Africa Connected

THE DAWN OF INDUSTRY 4.0

Increased internet access can see Africa prosper

by Anton Pretorius

You can attend a church service on your iPad; conduct an eye test on someone 100 km away; and even buy sunlight with your phone. There are apps for sending parcels, investing in cows, mapping terrorist hotspots and civil unrest; and food and medical supplies are being delivered across the African continent via drone.

 

From Marrakesh in the North to Nairobi in the East, a spurt of tech hubs are discussing the possibilities of ‘leapfrogging’ technology and incubating start ups. These are some of the probabilities with Africa’s ‘fourth industrial revolution’ (Industry 4.0).

 

Industry 4.0 is a giant step into the digital world which Topco Media’s Africa Tech Week 2018 will showcase next year (4-7 September 2017) at Cape Town’s International Convention Centre (CTICC) in the Mother City. Some are salivating that it will amount to the renaissance of a continent.

 

By 2020 there will be more than 700 million smartphone connections in Africa – more than twice the projected number in North America and not far from the total in Europe, according to GSMA, an association of mobile phone operators. In Nigeria alone 16 smartphones are sold every minute, while mobile data traffic across Africa is set to increase 15-fold by 2020.

 

 

Internet access in Africa

While the majority of Africans own a smartphone, internet access still remains a challenge across the continent. The World Bank Group’s recent Development Report 2016: Digital Dividends report found the following:

 

  • Governments are increasingly going digital, and a greater share of government jobs in developing countries is ICT-intensive than in the private sector. By 2014, all 193 UN member states had national websites: 101 enabled citizens to create personal online accounts, 73 to file income taxes, and 60 to register a business. But so far, developing countries have invested more in automating back-office functions (such as financial management and customs processing) than in services directed at citizens and business.
  • The number of direct jobs created by digital technologies is fairly modest, but the number enabled by it can be very large. In developing countries, the ICT sector accounts for only about 1% of the workforce on average: less than 0.5% in Ghana, for example; and in high income countries, it’s just about 3-5%.

 

  • Instagram, the phenomenally successful photo sharing app with over 400 million users at the end of 2015, had just 13 employees in 2012 when it was bought by Facebook for $1 billion. But indirect job creation by digital technologies can be huge. In Kenya, the M-Pesa mobile money system creates employment for more than 80,000 agents.

 

  • People’s perceptions are that digital technologies have certainly made them better off. In 12 countries surveyed in Africa, 65% of people believe that their family is better off because they have mobile phones, while 20% disagree (14.5% not sure). And nearly three-quarters say that mobile phones help save on travel time and costs, with only 10% saying otherwise. Two-thirds believe that having a mobile phone makes them feel more secure and safe.

 

  • The internet has also improved efficiency and productivity through automation and data-driven management. MajiVoice is a SMS-based complaint mechanism for water and sewerage services in Nairobi. Before it was initiated, the Nairobi water company received on average 400 complaints a month. Since its launch in 2013, the utility has been getting about 3,000 complaints a month, resolution rates climbed from 46% to 94%, and time to resolution dropped by 90%.

 

  • Much of the benefit from the internet (and arguably, the most important impact of the Information Age) is unmeasured, as it is not able to be captured in gross domestic product (GDP) statistics, such as time saved, consumer convenience, expanded choice, better quality leisure time, and access to more knowledge.

 

  • But many problems and failures of the internet surface when digital technology is introduced but the important analogue complements remain inadequate – that is, regulations that ensure a high degree of competition, skills that leverage technology, and institutions that are accountable.

 

  • When the internet delivers scale of economies for firms but the business environment inhibits competition, the outcome could be excessive concentration of market power and rise of monopolies, inhibiting future innovation. In Morocco, for example, politically connected firms are able to get preferential access to digital technology, thus entrenching their dominance and discouraging other firms from innovating, the report states.

 

  • When the internet automates routine tasks but workers do not possess higher-order skills (such as creativity and interpersonal skills) that technology enhances, the outcome is greater inequality as many workers compete for low-paying jobs.
  • When the internet helps overcome the barriers that impede service delivery but governments remain unaccountable, the outcome will be greater control, rather than greater empowerment and inclusion.

 

  • One curious paradox of the digital age is that autocratic governments have promoted e-government while censoring the internet. It’s called the “dictator’s dilemma” – if rulers permit open discourse on the internet, they risk challenges to their authority. If they don’t, they risk isolating themselves from the global information economy. This is a delicate balancing act, and countries are becoming more sophisticated in calibrating their control – for example, censoring content that might encourage collective action, but not individual criticism.

 

  • Firms’ use of the internet in Africa can vary widely among countries, even in the same sector. A 2014 study showed that among manufacturing firms in Kenya, 41% used it to manage their inventories, compared to 27% in Zambia and 6% in Uganda. Of service firms in Kenya, 41% used it to manage their inventories, compared to 15% in Zambia, 12% in Uganda, and 8% in Tanzania and the Democratic Republic of Congo.

 

  • Although governments are keen to leverage digital technology for better results, many public sector digital projects fail. Although data is scarce, various estimates from surveys of government officials, audit reports and country cases suggest about 30% of e-government projects are total failures, with the project abandoned before completion. Another 50-60% are partial failures, with significant budget and time overruns and a limited number of project objectives achieved; fewer than 20% are successes.

 

  • For example, Maji Matone, which facilitates SMS-based feedback about rural water supply problems in Tanzania, received only 53 SMS messages during its first six months of operation, far less than the initial target of 3,000, and was then abandoned.

 

  • The high failure rate is possibly because of a large gap between the regulatory, political and skills realities in government, and the ambitions of e-government projects. Others point to the “dangerous enthusiasms” of technological infatuation and faddism for large IT projects.

 

  • There’s a high geographical penalty for internet access in Africa. In Africa, being landlocked adds an average $232 to the monthly price of fixed broadband access – the average for coastal countries is $206, while for landlocked countries is $438.

 

  • ICT is one bright spot in Somalia’s economy, which had its fixed telecom infrastructure destroyed by war. With seven mobile operators and multiple internet service providers, the country has a higher penetration rate than its monopolistic neighbours, such as Ethiopia and Eritrea. Some 55% of Somalis used mobile phones to receive remittances; this has become indispensable as other financial channels such as hawalas, have been blacklisted as part of a crackdown on their suspected links to terror.