Invest in innovative technology to get Africa leapfrog inclusive development obstacles – IMF

Policymakers in Africa must invest in innovative technology so that the continent of over 1.3 billion people can leapfrog obstacles to inclusive development in its rebuilding effort after COVID-19, the International Monetary Fund (IMF) has stated in a recent report.

The fund asserted that Africa must shift its focus to retaining and creating wealth in a bid to generate economic growth that will lead to sustainable development. Thus, the management of resources, fostering inclusiveness, diversifying its economies, optimisation of the energy mix and placing human capital at the centre of policymaking will also aid the growth that will, in turn, lead to sustainable development.

The international lender also pointed out that for the development to be sustained, African policy must foster investment in research, development, and innovation (R&D&I) to reboot the continent’s economic structures and catch up technologically with the rest of the world.

Consequently, innovation and the digital information and technology that follow it have become a necessary component of any effort to address the challenges of food security, health, education, energy, and competitiveness. It also stated that unless African policymakers reap the potential benefits of research, development and innovation, the drive will continue globally, adding that the problem lies in the fact that innovation is talked about and debated in Africa but not strategized.

According to the report, Africa has enjoyed strong economic growth for most of the 21st century, but, the “Africa Rising” narrative that accompanied this growth is mostly a story of rising GDP, which is overly one-dimensional.

The IMF regretted that the economic growth of the continent has failed to generate many good jobs, which now, is postponing the benefits of the demographic dividend of a large working-age population that is supposed to free up resources that can be focused on inclusive development.

“African policymaking continued its now nearly half-century belief that achieving “development” is limited to managing poverty—in other words, equating the business of development to poverty reduction. The shift from the industrialization agenda of the early post-independence period to one of poverty reduction is a major reason for the continent’s economic malaise. As the African Innovation Summit (2018) put it, the development agenda shifted from socio-economic transformation to the lowest common denominator, managing poverty,” said the IMF.

Africa going digital post pandemic era

Despite all the economic and social devastation caused by the coronavirus pandemic, it has also given the African countries the opportunities to innovate and go digital, rebuild their economies with digitalization leading the way. The IMF also said that the civil societies, so far, seem more ready than policymakers in embracing digital technology.

“With no help from the government, the digital technology industry has grown in Africa – through incubators and startups, tech hubs and data centres. Information and communication technology (ICT) activities are spreading across the continent, and young Africans are responding with digital technology to the challenges posed by COVID-19, but digitalization is not widespread in Africa. Only 28 per cent of Africans use the internet, a digital divide that prevents the continent from taking full advantage of digital technology’s ability to mitigate some of the worst effects of the pandemic,” said the IMF.

The report further noted that change has occurred in Africa over the last five years as it suggested in the report that the continent may be receptive to building instead of merely rebuilding while it identified three major initiatives in the continent that could become game changers and breathing life into the top-down dimension of going digital. These are:

•The African Continental Free Trade Area (AfCFTA), which aims to create a single market with a combined GDP that exceeds $3.4 trillion and includes more than 1 billion people;

•The South African government’s new Centre for the Fourth Industrial Revolution of the World Economic Forum (WEF), for dialogue and cooperation on the challenges and opportunities presented by advanced technologies;

•The WEF’s Africa Growth Platform, which aims to help companies grow and compete internationally, leveraging Africa’s entrepreneurial activity—13 per cent higher in its initial stage than the global average.

While discussing the public policy place for the implementation of the initiatives towards digital drive, the IMF noted that African policymakers must make implementation of digital technologies an element of an ecosystem of innovation, as there’s no time to lose. However, a well-calibrated regulatory framework, investment in infrastructure, digital skills, and financial inclusion must take priority as digital solutions cannot be achieved in a vacuum.

The Fund further asserted that the massive adoption of digital technologies also means that policymakers must be aware of and address the complex legal and ethical impact of technology in society, including privacy, data, and tax evasion which is, especially true in Africa, where weak institutions may not uphold the rights and interests of their people against those in the market.