Digitalization to Spur African Growth

Digitalization to Spur African Growth

Digitalization, a term commonly confused with digitization, is currently a burgeoning phenomenon and the rise of the fourth industrial revolution has a lot to do with that. According to Gartner’s IT Glossary, digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities [1], whereas, digitization is the process of changing from analog to digital form.

It is undeniable that it is the time of an unquestionably global digitalization trend, and Africa has not escaped from it. The African economy has been booming since the early 2000s with a growth that counts on the impact of the most recent industrial revolution to foster digital innovations such as cloud computing and data analysis technologies [2]. This time, Africa is about to benefit from the technological revolution’s opportunities to pursue its development by driving inclusive prosperity [3].

The digitalization opportunity for Africa

“If governments and the private sector continue to build the right foundations, the Internet could transform sectors as diverse as agriculture, retail, and healthcare— and contribute as much as $300 billion a year to Africa’s GDP by 2025” (McKinsey Global Institute’s (MGI) “Lions go digital” report)[4]. This statement makes it clear the digitalization process in Africa, if boosted by internet use, could impact African countries and their GDPs as it previously did with BRICS (a contribution that went up to 10%), with potential impacts on areas such as financial services, education, health, retail, agriculture, and government [5]. The digitalization of financial services will allow for the financial inclusion of a large majority of populations who do not hold bank accounts and will ultimately bridge people in remote areas with financial and banking services. In regard to education, better content for students and better training for teachers will be provided if affordable tablets and e-books are leveraged. In terms of the health sector, the use of the internet will reduce the time and costs to access health services and contribute to providing a better-quality service. Regarding the retail sector, the use of e-commerce will allow Africa’s growing middle class to have access to new consuming experiences through more choices with better quality. Moreover, it will provide SMEs and entrepreneurs with access to a larger customer circle. In agriculture, the outputs will be more efficient with internet bringing specialized and needed information for farmers such as data about the weather, about crops and others. Finally, for governments, allowing access to information and improving transparency are two of the benefits internet can bring; and this will undoubtedly impact societies.

Victoria A. Espinel, President and CEO of BSA, The Software Alliance, and co-chair of the Global Future Council on the Digital Economy and Society, ensures that there are clear benefits from the digitalization of economies. In an interview with the World Economic Forum for the Annual Meeting of the Global Future Councils in 2016, she assures that the digital trend that is benefitting from the use of mobile data, could help in tracking dangerous diseases like malaria, or reducing fuel emissions with the development of new and more efficient cars for example [6].

The Digital Focus Points needed for Africa

Africa is undoubtedly benefiting from digitalization but where does it stand in the digitalized world and what tools should be leveraged to make the changes and the future positive impact possible?

According to the African Digital Maturity report, the level of digital maturity is different from one African country to another (Siemens 2017) [7]. The report showcases the assessment of the digital maturity of several African countries, highlighting valuable insights on the state of digitalization in the continent. Countries were classified as emerging, developing, established and advanced in their level of digitalization, and the analysis revealed several important facts. The first being that Africa is a diverse continent, hosting countries with different markets and disparate economies. Each country has specific patterns and levels of digital readiness or literacy. The report also highlights that disruption can be a means of development for Africa. While disruptive technologies are disturbing the occidental business models, they also spur African development. Governments should take the initiative to leverage past experiences in order to benefit from synergies between the processes of large mature organizations and the smaller digitally-oriented ones in order to improve the African digital framework. The success of digital mostly depends on the fertility of the macro-environment since several macroeconomic factors impact the ability to adopt digital.

Another important matter for the African digitalization process is globalization. Businesses should be conducted according to both local and global considerations. This means that they should adapt to the local specificities and challenges of each of the African countries. Finally, raising awareness on the true definition of the concept of digitalization is to be carried out. Several African companies defined digitalization differently because of the prevalent confusion around the notion. As mentioned in the beginning of the article, there is a difference between digitization and digitalization. Understanding the differences between the two notions is important in leading the way to a better digital adoption in the continent. Indeed, assessing and understanding one’s digital abilities is a necessity to implement transformative solutions that will lead to effective digital transformation.

The hype around the digital era is, therefore, a reason and this revolution will surely contribute to noticeable and necessary changes. However, several factors should be leveraged to make these changes a reality. Besides, the continent’s specificities should be kept in mind for a digitalized future that will positively impact not only targeted stakeholders but all the different ones involved all over the continent [8].

Hinde Adjar, Analyst at Infomineo.

Sources

[1] http://www.gartner.com/it-glossary/

[2] https://talent2africa.com/en/5-advantages-of-digitalization-in-africa/

[3] McKinsey Global Institute’s (MGI) “Lions go digital” report

[4] McKinsey Global Institute’s (MGI) “Lions go digital” report

[5] McKinsey Global Institute’s (MGI) “Lions go digital” report

[6] https://www.weforum.org/agenda/2016/11/the-digital-economy-what-is-it-and-how-will-it-transform-our-lives/

[7] https://www.scribd.com/document/356460304/Digitalization-Maturity-Report-2017

[8] https://www.scribd.com/document/356460304/Digitalization-Maturity-Report-2017