Why Africa is set to become the world’s growth engine

The continent has natural resource wealth and great strength in its young, talented, growing population

COMMENT | TOSIN ENIOLORUNDA | Tech innovations empower individuals, drive financial inclusion and foster economic resilience across the continent. Africa’s economic revival is real.

Economic progress in Africa has seen various false dawns. Whether halted by tragic natural disasters, political instabilities or military conflicts – brief periods of economic growth have often been followed by setbacks, deflating the hopes of a new generation.

There is, however, good reason to believe post-Covid Africa is experiencing a genuine change – and this time its influence could last.

Africa has natural resource wealth and great strength in its young, talented, growing population: genuine competitive differentiators. Yet, previous decades of such strengths have floundered due to poor infrastructure and an inability of governments to optimally navigate huge challenges.

Natural resources would be discovered, but without nearby railways or ports to export them, wealth would remain untapped or left in the ground. Stringent customs regulations and tariffs meant international countries could make more profit from processing cheap cocoa or coffee beans than the whole continent could from growing and exporting them.

A familiar story would be doctors, engineers and scientists – our future human capital – qualifying in African universities but taking their talent internationally to countries with higher wages and better all-round opportunities.

Good reasons now exist to make such distortions less relevant and to hopefully make change stick.

Digital transformation spreading across Africa

Digitalisation means we are seeing transformation across Africa, rather than in just a nation or two. It is a ground-up reform driven by people’s choices as individuals affecting how they work, trade, travel and interact. Every week, new apps and solutions become available, meeting consumer and business needs – all while creating data.

Management and use of this data is the transformative magic. Suddenly, masses of people – irrespective of location – who struggled to qualify or have access to a bank account, can demonstrate payment and credit histories. Affordable, easy-to-use digital systems improve access to financial services.

The result: small businesses could obtain POS (point of sale) systems and accept money without needing physical currency – increasing security, safety and transfer certainty. New payment and credit cards became available enabling international use. Online purchasing and instant currency conversion became possible, creating regional economies spread across countries.

In other sectors, digitalisation has been equally impactful. In utilities, it has transformed the management, delivery and payment of water, electricity and other services. Revenues, previously difficult to collect, can be recycled into greater investment.

For remote areas without connection to distribution grids, digitalisation facilitates mixed energy systems. These use solar power and wind turbines, even if the equipment is managed hundreds of kilometres away via digital communications and analytics.

Economic empowerment and sustainable growth

Logistics has also benefited. Motorcycle taxi drivers and couriers, whose two-stroke bikes pump noxious fumes into the atmosphere, can lease electric bikes based on their newly established revenue histories. They can enjoy greater safety while helping the environment.

In agriculture, farmers have benefitted from new payment systems for fertilisers, tractors and better seeds due to digital data making credit available.

The list of benefits for Africans on the ground – via their innovations or by tech companies making a difference – is endless. With digitalisation and its empowerment of rising populations and rapid urbanisation, it is clear Africa is building strong economic foundations and creating achievable and sustainable growth.

The overall result is that the tide of economic growth and prosperity is rising, lifting up individuals across the continent. This time the growth is real. African economies can, at last, attract investment to make them world leaders.

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Tosin Eniolorunda is the CEO of Moniepoint Inc.

Source: The Africa Report.