African governments urgently need to drive greater investment in the tech sector and the knowledge economy, according to Chido Munyati, head of Africa Division at the World Economic Forum (WEF).
On Thursday, the WEF released its latest report, “Attracting Investment and Accelerating Adoption for the Fourth Industrial Revolution in Africa”.
The report analyses the challenges Africa faces in joining the global knowledge-based digital economy and presents a set of tangible strategies for the region’s governments to accelerate the transition.
The forum’s report, written in collaboration with Deloitte, comes just weeks after the announcement by Google of a $1 billion investment to support digital transformation across Africa, which centres on laying a new subsea cable between Europe and Africa that will multiply the continent’s digital network capacity by 20, leading to an estimated 1.7 million new jobs by 2025.
Africa’s digital economy could contribute nearly $180 billion to the region’s growth by the mid-decade. Yet with only 39% of the population using the internet, Africa is the world’s least connected continent.
According to the report, tech start-ups such as Kenya’s mobile money solution Mpesa and online retail giant Jumia, Africa’s first unicorn, represent what the continent’s vibrant small business sector is capable of.
Despite raising $1.2 billion of new capital in 2020 – a sixfold increase in five years – this represents less than 1 percent of the $156 billion raised by US start-ups in the same year.
Meanwhile, Africa’s investment in R&D was just 0.42 percent of GDP in 2019 – less than a quarter of the global average of 1.7 percent.
The report breaks down these three policy enablers:
– Pass legislation such as “Start-up Acts” designed to spur private sector innovation, reduce the burden of regulation and promote entrepreneurship, in which Tunisia and Senegal are leading the way.
– Embed incentives for start-ups in legislation, such as start-up grants, rebates on efficiency gains through technology implementation, co-investment of critical infrastructure, tax-free operations for the early years, and incentives for R&D.
– Invest in workforce education, skills and competencies. Currently, only 2% of Africa’s university-age population holds a STEM-related (science, technology, engineering, mathematics) degree.-iol
