Technology in Africa: Set to Change the World
Why African tech developers might soon overtake Europe and North America.
Africa's population is growing fast, and so is its economy. Can the continent take advantage of this demographic dividend?
Africa's recent economic data give reason for hope: The continent has experienced an average growth rate of 4.9% per year since 2000. This is double the growth rate of the 1980s and 1990s, and it is the second highest growth rate in the world, surpassed only by the South Asian economies. The continent's Gross Domestic Product (GDP) reached 1.6 trillion US$ in recent years, which almost equals the GDP of Brazil or Russia. No doubt: Africa has become a major global market.
Some Asian tiger states, such as China, and many Latin American countries used their demographic dividend as a lever for development. Will Africa take the same path?
At the same time, another trend is shaping the continent's development: Africa's population is growing rapidly. Some Asian tiger states, such as China, and many Latin American countries once used their demographic dividend as a lever for development. Will Africa take the same path?
There are reasons for hope:
The African population is the youngest in the world. It reached one billion people in 2009 and is steadily growing. Two-thirds of all Africans are under age 25.
Theoretically, a growing population translates into higher labour supply, thus higher production and higher consumption levels. Furthermore, a young population can be a pool for innovation and creativity. These benefits of rapid population growth are an advantage for Africa, while the countries in the developed world face the problems of an aging population.
Thanks to the UN's Millennium Development Goals (MDG) considerable progress has been made in improving the well-being of Africans. The 2013 MDG report notes that the under-five mortality rate – although still the highest in the world – dramatically decreased 39% between 1990 and 2011, from 178 to 109 deaths per 1,000 live births on average. Some countries with especially high mortality rates for children under five years of age, such as Ethiopia, Liberia, Madagascar, Malawi, Niger and Rwanda, reported a decline of at least 60%. Furthermore, the rate of underweight children fell from 29% to 21% on average.
The MDG indicators regarding women have also improved. It is true that Subsaharan African countries have the highest maternal mortality rates in the world. But these declined by 41% over the past two decades, from 850 maternal deaths per 100,000 live births in 1990 to 500 in 2010. At the same time, the proportion of women who use contraception increased from 12% in 1990 to 25% in 2010.
Furthermore, there were respectable advances – although certainly not sufficient – in poverty reduction. Over the past two decades, Africa reduced the poverty rate by 4 points.
Many may assume that Africa's economic growth is mainly due to the expansion of extractive industries, such as mining, and the export of raw materials. But in fact these industries have only accounted for about 32% of Africa's economic growth over the last decade. Other growth contributors were branches such as wholesale and retail, transportation, telecommunications and manufacturing (McKenzie, 2010).
These figures show that there is rising consumption and demand from Africans themselves. Economic growth, improvement of social and health indicators, and population growth have certainly triggered this increase in domestic demand.
Africa has become the continent with the largest middle class growth in the world.
According to the African Development Bank, Africa has become the continent with the largest middle class growth in the world. Nowadays, 34% of all Africans – which adds up to 313 million people – spend $ 2.20 or more per day. This is more than twice as much as they spent twenty years ago. According to the McKinsey Global Institute, consumer spending will keep rising, growing from 860 billion US$ in 2008 to 1,400 billion US$ by 2020.
Urbanisation is likely to further boost economic development and local demand. While in 1980 an estimated 28% of Africans lived in cities, this number increased to 40% in 2010 –almost as much as in Europe and more than in India and North America. Forecasts show that it will probably even reach 50% by the year 2030.
The impact of urbanization on domestic demand in Africa is enormous. Obvious signs are the rising number of huge supermarkets opening their doors in African cities and the widespread use of mobile phones.
It's not surprising that young people in African urban centres show a high rate of the consumption of ICT products. Since 2000, the number of Africans connected to mobile networks has risen by 44%, compared to an average 34% in all developing countries worldwide and 10% in developed countries. According to figures published by Google and Twitter, for instance, the use of Youtube increased by 90% in just one year on the African continent (see articles in link section). Africa's cities will become huge markets for ICT products in the coming years (Deloitte GSMA, 2012).
If we take all these advances made in most African countries, there is serious hope that African economies will take off. It seems obvious that the high percentage of young people offers important development potential. Urbanisation is increasing, and as African mega-cities get connected to modern and reliable infrastructure, they become huge potential markets.
There is serious hope that African economies will take off.
It is necessary to remember, however, that considerable effort will be needed to tap this potential. The recent population boom in Africa is unique. Each year, between 10 and 12 million young Africans enter the labour market (see link below). It goes without saying that if the job market cannot offer them a perspective, the risk of rebellion is high. It could drive the affected countries into political and social instability. Just remember – when protests erupted in Tunisia and Egypt a few years ago, these countries had youth unemployment rates of 31% and 34% respectively.
The potential benefits of Africa's demographic development must not hide the fact that there is urgent need to address the challenges it poses in a courageous and determined way. If we do not provide the cities with appropriate infrastructure, we will have mega-slums instead of mega-cities. If we do not educate young people well, we will not have a productive labour supply, but rather a bomb of social unrest, violence and a threat to peace. So far, the slowness of African governments to tackle the labour market challenges proactively and decisively is reason for concern.
If we do not provide the cities with appropriate infrastructure, we will have mega-slums instead of mega-cities. If we do not educate young people well, we will not have a growing labour supply, but rather a bomb of social unrest, violence and threat to peace.
Providing employment must become a priority in African politics in the next few years, if it is not already the case. It requires a structural transformation of the African economies, including the improvement of agricultural productivity, the diversification of production and service supply, higher investments in infrastructure and energy, and fostering intensive labour sectors such as agro-industry and the creative economy. Otherwise, the virtuous circle of demographic growth is likely to turn into a vicious circle of poverty.
Use of Youtube increased by 90% in just one year (see two articles below).
Between 10 and 12 million young Africans enter the labour market each year
Deloitte (2012) "Subsaharan African Mobile Observatory 2012", GSMA Deloitte.
Hatch, G., Becker, P. et van Zyl, M. (2011) "The Dynamic African Consumer Market: Exploring Growth Opportunities in Sub-Saharan Africa". Accenture.
McKenzie, (2010) "What’s driving Africa growth?"
UN (2013) "Objectifs du Millénaire pour le Développement. Rapport 2013", Word Bank (2013), "World Development Report".