Empowering Africa’s Digital Entrepreneurs
The Fourth Industrial Revolution is here, and if African economies are to flourish, they must adjust accordingly. For governments, that means creating the conditions for private-sector innovation and entrepreneurship.
LUSAKA, ZAMBIA – Not long ago, big data, the Internet of Things, and artificial intelligence seemed closer to science fiction than reality. And yet, today, these technologies underpin services, products, and solutions that shape virtually every aspect of our lives, from how we communicate and consume information to the ways we save and spend money. But access to them remains uneven, leaving some regions – especially Africa – struggling to seize the opportunities of the technologies driving the Fourth Industrial Revolution.
The Fourth Industrial Revolution differs from the previous three in important ways. Past industrial revolutions – defined by the rise of steam and coal power, mass production, and digital technology, respectively – had clear boundaries, each transforming a particular set of activities separately.
The Fourth Industrial Revolution, by contrast, is all-encompassing, and creates new linkages among various sectors – for example, health and finance, computers and agriculture, or nutrition and transport. This wide-ranging interdisciplinary transformation has produced unprecedented disruption, as well as seemingly limitless opportunities.
But those opportunities are unevenly distributed. The Fourth Industrial Revolution, like its predecessors, is not a monolith that transforms the entire world simultaneously. Some countries – especially those with higher income levels, greater access to resources, and more extensive digital penetration – are at the revolution’s frontier, while others lag far behind.
Until Africa catches up to its counterparts in Asia and the West, it will continue to lose out on valuable opportunities to improve efficiency, spur growth, foster inclusion, and drive development. That is why African governments must act to enable the digital revolution to gain traction, which means creating the conditions for private-sector innovation and entrepreneurship.
African entrepreneurs have already proved their capacity for digital innovation, particularly in finance. Capitalizing on rapidly expanding access to mobile phones, the Kenyan mobile-network operator Safaricom created the mobile-payment platform M-Pesa in 2007. Since then, M-Pesa has lifted an estimated 2% of Kenyan households (186,000 in total) out of extreme poverty and transformed the country’s economic landscape.
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Similarly, Zazu – of which I am founder and CEO – is building an African digital-only bank, beginning in Zambia. One of our products, Zazu 619 – a free text-messaging platform that teaches people about their financial rights – has reached more than a million Zambians in just over a year.
Such digital innovation and entrepreneurship is essential to creating enough jobs for the 11 million young Africans set to join the labor market annually over the next decade. After all, the private sector accounts for 90% of all jobs created in developing countries.
But tapping the private sector’s full potential will require governments to do more to establish a supportive business environment. Policies covering a wide range of areas – including payments systems, data privacy, labor and consumer protection, and competition policy – must be designed with the explicit goal of encouraging innovation and enabling small and medium-size enterprises (SMEs) to grow. This will require governments to take the lead, while also creating space for private actors to offer insights and advice.
Furthermore, governments must foster investment in financial and digital literacy, which is essential to enable Africans to adopt new technologies, thereby ensuring that the digital revolution is as inclusive as possible. There is little use in introducing innovations, however groundbreaking, to a population that lacks the knowledge or skills to use them. If only a small elite group can benefit, economic transformation and broad-based prosperity will remain out of reach.
In Zambia, private companies like Zazu and development organizations such as FSD Zambia and Asikana Network have been working to promote financial and/or digital literacy and awareness. But this will never be enough. Governments must create incentives for more companies and organizations to launch financial and digital literacy programs.
Equally important, African governments must invest in digital infrastructure. The initial outlays will be substantial, but the returns will be much larger. Only with modern, national digital infrastructure can SMEs provide fair, affordable access to digital innovations.
Africa cannot continue to rely on extractive industries and lower-value-added manufacturing. The Fourth Industrial Revolution is here, and if African economies are to flourish, they must adjust accordingly. That means creating effective legal structures, ensuring reliable connectivity, and enabling equitable access to the digital innovations of today and tomorrow.