Imagine Africa’s Digital Economy of the Future

February 4, 2022

Policymakers, development partners, entrepreneurs, and ecosystem actors will discuss the key findings on innovation policy from the latest African Transformation Report: Integrating to Transform in a global webinar on February 23. Four priorities highlighted in the report are critical to Africa’s economic transformation and central to fixing fragmented digital markets.

Most African economies are simply too small to individually compete or adequately address global tech issues such as data security, privacy, the impacts of artificial intelligence, or the power of a few extraordinarily large corporations. Using a framework of regional collaboration, Integrating to Transform highlights actions to ensure holistic approaches to innovation and digital policy. These actions build on ACET’s programs across the continent, but also on the significant progress made by the African Union, the private sector, many African governments, and emerging innovation ecosystems of entrepreneurs, financiers, tech hubs, policymakers, and academia.

There are many reasons to be optimistic. The invention and innovation emerging from Africa in response to the COVID-19 pandemic has been truly amazing. At the same time, Africa’s institutions are showing maturity – from the African Continental Free Trade Agreement Secretariat to the African CDC. Briter’s Africa Investment Report for 2021 showed a large increase in investment across Africa’s innovation ecosystem, with nearly $5 billion in total estimated funding to start-ups, with twice the volume from 2020, and sixty-two percent of investment going into fintech. There have been important advances in research and collaborations, from the EU/AU Digital for Development Hub to IDRC/SIDA’s artificial intelligence for development (AI4D) research networks in Africa, and a strong focus on the digital economy and innovation in African forums such as the Financing Africa Summit and the FOCAC Summit.

Building on these positive developments, Integrating to Transform identifies four priorities for action that support Africa’s digital transformation:

1. Formulate digital strategies and establish policy frameworks to ensure that different sectors and value chains reinforce each other and lead to multiplier effects.

Such strategies should be complementary to and supported by the AU Digital Transformation Strategy. This framework addresses digital infrastructure, digital skills, innovation, entrepreneurship, and the development of an enabling policy environment, covering issues of access, pricing, licensing, cybersecurity, and data protection and privacy. A few African countries are implementing digital or innovation strategies, including Kenya, Mauritius, Morocco, South Africa, and Tunisia, but it will take a critical mass of well-aligned strategies to accelerate the African digital market.

2. Integrate Africa’s emerging innovation ecosystems and promote an environment for key stakeholders to agree on and adhere to policies for innovation, technology, and research and development.

Unlike more traditional sectors such as agriculture and manufacturing, digital and innovation policy in Africa is largely new and untested, hence it is even more important for a broad range of stakeholders to help inform policymakers. Few, if any, African countries are adequately supporting such ecosystems. Nigeria and South Africa have the most advanced innovation ecosystems, boasting 85 and 80 tech hubs respectively. But they have not adequately crowded in the private sector, academia, and all-of-government approaches to those ecosystems.

3. Coordinate efforts to boost investments in digital infrastructure and skills development by crowding in donor and private funding.

Even with the most integrated ecosystems and best policy frameworks, digital innovation and technologies will not provide full benefits to Africa without investments in both digital infrastructure and human capability. Broadband connectivity alone is projected to require up to $110 billion in investment, much to be borne by national budgets. A very large part of the IT content consumed in Africa comes from outside the continent, hence investment in data centers in Africa will foster the development of local digital industries and help lead to African sovereign control over data.

4. Build human capital for innovation and digital transformation.

The AU estimates that it will cost nearly $20 billion to provide digital skills training to all Africans. Ensuring the widespread availability of digital skills will require revamping education curricula according to current needs and trends in the digital economy and in the labor market, with a focus on science, technology, engineering, and mathematics and on entrepreneurship and innovation.

The poet and painter William Blake once said, “What is now proved was once only imagined.” While we can imagine an African digital economy driven by innovation and new technology that seamlessly crosses borders and connects regional and global value chains, such a digital economy can only be proven and supported by well-informed innovation and digital policy implemented across 54 nations.

Join ACET on February 23 at the webinar Innovation Policy: Securing Africa’s Future for a deep dive discussion on the African digital economy of the future.

Register for Deep-Dive Event


Rob Floyd is a former Director and non-resident Senior Fellow at the African Center for Economic Transformation (ACET).

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