IER - African Countries Need To Strengthen Their Digital Readiness To Benefit Fully From Digitalization, Says Unctad

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IER - African Countries Need To Strengthen Their Digital Readiness To Benefit Fully From Digitalization, Says Unctad

Geneva, Switzerland, 2 October 2017

​Digitalization is impacting every aspect of production and trade, from the largest corporations to the smallest traders, but there is a risk that it will lead to widening income inequalities, UNCTAD warned today in its Information Economy Report 2017, entitled “Digitalization, Trade and Development”.

The digital economy is evolving in Africa but at different speeds. While in Nigeria, 32 million people started to use the Internet between 2012 and 2015, in other African countries (including the Central African Republic, Eritrea and South Sudan), mobile cellular services still reach less than a third of the population.

Africa may be  the region with the lowest mobile broadband penetration, but it boasts also the highest growth rate of such penetration. Climbing mobile subscriptions have been accompanied by a rise in imports of communications equipment, as shown for Rwanda and Zambia (see figure).

“Many African countries need to become better prepared to take advantage of opportunities and to avoid negative impacts of digitalization”, says Ms. Shamika Sirimanne, Director of the Division on Technology and Logistics at UNCTAD.

The UNCTAD Report shows that Africa is lagging behind the most in key aspects of e-trade readiness: connectivity, payment solutions, trade logistics, Internet security and legal frameworks. For example, less than 40% of African countries have adopted data privacy legislation.

Nonetheless, digitalization is increasingly affecting African economies in a number of ways. The use of big data, artificial intelligence (AI) and three-dimensional (3D) printing are examples. In sub-Saharan Africa, large sets of data on soil characteristics are mined to help determine fertilizer needs and increase productivity. In the United Republic of Tanzania, recycled plastic bottles are being used to 3D-print prosthetics. And IBM is using its AI solution, Watson, to address development challenges in Africa in areas such as agriculture, health care, education, energy and water through the Project Lucy initiative.

E-commerce is another area that is growing fast. The Jumia Group (formerly Africa Internet Group) founded in 2012, now has a presence throughout Africa. According to the company, half a million local African enterprises are conducting business on its portals every day. Jumia offers retail sales in 7 African countries (Cameroon, Côte d'Ivoire, Egypt, Ghana, Kenya, Morocco and Nigeria), and its marketplace is available in 14 countries. Its growth has been strong, with an increase in its Gross Merchandise Value rising from €35 million in 2013 to about €289 million in 2015.

Preparing for the digital economy requires a concerted, holistic, cross-sectoral and multi-stakeholder approach to national policy making. Key national policy areas include ICT infrastructure, education and skills development in the labour market, competition, science, technology and innovation and fiscal issues, as well as trade and industrial policies. Most African countries also lack statistics on key aspects of the digital economy, hampering the ability to formulate evidence-based policies in this area.

”The international community needs to scale up its support to ensure that no-one is left behind in the evolving digital economy” says Ms. Sirimanne. Despite the growing importance of the digital economy, the share of ICT in total Aid for Trade declined from 3% in 2002−2005 to only 1.2% in 2015. One way to capitalize on existing knowledge and maximize synergies with partners is to tap into the UNCTAD-led eTrade for all initiative.

Figure - Imports of communications equipment and mobile cellular subscriptions in Zambia (left) and Rwanda (right), 2000−2015

Source: UNCTAD secretariat calculations, based on UNCTADstat and ITU World Telecommunication/ICT Indicators database.