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
THE OBSTACLES THAT IMPEDE THE DEVELOPMENT OF BRAZIL IN THE CONTEMPORARY ERA A...
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
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
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.
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.