HARARE – The World Bank (WB) says a digital technology revolution sweeping across the continent will spur growth in fragile African States this year.
In a report titled ‘Africa’s Pulse’ released last week, the WB said even as governments lagged behind in preparing economies for the digital era, the revolution, taking place at breakneck speed will propel per capita growth rates to 1,5 percentage points per year and push down the poverty headcount by 0,7 percentage point per annually.
“The digital transformation can increase growth by nearly two percentage points per year and reduce poverty by nearly one percentage point per year in Sub-Saharan Africa alone. This is a game-changer for Africa,” said Albert Zeufack, WB chief economist for Africa.
The analysis confirms a comprehensive report released by the London based TMT Finance, which forecast mergers, acquisitions and other telecoms transactions to reach US$10 billion during 2019.
The deals are expected to unlock job opportunities, youth entrepreneurship, improve farm productivity, create multiple markets and trigger high entrants of the region’s women into the labour force.
“The potential growth benefits and poverty reduction effects are larger in Sub-Saharan Africa, and especially among fragile countries,” Africa’s Pulse said.
Along the way, governments must implement strategies towards cultivating the right climates for operators to flourish, said the report.
“When complemented with appropriate human capital investments, these effects could more than double. Access to broadband is critical but not enough to materialise these digital dividends. The digital economy also requires a strong analog foundation, consisting of regulations that create a vibrant business climate and let firms leverage digital technologies to compete and innovate; skills that allow workers, entrepreneurs, and government officials to seize opportunities in the digital world; and accountable institutions that use the internet to empower citizens. Digital technologies offer a chance to unlock new pathways for rapid economic growth, innovation, job creation, and access to services in Africa,” said the report.
The WB said while great strides in mobile connectivity had been achieved in several African countries, only 27 percent of the region’s one billion people had access to the internet, as businesses were slowly adopting digital technologies.
Only a few African governments had invested strategically in developing digital infrastructure, services, skills, and entrepreneurship, said Africa’s Pulse.
“Closing the digital divide relative to other developing and advanced countries is needed for Sub-Saharan Africa to take advantage of the opportunities that information and communications technologies are providing. African governments also need to put in place a robust legal and regulatory framework that fosters competition. Radical technological change and adoption are needed to eradicate extreme poverty by 2030. The region needs to continue making efforts toward fully embracing the Fourth Industrial Revolution,” said the WB.
In several African countries, internet services have been rolled out by both governments and private sectors.
But exorbitant costs of accessing services have kept millions offline.
The report argued that this could be the result of lack of competition, especially in countries where only a few players dominate the telecoms landscapes.
“Competition can help reduce prices and expand usage. The digital economy needs to be inclusive and reduce the divide in gender, income, and rural areas. Regulations are essential to create an environment that fosters the innovative and bold use of technology,” noted the WB.
Africa’s Pulse downgraded Sub-Saharan Africa’s growth to 2,3 percent for 2018, down from 2,5 percent in 2017
It said economic growth remained below population growth for the fourth consecutive year.
Although regional growth was expected to rebound to 2,8 percent in 2019, it will have remained below three percent since 2015.
“The slower-than-expected overall growth reflects ongoing global uncertainty, but increasingly comes from domestic macroeconomic instability including poorly managed debt, inflation, and deficits; political and regulatory uncertainty; and fragility that are having visible negative impacts on some African economies. It also belies stronger performance in several smaller economies that continue to grow steadily,” he said.
In Nigeria, growth reached 1,9 percent in 2018, up from 0,8 percent in 2017, reflecting a modest pick-up in the non-oil economy.
South Africa came out of recession in the third quarter of 2018, but growth was subdued at 0,8 percent over the year, as policy uncertainty held back investment.
Angola, the region’s third largest economy, remained in recession, with growth falling sharply as oil production stayed weak.