How Technology Can Fuel Growth in Africa
Darren Roos, CEO of IFS, discusses with Business Chief, how technology can fuel growth within the African region.
The digital revolution in Africa is well underway, with industry analysts predicting Information Technology (IT) spending in the Middle East and Africa (MEA) will reach $83 billion by 2020.
Technological advancements hold the key to boosting economies and developing the African continent in the face of increased global trade tensions, weak demand and public debt remaining high worldwide. This is only if economic integration and the right infrastructure spending run in tandem with IT growth.
Africa has been widely regarded as the next big growth market for a variety of reasons. First, 60% of the 1.25 billion population is under the age of 25 years old, representing a demographic that is heavily weighted towards those who can meaningfully contribute to economic growth. The consumption market is growing at an annual rate of 3.9% and is expected to reach $2.1 trillion by 2025 - a promising prospect for global businesses to expand into or develop within. Finally, the mobile phone-enabled population in Sub-Saharan Africa alone is at least 456 million and will be increasing in size by 4.5% per year from now to 2025, creating fertile ground for further technological innovation.
This attractive opportunity has not gone unnoticed. This year saw Microsoft opening not one but two enterprise-grade datacentres in South Africa. Standard Bank, Africa’s biggest lender by assets, also announced it will shift its strategic core banking applications onto Amazon Web Services (AWS).
I have spent over 25 years in IT, starting my career in South Africa where I sold services for Siebel CRM implementations in my role at Dimension Data.
Watching the industry that I have been a part of for so long evolve into a growing marketplace where billion-dollar technology behemoths are actively courting Africa’s attention is exciting. Now, as global CEO of software firm IFS, I have also made an expansion into the South African market and the entire continent a key part of our growth.
Still, there are hurdles ahead that a growing labour force and other attractive demographic trends cannot counter without the right type of societal investment. African governments and agencies need to work together to meet the heightened expectations that the global technology industry has set for the continent.
The role of African economic integration
African political leaders recently strengthened the continent’s economic integration through the African Continental Free Trade Area (AfCFTA). With over 50 country signatories thus far, it will be the world’s largest free trade zone since the establishment of the World Trade Organization. By accelerating intra-African trade and boosting the region’s position in global trade negotiations, it could also rapidly advance economic growth and job creation.
Historically, there has been low levels of trade engagement between countries in the continent. In 2017, intra-African exports were 16.6% of total exports, compared to 68% in Europe and 59% in Asia.
By countering the current lack of coordination on how people and goods move in Africa, there would be more shared prosperity and supportive policies that would eliminate monopolies and reduce uncompetitive behaviour, as researchers with the World Economic Forum (WEF) point out.
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“It’s a game-changer,” said Arancha Gonzalez Laya, Executive Director of the International Trade Centre (ITC) at a session held at WEF earlier this year. “There’s much more political energy today than there has ever been on integration.” Execution will be key. Harmonising regulations, technology infrastructure upgrades and the efficient transportation of goods and services across the continent are just a few of the problems that could derail this process of trade engagement. Still, the programme is a step in the right direction.
The growing appetite for Enterprise Resource Planning (ERP) and IT software overall makes sense within this context. Technology should act as the glue that ties disparate parts of a business together, in addition to centralising information and data that may have existed in siloes or not at all. By harnessing data from ERP platforms, businesses are also far better placed to evaluate risk, manage and coordinate supply chains and orchestrate robotics. This will ultimately drive significant increases in productivity and profitability.
Creating collective benefit
Individual governments also need to harness the momentum from AfCFTA and the associated cash injected into their economies from its execution to support job creation and skills development. In a continent with vast economic disparity, this is no easy task. I also don’t think embracing the opportunity technology offers is simply a matter of spending more on traditional education. The conversation needs to be more nuanced, and focused on skills development to sustain this growing appetite for a smart, agile workforce. The Digital Roadmap campaign launched by the Pathways for Prosperity Commission calls for equipping people with foundational skills in literacy and numeracy, digital skills and ‘soft skills’ in communication, management, analytical thinking and problem-solving. There are different ways to create this opportunity, including formal education; technical and vocational education and training; and finally, employer-led training.
At IFS’s South Africa office, we are launching a Youth Skills Development Programme that targets disadvantaged and unemployed young people and trains them into certified company software consultants. They will be put through a two- to three-month training programme that is comprised of business skills as well as technical training. Once certified, all graduates will become part of our talent pool where our partners and customers can access their profiles for employment opportunities. We are aiming for one class of 20 every quarter. I encourage more corporations investing in the continent to think about how they can contribute to bettering society through skills creation while also driving technological innovation forward. National governments can play a vital role in ensuring this standard is met.
A brighter future
Combining technology with a booming workforce, increased trade coordination and infrastructure development provides a fertile ground for economic growth across Africa. With the right balance of these forces, the decade ahead also holds great promise for the continent to solidify its reputation as not only embracing technology but being a true innovation leader.
For more information on business topics in the Middle East and Africa, please take a look at the latest edition of Business Chief MEA.