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”.
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.
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