Investing in Africa’s digital transformation

A few years ago, I was in Lagos to see Alphabet’s digital skills programmes at work. There was excitement for the future of technology in Africa and all the jobs and opportunities it could bring. From jobseekers learning new skills to entrepreneurs building promising new apps and businesses, the people I met were inspiring.

These people were on my mind again when I addressed regional leaders at the African Union’s annual Business Forum last week. Although the continent is facing big challenges — from the ongoing pandemic to a difficult economic recovery — it also has plenty of reasons for optimism, led by its engineers, developers and entrepreneurs.

Africa is increasingly a place where innovation begins. There were more investment rounds for African tech start-ups last year than ever before. People everywhere now use mobile payment systems first developed in Kenya. Renewable energy solutions created in Africa are shaping a more sustainable future for us all. And thanks to the internet, African businesses can reach markets all over the world, while also providing solutions to Africa’s — and the world’s — most pressing challenges.

This is meaningful to me personally. Growing up in India, my family had to wait for every new technology to come to us, from the television that gave us a view into other parts of the world, to the rotary phone that meant we could get test results faster. Today, India is exporting technologies to the world.

Africa has the same opportunity. Despite having 18% of the global population, the continent currently accounts for just 0.4% of high-tech exports, and only 2% of the world’s broader service exports, which are now heavily reliant on technology. Boosting these exports will accelerate growth for the continent, much like it has in India.

Fortunately, Africa is on the cusp of a digital transformation. Over the next five years, 300 million more people are coming online in Africa, many of them young, entrepreneurial, and digitally savvy. The African internet economy has the potential to grow to $180-billion — roughly 5.2% of the continent’s GDP — by 2025.

Working in partnership with governments, companies such as Google can play an important role in accelerating this shift. In 2020, Google and Alphabet outlined some of those opportunities in our Digital Sprinters report, and in 2021 we committed an additional $1-billion to Africa over the next five years. Now, we are calling on others to make their own investments. We recommend focusing on four key areas that will ensure that the digital transformation benefits every African.

First, we must help to expand affordable and reliable internet access throughout the continent. We have seen during the pandemic that digital connectivity is a lifeline, helping people find essential information and connect to critical services. Our Equiano subsea cable will bring faster, better-quality internet to more people, helping to bring down costs by more than 20%. Working with partners like Econet Wireless, our Taara team is deploying wireless optical communications links that use light to transmit information at super high speeds through the air, improving both affordability and connectivity. We are also focusing on lowering the barriers to smartphone adoption, including by working with Safaricom in Kenya to introduce that country’s first device financing plans.

The second priority is to help African businesses of all sizes with their digital transformations. According to the Portulans Institute, business sophistication (defined as “knowledge workers, innovation linkages, and knowledge absorption”) lags well behind the availability of digital infrastructure. Closing that gap means enabling businesses to move online, training more people to pursue careers that depend on technology, and ensuring that companies take advantage of cloud computing.

Companies should invest in products and solutions that are fit for Africa, and African governments need to adapt regulatory environments and their own development strategies to be digital-first. Small businesses need to be at the centre of digitisation and training efforts, as they employ around two-thirds of the continent’s formal workforce.

A third priority is investing in African entrepreneurs. Where entrepreneurship flourishes, innovation and investment will follow. That is why we will be investing directly in African start-ups through a dedicated $50-million Africa Investment Fund, as well as through our global Black Founders Fund. We have already invested in SafeBoda — an app that connects passengers to safe, trusted drivers — and we hope that other companies will help to provide additional funding for start-ups across the continent.

The final priority is to support nonprofits and institutions working to unlock the benefits of technology. For example, the AirQo team at Makerere University in Uganda is using artificial intelligence and sensors to monitor air quality. We are providing them with $3-million so that they can take their work beyond Kampala, as part of a broader $40-million commitment to help NGOs respond to problems in their areas.

Any company seeking to invest in Africa should be open to learning. Google’s presence on the continent is already helping us improve the technology that we build for everyone. Looking ahead, deeper partnerships will be key to ensuring that Africa’s digital progress is sustainable. We hope more companies will join us in these efforts, helping to ensure that every person in Africa can take advantage of the opportunities technology creates. — © Project Syndicate

Sundar Pichai is the chief executive of Google and Alphabet

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Sundar Pichai
Sundar Pichai is the chief executive of Google and Alphabet

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