The World Bank believes that by harnessing the digital revolution, Africa stands a much greater chance at eradicating poverty.
Digital revolution essential to boost productivity in agriculture,
foster rural development and create jobs for Africa’s youth bulge
But in its Africa Pulse report released in April 2019, it says less than a third of people on the continent had access to the internet in 2018. Also, few African citizens have digital IDs or transaction accounts, which impedes their access to key services including e-commerce.
“Businesses are slowly adopting digital technologies to foster productivity, jobs, and sales. Digital startups face steep hurdles to obtain financing. A few governments are investing strategically and systematically in developing digital infrastructure, services, skills, and entrepreneurship.
“The youth population will miss the opportunity to maximise their potential in the job market if economic activity in the region does not fully embrace the Fourth Industrial Revolution,” it warns.
It argues that if the United Nation’s first sustainable development goal of eradicating extreme poverty by 2030 is to be realised, it can no longer be business as usual. It requires drastic action that boosts productivity in the agriculture sector, fosters rural development, and creates jobs for the youth bulge that is joining the labour force.
A total of 82% of people in the region live in rural areas and earn their living primarily from subsistence farming. Informal labour makes up 75% of total employment. The low productivity of farms, firms, and workers in the informal sector is partly a result of poor access to information on input, knowledge, and output markets.
But digital technology will not only help improve communication, but it can also potentially improve market efficiency, says the report. Mobile phones may help reduce information barriers for consumers, producers, and traders, and facilitate learning about prices. Other mobile applications may also reduce demand uncertainty and coordination costs by improving the flow of information.
It says pilot programmes have shown that technologies like blockchain can
potentially increase access to export markets by small stakeholders, by increasing data transparency across the supply chain. They also replace paperwork by automatic digital verifications.
Another advantage of digital technology is it has dramatically reduced the cost of private and public transfers and payments relative to traditional methods. Also, mobile money innovation has increased the frequency and amount of transfers, and it has reduced the implementation costs of government-to-person payments.
The digital space also allows those living in rural areas to have easier access to financial institutions. Another key benefit is that digital technology can provide educational content and help develop skills.
“Mobile phone-based applications can be used as a teaching tool in classrooms or as substitute teachers. Consequently, the digital economy can unleash new market opportunities and attract new entrepreneurs and investors to serve the poor-particularly in fragile countries,” the report reads.
“Creating and adopting digital technology tools that are relevant to the African context (that is, farmers in rural areas) combined with efforts on digital literacy can empower low-skilled informal workers to perform higher-skilled tasks and learn as they work. Such technologies can enable workers without any collateral but with the ability to make small savings to access credit and insurance products based on their recorded savings and purchase histories, and to be matched to better jobs over time.”
Because there is still a large gap in accessing quality internet broadband that is affordable, progress in mobile broadband internet services has been faster, the document says. As a result, Sub-Saharan Africa is the global leader in mobile money accounts.
By enabling digital connectivity in Africa, entrepreneurs and consumers will be able to participate in the economy. The World Bank says evidence from Ghana, Kenya, Nigeria, Rwanda, South Africa, Tanzania, Uganda, and Zambia shows that there are more than 300 unique digitals, multi-sided platforms (matching providers and consumers of goods and/or services) operating in the transport, online shopping, asset sharing, and professional services.
More than 80 percent of the digital platforms in these countries are homegrown. However, these platforms are not been used as extensively as foreign platforms such as Uber. It says foreign platforms are more likely to operate regionally than at the country level. U.S. platforms, like Freelancer, Elance (Upwork), ODesk, and Amazon Mechanical Turk, have global scale, but they are gradually being challenged by local platforms in some countries.
The report says that on the production side, digital platforms will help gauge demand over a wide geographical area and provide SMEs the opportunity to conduct business in new markets, including niche markets. They also allow SMEs to supply goods and services by alleviating location constraints and cutting marketing costs. This is expected to result in jobs for the rising youth population.
The World Bank advocates for digital IDs to help reduce poverty. It is estimated that one billion people across the globe do not have a legal ID and half of them are in Africa. This hinders access to basic services and economic opportunities. By providing legal identification countries will be more efficient in raising revenues, delivering services, and promoting private sector development.
It cites Malawi as a success story in the rollout of its national ID programme. Registration started in May 2017 and was rolled out in six months to 9.5 million citizens. Because it uses biometric data, the country’s national identity system is now linked to the registry for social programmes, the public service which has helped
eliminate ghost workers and other public services such as health.
Governments have contributed to the information revolution by providing citizens access to government portals via the internet. It says the interactive nature of a government’s digital platforms can potentially raise efficiency and reduce the cost of government operations, foster public sector transparency and accountability, reduce bureaucracy and improve access to government services.
The gives the eCitizen digital platform in Kenya as an example where individuals are provided access to various services through a series of portals, including obtaining business licences, permits, and registration; driver’s licences; applying for a passport, and searching for official land titles. Kenyans can pay for these services using mobile money, debit cards, and eCitizen agents.
But as governments continue investing in the digital revolution, they need to train public servants on how to operate and optimise innovations.
“The rising automatisation of government tasks will release resources to improve service delivery. Capacity building for civil servants is required to embrace innovation and propel their role as change agents in the public sector space…,” it says.
On digital entrepreneurship, which is broadly proxied by the quality of
entrepreneurship and the support it gets, the 2018 Global Entrepreneurship Index score for Africa (18.3) is lower than that of low-income and lower-middle-income countries (25 and 20.1, respectively). While North Africa has made more progress in supporting these ecosystems than Sub-Saharan Africa, only four countries have GEI scores above the world median (27.8) They are Botswana, Morocco, Namibia, and South Africa.
“Despite the strong entrepreneurial mindset in Africa and the growing number of digital entrepreneurial intermediaries, Africa has not translated its potential into a vibrant or comprehensive digital entrepreneurial ecosystem with commercial digital hubs that can generate talent and ventures able to compete at the global level,” says the report.
For instance, only Nigeria and South Africa have been able to produce private companies with a valuation exceeding $1bn.
“A strong emphasis is needed to provide the foundational building blocks to support the realisation of the entrepreneurial potential of the continent and for Africa to become an essential part of the global digital entrepreneurial ecosystem.”
By: Amy Musagrave