Tech investment is crucial to unlock Africa’s potential in a post-coronavirus world

July 30, 2020
Landry Signé.

Although the disruptive technologies of the Fourth Industrial Revolution (4IR) are playing a critical role both in fighting covid-19 from a health perspective, and in mitigating its economic and social impacts, their uneven distribution around the world is leaving countries with lower digital infrastructure and capacity behind. In comparison to advanced economies (such as the US, Canada, etc.), most African countries have a lower 4IR capacity (digital infrastructure and ecosystem), even if some are better optimizing their resources for higher effectiveness (Kenya, Rwanda, etc.). In order to strengthen Africa’s resilience and unlock its potential, it is therefore critical to invest in technology infrastructures and companies, especially information and communication technology, whether broader digital infrastructures, tech ecosystems, or startups.

In my book Unlocking Africa’s Business Potential, written before covid-19 and released on April 28, 2020, I explain why Africa is only scratching the surface of its true potential for private investment, and examine transformations and opportunities in the eight sectors with the highest social impact and potential returns on private investment—the same sectors that will foster economic growth and diversification, job creation, and improved general welfare in the post-coronavirus world.

Nearly all Fourth Industrial Revolution technologies rely on internet access, so investing in the development of physical and digital infrastructure and in universal and affordable access to broadband internet is critical. In Africa, the average broadband penetration in 2018 was only about 25%, although the number of broadband connections exceeded 400 million. The Broadband Commission Working Group on Broadband for All estimated that investments of $100 billion are required to achieve affordable and universal broadband in Africa by 2030, connecting an additional 1.1 billion people. Closing the current internet gap will prepare Africa to find sustainable solutions to challenges faced by African economies.

African tech companies are already providing innovative responses to the covid-19 pandemic.

In the health-care sector for example, once there is widespread digital connectivity, existing technologies can be implemented to address the lack of access to health-care providers, limited preparedness for emergency health situations, and insufficient medical equipment and supplies. Digital technologies provide sufficient innovations to facilitate the achievement of universal health coverage, from patient identification and public health data management to targeted interventions, effective health-service delivery, quick reimbursement, and evaluation of patient experience. M-TIBA in Kenya, for example, is a mobile health payment platform that enables its members to save money for health care or collect it from others, facilitating the mobilization of remittances for health purposes.

African tech companies are already providing innovative responses to the covid-19 pandemic. A Kenyan tech startup, Afya Rekod, is using its AI and blockchain-based health data management technology to monitor the spread of covid-19 in real time. Living Goods is increasing cell phone data allowances to its network of thousands of community health workers across Kenya, Uganda, and Zambia, so they can utilize covid-19 training, workflows, and messaging through the organization’s Smart Health app. The Nigerian genomics firm 54gene has been developing mobile testing labs, helping to cut down on the turnaround time between testing and receiving results. Another Nigerian firm, LifeBank, has created an online database to track the availability of medical equipment crucial to the covid-19 response, while Helium Health has built out its capabilities as a telemedicine platform. An array of African innovators have received recognition and funding to scale up their innovations, from homeschooling apps to incinerators for personal protective equipment. Greater investment in African startups will make a significant difference in increasing the effective response to the covid-19 health and economic crises, as companies will be able to scale up and build out their technologies even further. While we will see growth slow in the short term during the post-coronavirus recovery period, tech investment is critical so growth can continue even as the challenges of the pandemic are faced and drastically accelerate after the pandemic—the idea being that tech investment is necessary for dealing with the pandemic, recovering from it, and enhancing inclusive growth.

Beyond the health-care sector, African tech companies will be key to accelerating economic recovery, improving productivity and effectiveness, increasing income, and solving other critical challenges faced by African economies, citizens, and governments in the post-covid-19 era. There are already impressive examples of this by companies on the continent: uLesson is helping jump network connectivity gaps and high data costs across Nigeria and Ghana by offering a non-streaming option to access their expansive prerecorded secondary school education content. Food and agricultural e-commerce startups like Liberia’s Cookshop, Uganda’s Bringo Fresh, and Zambia’s eMsika are rapidly expanding under the new conditions caused by the pandemic, attracting investment to scale up operations. Merchants that previously operated only from brick-and-mortar shops have been able to pivot to the online marketplace using tools like Flutterwave and E Dey Shop. The use of digital payment systems has sharply increased since the outbreak. Nigeria’s Paga, for example, had a 300% increase in new users.

Increased investment in tech startups will be crucial in allowing companies that are already responding to the new economic and social imperatives created by the pandemic to scale up.

Although Africa has seen growth in startup investment recently, much more needs to be done. In fact, estimates of total investments in tech startups for 2019 ranged from $491 million to $1.3 billion to as high as $2 billion. Although this discrepancy is attributable to different parameters for what constitutes an African startup, like the location of a company’s headquarters or its age, as well as the inclusion of the value of undisclosed deals, and shows an increase compared with the previous years, the numbers pale in comparison to 2019 funding in India ($14.5 billion), Europe ($122 billion), the US ($130 billion) and China ($258 billion). Increased investment in tech startups will be crucial in allowing companies that are already responding to the new economic and social imperatives created by the pandemic to scale up their solutions. However, more than private capital investment will be needed if African technology is to be scaled up to a level that can both provide growth and respond to the economic and health challenges of the pandemic. Sound economic policies aiming at reducing the cost for doing business and unlocking innovation and competitiveness should also be successfully implemented.

Overall, it is clear that technological advancement is leading to increased prosperity on the continent by growing and creating jobs and increasing revenue and production. As the region comes online and adapts to the “new normal” over the next decade, Africans are likely to view digitalization as the gateway to most of their daily needs and activities, and in this way, information and communication technology, along with other critical sectors discussed in my book Unlocking Africa’s Business Potential, represents perhaps the greatest force both for responding to the health and economic challenges of covid-19 and for improving quality of life on the continent.

Landry Signé (@LandrySigne) is a professor and senior director at the Thunderbird School of Global Management, where he leads the Fourth Industrial Revolution and Globalization 4.0 Center and is also faculty head of the Washington, DC-based Executive Master of Global Affairs and Management. He is a senior fellow at the Brookings Institution, a distinguished fellow at Stanford University, a World Economic Forum young global leader, and the author of Unlocking Africa’s Business Potential.