Little to celebrate about the digital economy wave

It might so appear that the much hyped digital economy has lived up to the expectations people had for it 20 years ago. file photo | nmg 

By TIMOTHY ORIEDO

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Summary

• The Communications Authority of Kenya (CA) released Q1 report with glaring reports of Airtel had lost market share by five million mobile money and 16 per cent voice.
• The digital economy has transformed communication , consumption of information, and entertainment.
• Productivity growth, which many assumed would be invigorated by the impact of digital technologies, has been dismal for much of this century.

Recently three key industries announced bad news. Standard Chartered Bank

said it would close its Kisii branch, Barclays

was shutting down closing seven branches in Kenya, and Knight Frank estate agents sent a newsroom press release announcing the closure of Nakumatt Supermarket outlets from three prime mall locations in Kampala.

The Communications Authority of Kenya (CA) released Q1 report with glaring reports of Airtel had lost market share by five million mobile money and 16 per cent voice.

The digital economy has transformed communication , consumption of information, and entertainment.

This phenomenon explains why there is suddenly immense pressure on traditional industries that are getting disrupted pitting them against the so-called Big Five of the digital economy—Apple, Alphabet, Microsoft, Amazon, and Facebook—have, at various points over the last year, been the five most valuable companies in the world.

READ: Jumia on the list of 50 smartest companies

It might so appear that the much hyped digital economy has lived up to the expectations people had for it 20 years ago. In the early days of the Web, there were a myriad of colleges providing different trainings in computer packages; in this day and age those skills appear to be inborn going by the vanishing of the college adverts on computer packages and just how amazing toddlers navigate through smart phones.

In other important ways, however, its consequences have been smaller than you might think. Our GDP growth has, by historical standards, been disappointingly slow since the arrival of the Internet.

Productivity growth, which many assumed would be invigorated by the impact of digital technologies, has been dismal for much of this century.

READ: Smart policies will push digital banking in Africa

One could argue probably that GDP was not capturing the true value of the many free goods the digital economy offers or take for instance the new jobs born out of the phenomenal M-Pesa.

But there’s little doubt that the productivity revolution we hoped digitisation would usher in has yet to materialise or at least not matching the reverse effect rate at which key industries are folding.

The digital economy also has not transformed the job market as much as one might have expected. To be sure, we now have entirely new categories of workers: fleets of Uber drivers, and the M-Pesa agents and economy that relies on it.

But Kenyans are not getting jobs and some who had are being left jobless as industries digitise and undergo re-inventions. This harm is yet to be felt locally but because of things like online shopping, hundreds of thousands of retail workers will soon be out of a job.

More important, the digital economy has not been the source of a huge number of good, well-paying jobs. In fact, the rise and consolidation of the digital economy has coincided with a weak labor market.