AfDB wants Nigeria to lead in unlocking 4IR potential in Africa
The African Development Bank (AfDB) has said that the coming Fourth Industrial Revolution (4IR) has the potential to transform Africa’s economy, increase its productivity and enhance its global trade.
In doing this, AfDB said this would dramatically improve the wellbeing of African citizens, and make them more competitive. AfDB in its ‘Unlocking the Potential of the Fourth industrial Revolution in Africa’ study, with focus on Nigeria, Cameroon, Morocco, Africa and Uganda, believed that these countries, especially Nigeria, represent the different combination of strengths and weaknesses that African countries possess.
The 4IR represents a fundamental change in the way people live, work and relate to one another. It is a new chapter in human development, enabled by extraordinary technology advances commensurate with those of the first, second and third industrial revolutions. These advances are merging the physical, digital and biological worlds in ways that create both huge promise and potential peril.
According to the regional development bank, in the past, Africa was unable to benefit and capitalise on the opportunities brought about by previous industrial revolutions. It pointed out that this weakened its position in relation to international competitors.
In light of the benefits and challenges posed by the 4IR, AfDB in the report noted that Africa cannot afford to, nor does it have to, miss out on the opportunities brought about by the revolution.
According to AfDB, with a growing number of business users and end consumers, the 4IR is starting to become a reality in Africa. It pointed out that studies, which dated back to 2015 projected high growth in African start-up technological entrepreneurs, identifying 3,500 new technology-related ventures and an anticipated $1 billion in venture capital by 2018.
In 2019, it was revealed that reality has surpassed projections, as approximately 6,500 technology start-ups were identified on the continent, among which about 10 per cent develop 4IR applications (712 start-ups). They received $210 million in venture capital investments of the overall $2.27 billion investments in technology start-ups. However, AfDB noted that not all of these startups by any means are focused on the 4IR (many are in the realm of digitisation) but the basis for Africa’s growth into 4IR is already there.
On the supply side, the report noted that Africa cannot as of today be characterised as a producer of 4IR technologies, but rather as an adopter of existing technologies produced and developed elsewhere in the world. These products and services are often developed by foreign corporations or start-ups (e.g. Thales, Airbus, Zipline) but also by African corporations or start-ups to meet African demand.
It stressed that Africa’s large population, which is expected to double by 2050 to 2.4 billion, presents both a source of data to feed innovation in 4IR technologies as well as a dormant valuable market.
According to the present analysis, there is margin for growth on the supply side as proposed products and services in Africa stand way below estimated demand levels.
While there is no data available on the turnover of companies proposing 4IR applications, looking at the current level of capital investments is a first step to approximate the current supply levels. It stressed that some major disruptive 4IR technologies for Africa – namely Artificial Intelligence (AI), the Internet of Things (IoT), Big Data, 3D printing, Blockchain and drones.
However, Nigeria, and others face key challenges, which need to be tackled to unlock the 4IR in Africa, including: Human capital initial training and retraining; governance, policy and regulations; advancing information and communication technology (ICT) markets, and developing entrepreneurial and innovation support systems.
The region body stressed that lack of awareness and uninformed public opinion, uneven digital inclusion, obsolete governance systems not adapted to spatial and temporal issues posed by the 4IR,as well as competition and digital privacy encroachment represent the biggest challenges standing in the way of the adoption and absorption of emerging 4IR technologies on the African continent.
Commenting on ICT development, AfDB noted that on the supply side, the reduced extent and speed of the Internet on the continent is hindering the take-up of 4IR technologies. On the demand side, however, a large number of individuals and households do not use, or do not have devices to access the Internet.
According to the body, potential consumers are mainly the working poor and operate in the informal sector. This, it said may hinder large-scale and widespread adoption of 4IR technologies unless the applications are designed accordingly (i.e. cheap, easy, simple to access) to meet the specific needs of this consumer base.
In resolving some notable gaps as discussed above, AfDB recommended that there are three scenarios that Africa might consider. These are to maintain the status quo and miss out on the revolution, as Africa did for the three previous industrial revolutions. The study’s analysis discards this scenario. To do so would be neither beneficial for Africa’s development nor rational given its ability to participate in the 4IR.
Second would be to bypass other stages of development and leapfrog directly to the 4IR. AfDB noted that even though this path is paved with challenges to be overcome, Nigeria, Cameroun, South Africa, and others have more to benefit than to lose from taking the necessary steps to unlock the 4IR. However,it will inevitably have to pass through the third, digital, industrial revolution to ensure it has the digital infrastructure to support the 4IR;
The third, according to AfDB would be for Nigeria, and others to become a producer of 4IR technologies. This path is, perhaps, too ambitious for Africa as a whole and not foreseeable in the medium term (i.e. within five years). It would require a significant human capital gap to be bridged, which would require longer time to achieving.
“This scenario, however, is not out of the question for some ambitious African countries, but they would need to start to build their human capital now. In consequence, high-level recommendations were developed to support the range of stakeholders (African policy makers and regulators, business associations, development partners, and the African Development Bank) concerning the African continent’s efforts to pursue the 4IR under the second scenario,” AfDB stated.
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