Will digital disruption lead to inclusive growth?

The current global economic and geopolitical uncertainty, as well as ongoing disruptions, have brought to the fore the importance of conversations and actionable plans around digital transformation. It is important that as leaders in business and governments, we focus these actions on how we can seize the upside of digital disruption.

Disruption, particularly in digital technology, presents opportunities that could result in the kind of inclusive, sustainable growth that is required to materially impact the current levels of inequality and poverty. Our EY report, The Upside of disruption: Megatrends shaping 2016 and beyond, describes disruption as commonly meaning a transformation of business models and value networks driven by technology or business innovation. This disruption can come from public policy, macroeconomic trends, geopolitical events and other developments, upending more than business models and value networks, transforming political systems, regulatory regimes, social compacts and more.

Any transition comes with threats and opportunities, in Africa this means viewing the current digital disruption as a chance to change the status quo and move from commodity driven economies to knowledge driven economies. Given the digital strides made by Rwanda and Kenya, I believe that Africa has the potential to realise this opportunity. However this will depend on how well we as business and government leaders can leverage our partnerships to best upskill the next generation of Africa’s workforce.

EY has identified three primary forces of disruption, which I think are important to keep an eye on particularly digital disruption, as they are intertwined and all play a big role on how inclusive growth can be achieved.

The three forces of disruption include:

1. Globalisation

African countries have increasingly become integrated with the global economy in recent years. However, accelerating regional integration remains key to promoting greater levels of regional investment and trade. This means that the continent needs sufficient infrastructure in order to connect with itself.

What does this mean for businesses?

• Businesses have the opportunity to take advantage of the infrastructure gap in Africa to ply their capital, innovation and expertise.
• Business strategies need thinking in less conventional ways, below and beyond the country level.
• Businesses should have strategies that involve positioning themselves at key hubs as regional integration speeds up.

What does this mean for government?

• Collaborative leadership across governments will transform the promise of regional integration into a reality.
• Development Banks and the African Union as well as similar institutions must take the lead in investing in cross-border infrastructure.
• Tightening governance to assist Africa to compete globally for the capital it needs to support infrastructure development.
• Learning from the challenges in current large infrastructure projects.

2. Demographics

Africa’s young and growing population has the potential to become a powerful growth engine globally. This can happen if inclusive growth is accelerated, by promoting entrepreneurship and aggressively investing in education healthcare and general welfare.

What does this mean for businesses?

• Taking a proactive stance on providing innovation and competition opportunities and addressing the structural challenges to enhancing business services.
• Promoting local content and enterprise development as a key priority.

What does this mean for governments?

• Collaboration and partnerships with business and donor agencies needs to be the norm across the continent.
• Investing in education and vocational training programmes, ensuring that labour market policies are flexible, improving the ease of doing business and facilitating the growth of SMEs through the business incubator model.

3. Technology

Physical boundaries and barriers remain a challenge in trade, commerce communication, service delivery and human development in the continent. Technology transcends these barriers and offers potential for Africa to transform.

What does this mean for businesses?

• Better productivity, enhancement of existing products and services and the development of new products.
• Fostering the tech community across Africa through support of local hubs and ensuring ease of access to capital to tech enabled businesses.

What does this mean for governments?

• Delivering citizen-centric services using technologies like cloud computing.
• Assisting in promoting the growth of tech-driven businesses across Africa through skilled labour forces, affordable access to the internet and fostering a culture of innovation.

As we look toward the future, a best case scenario for Africa will be one that leads towards an inclusive sustainable growth path. This is underpinned by the ability to connect markets and polities within and beyond the continent – with emerging digital technologies being the catalyst in this regard and the related collaboration between the public and private sector.

Ajen Sita is Africa CEO at EY