Africa. A continent of 54 countries with more than 1.4 billion people.
It is the world’s largest free-trade area (African Continental Free Trade Treaty (Afcfta)), with GDP growing by 4 percent in 2023-24 according to African Development Bank forecasts and a booming middle and young class.
Since 2000, there has been talk of the “African Century” with the so-called African Renaissance: the rebirth of the African continent and South Africa after a century of apartheid.
Africa has experienced an unstoppable pace of growth: it has achieved a level of education that guarantees six years of schooling on average compared to four in the 1990s; it has experienced a population explosion, bringing about one million Africans into the job market every month; and it has become a hub of technological innovation with as many as 400 million-dollar local companies.
The expansion of local companies has made Africa a testing laboratory for global innovation. According to Harvard Business Review, “If you can create a product, service or business model that is cheap and robust enough to succeed in Africa, it is likely to be competitive in many other regions of the world.”
Indeed, Africa is witnessing a momentous transformation thanks to Information and Communication Technology (ICT) and digitization. This continent, once primarily known for its economic and social problems, is emerging as one of the most dynamic places for technological innovation.
Although the process is not proceeding uniformly, its rise is continuous in all African states and in every economic sector.
With the outbreak of the COVID-19 pandemic, digital technology has become an important tool more than at any other time to facilitate health monitoring, work and business across the continent.
There has thus been an acceleration of the digitization process that has led to the emergence of incubators, start-ups, technology hubs and data centers.
More than 640 technology hubs led by the private sector and young people have emerged across the continent.
Africa’s Silicon Valley
Digital technologies offer new opportunities for African economies. Investment in the sector is growing. In this way, Industry 4.0 is enabling thinking about unprecedented avenues for the continent’s economic development.
On the African continent, the Global Startup Ecosystem Report (GSER) 2023 specifically identified five major innovation ecosystems-Lagos in Nigeria, Nairobi in Kenya, Cape Town and Johannesburg in South Africa, and Accra in Ghana.
They consist of tech hubs (which include accelerators, incubators, startup support labs at universities, coworking offices), investor networks, and local startups.
UN pushes for digital revolution on the continent
Internet access is critical to Africa’s economic and social transformation, making it vital for governments to invest in digital technologies.
“Digitization is key to achieving the goals of Agenda 2063, and achieving this requires the contribution of all stakeholders,” said Antonio Pedro, acting secretary of the United Nations Economic Commission for Africa (Uneca), speaking at the Internet Forum 2022 in Addis Ababa, Ethiopia.
He stressed the importance of partnerships and collaboration to promote digital connectivity in Africa, which is on the path of economic transformation with the operationalization of the Africa continental free trade area.
The African Union (AU) has launched the Digital Transformation Strategy for Africa 2020-2030, which aims to help its members digitize their services by 2030.
Let’s look at some sectors already touched in terms of approach and processes by this digital revolution:
Internet access
Internet access in Africa has increased significantly in recent years due to more people owning smartphones and connectivity initiatives. Mobile phone networks have developed rapidly in Africa in recent times, with growth between 2007 and 2016 of 344 percent, three times stronger than the rest of the world. The historic communication deficit due to the scarcity of landlines on the continent is being overcome through the use of cell phones and smartphones.
Digitization of the banking system
Thanks to this new connectivity, the first mobile payments, made with cell phones, were born in the mid-2000s. A very useful financial inclusion tool for African economic development. In fact, in Africa it is estimated that 70% of adults currently do not have a bank account. Over the years it has quickly become indispensable in several countries on the continent, extending payment services to millions of people in otherwise underserved communities, overcoming the need for traditional telecommunications and banking infrastructure.
An excellent example of a successful industry in the African context is the famous MPESA, SMS money transfer technology introduced in 2007, has seen a very high rate of adoption in Kenya and subsequently in other African countries, reaching a total of 50 million active users by 2021. A 2020 report by Boston Consulting Group (BCG) indicates that Kenya and Ghana rank second and third in the world for digital payments usage, surpassed only by China. Also belonging to the mobile payments sector are three of the continent’s four startups that have surpassed the $1 billion investment threshold, thus acquiring the coveted title of “unicorns“: Nigeria’s Flutterwave, Interswitch, and Egypt’s Fawry.
Digitization of Public Administration
Demonstrating the power of the digital tool Mobile Money, the government in Nairobi has digitized all payments made by the public administration so as to improve its efficiency and thereby reduce corruption.
Kenyan President William Ruto thinks digitization should provide a 30 percent increase for national tax revenues and says, “Until now, the only way to pay for services offered by the public administration was through cash. It is our intention to change that and make it possible to pay through the M-Pesa system, with credit cards and in any other form possible on a digital platform.”
16 African countries have made significant progress in the deployment of information and communication technology (ICT/IT) in public administration. This was revealed by the United Nations Department of Economic and Social Affairs in a report titled “E-Government Survey 2022, The Future of Digital Government.”
The main digital services that most African countries have adopted revolve around civil status, business, and tax operations. The United Nations reports that in Africa, 61 percent of countries offer an average of 12 online services. For the first time, five countries (Nigeria, Rwanda, Angola, Egypt and South Africa) offer 20-21 online public services.
Digitization of education
Digital technologies are revolutionizing education in Africa, enabling access to online educational content and enhancing learning through interactive digital platforms. Collaborations between Africa and well-known Western universities are multiplying due to the ease of connection and interconnection. It is an indicator of the growing commitment to promoting higher education and research on the African continent. These partnerships benefit both African institutions and Western universities, contributing to the advancement of education and development in Africa.
Digitizing health care
In collaboration with a number of African governments within francophone-speaking countries, Transform Health, an organization founded in 2018 by seven sector partners that now works globally through people, communities, government agencies, and regional institutions (West African Health Organization in this case), is developing digitization projects to ensure quality levels of health care for underserved populations, marginalized groups, and those in poverty who still lack access to adequate health care.
To achieve this goal, however, robust and coherent software and hardware architectures are needed, improving coordination between the different actors on the ground, technicians, regulators and policymakers, to foster the best possible technology integration.
Digitization of agriculture
Digital agriculture offers opportunities for farmers and rural communities in a digitally driven agribusiness system that has the potential to transform women’s and youth perceptions of the broad agricultural sector into a positive and fruitful source of employment opportunities along agricultural value chains.
Inclusive, digitally transformed agriculture would help lift more than 400 million people in sub-Saharan Africa out of extreme poverty and improve the livelihoods of some 250 million smallholder farmers and pastoralists in the region.
Digital Revolution and Digital Divide in Africa: what to do?
The digital revolution process in Africa is ongoing and offers many opportunities for modernization, innovation and collaboration, but there is also the digital divide present in Africa to consider.
Of the 1.460 billion people in Africa, nearly 400 million are extremely poor, living on $1.9 a day or less (African Union Commission and OECD). Despite vast energy resources, only 43 percent of the total population of sub-Saharan Africa and 25 percent of the rural population have access to electricity (Blimpo and Cosgrove-Davies).
Although progress has been made, much of sub-Saharan Africa is still not connected, and large populations cannot take full advantage of the benefits of connectivity, as about one-third of the population cannot be reached by mobile broadband signals and only between 30-40% have access to the Internet (ITU, 2021).
Africa has proven to be a driving force in technological innovation and creative use of digital resources to address local problems. Collaboration among governments, the private sector, and international organizations is critical to harnessing the full potential of ICT in Africa and contributing to global progress in an increasingly interconnected era.
The expansion of African markets represents a significant opportunity for many small and medium-sized enterprises seeking to diversify their businesses and take advantage of Africa’s growth potential.
Africa. A continent of opportunity to be approached methodically and respectfully.
At Roncucci&Partners we help companies develop themselves and their business, embrace change and evolve to thrive in a world that is increasingly complicated, insidious and requires great expertise. We do this by applying punctual methods and rigorous strategies, the result of many years of experience and the richness of the numerous success stories we have conducted all over the world. Passion and method are indeed our guides to enhance the present and build the future.
