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Africa’s efforts in digital transformation is vast

Africa_digital_transformation

The continent is in a rush to fully embrace digitisation for its nationals, governments and the economy at large in the coming decade

Africa has experienced rapid urbanisation and social transformations in recent years but has been slow in demonstrating digital progress. One reason why digitisation on the continent has been sluggish is because of the digital divide between African countries pointing to the fact that they lack fair and equal access to advanced technologies.

Africa’s internet penetration is quite low compared to the rest of the world. For example, the continent’s internet penetration averaged 39.6 percent last year compared to 62.7 percent globally. This ties back into its existing digital divide which is pronounced with Kenya having 89.8 percent internet access while Burundi remains at 5.3 percent. Three years ago, Africa was reported to have consumed only 1 percent of the total international internet bandwidth globally.

But on the bright side, the digital economy of some African countries has already accounted for more than 5 percent of their GDP. Certainly, the numbers could more than double to between 12 percent and 20 percent for those countries if they continue to make the most of digital technologies. However, their ability to do so depends on the rate of economic growth in the coming years and the possibility to raise up to $400 billion to bridge the existing $600 billion financial gap.

International bodies support Africa’s digital ambition
Despite a burgeoning population, the continent’s digital openness is startling. It is, In fact, true that international bodies have realised the continent’s capabilities to deliver on its transformative potential but simply lack sustained support. Last year, the IMF Spring Meeting which is annually held by the World Bank Group and the International Monetary Fund took place in Washington to demonstrate strong interest in supporting Africa’s initiatives like the new Digital Transformation Strategy for Africa and the Digital Moonshot — specially designed to create a sophisticated digital phenomena.

The meeting indicates that Africa as a whole needs dynamic cooperation and partnerships from around the world to achieve its ambition to become fully digitally-enabled by 2030.

Africa’s concentrated efforts to push digitisation
Thus by the end of 2030 the continent seeks to digitally empower its nationals and increase accessibility to at least 6 mb/s at an affordable price to 1ctcs used per mb through a smart device. Establishing digital networks and services is crucial because it will strengthen intra-Africa trade, intra-investment and capital flows for national, regional and continental expansion at large. And this would require African governments and national bodies to create initiatives and policies to stimulate and speed up digital transformation.

As it turns out, the Digital Moonshot initiative — a strategy proposition developed in Africa will play a key role in assisting developing economies to draw maximum benefits from digital solutions. Not to mention, the initiative will also help them to achieve the UN Sustainable Development Goals which is essentially the blueprint to create a more sustainable and better future for all economies globally.

The initiative comprises five key elements which are particularly important to the continent’s digital ambition. The total estimated cost of the initiative is between $80 billion and $100 billion over the next decade — and more than half the investment is expected to come from the private sector.

Its first element is directed toward investing in digital infrastructure to improve accessibility and quality of connectivity, Internet of Things and data repositories on the continent. These investments are mainly anticipated to come from the private sector, with a small portion of it sourced from public investments. The second is focused on investing in a highly digital workforce to build digital economies and competitive marketplaces. The third is investing in digital platforms that are largely developed by the private sector. These platforms will offer products and services through digital channels. The fourth is aimed at driving financial inclusion on the continent by developing digital financial services like the M-Pesa. The fifth is seeks to create an ecosystem to foster entrepreneurship and innovation on the digital front — establishing itself to become the startup hub of the future.

Another initiative, the Digital Transformation Strategy for Africa which is co-led by the African Union Commission and the Economic Commission for Africa was developed to guide and support African countries’ efforts to capitalise on the socio-economic benefits of digitisation and advanced technologies. Currently, it is estimated that African countries invest nearly 1.1 percent of their GDP on digitisation, while developed economies spend 3.2 percent on an average.

Soon enough this initiative will develop further based on the current frameworks such as the Policy and Regulatory Initiative for Digital Africa (PRIDA), the African Continental Free Trade Area (AfCFTA), the African Union Financial Institutions (AUFIs), the Programme for Infrastructure Development in Africa (PIDA), the Single African Air Transport Market (SAATM) and the Free Movement of Persons (FMP) — which are an integral part of the African Union’s long-term vision to support Africa’s digital transformation.

For Africa, it is not only essential to prepare initiatives targeting digital transformation but create awareness and wrestle cybercrime, especially at a time when its potential to build robust digitisation and sophisticated cybercrime activities are both at their prime. The idea is to sharpen security and privacy skills for 100 million Africans annually by 2021 and 300 million annually by 2025 through an online digital skill programme.

In fact, a legislative framework known as the African Union Convention on Cyber Security and Personal Data Protection was established for member states to develop a national cyber security policy and responsive actions against cybercrime.

Internet potential is key to unlock digitisation
A report published by McKinsey predicted Africa’s iGDP to grow between 5 percent and 6 percent by 2025. Widespread urbanised thinking coupled with disposable income has encouraged a majority of Africans to become more tech-savvy, own internet-enabled devices and visit online regularly.

Data-based evidence shows that if the continent’s internet penetration becomes explosive as is the case with mobile phones, its iGDP could reach as much as 10 percent — potentially contributing $300 billion annually to its total GDP. Senegal and Kenya have the highest iGDPs on the continent despite not being its largest economies and governments of both countries are responsible for stimulating their internet penetration. Those are both true, but these developments will significantly scale up if Africa’s infrastructure investment continues.

The race for internet infrastructure build
The normal activities that African governments are involved with — preparing legislative drafts, initiatives and strategies, policies and so on — have been linked to the continuous digital infrastructure spend. Within Africa’s telecom and investment ecosystem, digital and broadband infrastructure is the most ambitious development, for it creates an increasing demand for 5G and fibre networks.

Last year, bankers, investors, advisers and key leadership from TMT companies and Africa’s telecom giants gathered at the TMT Finance Africa to discuss the continent’s current state of infrastructure development. In particular, fibre was perceived to be a game-changer in Africa’s digital infrastructure as it is still low in most African countries. This is why a leading submarine and terrestrial broadband operator Seacom pointed out the untapped opportunities in fibre penetration and now global cloud services companies seek to invest in many low-fibre network African markets.

Public and private sectors: the pulse of Africa’s digital spend
African governments alone cannot drive digital transformation. In particular, active participation is required from the private sector for two reasons. First, public investments are challenged to an extent due to different financial conditions of African countries. The second reason points to the fact that private firms feed expertise and knowledge while backing the African ecosystem.

Now firms in Africa and the Middle East are expected to spend $30 billion on digital transformation in 2020. In fact, private sector investment is likely to grow as telecom operators are showing significant interest in building out networks and digitising operations. The McKinsey report also predicted that the continent’s public sector spending on internet-related projects and initiatives will rise exponentially by 2025.

Although African countries have developed strategies in place, it is of utmost importance for both public and private sectors to cooperate and work together to help those countries realise their digital potential and further expand economic sectors such as ecommerce. This is especially important as retail trade is anticipated to reach $300 billion by 2025.

Sectors capitalising on digitisation
Africa is appealing due to rigorous efforts in building a digital economy. But what’s more interesting is the less pronounced outcome — the impact on six sectors which in turn could hugely benefit the African economy. As it appears, financial services, education, health, retail, agriculture and government will stand to long benefit — and technology-driven productivity gains in those sectors could potentially reach between $148 billion to $318 billion by 2025.

The manner in which digitisation could benefit financial services is extraordinary given the continent’s current circumstances. It is reported that 60 percent of Africans are estimated to have access to banking by 2025 and more than 90 percent of them use mobile wallets for online transactions and remittances. On the healthcare front, the combined power of internet and technology could lead to improved health outcomes contributing between $84 billion and $188 billion to the sector by 2025.

An inclusive approach is necessary
An inclusive approach is critical to the continent beyond its efforts in policy-making and advanced technology deployment. This means that there should be high participation from all stakeholders, including investment companies, fintechs, telecoms, government bodies, nationals and banks to effectively lead to cross-border coordination and global cooperation.

Current issues in Africa’s digital development
Digital transformation is attested to be a game-change for Africa. But the one aspect challenging its digital development is inadequate regulation and banks’ poor understanding. The benefits of digitisation can be fully harnessed only when African countries step up actions to further invest in digital infrastructure and human resources. Arguably, public and private sectors are required to work closely with governments to help them realise their digital potential in the coming years.

Another prominent issue that is hindering digital transformation on a national level is internet affordability — and case in point is Africa. According to the international target, 1GB of data should not cost more than 2 percent of the average national monthly income. However, Africa stood at 8.76 percent, compared to 3.5 percent in Latin America and 1.54 percent in Asia as of last September. With that, the continent needs to take into account that making the internet equally affordable and accessible across all African countries will encourage fintechs, telecoms and governments to play their part tenfold in pushing digitisation to the forefront.

Sub headline: The continent is in a rush to fully embrace digitisation for its nationals, governments and the economy at large in the coming decade
Meta Description: Africa has experienced rapid urbanisation and social transformations in recent years and is now seeking rapid growth in digital transformation.
Focus keyword: Africa digital transformation
Secondary keywords: Africa digitisation
Tags: Africa, Africa digital transformation, Africa digital economy, digital economy

Africa has experienced rapid urbanisation and social transformations in recent years but has been slow in demonstrating digital progress. One reason why digitisation on the continent has been sluggish is because of the digital divide between African countries pointing to the fact that they lack fair and equal access to advanced technologies.

Africa’s internet penetration is quite low compared to the rest of the world. For example, the continent’s internet penetration averaged 39.6 percent last year compared to 62.7 percent globally. This ties back into its existing digital divide which is pronounced with Kenya having 89.8 percent internet access while Burundi remains at 5.3 percent. Three years ago, Africa was reported to have consumed only 1 percent of the total international internet bandwidth globally.

But on the bright side, the digital economy of some African countries has already accounted for more than 5 percent of their GDP. Certainly, the numbers could more than double to between 12 percent and 20 percent for those countries if they continue to make the most of digital technologies. However, their ability to do so depends on the rate of economic growth in the coming years and the possibility to raise up to $400 billion to bridge the existing $600 billion financial gap.

International bodies support Africa’s digital ambition
Despite a burgeoning population, the continent’s digital openness is startling. It is, In fact, true that international bodies have realised the continent’s capabilities to deliver on its transformative potential but simply lack sustained support. Last year, the IMF Spring Meeting which is annually held by the World Bank Group and the International Monetary Fund took place in Washington to demonstrate strong interest in supporting Africa’s initiatives like the new Digital Transformation Strategy for Africa and the Digital Moonshot — specially designed to create a sophisticated digital phenomena.

The meeting indicates that Africa as a whole needs dynamic cooperation and partnerships from around the world to achieve its ambition to become fully digitally-enabled by 2030.

Africa’s concentrated efforts to push digitisation
Thus by the end of 2030 the continent seeks to digitally empower its nationals and increase accessibility to at least 6 mb/s at an affordable price to 1ctcs used per mb through a smart device. Establishing digital networks and services is crucial because it will strengthen intra-Africa trade, intra-investment and capital flows for national, regional and continental expansion at large. And this would require African governments and national bodies to create initiatives and policies to stimulate and speed up digital transformation.

As it turns out, the Digital Moonshot initiative — a strategy proposition developed in Africa will play a key role in assisting developing economies to draw maximum benefits from digital solutions. Not to mention, the initiative will also help them to achieve the UN Sustainable Development Goals which is essentially the blueprint to create a more sustainable and better future for all economies globally.

The initiative comprises five key elements which are particularly important to the continent’s digital ambition. The total estimated cost of the initiative is between $80 billion and $100 billion over the next decade — and more than half the investment is expected to come from the private sector.

Its first element is directed toward investing in digital infrastructure to improve accessibility and quality of connectivity, Internet of Things and data repositories on the continent. These investments are mainly anticipated to come from the private sector, with a small portion of it sourced from public investments. The second is focused on investing in a highly digital workforce to build digital economies and competitive marketplaces. The third is investing in digital platforms that are largely developed by the private sector. These platforms will offer products and services through digital channels. The fourth is aimed at driving financial inclusion on the continent by developing digital financial services like the M-Pesa. The fifth is seeks to create an ecosystem to foster entrepreneurship and innovation on the digital front — establishing itself to become the startup hub of the future.

Another initiative, the Digital Transformation Strategy for Africa which is co-led by the African Union Commission and the Economic Commission for Africa was developed to guide and support African countries’ efforts to capitalise on the socio-economic benefits of digitisation and advanced technologies. Currently, it is estimated that African countries invest nearly 1.1 percent of their GDP on digitisation, while developed economies spend 3.2 percent on an average.

Soon enough this initiative will develop further based on the current frameworks such as the Policy and Regulatory Initiative for Digital Africa (PRIDA), the African Continental Free Trade Area (AfCFTA), the African Union Financial Institutions (AUFIs), the Programme for Infrastructure Development in Africa (PIDA), the Single African Air Transport Market (SAATM) and the Free Movement of Persons (FMP) — which are an integral part of the African Union’s long-term vision to support Africa’s digital transformation.

For Africa, it is not only essential to prepare initiatives targeting digital transformation but create awareness and wrestle cybercrime, especially at a time when its potential to build robust digitisation and sophisticated cybercrime activities are both at their prime. The idea is to sharpen security and privacy skills for 100 million Africans annually by 2021 and 300 million annually by 2025 through an online digital skill programme.

In fact, a legislative framework known as the African Union Convention on Cyber Security and Personal Data Protection was established for member states to develop a national cyber security policy and responsive actions against cybercrime.

Internet potential is key to unlock digitisation
A report published by McKinsey predicted Africa’s iGDP to grow between 5 percent and 6 percent by 2025. Widespread urbanised thinking coupled with disposable income has encouraged a majority of Africans to become more tech-savvy, own internet-enabled devices and visit online regularly.

Data-based evidence shows that if the continent’s internet penetration becomes explosive as is the case with mobile phones, its iGDP could reach as much as 10 percent — potentially contributing $300 billion annually to its total GDP. Senegal and Kenya have the highest iGDPs on the continent despite not being its largest economies and governments of both countries are responsible for stimulating their internet penetration. Those are both true, but these developments will significantly scale up if Africa’s infrastructure investment continues.

The race for internet infrastructure build
The normal activities that African governments are involved with — preparing legislative drafts, initiatives and strategies, policies and so on — have been linked to the continuous digital infrastructure spend. Within Africa’s telecom and investment ecosystem, digital and broadband infrastructure is the most ambitious development, for it creates an increasing demand for 5G and fibre networks.

Last year, bankers, investors, advisers and key leadership from TMT companies and Africa’s telecom giants gathered at the TMT Finance Africa to discuss the continent’s current state of infrastructure development. In particular, fibre was perceived to be a game-changer in Africa’s digital infrastructure as it is still low in most African countries. This is why a leading submarine and terrestrial broadband operator Seacom pointed out the untapped opportunities in fibre penetration and now global cloud services companies seek to invest in many low-fibre network African markets.

Public and private sectors: the pulse of Africa’s digital spend
African governments alone cannot drive digital transformation. In particular, active participation is required from the private sector for two reasons. First, public investments are challenged to an extent due to different financial conditions of African countries. The second reason points to the fact that private firms feed expertise and knowledge while backing the African ecosystem.

Now firms in Africa and the Middle East are expected to spend $30 billion on digital transformation in 2020. In fact, private sector investment is likely to grow as telecom operators are showing significant interest in building out networks and digitising operations. The McKinsey report also predicted that the continent’s public sector spending on internet-related projects and initiatives will rise exponentially by 2025.

Although African countries have developed strategies in place, it is of utmost importance for both public and private sectors to cooperate and work together to help those countries realise their digital potential and further expand economic sectors such as ecommerce. This is especially important as retail trade is anticipated to reach $300 billion by 2025.

Sectors capitalising on digitisation
Africa is appealing due to rigorous efforts in building a digital economy. But what’s more interesting is the less pronounced outcome — the impact on six sectors which in turn could hugely benefit the African economy. As it appears, financial services, education, health, retail, agriculture and government will stand to long benefit — and technology-driven productivity gains in those sectors could potentially reach between $148 billion to $318 billion by 2025.

The manner in which digitisation could benefit financial services is extraordinary given the continent’s current circumstances. It is reported that 60 percent of Africans are estimated to have access to banking by 2025 and more than 90 percent of them use mobile wallets for online transactions and remittances. On the healthcare front, the combined power of internet and technology could lead to improved health outcomes contributing between $84 billion and $188 billion to the sector by 2025.

An inclusive approach is necessary
An inclusive approach is critical to the continent beyond its efforts in policy-making and advanced technology deployment. This means that there should be high participation from all stakeholders, including investment companies, fintechs, telecoms, government bodies, nationals and banks to effectively lead to cross-border coordination and global cooperation.

Current issues in Africa’s digital development
Digital transformation is attested to be a game-change for Africa. But the one aspect challenging its digital development is inadequate regulation and banks’ poor understanding. The benefits of digitisation can be fully harnessed only when African countries step up actions to further invest in digital infrastructure and human resources. Arguably, public and private sectors are required to work closely with governments to help them realise their digital potential in the coming years.

Another prominent issue that is hindering digital transformation on a national level is internet affordability — and case in point is Africa. According to the international target, 1GB of data should not cost more than 2 percent of the average national monthly income. However, Africa stood at 8.76 percent, compared to 3.5 percent in Latin America and 1.54 percent in Asia as of last September. With that, the continent needs to take into account that making the internet equally affordable and accessible across all African countries will encourage fintechs, telecoms and governments to play their part tenfold in pushing digitisation to the forefront.

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