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