Empowering Africa: Unveiling the Path to Prosperity through National Digital Economy Strategies
Categories : Blog
Posted:
Author: Digital Frontiers Institute
The Digital Economy is all economic activity that depends on or driven by digital inputs, including digital technologies, infrastructure, services, and data. It involves all producers, consumers, and governments exploiting digital inputs in their economic activities. The Digital Economy includes all online activities across multiple sectors, platforms, and channels (web, mobile, big data) that rely on digital technologies. Digital Economy augmented by the Fourth Industrial Revolution (4IR) is a disruption through emerging technologies in artificial intelligence (AI), Robotics, the Internet of Things(IoT), Autonomous vehicles, Biotechnology, Nanotechnology, and Cloud Computing.
Digital Economy hinges on five building blocks – Digital Skills, Digital Platforms, Digital Financial Services, Digital Entrepreneurship, and Digital Infrastructure. The COVID-19 pandemic accelerated positive response, adaptation, and digital transformation by economies across the Globe. Available data showed investments in digitalisation were pivotal to countries rebounding from the impact of COVID-19 and are crucial to immediate recovery through the promotion of FDI in the digital economy.
The Digital Economy differs from the traditional or physical economy and contributed 15% of the Global Gross Domestic Product (GDP) and was said to be growing 2.5 times faster than the physical World GDP. It was valued at $14.5 trillion in 2021 and projected to grow to $20.8 trillion by 2025.
The Digital Economy Landscape in Africa
Africa is home to about 1.39 billion people, boasts of enormous natural and human resources and is the largest free trade area in the world. Africa has an estimated GDP of $3.1 trillion in 2023 and will experience the fastest increase in the young or working-age population, a projected net increase of 740 million people by 2050. Therefore, Africa needs an evolving approach to forge a new development path and inclusive economic growth such that the benefits of economic growth are felt well across the population.
Africa faces challenges such as low digital connectivity, limited access to financial services, inadequate digital and physical infrastructure, and weak legislation or policies on data protection, privacy, and consumer protection. These have impacted the digital and traditional economy, limiting the opportunities to achieve digital cooperation and digital transformation for sustainable economic development, social inclusion, and global competitiveness.
The Rise of Digital Innovation
Despite these challenges, there have been some success stories. Africa has seen significant improvement in fintech, e-commerce, health tech, media and entertainment, and e-logistics in Nigeria, South Africa, Kenya and Ghana, etc. With the African Fintech Revolution, we have seen accelerated adoption in mobile money services, digital payment and remittances, venture capital funding, and ultimately, tech startups making their mark in trying to address challenges in financial services access and inclusion.
The growing connectivity predominantly via mobile has fuelled improvements in e-commerce and online marketplace, digital trade, and new policy direction around data protection and digital identity. There have also been impacts and prospects from infrastructures in the region like AfCTA and PAPSS. AfCFTA – African Continental Free Trade Area, is an agreement signed by forty-four members of the African Union in 2018 to establish a single, liberalised market for goods and services across the African continent.
In February 2022, AfCFTA built-in e-commerce and other forms of digital trade in its setup, highlighting the growing importance of digital trade in increasing market access, reducing trade transaction costs, and fostering innovation and technology adoption in Africa. PAPSS – Pan-African Payment and Settlement System is a cross-border financial market infrastructure enabling payment transactions across Africa.
The Digital Economy has the potential to unlock opportunities that will transform Africa through strategies or initiatives like National Digital Economy Strategies that provide the framework to promote digital infrastructure, skills development, innovation, and entrepreneurship. The legendary baseball player and coach Yogi Berra said, “if you do not know where you are going, you will end up someplace else.”
For the best outcomes, plans must be in place to verify the requirements, resources, and schedules and identify the success criteria. National Digital Economy Strategies are defined policies, priorities, objectives, and implementation plans focused on driving the digital economy for growth, well-being, and inclusiveness. The strategies are to boost economic productivity, enhance competitiveness and create sustainable economic growth.
A couple of African countries have formulated or in the process of making Digital Economy Strategies with varying flavours and delivery to promote digital infrastructure development, enhance digital skills and literacy, and foster innovation and entrepreneurship in the digital sector, creating an enabling environment for digital transformation.
The countries include Nigeria, South Africa, Kenya, Ghana, Rwanda, Senegal etc.
These National strategies focus on achieving:
- Economic Growth
To foster the creation of new industries and new job opportunities through innovation, improved technology, and increased productivity.
- Improved Competitiveness
Leveraging digital technologies to improve efficiency, reduce costs, and improve the quality of goods and services to remain globally competitive.
- Improving Digital Infrastructure
To promote investment in upgrading existing digital infrastructure and building new infrastructure like data centres, broadband networks, mobile wireless communication technology, and cybersecurity systems for reliable and high-speed connectivity, secure data transmission, and protection from cyber threats.
- Promote Innovation and Entrepreneurship
To stimulate the culture of innovation and entrepreneurship by supporting startups, small and medium-sized enterprises (SMEs), and research and development activities in digital sectors.
To facilitate the creation of new products, services, and business models that drive economic growth and job creation.
- Enhancing Public Service
Digitising government services to make them more accessible, transparent, and responsive to the user needs and promoting digital literacy and e-governance.
- Inclusive Growth
To ensure that no one is left behind or marginalised based on gender, age, or location, for instance, women, youths, and rural communities. The strategies recommend measures to bridge the digital divide and ensure the benefits of digital technology are accessible to all for inclusive growth.
- Enabling Regulation and Policies
By instituting a supportive regulatory and policy environment that encourages innovation, protects consumer rights, and ensures fair competition. A national digital economy strategy can help address regulatory and policy challenges by providing a framework for coherent and effective policymaking in the digital sphere.
Africa’s Digital Future
In today’s interconnected and technology-driven world, a thriving Digital Economy and Digital Economy Strategy would help African nations unlock opportunities to achieve digital cooperation and digital transformation for sustainable economic development, social inclusion, and global competitiveness. African stakeholders must be encouraged to participate actively to shape Africa’s digital future through collaboration and knowledge-sharing. As well as fixing infrastructure, skill and talent gaps, and policy regulation and implementation.
References:
https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/
https://www.elibrary.imf.org/downloadpdf/display/book/9789287073600/CH008.pdf
https://t4.oecd.org/publications/measuring-the-digital-transformation-9789264311992-en.htm
https://www.oecd.org/digital/global-forum-on-technology/
https://www.shs-conferences.org/articles/shsconf/pdf/2021/04/shsconf_nid2020_05016.pdf
https://www.techtarget.com/searchcio/definition/digital-economy
https://www.eib.org/attachments/thematic/study_the_rise_of_africa_s_digital_economy_en.pdf
https://www.ifc.org/content/dam/ifc/doc/mgrt/e-conomy-africa-2020.pdf
https://odi.org/en/publications/afcfta-unlocking-the-potential-of-the-digital-economy-in-africa/
Technology Specialist at BT Group
DFI Alumni and Community Member
Established in 2015, Digital Frontiers Institute is a proud brand of Digital Frontiers. Learn more about our Inclusive Digital Economy (IDE) courses and find out how to enrol: https://digitalfrontiersinstitute.org/course_category/inclusive-digital-economies/