By Edem HEVI
The IMF’s Global Outlook report in 2019, acknowledged Ghana as the fastest-growing economy in the world. Despite favourable economic growth over the years, it has remained a lower-middle-income country, for more than a decade since it first attained this status. Middle-income countries (MICs), which house nearly 75% of the global population, including 62% of the poorest people in the world, face several socio-economic challenges, including inadequate infrastructure, lack of investment capital and skilled labour, and government corruption and instability.
Technological innovations over decades have emerged as key drivers of the rapid economic transformation of many economies. The United Nations recognizes that technological advancement has the potential to promote a more egalitarian, peaceful, and equitable society by assisting in the achievement of the 17 Sustainable Development Goals. Technological innovations have been highlighted as the key engine of GDP per capita growth, allowing output to expand faster than labour and capital. The “Economic Miracle” of Japan (when Japan’s economy underwent an extraordinary turnaround from 1945 to 1991 riding on the advancement of domestic technological innovation) offers concrete evidence of how technology can catalyse a nation’s transformation.
Artificial Intelligence (AI) has become a major focus of scientific and technological innovations and is seen as a crucial driver of economic growth. The field of AI has witnessed rapid advancements, positioning itself as one of the most revolutionary technologies of the 21st century. However, AI’s potential can only be realised with appropriate policy support. Governments have responded by implementing strategies to guide the adoption of AI, underscoring its growing significance in various sectors.
AI has undergone a transformative journey, moving beyond its initial aim of replicating human intelligence to practical applications with substantial real-world consequences. Today, AI applications are ubiquitous, and it is challenging to provide a succinct definition of the technology’s capabilities. AI is recognised as a general-purpose technology (GPT) due to its wide-ranging applicability, continuous improvement, and ability to drive complementary innovations. Countries are increasingly adopting AI-driven technologies such as virtual assistance, chatbots, medical diagnosis, self-driving vehicles, order-delivery drones, AI robots, etc.
AI’s recent surge in development can be attributed to a combination of factors such as the availability of big data, the emergence of powerful graphics processing units (GPUs) for complex computations, and the resurgence of deep learning. Countries are in fierce competition to harness the advantages of AI, with some political leaders believing that the country with the most dominant AI power will achieve global supremacy. Developed economies are at the forefront of AI research and the automation of human tasks, giving them an advantage over developing economies. However, adopting an AI-first approach in developing economies can help overcome development challenges by enhancing essential services such as education, healthcare decision-making, and addressing issues in the financial sector.
The field of AI has garnered attention due to its potential benefits, challenges, and risks. While AI offers numerous benefits, it poses significant ethical and legal risks. The Organization for Economic Cooperation and Development (OECD) identifies various societal and economic challenges associated with AI, including economic transformations, inequality issues, competitive dynamics, labour market transitions and effects on jobs, and implications for democracy and human rights. Ensuring ethical and safe AI is a top priority, with stakeholders actively working on guidelines, regulations, and responsible practices.
The growing interest in AI tools and techniques in business and the global economy stems from their potential to profoundly transform industries, reshape business models, and drive economic growth. The rapid advancement in AI technologies, including machine learning, natural language processing, and robotics, have provided businesses with unprecedented opportunities to automate processes, enhance decision-making, optimize operations, and gain a competitive edge. AI’s remarkable capacity to analyse vast amounts of data and extract valuable insights holds the potential to revolutionise various sectors, including healthcare, finance, manufacturing, and retail.
The economic impact of AI can be assessed through direct GDP growth from sectors involved in AI technology development or manufacturing, as well as indirect GDP growth from increased productivity in sectors already leveraging AI. While estimates of AI’s contribution to productivity and GDP growth vary due to differences in research methodologies, projections indicate significant potential. For example, Oxford Insights forecasts a $15 trillion boost to the global economy by 2030, while McKinsey Global Institute estimates a $13 trillion growth equivalent to a 1.2% annual GDP contribution by the same year. PwC and Accenture also project substantial contributions by 2030 and 2035, respectively.
Despite the promising economic benefits of AI, several concerns require attention. One significant concern is the potential impact of AI on job displacement and its effects on the labour market. While AI’s recent advancements may enable it to outperform humans in various tasks, historical evidence suggests that automation initially substitutes human labour but also creates new job opportunities in the long term, a trend expected to continue with AI.
Additionally, there is a concern about AI widening disparities among countries, companies, and workers, with developed economies and leading companies potentially benefiting more and exacerbating existing inequalities. The Artificial Intelligence Index Report 2023 notes that there is an anticipation of increased demand and higher wages for workers with digital and cognitive skills, while those engaged in repetitive tasks may face declining demand and wages.
AI adoption refers to the integration of AI capabilities such as machine learning, computer vision, and natural language processing into at least one business function. To assess global AI adoption, the author analysed adoption trends, factors influencing adoption, and adoption issues. This examination involved evaluating government AI readiness, policy adoption, research initiatives, and investment levels.
The 2022 Government AI Readiness Index, developed by Oxford Insights in collaboration with the International Development Research Centre (IDRC), evaluated 181 countries based on factors like in-country digital skills, government innovation, and existing data capabilities. The index aimed to assess governments’ readiness to implement AI for public service delivery. The United States (US) topped the global index, reflecting its high preparedness for AI adoption in public services. Ghana ranked 104th out of 181 countries, while Egypt secured the highest position among African nations, ranking 65th on the index.
According to the OECD’s live repository of AI-related policy initiatives (https://www.oecd.ai), the number of AI-related policies exceeds 800 globally. Between 2017 to 2022, a significant number of countries releasing AI strategies annually were categorized as high or upper-income. Sub-Saharan African countries have been comparatively slower in developing national AI strategies compared to other regions. The United States leads with 77 AI-related bills, while Ghana lacks a national AI policy or strategy, highlighting a gap in its approach to AI governance. Among African nations, Egypt and Tunisia stand out with seven policies each.
Data from oecd.ai reveals that China is the top contributor to AI publications, with 1,335,458 works published between 2010 and 2022. Among African nations, Egypt leads with 28,602 publications, while Ghana ranks ninth with 3,237 publications.
The AI Index 2023 Annual Report from Stanford University reveals a steady increase in AI-related investment, totalling $934.24 billion between 2013 and 2022. According to oecd.ai, the United States of America leads in receiving the highest aggregate investment, totalling $459,122 million since 2012. In Africa, South Africa leads with a cumulative investment of $965 million since 2014. Venture capital investments in Ghana, spanning from 2021 to 2023, total $35 million, representing only 0.0076% of the investment in the United States and approximately 3.6% compared to South Africa.
Current State of AI Adoption in Ghana
Ghana’s AI adoption shows a mixed outlook. Ranking 104th in the Government AI Readiness Index suggests moderate preparedness, yet the absence of a national AI strategy reveals a policy gap. Despite being the third-largest recipient of AI investment in Africa, Ghana’s US$35 million venture capital falls short of global leaders like the United States. Increased investment and strategic efforts are crucial to bolster AI research and development capabilities and remain competitive globally.
However, there have been positive steps towards establishing an AI-driven economy in Ghana. Google’s establishment of an AI research centre, the first in Africa, and Ghana’s initiatives to develop a National AI Strategy demonstrate progress. Additionally, a portion of the US$200 million digital acceleration project is earmarked for assessing the regulatory impact of emerging technologies, including AI. Reports highlight Ghana’s digital capacity to effectively implement AI applications, signalling promising opportunities for AI-driven growth and development.
Barriers to AI Adoption in Ghana
In Ghana, adopting AI faces multiple barriers hindering successful implementation and utilization. These obstacles cluster into distinct categories:
Knowledge and Skills: Challenges stem from low digital literacy and a scarcity of local AI talent.
Infrastructure and Resources: Issues include limited access to electricity and the Internet, inadequate business capital, and insufficient investment in research and development.
Economic and Market Factors: Price constraints and restricted market access hinder AI technology adoption. Affordability concerns with mobile devices and internet services, along with low consumer purchasing power, limit demand for advanced products.
Institutional and Regulatory Environment: Barriers arise from the absence of a regulatory framework and strategy, institutional constraints, insufficient intellectual property protection, institutional dysfunction, and ethical and technical concerns.
Data Availability and Accessibility: Obstacles result from inadequate datasets and restricted access to training data. The scarcity of relevant and accessible data tailored to the Ghanaian context impedes AI development.
What Next for Ghana?
The economic importance of AI cannot be overstated, yet developing economies like Ghana are trailing in the AI race. By tackling challenges, formulating policies, and cultivating an enabling environment, Ghana can harness AI for economic development. Integrating AI across critical sectors has the potential to enhance efficiency, foster innovation, and boost competitiveness, thereby driving sustainable growth and enhancing livelihoods.
Addressing Policy Adoption
The government is urged to consult the Going Digital Toolkit by the OECD, offering policymakers invaluable resources and guidelines for crafting effective AI policies. Leveraging this toolkit can provide insights into crucial aspects like AI governance, ethics, and regulation, ensuring alignment with international standards. Furthermore, collaboration with countries such as Tunisia, Egypt, the United States of America, and other high-income nations with extensive AI policy expertise can be beneficial.
Creating an Enabling Environment for Private-Sector Investment
Private-sector investment, particularly from multinational organizations, is a key driver of AI investment in Ghana. To attract both local and international private-sector investors, the government must foster a favourable investment climate. This includes providing support for research and development and facilitating the growth of startups.
Integrating AI in Crucial Sectors
AI holds immense potential for transforming various sectors of the Ghanaian economy. However, prioritizing AI implementation in specific sectors is recommended. A multidimensional approach should be adopted to identify critical sectors, considering factors such as their contribution to GDP, alignment with developmental plans and priorities, and potential for AI-driven advancements.
This article is derived from the author’s master’s thesis, “Role of Artificial Intelligence in the economic development of Ghana”.
Edem is an IT Project Manager and an AI Researcher.
