- As COVID-19 confirmed cases rise, Africa faces its first recession in more than 25 years.
- The pandemic has accelerated job disruption on the continent.
- African governments and businesses must pursue rapid digital transformation to fuel growth and put people back to work.
We were all caught off guard when the COVID-19 pandemic disrupted the world. In Africa, where COVID-19 cases continue to rise and the first recession in more than 25 years looms, the imperative to act quickly and find solutions has never been greater.
The good news is that progress is already underway. In response to the challenges of COVID-19, many businesses embraced digital transformation, from creating tools for food deliveries and learning from home to migrating services online. At the same time, governments facilitated these shifts with swift, enabling policies. These efforts bode well for expanded economic activity and job creation across the continent.
Yet challenges remain. According to the newly released World Economic Forum’s Future of Jobs Report, COVID-19 has sped up the disruption of jobs caused by the technological changes of the Fourth Industrial Revolution. In South Africa, for example, 75% of employers surveyed said the pandemic would accelerate the automation of tasks.
In response to these shifts, the World Economic Forum’s Regional Action Group for Africa, created in April, will bring public and private leaders together to foster partnerships that help countries enact digital solutions that can save jobs and create new ones. By accelerating Africa’s digital transformation, businesses can also reap the benefits of efficient service to customers, lower costs and simpler business models.
Supporting the expansion of micro, small & medium enterprises (MSME) will be key. MSMEs are the backbone of Africa’s economy, accounting for an estimated 80% of economic activity and serving as the primary employer, with most small businesses hiring fewer than five employees. In the past, governments efforts to convert MSMEs from the informal to the formal sector have largely failed due to the myriad barriers to doing business.
It is in the interests of formal business, both local pan-African investors and multinationals, to invest in the transition of these businesses into the formal economy through their procurement budgets and other enterprise-development initiatives. This will in turn foster greater economic activity, create new markets, dent youth unemployment, and reduce the cost of capital.
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For example, three Alibaba Netpreneur and eFounder fellows – Alimaz Abebe, founder of Yenepay from Ethiopia, Clarisse Iribagiza, founder of DMM.Hehe from Rwanda, and Sethebe Manaka, founder of Vantage Properties from Botswana – have reported that their businesses have expanded five- to sevenfold within two months, illustrating the potential for micro, small & medium enterprises (MSME) to expand in Africa.
In addition, for Africa to take full advantage of the digital transformation currently underway, governments must supplement an enabling policy framework with swift infrastructure improvements.
According to GSMA The Mobile Economy Report 2020, smart phone connections in sub-Saharan Africa will nearly double by 2025, and Africa is leading the world in digital financial inclusion. Still, the pace of internet adoption is lagging behind the rest of the world due to a combination of factors including access to internet and energy infrastructure, affordability of devices and data, consumer skills and readiness, as well as locally relevant content.
The COVID-19 disruption to education delivery also remains a major challenge. The continued closure of schools in many countries threatens to set back an entire generation of children and youth. In addition, laid-off or furloughed workers need to acquire new skills for new digital business models. Digital skilling can fuel local innovation and help to accelerate growth, creating lasting change across the continent.
Innovative new public-private initiatives are seeking to bridge this education and reskilling crisis. For example, Coursera’s Workforce Recovery initiative is providing unemployed workers with access to online learning tools. Twelve sub-Saharan Africa governments have signed up to this initiative, namely Ethiopia, Equatorial Guinea, Kenya, Mali, Mauritania, Niger, Nigeria, Rwanda, Sierra Leone, Somaliland, South Africa, and Uganda. This speedy action is enabling thousands of their citizens to join free online learning during the peak period of the COVID-19 crisis.
Another initiative, EDACY Digital Skills for Public Services Employees, is imparting digital foundations training to civil servants in Ethiopia and Rwanda, so that they can effectively lead recovery efforts.
As countries strive to restore their economies, Africa must embrace digital transformation to build resilience for the post-COVID-19 world.
This article originally appeared on Business Day.