How to Build Africa’s Economy through Technology 2

Technology is the backbone of any developed knowledge economy. Technology industry is a necessary ingredient of the knowledge driven economy of 21^st century. Africa’s vast youthful economy could take advantage of IT and build a knowledge based economy. The IT industry comprises of IT services, e-commerce (online business), IT content providers (freelancers), software and hardware, and Digital Financial Service providers. Africa’s population of 1.2Billion is a proven market if technology could the be pivot of boosting the economy of the continent. Over 50% of the continent’s population is under the age of 25. It is a known fact that Africa has the highest amount of youthful block in the world.

Unemployment is the greatest plague fighting against Africa’s economic development. This anomaly has given birth to economic hardship, insecurity, health hazards and under achievement. Using technology has a policy to unlock the vast potentials of the continent and to stem brain drain is the key to make Africa knowledge based continent. Africa is termed as the next big growth market. It is a huge consumption economy and a mobile phone enabled continent. The aggressive digital ecosystem has increased access to smart phones and it has boosted information dissemination, networking, strong human resource development and an emerging financial inclusion economy.

The world poorest continent is Africa; technology should be the path to strong economic recovery. Governments of the continent must make policies that fast track ease of creating digital jobs. Internet penetration in the continent is low compared to population growth. Improving this trend could help reduce poverty in the continent. The countries that have above 50% internet penetration are the emerging economies on the continent. According to Statista.com on internet penetration on the continent of Africa, Kenya has the highest 87.2%, Tunisia 66.8%, Nigeria 61.2%, and South-Africa 55%. These economies have stronger GDP and a higher per-capital income than countries with low internet penetration. Building digital skill revolution is still the bridge to building a resilient economy in Africa. The informal economic challenge could be reduced with technology, 70% of Kenyans have mobile money account, and 75% of the population makes mobile money transactions. The financial inclusion Kenya has witnessed made the economy the leader in Africa’s technology revolution.

Nigeria’s internet penetration has grown astronomically in the last 20years. In the year 2000 it has 0.1% internet penetration and it has increased 61.2% in 2021. Digital payments have improved with increased in internet penetration. 2019 the B2C index value for e-commerce was 53.2%. Nigeria has the largest online marketplaces in the continent, Jumia, Konga, Jiji, and Flutterwave are prominent with strong online customers. Konga had 30million visitors in 2019 who were mostly young audience. There is a huge opportunity created by increased in internet penetration. Online marketplaces for automobiles have increased with 14% online purchases. Cash-on-delivery is a strategy by many digital platforms to accept cash as payments method.

Nigeria’s large and young digital entrepreneurial population has the capacity to change the economic narratives and become the engine of economic prosperity. The country could benefit from the dynamism of the youthful population which is driven by digital expression. The government coupled with the private sector must improve digital connectivity and it should be combined with digital skill acquisition and literacy. Creating a strong digital economy would bring economic opportunities and inclusive growth. According to the WORLDBANK on global digital economy, in 2016 it was about USD 11.5trillion which is equivalent to 15.5% of the world’s economy based on GDP. Nigeria needs to connect the rural economy to urban economy through digitalization. There must be deliberate effort by the government to reduce hindrances that decreases growth of high speed internet in Nigeria.

Digital economy only flourishes on digital platforms because it virtually connects people and things promoting transaction and interactions. Nigeria and many African countries have benefitted from Digital Financial Services (DFS). Digital Financial Services comprises of Automated Transfer System (ATS), Bank-based Services, The Switch Firms, and Non-bank based Financial Services. DFS are the cornerstone of digital economy and forwardly situated to alleviate the position of the financially disadvantaged. Informal economy in Nigeria is a strong contributor to the Nigeria’s economy. It contributes principally to creating employment and to national GDP. According to the IMF it contributed 65% to the GDP in 2017.

DFS providers could help in bridging the formal sector to informal sector of the economy through innovative financial services that could scale at the grassroots. Quality financial services could be a path to the Nigerians in Diaspora, helping the remittance streams and encouraging investments. It could also be a booster for exchange of human capital for Nigerians in the Diaspora. Digital economy if fully embraced, it would help the unemployment rate in Africa and increase investments in human capital. It would also unlock entrepreneurial capacity of the youths in the continent. Quality digital service is the missing link in Africa’s productivity expression.