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Peter Fabricius examines three areas where Africa could take advantage of other technological innovations to leapfrog its deficits in other areas.
The fortuitous arrival of cellphone technology in the mid-1990s helped Africa leapfrog a vast deficit in telecommunications. In 2000, there were only 14 fixed telephone lines for every 1 000 people in Sub-Saharan Africa – compared to 150/1 000 globally.
Even South Asia – the least developed region after Sub-Saharan Africa – had double its percentage of fixed telephone lines.
Now Africa's gap with the rest of the world in mobile telephone subscriptions is much narrower than it was in fixed-line technology. Africa's mobile phone access rate is about 65 to 70 percent, counting both those who own cellphones and those who have access to one.
In his book Africa First! Igniting a Growth Revolution, Jakkie Cilliers calculates that GDP grows between 0.7 and 1.4 percent, on average, for every 10 percent increase in fixed lines, and an additional 10 percent penetration of mobile phones increases GDP by around 0.8 percent per annum.
Mobile phones have enabled Africans to overcome other deficits, such as in banking. The M-Pesa mobile telephone banking system developed in Kenya has lifted nearly 200 000 households out of poverty, according to a study by Tavneet Suri and William Jack.
Can Africa likewise take advantage of other technological innovations to leapfrog its deficits in other areas?
Cilliers, founder and chairperson of the Institute for Security Studies in Pretoria, thinks so.
Three areas of technical innovation could have a particular impact by leapfrogging older technologies. The first is improved electricity access through renewable energy sources such as solar and wind, combined with improved energy storage, which would enable decentralised mini- and off-grid energy solutions. The second is an even more rapid rollout of mobile broadband and general improvement in ICT.
And the third is increasing digitisation to more rapidly formalise Africa's immense informal sector, mainly through the provision of digital identification of individuals, thereby unlocking access to banking, government benefits, education and other critical services.
Electricity access
Cilliers notes how in 2018, only about 54 percent of Africa's population had access to electricity, in contrast to about 85 percent in South Asia and well over 90 percent in the rest of the world.
The average price for electricity in Africa is about US$0.14 per kWh, compared to US$0.04 in South Asia and US$0.07 in East Asia. Some put the real cost of electricity in Africa as high as US$0.20 per kWh, largely due to the high cost of running back-up generators during regular power shortages.
Rapid electrification of the continent would improve both economic prospects and human development.
Kenya showed the way by increasing the proportion of its population with access to electricity, from about 20 percent in 2010 to about 70 percent in 2018, mainly with renewables.
On the digital front, Cilliers notes that a 2019 report on Africa by the UN Economic Commission for Africa found that digitising revenue collection could increase government revenue on the continent by 12 to 20 percent of GDP.
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More broadly, digitally identifying and registering citizens to ensure greater access to services just as banking and education as well as ensuring they pay tax and other dues can have a significant economic impact.
Cilliers says a study of seven focus countries (Brazil, China, Ethiopia, India, Nigeria, the UK and the US) by the McKinsey Global Institute found that "extending full digital ID coverage could unlock economic value equivalent to 3 to 13 percent of GDP in 2030".
This in turn could be an important step towards formalising Africa's largely informal economies. Using the sophisticated and comprehensive forecasting tools of the International Futures (IF) software of the University of Denver, Cilliers calculated that if Ghana could use digitisation to reduce the size of the informal economy as a portion of GDP by five percentage points (and also move labour from the informal to the formal economy) from 2020 to 2030, it would, by 2030, gain US$3.3 billion in the size of its economy (in purchasing power parity (PPP) terms).
Using the same programme, Cilliers models a "Leapfrog Scenario" which combines the impact of these three emerging technologies.
- improved electricity access through renewable energy sources such as solar and wind;
- a more rapid rollout of mobile broadband and general improvement in ICT;
- accelerated formalising of Africa's huge informal sector through digitisation.
To model the scenario of using more renewable energy, he reduced the capital cost-to-output ratio for renewables and electricity transmission losses (emulating advances in high-voltage, direct-current transmission technology) and increased electricity access.
Then he modelled a more rapid roll-out of mobile broadband and of a general improvement in ICT.
Finally, he emulated the impact digitisation could have on more rapidly formalising Africa's informal sector by reducing the contribution of the informal sector to GDP by six percentage points over a 10-year period from 2020 to 2030 and the size of the informal labour force by about ten percentage points.
This intervention would also modestly improve the effectiveness of governments because digitisation would increase their ability to raise taxes, provide services and oversee regulatory implementation.
He calculated these technological innovations would expand the size of 18 selected African economies by about two to three percent by 2040, compared to the current paths of those economies.
Chad would show the largest increase of 3.2 percent and South Sudan the lowest of 0.3 percent. South Africa's economy would grow by 1.5%, Kenya's by 2. 1% and Nigeria's by 2.6%.
In absolute terms, Nigeria's economy would expand by an additional US$139 billion above the current path forecast, while Egypt's GDP would grow by an extra US$49 billion and South Africa's by US$77 billion.
Meanwhile, the average African would experience an increase in annual income equivalent to US$438 per person by 2040, ranging from an additional US$249 for every citizen of Algeria, US$201 for every Liberian, US$378 for every Eritrean, US$404 for every Beninese, US$656 for every Ghanaian, and US$1 067 for every South African.
Reduction of poverty
Cilliers forecasts that the Leapfrogging Scenario would also reduce poverty in Africa by almost three percentage points – equivalent to 62 million people in 2040. This would largely be because of the increased size of the formal sector, with more persons in formal employment. The scenario would also slightly reduce inequality.
These are encouraging outcomes. But can Africa leapfrog what is surely its most debilitating backlog – bad governance?
Cilliers, ever the techno-optimist, suggests that technology could help even there. For example, he cites the way mobile phones have been used to transmit election results directly from polling stations in some countries and thereby forestall manipulation of those results in the counting.
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But a determined autocrat can counter-leapfrog even such technology. In this January's presidential and parliamentary elections in Uganda, for example, incumbent President Yoweri Museveni, thwarted opposition plans to bypass rigging in this way by simply shutting down the internet and social media over the election period.
Cilliers also suggests that decentralising electricity power generation through smaller wind and solar power plants will also thereby decentralise political power.
Perhaps. But it is not hard to imagine a ruthless central government finding ways of controlling power infrastructure, no matter if that control is supposed to lie in the hands of sub-national governments run by the opposition, for example.
Technological innovation is indeed a powerful instrument. But, as Cilliers himself acknowledges, ultimately, the impact of that innovation "will be magnified by efficient and open markets, clear and transparent regulatory frameworks and effective governance in the public and private sectors…"
"A strong focus on technology can provide leapfrogging opportunities for low- and middle-income countries, but governments must not lose sight of 'traditional' developmental issues, such as governance, infrastructure and skills."
Indeed.
- Peter Fabricius is a consultant to the Institute for Security Studies.
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