IFC: African businesses lag in digital tech use
Sunday May 19 2024
IFC Managing Director Mukhtar Diop (C), Vice President for Economic and Private Sector Development Susan Lund (R) and Regional Vice President for Africa Sergio Pimenta display the newly launched report on the sidelines of the Africa CEO Forum in Kigali, Rwanda on May 16, 2024. PHOTO | VINCENT OWINO | NMG
Africa is missing out on the economic benefits emanating from the digital revolution as most businesses are not using the technologies despite having access, a new study shows.
Research by the International Finance Corporation (IFC) shows that although 86 percent of businesses in Africa have access to digital technologies such as mobile phones, computers and the internet, only 24 percent are intensively using them for business-related functions such as accounting and sales.
As a result, they are not fully benefiting from the efficiency and growth associated with the use of these technologies.
“If you don’t have the proper use and the instruments to be able to use the connectivity, you don’t have the economic impact that you expect from that technology,” said IFC Managing Director Makhtar Diop during the launch of the report on Thursday on the sidelines of the Africa CEO Forum in Kigali.
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The study also found that there are stark differences between countries’ use of digital technologies and between businesses.
In Kenya, for instance, about 57 percent of firms adopt intensive use of computers, internet and other digital tools, which is more than double the continental average of 24 percent, and much higher than the adoption in low-income countries like Burundi.
According to Mr Diop, the low use of digital technologies has to do with the cost of internet, which remains unaffordable to most people across Africa, and is compounded by poor internet quality.
“The software and hardware that firms use is 35 percent more expensive in Africa than in the United States,” added Susan Lund, IFC’s vice president for economic and private sector development.
The study reveals that the poor digital and complementary electricity infrastructure is also limiting technology adoption on the continent. Other barriers are lack of skills and limited access to finance.
To improve the use of these technologies, governments will need to invest at least $6 billion in infrastructure, including in middle- and last-mile distribution of fibre internet, which is projected to lower the cost of internet.