INSIGHTS & IDEAS

Boosting Jobs in Africa through Digital and Industrial Linkages

May 8, 2023
Creating decent jobs for young people is one of the biggest challenges that most African countries have to overcome, despite their young populations and rising levels of education. A potential solution is to encourage firms to adopt digital and technological solutions more effectively to increase productivity and economic returns, which can result in more and better jobs.

ACET and its partners are at the forefront of exploring how digitalization can transform industries and create new opportunities for job creation and entrepreneurship in Africa. One of the initiatives showcasing this work is a partnership with Megatrends Afrika, which explores the challenges and opportunities faced by digital entrepreneurs in Africa, including their access to finance and the impact of their activities on economic development. As part of this initiative, ACET recently surveyed entrepreneurs in Ghana and co-hosted a peer learning event on April 19, 2023. The peer learning event included speakers from Unilever, Jetstream, the National Entrepreneurship and Innovation Programme (NEIP) in Ghana, and the Kiel Institute for the World Economy.

While much of the research and literature on digitalization in Africa speaks of new opportunities in the digital age, these gains have not yet been realized at a large scale in most African countries. Digitization is largely a new area of focus for policymakers, the private sector, and innovators, who have not been able to harness it for sustained economic growth and job creation for African economies. Too few domestic technology and digital firms are integrating their offerings into the service and industrial sectors. Without this integration, information asymmetry will continue leading to missed opportunities. For African governments to accelerate their economic transformation, particularly in the face of global uncertainties, governments need to work with the private sector, particularly MSMEs, to integrate technological advances in traditional and emerging industries.

The ACET survey data reveals some interesting insights into the digitalization practices of firms in Ghana. Most firms (93%) have been adopting digital solutions for more than three years, but only about half (53%) offer them as part of their business model. Moreover, less than half of the firms (41%) use their own digital solutions internally. The main motivations for digitalization are to enhance customer experience (82%), streamline business processes (77%), and increase revenue and productivity (59%). However, firms face several external challenges. High business operations and internet data costs are the most-cited issues, followed by the lack of ICT infrastructure, which half of the respondents mentioned as a challenge. In terms of skills needs, big data analytics and business analysis are equally in high demand.

The event also featured a presentation of the study “Mobile Money – First Results from African ACE-G Survey” by the Kiel Institute for the World Economy (IfW). This study examined how mobile money can enable firms to deal with global financial shocks and enhance their resilience. The study surveyed 656 firms in Ghana and found that online banking was a rare practice, with only 2.8% of firms (primarily large ones that are part of global value chains) using it. The study also uncovered a gender gap in digitalization, with women lagging behind men in reaping its benefits, but the causes of this gap require further investigation. Furthermore, the study demonstrated that digital technologies provided temporary relief for liquidity problems and higher resistance to shocks such as the COVID-19 pandemic. Results also showed that online banking is the most effective tool for reaching export markets and that mobile money could bolster value chains by easing transactions and payments.

The project “Megatrends Afrika: Effects and options for action for German and international politics” investigates how megatrends are affecting African states and societies. It aims to develop ideas for German and European cooperation with African partners to make the ongoing change processes sustainable and fair. Megatrends Africa is a cooperation between the Stiftung Wissenschaft und Politik (SWP), the German Institute of Development and Sustainability (IDOS) and the Kiel Institute for the World Economy (IfW).
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1 Comment

  1. EDDIE AMEN KARGBO

    we are very much happy to be part of development programme in Sierra Leone, Please kindly consider us to be your development partnership , The name of our Organization is Youth Employment and
    Development Agency Y E D A based in Freetown , Sierra Leone

    Our areas of issue is to give Training and Skills to develop their manpower for any kind of work or jobs ,

    Please we look forward to have a working relationship and partnership
    in Development,
    Thanks

    Eddie Amen Kargbo

    Reply

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