African countries poised for another digital leap – with some targeted help

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African countries poised for another digital leap – with some targeted help
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Earlier this year – until authorities lifted COVID-19 restrictions – all air travelers to Ghana had to go online to pay for a COVID-19 test that was administered upon arrival at the Kotoka International Airport. Within 15-30 minutes of taking the test, the results were back, linked to QR codes which also connected to the passenger’s passport information and were sent to the Ghanaian health authorities.

It was an impressive, efficient system – much better than what is provided by the airports of most developed countries. It also sent an immediate message to anyone who flies here: Ghana, just as many other African countries, is on the cutting-edge of digital technology.

Indeed, on a recent trip to Ghana and Côte d’Ivoire, I witnessed thriving technology companies and many young people working in tech start-ups, including several women MDs and CEOs. These two countries are clearly accelerating toward a digital future. But it’s also clear that this progress is in the nascent stages, and that much more needs to happen so everyone here can fully take advantage of the digital world.

Much is moving in the right direction. In the five years leading up to the outbreak of COVID-19, Ghana’s GDP was growing at 7 percent annually. While the pandemic disrupted growth in 2020, real GDP per capita is projected to return to its pre-COVID-19 level in 2021-2022. Many entrepreneurs have created new businesses, and consumers have created a strong demand for digital infrastructure and services. Mobile revenues have grown by 17 percent per annum since 2016, driven by increasing data consumption and 4G up-take, and the cost of internet access is among the lowest in Africa.

Ghana also has several privately developed and operated data centres, including a Tier-4 data centre, which means it has the highest tier type of data and internet traffic centre that a country can have. Ghana’s Tier-4 data centre is powered by solar energy that currently supplies well above the power that is needed to run it.

In Côte d’Ivoire, government has ambitious plans for jobs creation through its successful agricultural sector, industrial development, and growth in the services sector. All of these require access to digital infrastructure, technologies and services, including for e-logistics services that support growth. Technology businesses – such as New Digital Africa, among others – are planning expansions into cloud and data, and integrated enterprise services.

For Ghana, Côte d’Ivoire and other African countries, the construction and arrival of the 2Africa and other submarine cables by 2024 promise to expand broadband and data access to businesses, and to the population – for mobile money, education and health services. Content generation and creative industries are attracting talented youth to digital businesses. That should help increase the number of high-speed internet subscribers. In 2020, fixed broadband penetration was at less than 5 percent of households, even though mobile penetration in both countries is above 85 percent.

From discussions with private sector and government leaders in both countries, it’s clear that several issues need to be addressed in parallel if both nations are to capitalise on the digital technology that is becoming available to them.

First, governments need to enforce regulations better to ensure competition in the sector. Even though both Ghana and Côte d’Ivoire set up telecoms regulators, the implementation of the regulations has been weak, allowing dominant companies to crowd out competition.

Second, in time for the arrival of the new submarine cables, these governments need to create the right mix of incentives to promote a sharing of critical infrastructure, including fibre-optic systems belonging to governments and utilities. In the past, governments and private companies have laid their own proprietary fibre-optic networks. Governments can – with integrated, central planning – create new fibre companies which will lease out capacity and promote competition for the benefit of all.

And third, organisations like IFC can help create more opportunities for the private sector by building capacity, helping design and implement projects, and bringing much needed capital injections which will fuel growth and create many more jobs.

These two West African countries are ready to jump fully into the digital economy. With some targeted government regulations that promote competition and open markets, and with more capital and guidance for the private sector, the experience of getting a COVID-19 test (and results soon after) at Kotoka International Airport would not be the exception, but the norm here.

Diep Nguyen-van Houtte manages early-stage project development (Upstream) work in infrastructure for IFC, which is the private sector part of the World Bank Group.

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