Will Africa Сlose the Digital Divide
One of the biggest questions of the digital era is whether the fruits of the technological development will help to solve the world’s biggest socio-economic problem – the one of unacceptable inequality of distribution of wealth. Or, on contrary, will they lead to a new version of Marxian gloomy prophecy of “rich get richer, and the poor get poorer”? The problem became to be known in late 1990s as the ‘digital divide’, the disparity in economics and social opportunities created by the lack of access to modern technology by certain social groups, regions or nations.
What change did the arrival of digital technology make? On the brighter side, some African countries have scored remarkable achievements in the digital economy, for one prominent case one may turn to the example of M-PESA in Kenya, the world’s largest system of mobile money in relation to GDP. Africa is the continent, where digital – in the form of mobile communication - becomes the most inclusive piece of infrastructure. Take the example of Chad, a country roughly in the middle of the continental ranking in terms of GDP per capita: while 50.8% of the population has access to an improved water source, 35.4% are literate and only 4% enjoy access to electricity, there are 52 mobile subscriptions per 100 inhabitants . As a result, the share of the mobile economy in GDP in Sub-Saharan Africa is considerably higher than the world average: 7.7% vs. 4.6%. The continent has its digital corporate giants, like Naspers from South Africa with a market capitalization of $70 billion.
Still, Africa faces strong challenges in the digital era. It generally lacks resources to develop adequate infrastructure; most of the countries are too small as markets to nurture globally competitive players; there is a strong unmet need for human resources that would have world-class digital skills. The highest place an African country has in the Network Readiness Index is the 49th, hold by Mauritius, a small and effective service-based economy, then comes South Africa, at #65. The advent of powerful data processing systems, the ‘big data era’, opening many new economic opportunities, is another challenge. The continent is naturally handicapped here due to the climate, as the data centers are producing heat at mass scale, they are most effective in cold environments. Additionally, countries of Africa are short on electric power generation while data centers are very power-intensive. The necessary hardware also requires significant financing. Currently, the continent hosts only two of the world’s top-500 supercomputers, both in South Africa.
To sum up: even if the countries of Africa are closing the so-called ‘first-level digital divide’, the disparity with the advanced economies in terms of share of population accessing the Internet, there are the inequality of digital skills and mode of use of technologies (the ‘second-level divide’) and the resulting differences in the depth of penetration of digital technologies into everyday life (the ‘third-level divide’). Unfortunately, there is too little research available to answer the vital question, whether the latter divides are diminishing or growing. Yet, the scholars of digital inequalities do agree that the strong government policy is the second most important factor that affects it, after the level of wealth in country.
Thus, the continent requires careful and insightful strategic planning for the development of digital economy. Such planning should launch the concerted national efforts of both state and private actors with focused prioritization of actions, seeking to overcome the deficit of resources and to maximize the possible effects of digital technologies on the socio-economic development.
About half of African countries currently do have national digital strategies and very few have a strategy for national digital economy. Those strategies that exist are too focused on the issues of basic infrastructural development, overcoming the first-level divide. This is understandable, as infrastructure is the traditional domain of direct government actions, yet it misses the key point of digital transformation: it is about the effects of the creative use of new technologies, not about the technological base per se. As was said, catching up through replicating the pathway of the advanced economies is likely to widen the technology gap, not close it.
Africa needs to creatively leverage the few strengths that it has developed in the digital space to accelerate its development drive. Those strengths are mobile, digital finance and pan-African cooperation. The share of mobile economy in GDP of Sub-Saharan countries is already almost twice the world average, the continent has developed unique ecosystems that use very cheap and robust technologies to achieve amazing results. An integral part of those ecosystems is digital money, M-Pesa from Kenya largely opened the eyes of the world bankers on the potential of mobile payments. Finally, while the countries of the continent individually are relatively small markets (only Nigeria has a chance to enter the global top-20 by the size of GDP), combined they host over 1,2 billion customers.
The continent has made some interesting progress in coordinating efforts in the digital space. The African Union convention on data is currently the unique example in the world of harmonization of national regulation in this important sphere. Ironically, though, the content of the convention may become a barrier, rather than a stimulus, in developing national digital economies, as the cost of compliance will be quite high for digital businesses that typically start up on a shoestring. As was said, the continent is naturally handicapped for developing data processing capabilities, thus any legislation in the domain should be careful not to regulate away opportunities together with risks.
Unfortunately, the three domains of strength are seldom touched upon in the existing digital strategies of African nations. The issue of international cooperation is particularly overlooked, with typical strategy boldly stating that a country should become ‘a regional digital hub’, without further clarifying what it means or whether the ambition would be shared by other countries of the region.
Sometimes it seems that the agenda of digital transformation in the economy is not yet internalized by the national stakeholders of most African countries. The way of strategizing about digital development reminds the agenda of ‘speeded industrialization’ of the 1960s (promoted back then by economists like Francois Perroux). Africa was part of this effort, as stated in President Kwame Nkrumah’s speech of 1963: “We shall accumulate machinery and establish steel works, iron foundries and factories; we shall link the various states of our continent with communications; we shall astound the world with our hydroelectric power…” Almost sixty years later we know that this bold vision met many challenges; overall the project is far from being accomplished.
The modern efforts of an economic breakthrough on the African continent should take note of the lesson: the strategic plans should be based not only on the aspirational vision but also on the sound analysis of possible barriers and challenges as well as existing strengths. Clearly, the African countries need to find an effective niche in the global digital economy, that will provide for the acceleration of inclusive social and economic development with technologies, with focus on the creation of human capital, industrialization and bringing the agriculture up to the modern productivity standards. Provided the restraints in resources in the countries of the continent these goals can be achieved through focused, clearly prioritized policies with consorted nation-wide efforts and private-public partnership.
Is such a breakthrough possible at all? Look at the graph, which plots the GDP per capita (in constant international dollars of 2010) of China vs. five important African economies. When Dan Xiaoping started his drive for modernization in mid-1970s China was poorer than many African countries by the factor of 10. Just some 20 years ago China had lower GDP per capita than the Republic of Congo. Yet it managed to turn itself not just into a middle-income economy but into a global technological giant. The future that Africa has in the digital era is not guaranteed to be bright, yet it is in the hands of the formal and informal leaders of the continent to shape it to the benefit of their nations and their people.