Digital transformation is key to African growth
Developing technology on the continent is a huge opportunity for investors and can be a lever for social advancement, but the private sector has an important role to play
Improving access to digital technologies in Africa is a major component in the push towards growth on the continent and will help its countries to catch up with their more advanced counterparts elsewhere.
However, much of the financing and innovation for this must come from the private sector by its very nature and will doubtless be a talking point at the IMF/World Bank meetings in Marrakech this week, where GlobalCapital's sister publication, GlobalMarkets, is publishing daily news and anaysis.
Crucial aspects of this push involve further developing infrastructure, improving education and training and continuing to promote entrepreneurship across generations.
Governments in countries including Morocco, Ghana and Kenya have already taken important steps to encourage digital transformation with initiatives including government subsidies and programmes to bring connectivity to rural areas.
Digitising the continent allows younger generations to create white collar jobs for themselves that allow active engagement in the workforce. If done at scale, this will naturally encourage sustainable growth.
Many African countries are well set up to exploit technological advancement because and not in spite of their lack of relative advancement. An undigitised soceity is one unencumbered with outmoded technology that is prohibitively expensive to upgrade.
Compare Kenya with the US, for example. In the latter, for example, an overreliance on cheques meant that chip and pin and contactless payment systems were rolled out far slower than in other economies.
In Kenya, the lack of either telephone networks or a well developed banking network in comparison with more developed economies meant the country could skip straight to mobile telephone networks for mass adoption and that in turn precipitated the arrival f the Mpesa system in 2007. This has given millions of unbanked Kenyans the ability to make and receive payments simply by using their mobile phones. It has since expanded to six further countries.
Africa has used technology across society, from primary schools to small scale entrepreneurs in recent years and will continue to skip ahead in its digital development if it continues to receive the correct support and financing.
Some estimate that in the next one or two decades around half of all of the world’s young people will live in Africa. This means that there is an opportunity to provide the skills and tools that they need to be able to succeed in what is said to be the fourth industrial revolution.
Providing human resources for the rest of the world, which is rapidly aging, is one example of how digital transformation can be put into action. Young people, digitally native and located n convenient time zones, can establish themselves as an outsourcing alternative to more established countries like India, for example, which is nine hours ahead of Eastern Time in the US and 5h30 ahead of Greenwich Mean Time.
For emerging countries in Africa, tech provides the route to developing their capital markets with the most stability and the least risk. Regulators are ready to encourage activity.
It will not be plain sailing, however. Rapid growth can present cybersecurity problems. Huge amounts of data will be amassed and the infrastructure to secure it and police it will need to grow at an equally fast rate.
This is no reason to fear progress, however. Africa has a golden opportunity to promote its own growth using digital technology, and investors have a rare opportunity to join at the very beginning.