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African leaders committed to building a digital economy

Ceyla Pazarbasioglu's picture
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Mbarak Mbigo helps his colleagues who are software developers at Andela, in Nairobi, Kenya. © Dominic Chavez/IFC


We only have to look at the way we communicate, shop, travel, work and entertain ourselves to understand how technology has drastically changed every aspect of life and business in the last 10 years.

Technology-driven changes are radically transforming the world and enabling developing countries to leapfrog decades of “traditional” industrial development. But disruptive technology also increases the stakes for countries, which cannot afford to be left behind.

Sub-Saharan Africa demonstrated its capacity to harness technology when it embraced the mobile telecom revolution in the 2000s. Now again, there is huge potential for digital impact in Africa. But to achieve that, the five foundations of a digital economy need to be in place - digital infrastructure, literacy and skills, financial services, platforms, and digital entrepreneurship and innovation.

During the Spring Meetings in April, the World Bank Group launched the Digital Economy for Africa (DE4A) initiative, which brought together African finance and ICT ministers, central bank governors, global tech and telecom giants, as well as local and regional internet platforms, think tanks and thought leaders, digital entrepreneurs and development partners. The event underlined the role of the digital economy as a new driver of growth, discussed how to build its foundations, and looked at the risks of being left behind.

DE4A is now working with a group of countries on a Digital Economy Country Assessment (DECA), which will form the basis for digital economy country strategies. One of the goals of DE4A is to increase connectivity across the region and connect the rural and urban poor to digital financial and government services, markets and information. This will build the base for vibrant digital entrepreneurship and raise the level of digital literacy and skills.

Many countries have already started on the path toward a digital economy. Senegal has set a target of generating 10 percent of its GDP from the digital economy by 2025. Rwanda has rolled out 4G and fiber connectivity to deliver online e-government and other services across the country. Kenya has been a pioneer in mobile money and is exporting its model.

Available and affordable internet is a prerequisite for sub-Saharan Africa to participate in the digital economy. However, the region is not fully connected to broadband infrastructure. Twenty-one of the 25 least-connected countries in the world are in Africa and only 22 percent of the population has access to the internet. The region would benefit from focusing on putting in place innovative business models for connectivity, leveraging alternative infrastructure under a “dig once” principle and improving the policy and regulatory environment to boost private sector investment.

Besides connecting people to the digital world, making it easy for people to prove who they are through digital IDs is critical. However, 29 percent of adults in sub-Saharan Africa have no way of identifying themselves. This percentage is much higher among women, youth, and the very poor. Digital ID programs could allow people to access essential governmental services, much like Rwanda is already doing.

Bringing people online also helps increase access to formal financial services, including mobile money. The good news is that sub-Saharan Africa has the highest level of mobile money use in the world. For instance, when the government of Côte d’Ivoire issued multiple mobile network operator licenses, the market opened and the new Global Findex data. shows a tremendous increase in financial access. The challenge, however, is to expand this access. Fifty-seven percent of adults still don’t have a transaction account, and only one in five adults has a mobile money account. To improve financial access, countries are starting to look into harmonizing regional frameworks for payment systems, cross-border data flows, data privacy, cyber security and consumer protection. These are also critical to creating economies of scale and driving regional integration, both of which are necessary for sub-Saharan Africa to become competitive in the global digital economy.

Establishing the platform for mobile payments and transactions opens the door to the “platform economy” of e-commerce and online markets and the “shared economy,” which have become drivers of growth in digital economies. For the platform and shared economies to take off, the region needs vibrant entrepreneurial ecosystems to help local firms turn their creativity and energy into value-creating online businesses. Sub-Saharan Africa has one of the most entrepreneurial and youngest populations in the world, according to Total Early-stage Entrepreneurial Index, but elements of the entrepreneurial ecosystem – mentoring, seed funding, office facilities – are lacking in most countries. While Africa has many examples of excellence, we need to build more tech-enabled businesses that create jobs and open new markets.

Better digital literacy and skills are another must. At the most basic level, people need digital literacy to interact with the digital world. Most workers need digital skills to use technology in daily work. And digital entrepreneurs need specialized coding and programming skills to build online businesses. Big tech companies and specialized education companies such as Andela are already building these skills in key African markets.

We need to work together across the public and private sectors, regional organizations and development partners to support Africa’s efforts to take advantage of the technologies of the digital transformation to accelerate sustainable development.

We are committed to helping Africa build its Digital Economy, and look forward to working with governments and the private sector to make it happen.

Comments

Submitted by Angapat Raghu Menon/Neeraja R Menon on

In Africa the digital world is only up coming, but the investment in the field is to take proper intrest to invest in the areas of Digital transsactions in the banks and other comitments in the region. Some how the west African countries are much better than the Sub-Saharan countries in the Africa. Esspecialy the Countries like Nigeria and the Former french coloniees,. The investment in this region is very poor, but the developed countries should invest the infrastructure development in the digitel world,where the economy should develop in this region. High tech companies should invest in the region where the digitel world should take developments in the region. But the development should take place when the technologies should develop from the basic level of Schools, whre the acess will take place eaciar. In Rwanda Kenya, Senegal are some extend developing, the revenue will increasing slowley, and the economic development is taking place. The tecnical development will take place when the African countries shuld make polices libarel. Hope by 2030 the economic development will take place in the degital world and eliminate poverty.

Submitted by Risper Akinyi Pete on

SMEs spur economic and industrial growth hence the need for digitizing SMEs and making them competitive. SME leaders need to understand and take advantage of technology in market access and advertisement.

Submitted by Bamai Namata on

Great initiatives being put in place by the world bank. I think higher focus should be placed on leaders at the micro level who are in charge of decision making that drives local digital economies as well as improvement of access to basic infrastructure that hold the economy together such as internet connections and funding.

Submitted by Chris Emoghene on

Slow down in mobile telecom penetration in most rural communities, high cost of access to the internet and lack of proper means of identification pose serious challenges to the actualization of the Financial Inclusion targets and its attendant economic benefits across Sub-Saharan Africa.

Submitted by Mohammed Buhari on

This is true and very important. In Nigeria particularly we need digital infrastructure, platforms, skills and funding. Youths are ever ready to go for it all they need is enabling atmosphere.

Submitted by Professor Dr Muhammad Nawaz on

There are multiple aspects of digital economy. While working on the initiation of project "Collective Action for Knowledge Economy" (CAKE) is based on digitalization for informal, formal education and skills development to achieve SDGs through which we plan to address from basic to advanced info system delivered through an appropriate platform.

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