As part of its ongoing effort to help policymakers on the continent make the transition to a knowledge-based digital economy, the World Economic Forum released a new report, which is titled, “Attracting Investment and Accelerating Adoption for the Fourth Industrial Revolution in Africa.”
Developed in collaboration with Deloitte, the report was released few months after Google announced a $1 billion investment to support digital transformation across Africa.
Estimates from the International Finance Corporation (IFC) say that Africa’s digital economy could add nearly $180 billion to the continent’s growth by the middle of this decade. Despite this, Africa is the world’s least connected continent, with only 39% of the population accessing the internet.
Even though it raised a total of $1.2 billion in funding in the year 2020, which is a six-fold increase in five years, this is still less than a tenth of the $156 billion raised by US start-ups in that year. The African continent invested less than half a per cent of GDP in research and development in 2019, which is less than one-quarter of the global average.
The head of the World Economic Forum’s Africa Division said that African governments need to push more money into the tech and knowledge sectors. Putting incentives in legislation and investing in science and technology skills are ways that policymakers can make a difference.
The following are the three policy enablers discussed in detail in the report:
1). Pass legislation such as “Start-up Acts” designed to spur private sector innovation, reduce the burden of regulation and promote entrepreneurship, in which Tunisia and Senegal are leading the way.
2). Embed incentives for start-ups in legislation, such as start-up grants, rebates on efficiency gains through technology implementation, co-investment of critical infrastructure, tax-free operations for the early years, and incentives for R&D.
3). Invest in workforce education, skills and competencies. Currently, only 2% of Africa’s university-age population holds a STEM-related (science, technology, engineering, mathematics) degree.
“African governments urgently need to drive greater investment in the tech sector and the knowledge economy,” said Chido Munyati, Head of Africa Division at the World Economic Forum. “Policy-makers can make a difference by reducing the burden of regulation, embedding incentives within legislation and investing in science and technology skills.”
