How will Africa benefit from the 4th Industrial Revolution?

Paul Clark, Portfolio Manager and Africa Specialist at Ashburton Investments.

This year the focus of the World Economic Forum (WEF) meeting in Davos was the “4th Industrial Revolution”. Essentially this is about the rapid changes that are happening in the technological space and how these will affect the way the world operates and the different ways economies will grow as more and more connectivity drives the way we do things.

Discussions in Davos were mainly about the developed world and major emerging economies (Africa has its own focused forum later in the year). In the same way that low oil prices are a boon for some and a curse for other economies, we believe that technological changes will actual benefit the early stage emerging economies on the continent while posing challenges for the developed world.

According to the WEF, some of the major global challenges are food security, the need to make growth inclusive, unemployment, financial access, gender equality and healthcare.

We know that mobile money has made huge inroads in improving financial inclusion in Africa. In countries that were early adopters (mainly in East Africa) between a quarter and a third of the population opened accounts between 2011 and 2014. Some of the larger countries that started later will catch up fast. One of the reasons financial inclusion is key in poorer countries is because women are much less likely to have a formal bank account than men and mobile money can help to level the playing fields.

Small and medium-sized companies (SMEs) are a key part of the economies in Africa and are strong drivers of growth and employment. Many of these businesses are run by women. The 4th Industrial Revolution will reduce costs for SMEs and also provide opportunities that never existed before. Think of the (stupendously!) increased marketing reach someone running a small bed and breakfast can achieve through a service like AirBnB and with almost no capital outlay. We are already seeing mobile money platforms used to provide short term loans to SMEs to enable them to expand working capital. Support for and growth in SMEs will help to address Africa’s unemployment, promote inclusive growth and encourage gender equality.

Although re-educating an already employed workforce in developed countries is creating concerns for businesses and governments, in Africa, where many people work in the informal sector, technology should be enabling and create new jobs faster than those lost to automation in the formal economy. Of course the use of technology in education, e.g. tablets used to show lessons from skilled teachers in maths and science to rural pupils, can be instrumental in raising education standards at a reasonable cost for the continent.

Health care should also benefit from the new technology era. From improved diagnoses because of the possibility of sending pictures of patients’ symptoms as well as key data from rural areas to a central specialist, to delivering medication by drones to remote clinics, the possibilities seem endless.

We strongly believe that Africa will be a large beneficiary of the new developments that the 4th Industrial Revolution brings to the global economy.

To end off, I would like to quote Naadiya Moosajee , a WEF Global Shaper, who wrote “Necessity is the mother of invention, and in Africa it has been the mother of innovation”.