Africa Finance Ministers conference discusses importance of digital economy to continent
African countries are noticing the importance of digitalization and the digital economy in driving growth and transformation on the continent and they are moving towards utilizing the advantages for development.
As a result, digitalization and the digital economy is taking center stage at the ongoing 52nd Session of the Conference of African Ministers of Finance, Planning and Economic Development being held in Marrakech, Kingdom of Morocco from March 20 to 26, 2019.
In her opening remarks at the opening of the Experts Meeting preceding the Ministers’ Meeting, Dr. Vera Songwe, the Executive Secretary of the United Nations Economic Commission for Africa (UNECA) said the importance of digitalization and the digital economy in driving growth and structural transformation, as well as optimizing fiscal performance in Africa cannot be overstated.
The value of the global digital economy is estimated at over $11.5 trillion, set to rise to over $23 trillion by 2025. It is currently estimated to represent 15.5 per cent of global GDP and is expected to reach 25 per cent of global GDP in less than a decade, she said.
According to Dr. Songwe, there has been a rise in the digital innovation hubs on the continent, such as the Silicon Savannah in Nairobi and the Kumasi Hive in Ghana, not to mention more solution-oriented technologies such as ‘Flutterwave.’
“Flutterwave has enabled global payment processing in Nigeria through a single, seamless platform. In 2018, this application was reported to have processed $1 billion worth of transaction,” she said.
Such digital developments can have a transformative effect across the economy by reducing barriers to entry and expanding market reach for businesses, creating jobs, and boosting both domestic and foreign trade in goods and services, she added.
“We believe that the African Continental Free Trade Area will be the game-changer for structural transformation in Africa through stimulating industrial exports towards a more balanced and sustainable export base.
Digital trade in Africa is rapidly growing at an estimated annual rate of 40 per cent, and is expected to constitute a growing share of trade, especially for intra-African trade. The impact of this growth is two-fold. Firstly, by generating opportunities for micro, small and medium sized enterprises; and secondly, by widening the tax and non-tax revenue base upon which countries finance their long term development strategies,” she said.
Noting that digital applications are already being used to fill credit gaps, she pointed that it is empowering women as entrepreneurs; providing real time market data for rural and remote farmers as well as data analytics for climate-related information.
Citing Kenya, she said there is currently an array of services such as M-pesa, Nikohapa and i-cow that have empowered women entrepreneurs to better manage their businesses. Kenya’s Safaricom forecasted that 90 per cent of their data in 2016 would come from data alone, she said.
“There is also an opportunity for African countries to capitalize on these developments to positively impact public service delivery including the efficiency and reach of social safety nets, education and health outcomes.
Mhealth, for example, creates more than five billion points of contact between consumers, healthcare workers, health system administrators, and firms in supply chains for health commodities. The Stop Stock-Outs campaign encouraged consumers and pharmacists in six Sub-Saharan countries to report shortages of medicines and other products, providing market information for stockists, she said.
Dr. Songwe indicated that with the right policies and enabling frameworks businesses can leverage digitalization to meet local demand across a myriad of sectors, particularly stimulating engagement with global markets and value chains through the provision of auxiliary goods and services.
Digital technology can help tackle youth unemployment by increasing access to much needed skills, such as through Massive Open Online Courses; and through linking skilled workers such as electricians and mechanics with clients online. Companies are increasingly using online marketplaces to outsource tasks to workers globally. According to the World Bank, the total market size for online outsourcing was estimated to grow to $5 billion by 2018,” she said.
By Emmanuel K. Dogbevi, in Marrakech, Morocco
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