'Internet disruptions, power outages limit digital opportunities'
Two hydra-headed challenges of erratic power supply and constant Internet disruptions have been identified as major limitations stifling the economy, especially digital opportunities.
These challenges and others would continue to hinder economic growth, except urgently and permanently addressed.
According to a research report themed: African Leapfrog Index (ALI), conducted by the Mastercard Centre for Inclusive Growth and The Fletcher School at Tufts University, with a focus on six countries, including Egypt, Ethiopia, Kenya, Nigeria, Rwanda, and South Africa.
ALI, which was launched during the World Economic Forum on Africa, provided insights on key drivers that could accelerate digital inclusion across the continent.
The researchers said the findings of the study aimed to help countries across Africa optimise their burgeoning digital evolutions in order to accelerate economic development.
Specifically, the ALI pointed out that Nigeria’s route to capturing more digital opportunities runs through improving the reliability of basic infrastructure.
While Nigeria is strong in Internet affordability, the ALI noted that investments in reducing power outages and other unintentional disruptions to the Internet will be key to enhancing the country’s digital potential. Of the six countries studied, Nigeria has the biggest gap to close in this area, the researchers noted.
The Divisional President, sub-Saharan Africa, Mastercard, Raghav Prasad, said, “Digitisation has the greatest potential to overcome infrastructure barriers to accelerate inclusive economic growth across multiple sectors of the economy.
“Independent research like the African Leapfrog Index equips policymakers and community leaders with data-driven insights to inform economic development, and it can help other key stakeholders across all sectors better understand the opportunity for – and pathways to – digital inclusion on the continent.”
According to the report, nearly 50 million people will be added to the labour force in the next few years, most of whom will fall somewhere on a spectrum between digitally sentient and digitally sophisticated.
Speaking on the findings of the research, the Dean of Global Business at The Fletcher School at Tufts University, Prof. Bhaskar Chakravorti, said, “The ALI is intended to help countries and stakeholders in Africa recognise where the potential for technology-led leapfrogging is high. This means acknowledging the strengths of each country and which policy areas are prime candidates for intervention to enable stakeholders to prioritise resources appropriately.”
The report, which noted that Nigeria has a powerful entrepreneurial climate that gives rise to innovative ventures such as Jumia, Interswitch, and Andela, informed that the country was Africa’s leading startup investment destination in 2018, recording nearly $95 million in deals with applications cutting across the education, fintech, agriculture, healthcare, logistics and travels sectors.
The ALI recommended that 87 per cent of Nigeria’s economy is transacted in cash, it noted that 4/5ths of Nigerians had never heard of mobile money. “Banks and telecoms providers don’t want tech start-ups on their turf. Policies to stimulate greater mobile money use is a must; e.g. in 2018, the central bank allowed telecoms and supermarkets to be “payment service banks,” and take deposits and make payments
“Policies must address many issues that inhibit scaling: the high frequency of power outages; low level of public trust in the technology; a large thriving informal economy (65 per cent of GDP and 80 per cent of the workforce). Nigeria’s sizable super-wealthy community can be encouraged to participate in early-stage and angel investments in digital startups.”
The study stressed that the digital economy was poised to be not just the driver of consumption but also of livelihoods.
The report added, “Leveraging its strengths in governance, digital evolution and mobile money, Rwanda has the potential to benefit from investments in infrastructure, greater Internet penetration and online freedoms.
“One of Egypt’s primary strengths lies in the ease of creating medium- and high-skilled digital jobs. Continuing to further efforts to drive digital payments and limit the usage of cash will significantly help drive digitalisation.
“Ethiopia has the potential for greatest digital gain from creating strong digital foundations, improving on its low momentum and moving away from its near-total reliance on cash payments, towards digital payment rails.”
According to the Index, Kenya has seen the greatest amount of digital change over the past decade of all African countries studied, and currently has over 80 per cent Internet penetration.