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Africa must close the digital divide or…

13 Dec, 2021

It is important that Africa closes the current growing digital divide between the continent and the rest of the world, otherwise the continent’s youths will miss out on the opportunity to make meaningful contributions to Africa’s economic aspirations. Thankfully, digitalization offers a unique opening to interrupt this narrative.

This view, beautifully expressed by Dr. Anthony Coleman, the Principal Research Economist & Senior Manager of the Cairo-based Afreximbank, became the fulcrum of the Session One discussion on the first day of the 2021 Africa Think Tank Summit, organized by the African Capacity Building Foundation (ACBF) on 9-10 December.

Dr. Coleman quoted figures from the World Bank’s World Development Indicators Database 2019, to show that the size of the African population with access to the internet is less than 50%, which compares unfavorably with East Asia and the Pacific’s 65%, Latin America and Caribbean’s 68%, Europe’s 85%, and North America’s 90%.

To make any headway, Dr. Coleman advocated that Africa should tackle the challenges in a coordinated manner. “Indeed Agenda 2063, the Africa we want, and the aspirations of the AfCFTA can only be achieved if the continent works in a coordinated manner to optimize existing synergies while at the same time addressing the hereditary challenges,” he said.

Session One was held under the theme: “Understanding digital transformation: State, implications, and potential for building back Africa better”, and was moderated by the ACBF Executive Secretary, Prof Emmanuel Nnadozie.

Dr. Coleman ascertained that digitalization would contribute immensely to unlocking new opportunities for growth, economic transformation, innovation, job creation, and access to services that could only be possible through the internet or through digitalization.

To him, the ongoing ramifications of Covid-19 have increased the urgency of the need for Africa to accelerate technology adoption, especially in the context of the Fourth Industrial Revolution.

“We are all aware how mobile money transfers have contributed to financial inclusion across Africa,” Dr. Coleman said. “However, access to reliable internet services is a nightmare in many African countries. Some countries are in fact struggling to introduce digital IDs.”

It is in this context that Afreximbank is determined to ensure that requisite digital infrastructure is established across Africa to facilitate especially the movement of goods and services and also easing doing business on the continent, all with the view to contributing to the African aspiration of achieving sustainable growth.

According to Dr. Coleman, the bank is currently piloting the implementation of its Pan-African Payment and Settlement (PAPS) system, a digital platform which will enable intra-African trade and cross-border payment to be made in African currencies, thereby reducing the persistent challenges imposed by the liquidity constraint of having to look for hard currencies such as the Euro or the Pound Sterling or the American Dollar for intra-African trade to be possible.

Explaining how it will work, Dr. Coleman said if an Egyptian, who uses the Egyptian Pound, buys goods and services from a supplier in Zimbabwe, who uses the Zimbabwean Dollar, the Egyptian will pay through the PAPS in Egyptian Pound for whatever services or goods bought from the Zimbabwean supplier, who will receive payment in Zimbabwean Dollar via the PAPS. 

“It is one way the Afreximbank is going to reduce transactions costs in intra-regional trade and help formalize a significant part of the current informal cross-border trade in Africa, thus creating the conditions for a sustainable post-Covid-19 recovery’” Dr Coleman explained.

He said the bank had also created and is mplementing a pan-African due diligence repository, a digital platform called MANSA, which is targeted at financial institutions, corporate entities and SMEs. MANSA was developed to address the perceived risks inherent in doing business in Africa and with Africans.

The platform will provide a single source of primary data needed to conduct customer due diligence and know-your-customer checks on counter-parties on the continent. This, Dr Coleman said, would reduce the risks of doing business in Africa and facilitate a better understanding of African entities by counter-parties.

The Afreximbank is also implementing a digital intelligence platform called TRADA which will provide comprehensive market information on trade and investment opportunities in Africa, with the aim of facilitating not only business-to- business match-making but also intra-African trade and investment.

TRADA will support business transactions between buyers and sellers in and outside Africa, and provide a centralized digital source of regulations and legislative requirements for all trade and investment activities across the continent.

Dr Coleman said the platform had become necessary because one of the key inhibitions to doing business in Africa was the lack of information. “So the TRADA platform will help ease the burden of the difficulty in accessing relevant information in order to do business.”

He continued: “The bank is of the view that the only way for Africa to build back and forward is for all stakeholders, including policy makers, commercial banks, development partners, institutions, the private sector, and academics as well as think tanks, among others, to work in harmony continent-wide to close the digital divide and propel Africa on a sustainable growth trajectory while at the same time consolidating the development gains that have been made over the past two decades.”

According to Dr Coleman, the bank takes its relationships with think tanks and ACBF very seriously. “We know it is in this unity and partnership that we will be able to achieve the Agenda 2063’s aspirations and optimize the gains that are inherent in the AfCFTA which have been touted as a game changer.”

He said the relationship and collaboration with think tanks and all other major stakeholders would help the bank to ensure that Africa digitalize in order to put the continent at the level where it should be, and to reduce poverty and inequality among its citizens.

Contributing to the discussion, Mr Tunde Fafunwa, Advisor to the UNECA Digital Centre, and Managing Partner of Kitskoo Inc, said the environment in Africa at the moment showed that up to 80% of Africans were in the informal sector, but while this was a major challenge, it was also one of the major opportunities for digitalization.

“We have a very young population, more than 70% is less than 24 years of age, and more than 170 million youths will be joining the ranks of employment over the next 10 years,” Mr Fafunwa said.

Against this backdrop, he said, Africa had made significant gains in terms of digitalization, e-payments and mobile transfers, even though the continent has only 55% mobile phone penetration at the moment and internet penetration is only at 30%. In that sense, Africa still has a major challenge of building digital infrastructure.

This is why, according to Mr Fafunwa, UNECA still sees infrastructure as critical, and why it is working with African governments to attract investment to generate infrastructure.

“Governments are a key part of the economy,” Mr Fafunwa said, “and unless and until governments fully adopt e-payments, electronic transactions, and move to e-government across all the sectors, it will be difficult to trigger private investment that will help build capacity.”

In her contribution, Ms Camilla Rocca, Head of Research at the Mo Ibrahim Foundation, said that access to digital technology in Africa had significantly improved since 2010. Every African country had more households with computers in 2019 than in 2010. Every country, but Libya, had more mobile phone subscription in 2019 than in 2010, and 3G coverage had improved in every country except Eritrea in the last decade.

However, challenges still remain.  “In too many African countries,” Ms Rocca said, “access to digital facilities such as internet and computers is still low. In 2019, there were only 10 African countries where over 50% of households had internet access, and only 5 African countries where over 50% of households had computer access.”

However, in terms of the digital divide, Ms Rocca said there had been a significant improvement continent-wide, even though access to digitalization still remained “very, very low” as compared to other areas of the world.

“So the message here is for the continent to continue to sustain the progress with the aim of scoring higher, because compared to the global level, Africa is still relatively weak,” she added.

She said Covid-19 had presented a very unique challenge to Africa in terms of school closures. Although in Africa school closures had been relatively lower than the global average – 30 weeks in Africa and 35 weeks globally -  what was key in Africa was that school closures meant no learning at all for African pupils and students as 50% of Africa’s children has no access to any remote learning tools, which included the internet, television and radio.

In contrast, while school closures globally were at an average 35 weeks, the response around the world was to move learning to digital platforms, which Africa lacked.

Joining the discussion, Mr Ibukun Onitiju, Head of Digital, Nestle Central & Central Africa, quoted research that showed that “it is not what governments and the private sector are doing that is impacting the digital transformation in Africa, but what individuals are doing”. It is thus imperative that individuals are empowered to increase their digital skills and access to technology.

He said the combination of individuals, state, and businesses in the digital revolution would enhance opportunities in Africa, and therefore the continent should embrace the new reality and forge ahead.

Mr Onitiju called for an overhaul of the African curriculum to provide skill sets that businesses will require in the digital arena and elsewhere. He said Nestle was actively investing in the youth in terms of internships and introducing them to digital technology that is not only used in Africa but globally.

Thomas Kwesi Quartey

ACBF has been granted the status of a specialized agency because of the potential to transform Africa through capacity development.

H.E. Thomas Kwesi Quartey, Deputy Chairperson, AU Commission
Erastus Mwencha

The recognition of ACBF as the African Union’s Specialized Agency for Capacity Development launches the beginning of a new era for capacity building by ACBF, which will require an appropriate level of political commitment and financial support from all stakeholders.

H.E. Erastus Mwencha, Chair, ACBF Executive Board
Lamin Momodou

The remarkable achievements ACBF has registered over the past 26 years is not by accident in our opinion. They have come through hard work, dedication, commitment, purposeful leadership, support from the member countries as well as productive partnership building.

Mr. Lamin Momodou MANNEH, Director, UNDP Regional Service Centre for Africa
Goodall Gondwe

Africa needs ACBF as much, probably more now, than at the time it was created in 1991.

Hon. Goodall Gondwe, former Chair of the ACBF Board of Governors and Minister of Finance – Malawi
Ken Ofori Atta

Ghana’s partnership with ACBF is a tremendous blessing for us and therefore the opportunity for Ghana to host the 26th ACBF Board of Governors Meeting is something that we treasure.

Hon Ken Ofori Atta, Chair of the ACBF Board of Governors and Minister of Finance - Ghana