By Motoki Aoki
On June 3, German software giant Systems Applications Products (SAP) announced “Digital Africa,” a partnership with the German Ministry for Economic Cooperation and Development (BMZ) that seeks to support the development of Africa’s digital potential. This program—one of SAP’s $500 million investment initiatives—will train 20,000 children in 11 African countries, underscoring growing recognition of the role of Information, Communications Technology (ICT) in driving broader development in Africa. The new partnership comes in recognition of the significant opportunity ICT driven initiatives present in Africa, both in terms of development impact and profit potential. Here’s a review of that opportunity, and the trends that are driving it.
Diversified economy for Africa‘s high demographic dividend
Surprisingly, by 2035, the number of Africans joining the working age population (ages 15-64) will exceed that from the rest of the world combined. With the right conditions for sustainable job creation, Africa will enjoy a rapid-growing demographic dividend. Indeed, many Africans are migrating from rural to urban areas to search for better opportunities. This massive urban migration can be transformed into a positive, but in the short term it will stretch already limited public resources.
Currently, agriculture supports the livelihoods of 80 percent of the African population. However, due to low productivity, overall competitiveness in the sector stagnated. The movement toward ICT will improve the productivities, including crop varieties, control of insect pests and livestock diseases, and better methods of natural resources management. Investing Africa’s capabilities in science and technology will further diversify and strengthen African economy.
Sub-Saharan Africa‘s Job Creation
Diversified economic activity is an important prerequisite for sustainable job creation. Therefore, a holistic ICT strategy in collaboration with technology companies must be an integral part of any strategy for sustainable growth across African countries. Creating a secure business environment, prioritizing technological investments, and improving science and technology training are all necessary foundations for Africa’s sustainable growth.
Private sector led youth development is also worth mentioning. Constrained government budgets make private sector involvement critical for this development. Public initiatives supported by the private sector can create new job opportunities that will simultaneously create a more skilled workforce.
Today, many technology companies are investing in African labor development. For example, Cisco’s Networking Academy (CNA) partners with education institutions and local NGOs in 47 African countries to deliver an ICT training program. The president of Cisco Africa, David Meads, writes that more than 92,574 students enrolled in CNAs across Africa in 2014.
Africa’s premature IT industry has huge potential for growth
One major hurdle to Africa’s economic development is the unskilled nature of the workforce and the low rate of technological penetration. According to the Africa Competitiveness Report 2015, only 25 percent of Africans use the Internet, compared with 30 percent in Southeast Asia, 40 percent in Latin America and the Caribbean, and 80 percent in OECD countries. This gap represents unrealized market potential, and mobile broadband penetration in Sub-Saharan Africa is expanding significantly.
In 2014, one-third of Africans were unique mobile subscribers, and that number is expected to climb to half by 2025. ICT will continue to be a key priority going forward as the world becomes increasingly digital. Mckinsey suggested Internet contribution to Africa’s GDP is projected to grow at least 5-6% by 2025, and if Internet access becomes as widespread as mobile phones, then it could account for as much as 10%, or $300 billion of total GDP.
Technology is a key benefit multiplier to improve overall social performance
The growth of ICT in African markets creates a window for innovative solutions to development challenges. One example is mobile banking, where technology has facilitated greater financial inclusion through solutions like M-Pesa, the mobile based money transfer and microfinancing service. The remarkable uptake of mobile technology in the region has opened up new ways of delivering services. Mobile phones are being used to track the spread of infectious diseases. ICT can drastically reduce the costs of education by providing high-quality programming online. This month, the president of Kenya, with support of the Kenya Private Sector Alliance, implemented the e-procurement system to improve government transparency.
Technology improves productivity in various economic sectors and provides benefits to potential stakeholders along the value chain. The strategic collaboration of public-and private organizations to increase the skills of the labor force , like the one between SAP and GIZ, will only amplify the trend towards ICT.
Motoki Aoki is a researcher with the Project on U.S. Leadership in Development.
Photo courtesy of Wikimedia user SandisterTei under a Creative Commons Attribution 3.0 Unported License.