FROM AN EXTERNAL POINT OF VIEW IT APPEARS THAT THERE IS ONLY LIMITED ADOPTION OF TECHNOLOGIES ACROSS AFRICA. WHAT ARE THE MAIN AREAS OF TECHNOLOGY ADOPTION ACROSS AFRICA?
EDITOR’ S QUESTION
FROM AN EXTERNAL POINT OF VIEW IT APPEARS THAT THERE IS ONLY LIMITED ADOPTION OF TECHNOLOGIES ACROSS AFRICA. WHAT ARE THE MAIN AREAS OF TECHNOLOGY ADOPTION ACROSS AFRICA?
Q & A with McKinsey Global Institute
The accelerating scope, scale, and economic impact of technology is a major transformative force around the world. Faster penetration of the internet and mobile phones offers Africa a huge opportunity to enhance growth and productivity; Africa’ s penetration of smartphones is expected to reach 50 % by 2020, from only 18 % in 2015. Previous McKinsey Global Institute research estimated that the internet could drive 10 % of Africa’ s GDP by 2025.
This trend is already transforming a number of sectors, including banking, retail, power, health care, and education. Electronic payments are sweeping across the region and changing the business landscape. East Africa is already a global leader in mobile payments. E-commerce in Africa is growing quickly— revenue has doubled in Nigeria each year since 2010.
In South Africa, smart metering is taking off and is expected to modernise consumer payments in the power sector, while ambulance services are using mobile application technology to improve response times greatly. The African Leadership University, launched in Mauritius in 2015, is using technology to reduce teaching costs and deliver e-learning, creating a replicable model for expansion across the continent.
IT technologies are essentially deployed in urban areas for businesses and consumers. What is the state of urbanisation in Africa? Africa is the world’ s fastest urbanising region. Over the next decade, an additional 187 million Africans will live in cities— equivalent to ten cities the size of Cairo, Africa’ s largest metropolitan area. Between 2015 and 2045, an average of 24 million additional people are projected to live in cities each year, compared with 11 million in India and nine million in China. Urbanisation has a strong correlation with the rate of real GDP growth, because productivity in cities is more than double that in the countryside: Africa’ s urban GDP per person was $ 8,200 in 2015, compared with $ 3,300 in rural areas.
Higher productivity translates into higher incomes, and cities offer better access to infrastructure, education, and new markets, resulting in more rapid growth in consumption by households and businesses. The challenge will be to cope with the stresses of rapid urban expansion, including provision of housing and services.
Manufacturing is usually the engine of business and drives a significant amount of demand for IT business applications. What is the state of manufacturing across Africa? Africa contains 60 % of the world’ s unutilised but potentially available cropland, as well as the world’ s largest reserves of vanadium, diamonds, manganese, phosphate, platinum-group metals, cobalt, aluminum, chromium, and gold. It is responsible for 10 % of global exports of oil and gas, 9 % of copper, and 5 % of iron ore. Even at recent low prices for such commodities, a significant share of African production continues to be cost competitive, putting the resources sector in a strong position for when demand and, eventually investment recover.
Capturing these opportunities will be challenging. Governments will need to improve their investment attractiveness in a weaker environment, while companies must review their approach to community engagement so that they have the support of local communities as well as their license to operate from regulators.
Source: McKinsey Global Institute’ s new report Lions on the move II: Realising the potential of Africa’ s economies.
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