Africa’s Development Dynamics 2021

Digital transformation provides a great opportunity for African countries. But the gap between rural and urban areas in terms of internet access is still large. Rural areas are lagging behind. Dissemination of digital innovation must expand beyond large cities.

The response to the COVID-19 crisis builds momentum for Africa’s digital transformation to overcome the pandemic and create more productive jobs, according to the latest edition of Africa’s Development Dynamics (AfDD) launched by the Organisation for Economic Co-operation and Development (OECD) in January 2021.

The COVID‑19 pandemic is the hardest shock to African economies in 25 years. In that context, Africa’s booming digital sector offers an opportunity for governments to help kick-start a new growth cycle in the aftermath of the COVID-19 crisis, according to the report. By encouraging the spreading of digital technologies, data and interconnection to all sectors, starting with healthcare, African countries can accelerate economic transformation and the creation of productive jobs, in line with the Aspirations of the African Union’s Agenda 2063.

Only 26 per cent of rural dwellers use the Internet regularly


In just ten years, Africa’s total inbound international Internet bandwidth capacity increased more than 50-fold; the operational fibre-optic network extended almost four-fold; mobile cellular subscriptions more than doubled; and about 58 per cent of the population now live in areas covered by 4G networks. 

Africa has over 480 million mobile money accounts, exceeding all other developing regions taken together. More than 500 African companies provide technology-enabled innovation in financial services (fintech). The valuation of some African start-ups exceeds a billion US dollars. Over 640 tech hubs are active across the continent.

Beyond digital infrastructure development, however, most digital success stories remain exceptional. Innovations hardly trickle down to the real economy and create too few jobs. Only 26 per cent of rural dwellers use the Internet regularly, compared with 47 per cent of urbanites. In 37 African countries, more than 50 per cent of the population cannot afford 1GB of data per month. Only 31 per cent of all African firms have their own website.

Fostering dissemination of digital innovation beyond large cities 


The report recommends four policy actions for governments to accelerate digital transformation and job creation in all economic sectors:

  • Promote the dissemination of digital innovation beyond large cities. Only 35 per cent of intermediary cities are connected to terrestrial fibre-optic networks. Connecting them can have a strong multiplier effect, since 73 per cent of Africans will live in intermediary cities and rural areas by 2040.
     
  • Invest in the development of Africa’s workforce skills and provide social protection for informal iWorkers. Recent surveys show that many iWorkers face unpredictable and lower compensation than the national minimum wage, and they do not benefit from standard labour conditions as in formal employment. 
     
  • Remove barriers that prevent smaller firms from competing and growing in the digital age. Venture capital funding for Africa’s start-ups grew seven-fold between 2015 and 2019, yet the funding ecosystem for entrepreneurs remains fragile and inadequate. Half the most dynamic start-ups are based in only five cities:  Cape Town, Lagos, Johannesburg, Nairobi and Cairo.
     
  • Regulations need to be updated and harmonised at regional and continental levels. Currently, only 28 countries in Africa have personal data protection legislation in place, while 11 have adopted substantive laws on cybercrime.

(OECD/ile)

Read more and download the report Africa’s Development Dynamics 2021 at OECD website

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