- Energy, skills gap and poor infrastructure remain huge hinderances to realizing tech-enabled economic growth in Africa.
- Investments in technology can offer an accelerated pathway to inclusive productivity growth in Africa. However, many economies are struggling to make progress.
- Modern technology offers chance to foster entrepreneurship and innovation while attracting foreign direct investments.
New technology has fostered growth in all industries for all centuries and Africa is banking on tech-enabled economic growth albeit with struggles. For economies to have an edge over their peers, technology plays a vital role
Technology can help businesses grow on one hand and especially emerging technology has the potential to create jobs.
“The first half of 2023 has seen a resurgence of enthusiasm about technology’s potential to catalyze progress in business and society,” says Micheal Chui in his report: Technology Trends Outlook 2023.
“Investment in most tech trends tightened year over year, but the potential for future growth remains high, as further indicated by the recent rebound in tech valuations,” reads the report.
But what of Africa’s investment in technology? Is Africa investing in tech-enabled economic growth and if it is, is the investment enough to make a difference? Evidence from empirical studies shows that technology offers a clear pathway to inclusive productivity growth. Technology also fosters entrepreneurship, innovation, and even foreign direct investment.
Research also shows that when it comes to adopting technology in Africa, women are again at a disadvantage. According to a recent World Bank study, in Africa, only 2 per cent of micro-sized firms are owned by young women. The youth own about 8 per cent of micro-firms, the World Bank notes.
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Infrastructure for tech-enabled economic growth
The trouble does not only lie in adopting new technologies but in the infrastructure needed for tech-enabled economic growth. In terms of important infrastructure areas like energy, road and rail transportation, and water infrastructure, Africa falls behind the rest of the globe.
According to data from the World Bank Enterprise Surveys, customers in sub-Saharan Africa experience nine outages on average every month. These power outages last an average of 5.7 hours each. However, determining the precise scope of energy poverty in in Africa remains a toll order.
In Africa, numerous companies face significant constraints due to inadequate or unreliable electricity supply. As a result, many of them resort to using diesel generators as an alternative, negatively impacting their economic efficiency. Moreover, these generators have adverse effects on the local environment and public health.
For the continent’s economic advancement, for the welfare of its 1.3 billion citizens, and for the expansion of its tech-enabled commerce, it is crucial to close this infrastructure deficit.
Transformation for jobs
“Bold policy actions that create a conducive technology adoption environment will lead to positive impacts visible to governments, enterprises, and households,” says Prof. Zamburage Ngoni, of University of Dar es Salaam.
While Africa is lagging behind in its investment in technology adoption; “absolute investments remained strong in 2022, at more than $1 trillion combined.”
In a report titled Digital Africa: Technological Transformation for Jobs, the lack of skills among African youth is a major hindrance to the adoption of technology and national development.
“We can’t overstate the importance of talent as a key source in developing a competitive edge. A lack of talent is a top issue constraining growth. There’s a wide gap between the demand for people with the skills needed to capture value from the tech trends and available talent,” adds the report.
According to the survey, 3.5 million job postings in tech trends found that many of the skills in greatest demand have less than half as many qualified practitioners per posting as the global average.
Skills for tech-enabled economic growth
While Africa lacks the skills for new technology, the trend is that “in the coming decade, 20 to 30 percent of the time that workers spend on the job could be transformed by automation technologies, leading to significant shifts in the skills required to be successful.”
But Africa is again struggling to keep pace. Numerous youths lack the needed skills to be employed by tech companies. Worse still, the lack of skills for technology adoption leaves the youth at a disadvantage against foreign well-trained peers.
“Job postings in fields related to tech trends grew at a very healthy 15 percent between 2021 and 2022, even though global job postings overall decreased by 13 percent.”
Above shows that job opportunities lay in the tech industry that African youth are not skilled for. Which begs the question: how is Africa’s future is based on new technology yet the youth cannot use these technologies? “The shortage of qualified talent has been a persistent limiting factor in the growth of many high-tech fields,” notes the survey.
Africa, the world’s youngest continent, is projected to comprise 20 per cent of the global workforce by 2030. An estimated 33 per cent of the workforce will be the youth. Each year, Africa will add 10 to 12 million young people to the workforce.
Africa’s rising mobile phone subscriptions, internet availability, and innovations in mobile banking indicate a growing digitalization trend. This digitalization will significantly impact labor markets and economies, both within the region and on a global scale.
Industrial machine learning
Researchers shows that lack of skills is more pronounced when you focus on emerging technologies like industrial machine learning.
It remains the role of leaders in Africa to show ‘true leadership’ and push for investment in technology. They also need to call for the adoption and skills training for African youth. There is a need for long-term strategies that can enhance the emergence of tech-based economy in Africa.
If African youth do not have the needed skills to harness opportunities in tech, the continent could miss a lot. Lack of necessary skills in technology, which is billed to drive economic growth, could further worsen poverty levels. By strategic investment in skills development right at an early stage, Africa can reap big in the future.
“Kenya’s industrialization process will not be easily achieved in practice. Unlike the newly industrializing countries, which industrialized under protected domestic markets, Kenya is attempting to achieve the same result with a liberalized market.”
Kenya: Political will in tech adoption
In Kenya, technology policy-making involves three ministries and their departments. The key ministries are Education, Science and Technology; Tourism, Trade, and Industry; and Labour and Human Resources Development.
However, there are limitations in working relations between technology and higher education under the same ministry, as stated in the UNCTAD report titled “Africa’s Technology Gap. Additionally, the report highlights the absence of a mechanism to analyze Kenya’s competitiveness compared to other countries. Consequently, this is hindering the formulation of practical technology policies.
What is needed is a body charged with analyzing technology needs at the broad economic level. Consider empowering a unified body or commission to design cross-ministerial strategies and execute them. The success of Asian newly industrializing economies is attributed to their coordinated and timely strategic planning. This was often with input from the private sector and transactional investors. African leaders should take this into account for their own development initiatives.
