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Africa’s future is innovation rather than industrialization

North Beach Pier, Durban, South Africa Image: Captureson/Unsplash

Africa has taken three significant steps in recent months on its journey to a stronger economic future.

In March, the African Union launched the African Continental Free Trade Area (AfCFTA). This landmark agreement aims to create a single market expected to generate a combined GDP of more than $3.4 trillion and benefit over 1 billion people.

In April, the South African government announced the launch of a new Affiliate Centre of the World Economic Forum’s Centre for the Fourth Industrial Revolution (C4IR).

The Centre will act as a focal point for dialogue and co-operation on the challenges and opportunities presented by advanced technologies, which are merging our physical, digital and biological worlds. These include a number of tools that, combined, will disrupt Africa’s dominant agricultural, extractive and manufacturing industries, offering the continent an unparalleled opportunity to transform and thrive.

And the World Economic Forum has just launched the Africa Growth Platform, an initiative aimed at helping startup enterprises grow and compete internationally. With early-stage entrepreneurial activity 13% higher than the global average, Africa is well placed to get startups off the ground, but it also has a higher-than-average failure rate due to insufficient support and infrastructure. The Africa Growth Platform will bring together governments, investors and businesses to help startups thrive and become sustainable.

Advanced technologies predicted to disrupt industry in Africa
Advanced technologies predicted to disrupt industry in Africa
Image: A.T. Kearney, 2019

 

These are important steps forward. Because despite recent economic growth, Africa remains subject to lingering challenges–including inequality, relatively poor agricultural productivity and significant youth unemployment. It is also about to witness a population explosion, with 2.4 billion people expected to call the continent home by 2050. Job creation is essential, and the 4IR – underpinned by forward-looking trade agreements and support systems for entrepreneurs – has the potential to supply much of that demand.

Africa’s digital revolution

Africa has definitely grasped the promise of the 4IR. More than 400 tech hubs have sprung up across the continent, with Lagos, Nairobi and Cape Town emerging as internationally recognized technology centers. These cities now host thousands of startups, along with the incubators, accelerators, innovation hubs, maker spaces, technology parks and co-working spaces that support them.

Image: GSMA Ecosystem Accelerator Tech Hubs Landscape Report 2018

 

Notable successes include the mobile lending app Branch International, which recently raised $170 million in one of the largest funding rounds achieved by an Africa-focused startup, and a billion-dollar IPO for Jumia, the largest e-commerce company on the continent and the first African tech startup to be listed on the New York Stock Exchange. Elsewhere, pockets of proactive government policy, like Tunisia’s Startup Act, are helping foster this culture of innovation.

Efforts like these will become increasingly important to help a hyper-connected and entrepreneurial youth population on its way to a digital future. However, with one or two exceptions, these initiatives are largely being driven at a city or enterprise level, rather than an integrated national level, to Africa’s detriment overall.

One illustration of this can be found in the World Economic Forum’s Readiness for the Future of Production Report 2018, which analyzed countries’ preparedness to capitalize on emerging technologies. Of the 25 African countries assessed, 22 were classified as having a low level of readiness for the future, due to lack of the necessary enabling conditions. Beyond tech platforms and innovation capacity, these include a robust institutional framework, the right skills and talent, the ability to attract global trade and investment, availability of sustainable resources and a thriving demand environment.

Although the Middle East and North Africa region fared better on average than sub-Saharan Africa, readiness across each driver varies considerably by country, indicating the absence of co-operative action. As we have seen from other global tech hubs from Bengaluru to Berlin, Beijing to Boston, this spurs the chances of success even more than the technology itself. Policy, regulation, finance, infrastructure, education and talent must all come together in an innovation ecosystem focused on an integrated agenda and propelled by unconstrained collaboration.

 

How Africa can grab the 4IR opportunity

The continent must also overcome significant hurdles if it is to grab the 4IR opportunity and become the global hotbed of innovation. Three ingredients are key to making that grab:

1. Definitively tackling the digital hygiene gaps

The single basic requirement for any tech center is access to cutting-edge digital connectivity, which has come in leaps and bounds across Africa as mobile adoption has accelerated. However, many “last mile” or even “last 50 meters” connectivity gaps remain, the allocation of licensed spectrum is sporadic, and government-driven internet shutdowns continue to plague countries like Somalia and Ethiopia. What’s more, reliable access to energy, clean water and other resources is not a given, while digital tools do not completely remove the need for effective road systems and transportation links.

2. Gaining useful, actionable insights from the data glut

It’s become common to refer to data as “the new oil,” and in one sense, it is According to research, the big data analytics market is set to reach $103 billion by 2023, and it’s estimated that every person will generate 1.7 megabytes in just one second by 2020. On the other hand, data is nothing like oil because it’s not a finite resource. Far from it. This presents an opportunity for Africa, if it can turn the forthcoming glut of bits and bytes into useful, actionable insights that can be accessed and shared easily. To do this, cross-continental policies and standards for the generation, regulation, use and management of data will need to be developed–a not inconsiderable task.

3. Building the new skills needed – against the clock

As already mentioned, machinery on its own isn’t enough to succeed in the 4IR–you also need to know how to run it. Africa is by no means alone in facing a potential gap here, not only in the specialist technical skills required to work with emerging technologies, but also in the complementary capabilities to help people adapt to an ever-changing job market. It’s necessary to fast-track moves to skill and reskill the future and existing workforce, making sure adjustments are addressed early within the education ecosystem and refined on an ongoing basis through further education and life-long learning.

The need for an innovation ecosystem

To do all of this effectively, today’s fragmented efforts must be turned into a cohesive approach. Institutions like the African Union and Africa50 along with the Africa Growth Platform and the C4IR have sown the seeds for pan-African collaboration and investment, but more public-private partnerships are essential. The World Bank suggests the comparative success of certain African tech clusters can be attributed to the establishment of “organic, multi-stakeholder ecosystems” and that these are more effective than initiatives led by government, the private sector or academia alone.

If Africa can develop these clusters further and create an integrated innovation ecosystem to tackle the 4IR, it stands to supercharge its economies, its societies and the livelihoods of millions.

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