NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, December 6, 2019

By Bhaskar Chakravorti and Ravi Shankar Chaturvedi

Africa is closely watched as the next big growth market – a description that has persisted for a while. There are many reasons for optimism: the African continent is home to some of the youngest populations in the world, it promises to be a major consumption market over the next three decades, and it is increasingly mobile phone-enabled. An emerging digital ecosystem is particularly crucial as multiplier of that growth, because access to smart phones and other devices enhances consumer information, networking, job-creating resources, and even financial inclusion.

Despite these reasons for optimism, the promise remains unfulfilled. Growth in Africa has stalled; both the IMF and the World Bank have cut their 2019 economic growth projections for sub-Saharan Africa (SSA) to 3.5% and 2.8%, respectively, with growth in 2018 at 2.3%. Poverty has increased — 437 million of the world’s extreme poor are in SSA — and 10 of the 19 most unequal countries in the world are in SSA. The World Bank projects that if poverty reduction measures and growth remain sluggish, Africa could be home to 90% of the world’s poor by 2030.

Despite these sobering statistics, we wondered whether the true acceleration potential for the region lies in the rapid spread of mobile digital technology, which would help the region “leapfrog” ahead in its economic development. At the Tufts Fletcher School, in a research project funded by the Mastercard Impact Fund administered by the Mastercard Center for Inclusive Growth, we examined this proposition. We studied six key countries drawn from different sub-regions of the continent representing distinct archetypes of size (of economy and population), economic growth, median age, quality of governance, and digital momentum : Egypt, Ethiopia, Kenya, Nigeria, Rwanda, and South Africa. We examined three primary categories of levers that could translate digital technology uptake into development and inclusive growth: jobs enabled by digital platforms; institutional drivers necessary for digital success; and the foundational digital potential of the country.

Photo courtesy of David Evers.