Kenya is among six countries identified as leaders in expansion of Africa’s share in the global digital economy, according to a new research.
These countries, the report says, are making remarkable progress in digital realm, boosting financial inclusion by creating digital platforms “that work for everyone and everywhere”.
The research conducted by Mastercard Center for Inclusive Growth in collaboration with The Fletcher School at Tufts University in the US, says the six countries are harnessing “the true potential of technology to drive inclusive growth, in a period of changing global market demands”.
The report, Getting Lions to Leapfrog: Can Digital Technologies Deliver on Africa’s Delayed Promise of Inclusive Growth? uses Kenya, Egypt, Ethiopia, Nigeria, Rwanda, and South Africa as case studies to provide insights on key drivers that could accelerate digital inclusion across the continent.
The six countries were examined against three primary variables — ease of creating digital jobs, resilience of governance and infrastructure and foundational digital potential.
The African Leapfrog Index (ALI) examines the possibility of technology helping overcome the primary barriers that have long held back African economies.
“The ultimate aim of the research was to help countries across Africa optimise their burgeoning digital evolutions, in order to accelerate economic development. These six countries were selected based on their size, economic growth, the median age of residents, quality of governance and digital momentum,” the report reads.
Mastercard’s Division President for Sub-Saharan Africa Raghav Prasad told Digital that Africa has come of age as it has more technology thinkers.
“There are wonderful dynamics in the digital economy and the continent has the potential to increase access to crucial services using mobile technologies and eventually help narrow the gap that exists,” he said.
“In the next ten years, Africa will have achieved substantial growth in digital inclusion and is set to leapfrog the rest of the world due to the numerous opportunities that exist.”
The rise of e-commerce, entrepreneurship and digital adoption represents tremendous potential for inclusive growth across Sub-Saharan Africa. But in order to realise this potential, the continent needs to ensure everyone has access to networks and resources they need.
Also, in order to make important strides in the global digital economy, Africa needs to create an enabling environment to support areas of rapid digital growth, the report notes.
Prof. Bhaskar Chakravorti, Dean of global business and founding executive director of Fletcher’s Institute at Tufts University, notes that for a sustainable digital transformation that involves all African states to take off, new ideas must be accommodated in the tech ecosystem.
“All talents in the technology front should be harnessed and nurtured as a sure away to inspire innovation. Capital goods and infrastructure such as roads, electricity and mobile networks should be enhanced to create solutions for commercial and societal needs,” noted that Prof. Chakravorti who also serves on the World Economic Forum's Global Future Council on Innovation and Entrepreneurship.
Sub-Saharan Africa’s already burgeoning youth population, which is expected to grow by over 50 percent by 2050, presents a significant opportunity to create a demographic dividend, unlocking further investment in digital infrastructure as well as creating a more robust and inclusive workforce. These elements are banked on to help Africa embrace the Fourth Industrial Revolution at a more rapid pace, ultimately making the region’s economies more globally competitive.
Kenya, for instance, has been at the forefront of the African digital revolution over the past decade, and currently has over 80 percent internet penetration.
The country has been looking into leveraging various segments of digital economy such as e-commerce, taxi hailing services and blockchain to create jobs and spur growth.
South Africa has been expanding the integration and use of digital technologies across all segments of society, particularly to those who sit at the lower end of the pyramid.
Although Africa’s digital outlook is generally encouraging, there are still reasons for concern. A report by the United Nations Conference on Trade and Development (UNCTAD) reveals that Africa and Latin America account for less than one percent of the global digital economy.
“On almost all fronts, Africa seems to be lagging behind which reveals the continent may be losing when it comes to the value of the digital economy,” reads The United Nations Digital Economy Report 2019.
Mr Prasad is, however, optimistic that with the ongoing global trend in reduction of internet costs, Africa will benefit in the process as technologies such as cloud computing reduce initial costs of starting businesses.
“This will spur more growth and drive new innovations that will contribute to a bigger share of the global digital economy,” he said.
“With the right policies and support from the private sector, the capability to create new business models will be raised.”
Experts say for entrepreneurship to be the engine of digital growth, there is need to create a conducive business atmosphere to reduce the high number of start-ups folding few years after being established. According to Forbes, nine out of ten start-ups fail within the first five years of operation.
“Multiple players must be involved to invest in the passion of young entrepreneurs. There should be mentoring programmes for start-ups with more access given to new platforms,” said Mr Prasad.
Prof. Chakravorti echoes Mr Prasad remarks, asserting that a conducive environment forms the foundation of the success of any business.
“The necessary conditions must exist as well as a strong nurture and support ecosystem that attracts both local and foreign investors,” Prof. Chakravorti said.
With nearly 50 million people added to the African labour force in the next few years, most of whom will fall somewhere on a spectrum between digitally sentient and digitally sophisticated, the digital economy is poised to be not just the driver of consumption but also of livelihoods.
Natasha Jamal, Regional Director, Mastercard Center for Inclusive Growth for Middle East and Africa, said the company is rethinking what growth means for everyone in today’s digital economy, as well as helping to provide the tools and networks that can help people reach their potential and achieve a more secure future.
“Independent research like the ALI equips policymakers and community leaders with data-driven insights to inform economic development; and it can help other key stakeholders across all sectors better understand the opportunity for — and pathways to — digital inclusion on the continent,” she said.
“The ALI is intended to help countries and stakeholders in Africa recognise where the potential for technology-led leapfrogging is high.
This means acknowledging the strengths of each country and which policy areas are prime candidates for intervention to enable stakeholders to prioritise resources appropriately,” said Prof Chakravorti.