services have generated 1.7 million direct jobs (both formal and informal), contributed to $144 billion (Sh14.4 trillion) of economic value (8.5 percent of the GDP of sub-Saharan Africa), and contributed $15.6 billion (Sh1.6 trillion) to the public sector through taxation, the study show.
However, the continent can do more to harness massive opportunities that ride on technological advances. Digitisation, the report says, has resolved information asymmetry problems in the financial system and labour market, thus increasing efficiency, certainty, and security in an environment where information flow is critical for economic growth and job creation.
It further says that adoption of AI, the Internet of Things (IoT), and blockchain can enhance opportunities for data gathering and analysis for more targeted and effective poverty reduction strategies.
“Since blockchains are immutable, fraud, and thus the cost of risk, is reduced, it also has immense opportunities for job creation in Africa. Given the informal sector is estimated to constitute 55 percent of sub-Saharan Africa GDP, the tools can be transformational.”
Through mobile technologies, the transformational power of formal financial services through mobile phones, such as Kenya’s M-Pesa, reaching the underserved, including women, who are important drivers for sustainable poverty eradication, will be fully felt, according to the study.
“These financial services allow households to save in secure instruments to enlarge their asset base and escape cycles of poverty.”
By 2030, Africa’s potential workforce will be among the world’s largest, and so, paired with the needed infrastructure and skills for innovation and technology use, the 4IR represents a massive opportunity for growth.
Already, the continent’s working population virtual savings products and short-term credit platforms include Kenya’s M-Shwari, KCB M-Pesa, and Equitel, M-Pawa in Tanzania, and Mokash in Uganda and Rwanda. Mokash has been extended to Côte d’Ivoire. The study says mobile technologies and services generated 8.6 percent of GDP in sub-Saharan Africa and supported almost 3.5 million jobs in 2018. By 2023, the report adds, mobile’s contribution will reach almost $185 billion, 9.1 percent of GDP.
Population is becoming better educated too, and prepared to seize the opportunities provided by the 4IR. For example, the share of workers with at least a secondary education is set to increase from 36 percent in 2010 to 52 percent in 2030.
Digitisation, the report notes, has also impacted economic growth through inclusive finance, enabling the unbanked to enter the formal system through retail electronic payments platforms and virtual savings and credit supply technological platforms.
“More broadly, digitization is enabling entrepreneurs and businesses to rethink business models that are more impactful, sustainable, and connected to other sectors of the economy. With fintech, digitization has gone beyond the financial sector to affect the real sector and households, transforming product designs and business models across market segments,” the study says
“Businesses are able to design products and trade online, and individuals are able to operate financial services and payments for shopping and investments. The government is also migrating to online platforms to conveniently provide public services.”
It adds: “Increased financial inclusion contributes to greater capital accumulation and investment, hence potential for employment creation.”
Africa has yet to harness the full potential of its agricultural sector too, and 4IR technologies provide an opportunity to do so, the research says. Farming alone accounts for 60 percent of total employment in sub-Saharan Africa, and the food system is projected to add more jobs than the rest of the economy between 2010 and 2025.
The study notes that information on competitive pricing, monitored crop information, disease prevention tips, and disaster mitigation, support has the potential to transform the agriculture sector to improve income, production, and demand throughout the continent. Furthermore, as incomes rise across the continent, growing consumer demand for food and beverages will coincide with business-to-business growth in agro-processing.