Boosting Africa’s economic dynamism key to prosperity
Africa has emerged from generalised poverty, over-reliance on a few economic sectors and high dependence on foreign aid to become a continent with centres of technological innovation, an increasingly sophisticated labour force and specialised industries.
In the past three decades, Africa has emerged from generalised poverty, over-reliance on a few economic sectors and high dependence on foreign aid to become a continent with centres of technological innovation, an increasingly sophisticated labour force and specialised industries.
The economic growth has been propelled by economic dynamism rather than the growth of traditional sectors like agriculture, manufacturing and oil and gas.
Economic dynamism is characterised by the growth of the economy in different directions, fuelled by innovation, labour mobility and agility. This agility has become the single-most important comparative advantage across industries and countries.
Among the drivers of this dynamism is increased communications. Improved and broadly available mobile technologies, the internet and the resulting access to information are supporting the acceleration of commercial transactions.
Internet penetration in Africa is expected to hit 50 per cent by 2025. Of the 316 mobile money services, 173 operate in Africa. Sales apps like Jumia, Jiji and Takealot are increasingly gaining market share across Africa.
Mobile apps like Education Hack, Photomath and K53 South Africa are becoming mainstays among African youth, increasing their interest and performance in academics and languages.
Dozens of health apps are opening the door to healthcare. Zuri Health, a Nigerian health app for online doctors bookings and consultations, has a fast-growing subscriber base, as MyHealth Africa and Health X.
Since the 2010-2012 Arab Spring, digital civic engagement platforms like Ushahidi in Kenya which is deployed globally have grown into everyday engagement and advocacy tools. Governments have launched e-government mobile apps, bridging the gap between them, communities and individuals.
African entrepreneurship
The African Development Bank says 22 per cent of Africa’s working-age population are entrepreneurs—the highest globally.
The number of startups in Nigeria was estimated at over 3,360 in 2022, the highest in Africa, followed by Kenya and South Africa, at 1,000 and 660, respectively, the same year.
The boom of arts and culture constitutes the pinnacle of African entrepreneurship, the threshold of the transition between functional production and the arts, and perhaps also the border between economic growth and economic dynamism.
The transition is supported by some African governments, international organisations, and the financial sector, with Afreximbank committing $500 million to it.
Diaspora investments are transforming the economies of African countries from rigid and traditional to more flexible and agile structures, leading to economic diversification, and seamless directional growth towards sectors with growing demand, like health, fintech, and more advanced manufacturing.
Public and private investments must, thus, focus on the factors that will make economic dynamism a pervasive driver of wealth and prosperity. They include, first, greater investments in tertiary education, with an emphasis on fields such as information technologies, finance and the arts.
Second, supporting increases in the rate of expansion of mobile technologies and internet connectivity, linking underserved communities and taking advantage of a growing array of financial services, education platforms and civic engagement.
Third, fostering domestic and foreign investment in entrepreneurial innovation, recognising that innovation, by virtue of its transformational power, is intrinsically linked to rapid economic growth.
This is one of the fundamental reasons why the Africa Trade and Investment (ATI) programme, the flagship of USAid and the Prosper Africa Initiative, is making highly targeted investments to promote the rapid growth of critical sectors in 45 African countries.
ATI bolsters USAid’s ability to boost trade and investment to, from and within Africa by bringing together services and resources from across the US government to empower the private sector with market insights, deal support and solutions to strengthen business climates to promote economic dynamism and economic resilience.
Mr Estrada-Valle, a trade economist, is Chief of Party, the USAid Africa Trade and Investment programme. [email protected]. @JEstrada_Valle
