A long-term Egyptian recovery in place since currency devaluation in 2016 can resume after the war between Russia and Ukraine ends, Mathias Althoff, ... partner at Swedish frontier markets investor Tundra Fonder, tells The Africa Report.
It is the first of May, international day of workers, at the Athlone Stadium in Cape Town. Paul Mashatile, dressed in the trademark yellow and green T-shirt of the ruling African National Congress (ANC), is speaking to a packed audience of trade unionists dressed in red.
“There are many of our people looking for jobs, many young people who have finished college and university looking for jobs,” says Mashatile, treasurer general of the ANC. “We want growth that is accompanied by meaningful employment.”
Mashatile is not exaggerating about the youth unemployment crisis. One in every two young South Africans lacks a job. The large number of unemployed youth in Africa is a problem that is slowly coming into view as one of the biggest challenges of the 21st century.
“It is a recipe for social unrest,” said Sudanese telecoms billionaire and governance enthusiast Mo Ibrahim, speaking at our The Africa Report Debates on 6 April in Abidjan. The theme was ‘The new tech revolution – job creator or job killer?’
Ibrahim added: “These guys will go and join Boko Haram. They go to the Mediterranean trying to cross into Europe. That’s what is going to happen.”
And while many fete the economic progress of the continent in recent decades, it has not necessarily helped employ younger generations.
“We have had growth, yes – 8, 9, 10% – but we have no jobs. It is jobless growth,” added Zyad Limam, editor of Afrique Magazine, pointing to Africa’s reliance on exporting raw commodities. A recent report from the African Development Bank (AfDB) backs him up: “Between 2000 and 2008, employment grew at an annual average of 2.8%, roughly half the rate of economic growth.”
Source of inequality
For Ibrahim, the employment crisis creates a sense of urgency, but the growing role of technology is also being questioned. “The income of the vast majority of people has stagnated over the past 10 years. And people ask why. […] Many people accuse technology of being a source of this inequality,” argued Ibrahim.
This is certainly a concern in rich countries, where stable employment in some areas has been threatened by ‘job platforms’ such as Uber, for example.
In African countries, in contrast, the vast majority of workers are now self–employed, so these sorts of changes in technology have different impacts. But, more broadly, the use of robots in factories is eliminating demand for the manual work that employed millions over the past century.
How do these concerns translate to the continent? One very real fear is a double punch, in which technology plays a key role.
First, after the period of jobless growth, Africa’s next decade will be becalmed economically, partly by the end of galloping commodity-price growth, and partly by the macroeconomic problems created by African countries over-extending themselves during the recent good times.
Second, China’s massive investment in robotics means “the flying geese are not coming to Africa”, according to AfDB president Akinwumi Adesina. He was referencing the theory whereby capital naturally seeks out low-wage locations in late-industrialising countries. “A lot of these Chinese low-wage manufacturing jobs are being replaced with Chinese robots – which don’t riot, don’t go on leave, and don’t get sick.”
Tech as an enabler
A report from the World Economic Forum outlines the threat to Africa’s hopes for industrialisation and employment: ‘It has been estimated that, from a technological standpoint, 41% of all work activities in South Africa are susceptible to automation, as are 44% in Ethiopia, 46% in Nigeria, 48% in Mauritius, 52% in Kenya and 53% in Angola.’
And it is not just China betting on a technological revolution. Advances in 3D-printing are changing the game for factory work, which was the route out of poverty and into employment for so many countries in the past.
Chioma Agwuegbo pointed out that not all of Africa’s economic woes can be blamed on technology. “Technology has been more of an enabler”, said the founder of TechHer, a platform for furthering women’s access to and influence on technology in Nigeria and beyond. “It has opened new markets. It has flattened the globe for Nigerians to be able to work across the whole continent. For every job that has been lost, new jobs will be created.”
Pascal Lamy, former director general of the World Trade Organisation, agreed. “As always, [new technology] will destroy some jobs and create others. The question is, what is the net sum?”. New research suggests a more moderate impact for the current wave of tech on employment.
Like the original Luddites who threw clogs into labour-saving cotton factories in the 19th century, it can be hard to imagine what kind of new jobs will be created in a world undergoing widespread change.
“Technical change will always happen. Innovation will happen. The question is what we do about it. How do we prepare?” asked the AfDB’s Adesina.
Answering that question requires a shift in mindset, said entrepreneur Eric Kacou, who advises companies across the continent. “As long as we still run the software in our heads which is BBC – Born Before Computing – we are not going to go anywhere.” He pointed towards how fast things are moving now, and the new economic models being created: “It probably took Ikea 70 years to reach $40bn in sales. After 15 years, Alibaba was at $700bn.”
The pace of that change, however, suggests that even the best-prepared can be blind-sided. The future, we are constantly reminded, belongs to those with the skill sets to seize it. “The jobs are there; whether we have the skills to match is the question,” said Adesina. “The day that students go to school, within four years those courses are obsolete”. He wants computer programming to be mandatory from primary onwards: “The currency of the future is going to be coding.”
Coding isn’t everything
But Africa’s education systems are far from being the supple environments needed to teach coding. “Education is the thing that has least changed in the last 50 years,” argued Afrique Magazine’s Limam. “We do education, even in the rich world, the same way as we did it in the 19th century. If we did medicine the same way we did education, we would all be dead by now.”
As a caveat, Agwuegbo added that we should not simply fetishise coding. “We taught women to code and they did nothing with it, because technology that would be useful is technology that is applied to a problem.”
Increasingly, the skills needed by companies are different. “Take a job posting. Ten years ago it would have asked you for a degree and certain technical skills,” said Kacou. “Today, they ask are you a team player? Do you have a positive attitude? Can you learn? We have to teach people how to learn, make them critical in their thinking, able to solve problems.”
But whose responsibility is it to put together the syllabus and train the next generation? For Limam, even if there is a great deal of energy being put into private education on the continent, “the fact is that the private schools are for a minority, so how can you create talent when the public system is not delivering?”
Adesina agreed that many African states are lacking when it comes to leading their countries into the future: “We commissioned a study with the African Center for Economic Transformation and were shocked that, in terms of our governments’ awareness of the Fourth Industrial Revolution, preparedness and knowledge were very low,” said Adesina.
Mindsets are a stumbling block. Some in East Africa, for example, are still fighting the last war, seeking to replicate Asian-style manufacturing growth with heavy infrastructure investment – something Kenyan economist David Ndii calls the ‘cargo cult’ of our times.
Former World Bank president Jim Yong Kim worried in recent years about heavy–handed industrial policy in a world of artificial intelligence. A South Korean by birth, Kim would no doubt approve, however, of the massive state investment Korea made in broadband telecommunications in the 1990s, which allowed it to be one of the few countries to create a rival for Apple.
Beyond the great strategic levers of state, there is a lot to play for, too. “In South Africa, we decided drones were dangerous. So we banned them,” Nadia Museti, a South African technology student, contributed from the floor. “The same thing is going to happen to fintech. We’ve got a highly regulated financial sector. The minute government gets involved and says: ‘Wait a minute, there are illicit financial flows, people are getting paid without us getting a cut’, then they regulate to clamp it down.”
For Nigerian fintech entrepreneur Ngozi Dozie, co-founder and CEO of Carbon (formerly Paylater), regulators can be more supple than we realise. “Nigeria’s central bank may be introducing a ‘regulatory sandbox’ for fintech,” he said – a way to learn more about how the sector works without overburdening it with rules, much as Mauritius has done.
In Rwanda, drones have proved they can be the opposite of ‘dangerous’. Zipline has operated its blood delivery service there since 2016, delivering more than 10,000 cargoes by drone.
Hadiatou Barry of Zipline explained: “We worked really closely with the civil aviation authority to set up the rules that guide the way we operate in the airspace. Very few countries have been able to develop these kinds of regulations. […] That has inspired the US civil aviation authority, who are now coming to us. We shouldn’t even talk about leapfrogging, we should talk about Africa setting the pace.”
Co-operate now, not later
Former WTO boss Lamy added: “Look at the problems the EU has to create a single digital market. […] If African heads of state agree that they should have a similar regulatory environment for the digital market, they can do it now. And that would be a huge comparative advantage in terms of costs and scaling up the digitisation of the African production system.” One only has to look at the East African Community – an early mover in the regional harmonisation of telecoms tariffs – to see the benefits for big players like Safaricom.
Innovations like mobile money show the power and depth of change that tech can bring. A huge proportion of Kenya’s gross domestic product goes through mobile-money platforms. But early studies of mobile-money platform M-Pesa’s economic impact – like the 2010 study by Megan G. Plyler, Sherri Haas and Geetha Nagarajan – found employment creation was not high on the list of its impacts.
The state itself can use technology to improve its operations.
Cina Lawson is Togo’s digital economy minister. She has been trying to bridge the gap between government institutions designed before computers and the needs of the citizenry today. One example is a partnership to help identify which among the country’s 10,000 boreholes are faulty: “We created a platform for the ministry of water, a toll-free number that citizens can call written on the side of the borehole, which links to a GPS system and immediately alerts the ministry.”
Voice of the people
There is a tendency for technologists to see only the market opportunities. But digital disruption is hitting politics across the world. “Social media has revolutionised politics. Especially in Africa, where there were no mass media models outside of state television,” says Limam. “But there is a downside, as states are also good at tech.”
“Look at the Not Too Young To Run Bill. We used technology to crowdsource young people in the country to put pressure on our government,” said Agwuegbo, citing a Nigerian example of technology strengthening citizens’ power over government.
Yet there is a growing sense that large institutions – be they big governments or big corporations – are able to use new technology to control and exploit. As outlined by Shoshana Zuboff in her book Surveillance Capitalism, new technology companies ‘unilaterally claim human experience as free raw material for translation into behavioural data … [which is then] fabricated into predication products [which then] are traded in a new kind of marketplace that I call behavioural futures markets.’ A brief examination of how the Beijing government uses behavioural information to control populations – and ‘freeze’ politics – may give pause for thought.
One constant through human history is that over-exploitation eventually leads to revolution.
Lamy argued that Karl Marx was right when he predicted the political upheavals of the 19th century, but that he was wrong about capitalism. It adjusted, and governments created welfare states.
Lamy concludes: “So the big question is, is capitalism ready to morph once more into a system that avoids revolution. Is it going to create the same sort of antidote or not?”
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options