Many African countries reacted quickly and effectively to mitigate the health and economic risks posed by Covid-19. Less well documented is the agility with which the region’s private and public actors have adapted their digital practices in light of pandemic-related constraints. But the success stories are spectacular.
For example, person-to-person mobile money transfers in Rwanda increased fourfold during the first month of lockdown from mid-March to mid-April 2020, as contactless payments became the “new normal.” To slow transmission of the coronavirus, innovative start-ups developed digital solutions, like remote mobile app DiagnoseMe in Burkina Faso and Covid-19 triage tools in Nigeria. Education ministries in at least 27 African countries set up e-learning platforms for students affected by school closures.
But these extensive entrepreneurial resources, and the opportunities created by the global digital revolution, will not be enough to fuel the economic transformation envisaged by the African Union’s Agenda 2063. In particular, the magnitude of Africa’s job-creation challenge is such that isolated success stories cannot substantially improve the numbers.
As the number of Africans aged 15 to 29 with upper secondary or tertiary education rises from 77 million today to a projected 164 million by 2040, the demand for more jobs will keep growing. By itself, the digital sector will be of little help: start-ups typically create few opportunities – usually for highly qualified innovators. The solution lies in the widespread dissemination of digital innovation across the economy as a whole.
Triggering large-scale job creation in Africa, therefore, requires policies that bring digital solutions to the non-digital economy. Yet, although eight out of 10 African countries have digitalisation strategies in place, they tend to focus overwhelmingly on the digital sector. In the 2021 edition of Africa’s Development Dynamics – a joint report by the African Union Commission and the OECD Development Centre – we propose four guiding principles to help governments reorient and strengthen their digitalisation strategies.
First, policymakers must promote the dissemination of digital innovation to everyone, not just to those living in large cities. Although 73 per cent of Africans will be living in intermediary cities and rural areas by 2040, today only 35 per cent of those cities are within 10km of a high-speed terrestrial fibre-optic network. Likewise, only 25 per cent of the continent’s rural dwellers have internet access, compared with 35 per cent in Asia and 40 per cent in Latin America. Universal access to digital technologies also requires more affordable data across the board. Currently, only 17 per cent of Africa’s population can afford one gigabyte of data each month, compared with 37 per cent in Latin America and the Caribbean and 47 per cent in Asia.
A second priority is to prepare Africa’s workforce to embrace digital transformation. Some 45 per cent of young people believe their skills are inadequate for their jobs. On current trends, self-employed and contributing family workers will account for 65 per cent of the region’s total employment by 2040, compared to 68 per cent in 2020. The emergence of new forms of work in the digital economy will drive much of this growth, and calls for a regulatory framework and social protection schemes for all, especially self-employed workers who rely on insecure contractual arrangements with e-platforms.
Third, governments need to help African start-ups as well as small and medium-size enterprises adopt the most effective digital tools to compete and innovate in the digital era. Only 31 per cent of firms in Africa’s formal sector have a website, compared with 39 per cent in Asia and 48 per cent in Latin America and the Caribbean.
Lastly, policymakers must coordinate at the regional and continental levels. National digitalisation strategies cannot work in silos. Integrating the continent’s digitalised economies in the African Continental Free Trade Area calls for supranational cooperation in areas including digital taxation, data security, privacy standards, cross-border data flows, and interoperability.
As of today, only 28 African countries have personal data-protection legislation in place, and just 11 have adopted substantive laws on cybercrime. These countries should share their experiences and lessons learned with the rest of the continent.
By Mr Victor Harison, commissioner for Economic Affairs of the African Union, and Mr Mario Pezzini, the director of the OECD Development Centre.