WEBCAST | Africa’s Digital Transformation in the Age of Coronavirus
On May 7, 2020, the Wilson Center Africa Program and Ovamba Solutions, Inc. co-hosted the event "Africa's Digital Transformation in the Age of Coronavirus."
WEBCAST | Africa’s Digital Transformation in the Age of Coronavirus
On May 7, 2020, the Wilson Center Africa Program and Ovamba Solutions, Inc. co-hosted the event "Africa's Digital Transformation in the Age of Coronavirus." Congresswoman Jane Harman, Director, President, and CEO of the Wilson Center gave introductory remarks, and Dr. Monde Muyangwa, Africa Program Director, moderated the event. The event featured six speakers: Mr. Moctar Yedaly, Head, Information Society, African Union Commission, Ethiopia;Dr. Tim Kelly, Lead ICT Policy Specialist, Transport and ICT, World Bank Group, Kenya; Mr. Kennedy Mubita, Africa Head, Standard Chartered Ventures, Standard Chartered Bank, Kenya; Mr. Musa Jimoh, Director, Payments System Management Department, Central Bank of Nigeria, Nigeria; Ms. Viola Llewellyn, Co-Founder and President, Ovamba Solutions, Inc., United States; and Ms. Meg King, Director, Science and Technology Innovation Program and, Strategic and National Security Advisor to Wilson Center's CEO and President, Wilson Center, United States. Looking beyond the digitization-related challenges exposed by the ongoing COVID-19 pandemic, this event provided a better understanding of the current state of economic digitization in Africa and the potential for transforming African economies through digitization.
Congresswoman Harman’s opening remarks highlighted positive areas of progress and some challenges facing Africa in building its digital economy. She shared recent examples of the Kenyan and Ghanaian governments' public-private collaborations to meet the challenges posed by COVID-19 by waiving some mobile money transactions, whereas South Africa and Uganda have responded with utilizing apps to provide accurate public health news or facilitate fruit and vegetable deliveries. However, she underscored the need for the day's discussion given the persistent digital divide, which especially impacts Africa's large informal economy and the many people who rely on daily in-person interactions for their livelihoods.
Mr. Yedaly set the stage for the conversation by providing a continent-wide overview of the state of digitization in Africa. He noted that mainstreaming digitization is a driving force for innovative growth in Africa and a priority for the continent's leadership. To this end, the African Union has developed a continent-wide a Digital Transformation Strategy to take advantage of the opportunities for Africa to leapfrog in terms of development and which consists of four pillars: 1) Enabling environments and policy regulation, 2) digital infrastructure, 3) digital skills, and 4) digital innovation and entrepreneurship. While a strategy is in place, and governments across Africa have developed policies promoting digital transformation, there is still more work to be done. Digital infrastructure, policy frameworks, and regulations are lagging or lacking, especially for artificial intelligence, 5G, and other drivers of transformation. Digital innovation and entrepreneurship have increased, with more than 400 digital hubs in Africa in 93 cities, including over 130 new hubs opening in the last two years, generating more than $1.1 billion. Yet, many Africans still lack internet access, and digital literacy is the lowest of any region. Cybersecurity is a particularly pressing issue, with increasing attacks and a lack of personal data protection. There is a need for greater policy attention to security, as fewer 20 percent of African countries have cybersecurity strategies or regulations and lack sound policies on personal data protection.
Dr. Kelly began by observing that COVID-19 is changing the way the world works and does business. He addressed some of the key actions and investments necessary to take advantage of digitization and leapfrog digital development opportunities in Africa. He highlighted the World Bank's top three digital priorities in responding to COVID-19: 1) Ensuring the internet continues functioning, including by increasing bandwidth and conducting network management. 2) Ensuring business and government continuity, facilitating home-based work, facilitating mobile money transfer, and supporting governance in meeting public welfare. Kelly noted efforts by the World Bank to provide essential workers with data bundles and provide communications rooms to government ministries. There has also been a demand to help the most vulnerable, with Kelly citing the example of Kenya lifting levies on mobile money transactions. 3) Using fintech to support businesses and communities by accelerating the uptake of mobile money and financial payment substitutes. The World Bank has committed around $12 billion to COVID-related support from April to June 2020. The Bank is adapting existing programs, such as "smart villages," to prioritize the health sector to meet new challenges. The World Bank is also working with the AU’s the “Digital Africa Moonshot,” a commitment of over $100 billion between now and 2030 to achieve universal broadband access across Africa.
Mr. Jimoh addressed the specific efforts of the government of Nigeria to improve the country’s digital infrastructure and create the “Smart Nigerian Digital Economy,” and the Central Bank of Nigeria's (CBN) policies to support this initiative. The CBN is pushing efforts to digitize the economy, bring small and medium-sized enterprises (SMEs) into the digital space, and increase financial inclusion, particularly through client identification by expanding bank verification number enrollment and expanding the number of mobile agents. Nigeria is facing three major challenges: 1) infrastructure gaps—many areas of Nigeria still lack consistent electricity and internet access, 2) cybersecurity—while there is some trepidation about the privacy and security challenges of electronic transactions, the government passed a cybercrime prevention act to combat fraud, and 3) building expertise and human skills development around new technologies, financial services, and the emerging ICT sector. Nigeria needs to develop a digital inclusion strategy to meet these challenges and continue its efforts to develop and implement the national identification system. CBN is also pushing forward initiatives to spur fintech companies that will help drive the digitization agenda, including by developing a regulatory sandbox, open banking and open API to democratize access to financial services, and setting up a cyber-vision center for discussions and analysis on cybersecurity and threat analyses.
Mr. Mubita spoke to the fact that digitization offers the continent an opportunity to build an Africa-centric view of the continent, and that the private sector could support and facilitate this effort by providing services to the previously unbanked. However, several challenges exist concerning how the private sector operates, such as the private sector's tendency to work in silos whereby they view digital knowledge as a competitive advantage, rather than a public good and an opportunity to transform the whole continent. Mr. Mubita also noted that regulators are behind the curve as they are still primarily reactive to developments. As a result, regulators tend to take a risk mitigation approach rather than viewing technology as a facilitator of development. He also observed that while increasing consumer data is available, it tends to be personalized and thus inaccessible to new businesses. Some of the opportunities of digitization to transform African economies are increased access to markets across Africa, building stronger intra-African supply chains, and increasing the volume of sales. Digitization can also improve operational efficiency for businesses and give them access to credit by increasing digital data and building user profiles that provide SMEs, in particular more access to financial services. Mr. Mubita recommended the facilitation of open innovation to break down silos, view digital knowledge as a public good, improve data democratization, and develop intra-Africa supply chains and market access.
Ms. Llewellyn highlighted the importance of regulatory frameworks and the role of central banks in elevating access to the digital economy, access to markets, and access to credit, particularly for the informal sector. She noted some of the broken links in the current digital finance systems, particularly in Central Africa, where siloes continue to exist, such as the lack of acceptability of digital signatures or mismatches between bank and mobile money accounts. Enhancing cross-border trade is key to economic transformation, and a digital platform can boost these efforts. She noted the new opportunities for digital as a new growth sector that COVID-19 is opening up as traditional leading sectors such as oil might diminish. There are more opportunities to apply digital technologies to supply chain management and manufacturing, and opportunities for digitization in industries such as health care, transportation, and logistics. She urged the adoption of open source data in Africa, whereby information can be accessed by innovators to accelerate the development and adoption of tools and technologies and underlined how crucial regulatory sandboxes are to this innovation. Ms. Llewellyn gave three recommendations: 1) Open up modern manufacturing as the best way to restart economies in both the resulting production and secondary education for workers that occur from applying digital tools to manufacturing. 2) Create digital cross-border partnerships—particularly giving opportunities to digital last-milers, and 3) Revisit regulatory frameworks to offer incentives for innovation
Ms. Meg King shared lessons and practices from other global efforts that could be informative or adapted to the African context. Ms. King recommended adapting existing trade strategies, breaking down silos, and democratizing data. She noted the importance of mainstreaming digitization into economic strategies and trade agreements. In this regard, she cited the United States-Mexico-Canada Agreement's (USMCA) inclusion of digital elements in their mandate. Key aspects of the USMCA may be worth adapting to Africa, including acceptance of digital signatures, duty-free internet for digital products, and protection of intellectual property. Government data-sharing requirements could also be beneficial, particularly for health, population, and trade information. First, however, basic infrastructure needs, such as power and internet access, must be addressed. Security concerns are also significant as digital payments, in particular, are a big target for criminals, including digital smurfing and corruption. Ms. King emphasized the importance of digital ID schemes, data protection, and consumer privacy schemes, and the application of financial fraud sector best practices. She noted that a combination of innovation, privacy, and consumer protection would be critical efforts going forward.
In the subsequent discussion, participants posed questions via Twitter and email regarding the digital gender divide, building youth skills for the digital economy, the issue of politicizing internet and government internet shutdowns, and the development and innovations around personal credit scoring in Africa.
“An estimated 86 percent of workers in Africa are part of the informal economy, which means millions of Africans rely on in-person interactions to earn a living, buy essential goods, attend school, or access public services.”
“Digitization, simply put, is a mass adoption of connected digital services by consumers, enterprises, and governments. This issue has emerged in recent years as a key driver for economic growth, job creation, and development, all of which are sorely needed across many parts of the African continent. Like other regions, Africa has embraced the promise of the digital economy, for it is now understood that it is not a choice, but an imperative, if the continent is to realize its full development potential.”
“I do hope that as we talk about business continuity, we are also thinking about education continuity. I can only imagine the number of African children where we already had issues with access to education alongside some quality issues as well, what this COVID-19 is going to do in terms of the ability to continue educating Africa’s youth and children, particularly in the rural areas.”
“The digital transformation, i.e., the mainstreaming of ICT in all social-economic development sectors and applying new technology to radically change the processes, citizen experiences and values, is, as said before, a driving force for innovative inclusion and system growth in Africa. For Africa, the current moment is really a leapfrog-opportunity. Our leadership in Africa have recognized that and decided to adopt and implement as soon as possible the digital transformation strategy.”
“Number one is the enabling environment and policy regulations. Governments have to have the responsibility to create an enabling environment with policy and regulations that promote digital transformation. Unfortunately, most of our African member-states are not ready from a regulatory and policy point of view for issues like artificial intelligence, the internet of things, machine to machine, 5G, which are actually really helping to drive the digital transformation.”
“In Africa, unfortunately, despite the growth and the acceleration we have in the mobile sector, unfortunately nearly more than 300 million Africans live more than 50 kilometers from the fiber and cable. As Tim and his team has provided a year ago…sometimes ago, I mean, it is estimated that every 10 percent increase in broadband penetration in the low and middle-income countries, it results in an increase of 1.38 [percent] of GDP. And we can see that Africa is still really under that margin.”
“Unfortunately, most of our people so far are not really digitally savvy, specifically when it comes to our leadership and within the government and the administration and so on. Africa still has the lowest literacy in the world, and hence the same thing is happening within the digital space.”
“[As COVID-19 continues to impact Africa] it’s clear that Africa will struggle to implement some of the measures that have been used successfully elsewhere in the world, for instance, social distancing and physical isolation. In many African cities, many African marketplaces, that is just not possible at all. But that’s why I think a digital response to the coronavirus epidemic is so important for Africa. It’s an area where Africa can learn from the rest of the world and an area where Africa has, as we said earlier, the chance to leapfrog through its digital transformation.”
“In terms of what we’ve been doing at the World Bank to respond to the pandemic, I think there are three broad priorities in what we’re doing in terms of managing technology and responding to it digitally. The first of those would be to make sure that the internet continues functioning, increasing the bandwidth that’s available, particularly to governments, trying to reduce the level of congestion that we experience on networks. We’ve seen globally an increase in internet traffic of more than 30 percent just since the middle of March, and in some countries the spike has been as high as 60 percent.”
“And in the longer-term response, our commitment is to what is sometimes called the digital African Moonshot, a commitment of over 100 billion dollars between now and 2030 with the goal of achieving universal broadband access within Africa. Now, most of that commitment will come from the private sector but the World Bank is a major donor and lending agency together with our other development partners such as the African Union, the African Development Bank, [which] will also be making their commitments on fulfilling that 100 billion dollar commitment.”
“With the things that are happening recently, we have seen that digitization has become a major compelling imperative for all Nigerians. With social distancing, a lot of Nigerians do not want to touch physical devices, everybody wants to go virtual, everybody wants to do transactions virtually.”
“Identity is a major challenge in Nigeria. Every individual has to be identified. Today the Banks took up the initiative of providing bank verification numbers to Nigerians, and well over 45 million of Nigerians already have that [number] within the banking sector.”
“The digital framework has enabled Africa to have an Africa-centric view of the continent in terms of where are the people, where do they live, and what they are doing, and so far has facilitated a lot of the payment services between people who were previously unbanked and bring them into the financial limelight.”
“So far, the private sector and the entities that are operating in the digital space in Africa are siloed, in the sense that, you know, they are internally-focused and not industry-focused, and that will need to change because over time we will need to basically find solutions that fit the African continent. Because of this siloed mentality, what tends to happen is that some of the players in the sector use the digital knowledge they get or the digital interaction as a competitive advantage rather than, you know, seeing it as a societal or developmental necessity that is going to happen and the best way necessary for the continent.”
“In my experience, digitalization has actually helped in terms of rebalancing the gender divide…but having said that, of course overall the [tech] community is still very male dominated.”
“It would be very difficult to continue digitized trade when entire regions don’t accept PDFs or a digital signature. We have fundamentally deep issues that make the ideology of digitizing Africa exciting, but there are many things that need to be resolved.”
“How can we make sure that digitization affects those people who previously couldn’t get access to credit, but were doing informal business on the trade front? This goes back to the wonderful things that are happening out of the African [Continental] Free Trade Agreement and the free trade zone. The digital platform is the answer to cross-border manufacturing, cross-border trade, between Africans with Africans, for goods that have been created underneath our very feet.”
“There is a certain level of anonymity that comes along with being able to sit behind a computer and code. There is the opportunity to not be judged by gender when coming to the table with ideas that actually resolve an issue and can be monetized…”
“The women are leading the way in using digital solutions to resolve problems… [In] Ovamba’s own portfolio of customers, who we fund with alternative trade products, the best performances in there are by women who saw an opening for, ‘I no longer need to come in with a land title, I can get addressed and measured according to my intrinsic ability to run my business. There’s the opportunity to grow beyond the treasury limits that I would have seen.’ So [digitalization is] affecting many different areas in which women have wanted to participate and be heard, and it’s also affecting the way women want to raise their children.”
“Rather than large formal schemes, I suggest that as leaders of African nations consider how best to ensure the implementation of some of these new digital initiatives, they have got to find ways to adapt existing trade agreements, which include some of the legal protections you were mentioning, Viola, and develop specific innovation strategies and security strategies. All things that most of the presenters today have discussed. We’ve got to break down those silos, as has been mentioned, and data does need to be democratized in order for Africa to make the most advantages of the capabilities that exist today and can be improved.”
“In North America, the newly ratified U.S.-Mexico-Canada trade deal is the first of its kind in the world to include a digital trade chapter. It removes barriers and adds protection so more products and services can be bought and sold online…and it’s worth taking a little time to think about how it might be adopted in the African context… It requires each nation to accept electronic signatures on contracts, which is not a highly technical solution, it’s possible. It creates a duty-free internet for importing or exporting digital products, like stream[ing] music or games...It also protects intellectual property, like source code and algorithms so businesses feel comfortable trading rapidly. I don’t believe the African Continental Free Trade Agreement includes these digital provisions yet, but implementers should look at the USMCA model and consider adopting some of these ideas, like digital contracts and the sharing of government data.”
“But you can’t use some of these capabilities, IA being one of them, without basic infrastructure in place.”
The Africa Program works to address the most critical issues facing Africa and U.S.-Africa relations, build mutually beneficial U.S.–Africa relations, and enhance knowledge and understanding about Africa in the United States. The Program achieves its mission through in-depth research and analyses, including our blog Africa Up Close, public discussion, working groups, and briefings that bring together policymakers, practitioners, and subject matter experts to analyze and offer practical options for tackling key challenges in Africa and in U.S.-Africa relations. Read more