Africa´s development dynamics 2021
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Report Presentation of Africa´s development dynamis (2021) at the OECD Berlin Centre Webinar on 25/03/2021 by Mario Pezzini | Director OECD Development Centre, Special Advisor to the OECD Secretary-General on Development
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Africa´s development dynamics 2021
- 1. Digital Transformation for Quality Jobs Mario Pezzini Director, OECD Development Centre Special Advisor to the OECD Secretary-General on Development 25 March 2021 co-organised by SAFRI and the OECD Berlin Centre Report Presentation: Africa’s Development Dynamics 2021
- 2. 2 Africa is an important engine for global recovery 902 (+136%) -200 (-20%) 263 (+31%) -85 (-17%) 25 (+12%) Africa China India Europe United States Workforce changes 2015-50, in millions By 2050, Africa will account for 69% of the total increase in global labour force Africa’s annual GDP growth (4.2%) only lagged behind Asia’s (6.2%) during 2000-19 4.2 2.9 6.2 1.9 0 1 2 3 4 5 6 7 Africa LAC Asia (no high inc.) OECD % Annual GDP growth, 2000-19 Source: OECD Stat, IMF World Economic Outlook database (October 2020), and AUC/OECD (2018) Africa’s Development Dynamics 2018. Between 2000-19, FDI flows to Africa grew at 8.5% per year
- 3. 3 The COVID-19 global recession sets back 25 years of positive development dynamics Note: * for projections. Source: Authors’ calculations based on IMF World Economic Outlook database (October 2020) • Global GDP contracted by 4.2% in 2020 • Africa’s GDP contracted by 2.6% in 2020 41 African countries entered recession (vs. 11 in 2009). • 40 million people could fall back into extreme poverty by 2021 in sub-Saharan Africa . Expected real GDP growth in the 5 African regions, 2020, % YoY -8 -7 -6 -5 -4 -3 -2 -1 0 East Africa North Africa West Africa Central Africa Southern Africa Africa % -4 -2 0 2 4 6 8 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020* % Real GDP growth in Africa, 2000-2020, % YoY
- 4. Africa has lower financial resources per capita than during the 2008 Global Financial Crisis Source: AUC/OECD (2021) Africa’s Development Dynamics 2021: Digital Transformation for Quality Jobs.
- 5. Africa’s ongoing digital transformation must play a role in the Global New Deal Africa’s digital economy is growing fast… …and helping to mitigate the of COVID-19impacts Source: Authors’ calculations based on GSMA (2020a), GSMA Intelligence (database). 0 20 40 60 80 100 2009 2011 2013 2015 2017 2019 % of population covered by 4G network Africa LAC Asia 480 million mobile money accounts
- 6. HOW IS DIGITALISATION TRANSFORMING AFRICA’S JOB MARKETS?
- 7. Digital ecosystems are growing fast, but jobs creation for Africa’s youth depends on diffusing digital innovations to all economic sectors A dynamic start-up ecosystem A dynamic innovation scene in the digital sector… …but only few direct jobs are being created Telecom companies in 43 African countries employ 270k fulltime workers 20 leading start-ups employ 20k workers while raising USD 3 billion in funding vs. 29 million new workers a year until 2030 Large-scale job creation requires diffusing digital innovations from lead firms to the rest of the economy Source: AUC/OECD (2021) Africa’s Development Dynamics 2021: Digital Transformation for Quality Jobs.
- 8. Unequal access and use across space, gender, education levels and employment status prevents digital diffusion Mobile phone and Internet usage among Africa’s youth, aged 15-29, by population groups, 2015-18 53 22 44 30 8 34 77 58 16 43 48 92 73 86 77 58 86 97 93 73 87 83 0 25 50 75 100 Urban Rural Male Female No education or incomplete primary Primary or lower secondary education Upper secondary or tertiary education Waged-employee Self-employed Unemployed Out of labour market Geographical situation Gender Education Employment status % Regular Internet usage (%) Mobile phone ownership (%) Source: Authors’ calculations based on Gallup World Poll survey
- 9. WHICH POLICIES CAN ACCELERATE DIGITAL TRANSFORMATION FOR JOBS CREATION?
- 10. 1/ Closing the spatial gap: connecting intermediary cities and spreading digital innovations for rural development 10 Source: AUC/OECD (2021) Africa’s Development Dynamics 2021: Digital Transformation for Quality Jobs.
- 11. 2/ Closing the competitiveness gap: focus on African SMEs 11 Support digital adoption among SMEs Digital trade facilitation (e-custom, streamline regulation for digital payment & taxation) Ensure competition among e-commerce platforms Encourage intellectual property right registrations Africa accounted for 0.5% of patent registrations globally Unblock innovative funding mechanisms for SMEs: Improve risk assessment methods, acceleration programmes for entrepreneurs, public procurements and public guarantees mechanisms Set up small venture capital funds for start-ups (e.g. Teranga Capital Fund in Senegal) Early-stage start-ups receive only 5% of venture capital funding in 2019 Women-led start-ups received only 2%
- 12. 3/ Closing the social gap: e-skilling the workforce and preparing the labour markets for the digital transformation 12 Source: AUC/OECD (2021) Africa’s Development Dynamics 2021: Digital Transformation for Quality Jobs.
- 13. Continental & international co-ordination is key to achieve Africa’s digital transformation and Agenda 2063 15+ initiatives by AU to harness digital technologies and innovation: Support the AfCFTA implementation Achieve a digital single market by 2030 Coordinate on digital security and data regulation Only 1/5 African countries have a legal framework on digital security 11 countries have adopted substantive laws on cybercrime A global New Deal to building back better Tackle debt issue to support investment Rethink development strategies Source: AUC/OECD (2021) Africa’s Development Dynamics 2021: Digital Transformation for Quality Jobs.
Editor's Notes
- Africa is an important actor for the Global New Deal because: Africa’s annual GDP growth (4.2%) only lags behind only Asia’s (6.2%) during 2000-19 Domestic demand accounted for 69% of Africa’s growth during this period By 2050, Africa will account for 69% of the total increase in global labour force key for global workforce/savings.
- Despite limited financial resources available, several African countries like Kenya (3rd), Ghana (5th), Ethiopia (6th) or Senegal (8th) fared better than most G20 countries in their response to the pandemic according to the Foreign Policy’s COVID-19 Global Response Index. This index tracks responses in critical policy areas among 36 countries, including public health directives, financial responses, and fact-based public communication.
- The COVID-19 crisis has ripened the context for digitalisation to accelerate Africa’s productive transformation and make the continent more resilient to future crises. Still, the power of the digital transformations remains largely to be harnessed in many African countries: persistent digital divides constrain Africa’s capacity to respond to shocks of the pandemic.
- Core digital sector= very capital intensive, profitable, but only few direct jobs. Digital economy = Innovation, but few direct jobs Digitalised economy = creates a lot more indirect jobs (use of digital technologies by the traditional sectors to improve productivity, skills, lower transaction cost, getting new markets, etc.) Digital technologies : the internet of things, 5G wireless networks, blockchain, artificial intelligence, big data and cloud computing. The core scope focuses on the Information and Communication Technologies (ICT) sector “a combination of manufacturing and services industries that capture, transmit and display data and information electronically”. The narrow scope includes all activities that solely exist thanks to digital technologies plus the production of those digital technologies. This includes the ICT sector, and other elements such as digital services, retail and content activities as well as emerging activities -the platform economy, the gig economy, the sharing economy- that did not exist before the emergence of digital technologies (Airbnb, Uber, eBay, Alibaba…) The broad scope covers all economic activities based on digital technologies: e-business (ICT-enabled business transactions) and its sub-sets, e-commerce (ICT-enabled external business transactions), algorithmic decision-making in business, use of digitally automated technologies in manufacturing and agriculture including Industry 4.0 and precision agriculture, etc.
- 73% of Africans will continue to live outside of major urban centres by 2040, The majority of Africa’s intermediary cities are located far from a high-speed terrestrial fibre-optic network. Current prices of data services would have to be halved to be affordable for 75% of the population. AgriTech (smart contracts, real-time payments, blockchain) can transform the agricultural sector and help address the specific challenges of smallholders. Kenya, South Africa, Nigeria, Ghana and Côte d’Ivoire are most active on AgriTech solutions.
- Only 17% of African early-stage entrepreneurs expect to create at least six jobs, the lowest proportion globally. In 2019, Egypt, Kenya, Nigeria and South Africa attracted the lion’s share (85%) of Venture Capital funds in Africa. Having a website is positively associated with a 5.5% increase in the share of direct exports in firms’ sales. Only 31% of firms in Africa’s formal sector have a website, compared to 39% in Asia and 48% in LAC. In 2018, only 17 000 patent applications, or 0.5% of the worldwide total were registered in Africa, of which a large majority (81.6%) emanated from non-residents.
- By 2040, own-account and family workers will represent 65% of employment under current trends. In South Africa, the numbers of gig workers are growing over 10% yearly and could reach the millions within the next decades. However, they often face precarious working conditions. Today, 45% of youth feel their skills are inappropriate for their jobs.
- Through Agenda 2063 programmes, the African Union is leading over 15 initiatives to harness digital technologies and innovation for industry, trade, financial and payment services, education, agriculture, health and other sectors. The African Union aims to achieve a digital single market by 2030. To that purpose, the African Union Commission developed the Digital Transformation Strategy for Africa (DTS) 2020-2030. Integrating the continental’s digital and digitalised economies calls for supranational co-operation in areas such as digital taxation, data security, privacy, and cross-border data flows.