Technology: Africa’s Digital Economy

Photo by NESA by Makers on Unsplash

Do you ever feel like you are living in the future?

I do. Recently, my friend and I visited one of the well-known malls in the city – Nairobi. We happened to be doing some essential shopping for groceries and household items. Normally, when going to such places, you’ll have to be ‘checked-in’ and the time your car spends on their parking lot, would be charged appropriately. However, contrary to the usual chip-coin parking transaction exchange between the machine dispenser and yourself, we had no such experience. Instead our car plate was scanned and we were issued with a receipt having a QR code which we scanned when paying. When leaving the mall, our plate was scanned and automatically the gates opened.

It was a staggering moment to see technology in display under a concept referred to as Automatic Number Plate Recognition (ANPR). ANPR, just as the same sounds, is a technology that is used to capture and recognize a vehicle’s registration number automatically. While this experience only exemplifies one instance, it is worth noting that the scope of interactions with technology in our daily lives is quite enormous. Our lives are and will continue to be shaped largely by these interactions. In the next twenty-four months or less, the planet will add more computer power than it did in all previous history. And if you’ve not heard about the fifth-generation network, you can do so here.

It is quite straightforward to pinpoint the presence of technological revolutions in our lives. Right from the use of online taxi service, to mobile banking applications, to online check-in services, fast food delivery and online shopping experience; all at the fingertips of our hands. At this stage, telehealth and telemedicine has become a key integral of our physical lives. This has seen organizations come up with mobile solutions that enable one to book an appointment with the doctor. But this time round, instead of the patient going to the doctor, the doctor comes to the patient.

An example of an innovation that has made enormous impact would be the presence of mobile money transaction service, well-known as ‘Mpesa’. Mpesa was established in the year 2007 and since then it has proven to be a leading mobile money service, not only in Africa but also globally. Before this technology was invented, sending money was through ‘brick-and-mortar’ methods. These methods included: by hand, bus, post office or money order, direct deposit, bank money transfer services or through bank cheque. It is estimated that 58% of money transfer was through hand, while bus and post-office money order accounted for 27% and 24% respectively of money transfer.

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MPESA mobile money application – Photo Courtesy Gadgets-Africa.com

Mpesa has since evolved from a basic SIM-card-based money transfer application to a fully-fledged financial service, offering loans and savings in conjunction with local banks, plus merchant payment services. The extent of Mpesa’s footprint on the Kenyan economy is quite deep. When Mpesa service was being launched, the average distance to the nearest banking facility was 9.2 kilometers. Eight years later in 2015, the average distance to the nearest Mpesa agent was a mere 1.4 kilometer. Today, it is less than a kilometer. This increased access to mobile money has reduced poverty by facilitating easier and safer savings as well as enabling people move out of subsistence farming into business or sales occupations. From a wider scale, the velocity of money in the economy has increased. This has had a butterfly effect on different aspects of the economy including GDP.

However much we’ll continue to attribute a proportion of the GDP increase to technological innovations and services such as Mpesa, it is important for us to grasp the presence of the digital economy and its impact on the overall economy. The digital economy is a term that has been coined to express the existence of an economy that is based on digital computing technologies which ensued from the billions of daily online communications among people, businesses, devices, data and processes. It is rooted on the interconnectedness of people, organizations and machines that emanates from the internet, mobile technology, and internet of things. 

More than half of the world’s population are connected to the internet. In Africa alone, the percentage of people connected to the internet is roughly 40% (Internet World Stats). While there’s still a long way to ensure that every person and organization is connected to the internet, the progress we have shown so far has immensely improved lives from all divides. From the likes of Mpesa mobile money transfer service to the presence of ecommerce platforms, all these are ways in which the digital technologies are transforming African economies and the digital economy is gaining momentum.

In the 21st century, ICT and digital literacy is a necessity, not a luxury. World Bank Digital Director Dr. Boutheina Guermazi points out that the foundations of a digital economy: internet connectivity, data and voice, would depend on a fully integrated digital infrastructure. Building a social digital economy would require a deep focus on areas such as: digital infrastructure, digital literacy and skills, digital financial services, digital platforms, and digital entrepreneurship and innovation. The big question therefore is: ‘Can Africa attain the goal of providing access to internet connectivity to every individual so as to build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation [SDG-9] by 2030?’

Can the internet reboot Africa? | World news | The Guardian
People using their mobile phones: Photo courtesy – The Guardian.com