Tech trumps industrialisation as focus for Africa’s Agenda 2063
• Embracing latest developments will bring access to jobs with better pay and expand access to markets
While the industrialisation goals of AU Agenda 2063 are laudably ambitious, African policymakers may need to rethink it as technology pervades. Lack of reliable energy is a growing constraint.
Agenda 2063, a framework formulated to guide Africa’s development for the next 50 years, could already be ageing and in need of a refresh to adapt to fast-changing economic realities. Its timeline is so long term that it will inevitably need frequent course correction along the way.
Many commentators and policymakers have argued that Africa’s development and economic growth depends on how quickly it can industrialise and achieve economies of scale needed to compete globally.
But the global infiltration of digitalisation and associated technologies provides Africa with a rare opportunity to embrace these latest developments. This will enable it to leapfrog the slow, expensive grind of industrialisation while providing access to jobs with better pay and expanding access to international markets.
Besides, manufacturing needs an excellent and reliable power supply to flourish. With chronic power shortages, Africa is unlikely to reap any immediate dividends in this area. Even SA, one of the continent’s most industrialised economies, has struggled with rolling power cuts for more than a decade.
With the AU Agenda 2063, from light manufacturing and advancing to higher levels of sophistication, the historically prevalent development path followed is no longer applicable or desirable due to fast-advancing technologies of the digital spectrum.
Instead, sectors such as e-commerce and fintech have become important, and will continue to be more and more relevant in Africa’s economic advancement.
Nigeria, Africa’s largest economy and one of the continent’s many giants that struggles with power supplies, has become a technology hub with most African fintech based in Lagos, that country’s financial capital.
The same can be said for various other African tech hubs, such as in Kenya, Uganda and Ghana, which have leapfrogged the manufacturing path and become leading players of the fintech space.
QUALITY EDUCATION
Time-to-job proficiency in traditional manufacturing is so much longer than those with a digital focus, it makes an argument on its own.
With traditional manufacturing there is a long lead time for education, followed by apprenticeships before a country starts reaping the benefits. In the case of engineers, it could be as long as 12-19 years before they have completed all education and training and are net economic contributors.
We cannot consider the shift to digitisation without recognising the importance of quality education. But with digitalisation, online education can help African youths access education beyond the national education structure and at a fraction of cost of in-person training.
One key infrastructure need for all of this to take off and advance is access to reliable, affordable and high-speed internet, which can be provided through mini grid towers powered through renewable energy sources such as solar panels. Africa has abundant sun power.
In the digital space, one can secure a job that pays above minimum wage with only a high school diploma and six months of coding training.
Search giant Google and Andela, a global talent network that connects companies with remote engineers in emerging markets, are among many companies that have trained and placed thousands of coders, programmers and related technologists in employment across Africa.
The tech space promotes entrepreneurship, allowing firms and start-ups to grow rapidly with less physical capital and little to no geographic bricks-and-mortar presence.
Digitalisation can foster the creation of new jobs while also developing its human capital base, so helping Africa achieve its demographic dividend and avoid its demographic curse.
NO SHORTAGE
International investors have noticed. Technology-based sectors have shown resilience in finding funding sources. Even during the Covid-19 pandemic, data show that funding for African fintech quadrupled from 2019 to 2022.
In the first six months of 2022 alone, venture capital funds invested as much as $3bn in African fintechs. This is expected to grow to about $180bn by 2030.
Most of these investors have been typically from the US, and
ONE KEY INFRASTRUCTURE NEED FOR ALL OF T HIS TO TAKE OFF IS ACCESS TO RELIABLE, AFFORDABLE, HIGHSPEED INTERNET
to a lesser extent Europe, indicating that there is no shortage of capital or appetite for the sector. The world’s capital is willing to come to where the talent and markets are, which could help reverse the brain drain the continent has suffered for years.
Curiously, there is a lack of a strong presence of Africanbased fintech investors, who one would expect should be willing to invest alongside their international counterparts given their on-the-ground expertise and long-term interest in the sustainable development of the continent.
With the right policy adjustments, Africa is full of opportunities in the digitalisation space. This can shape Africa’s next few decades, ensuring the continent emerges economically long before the century ends — and certainly before 2063.
● Nampala is head: Africa financial institutions & sovereigns coverage at RMB.