Five Ways African Countries can use Technology to meet 21^st Century Economic Challenges

Business development and entrepreneurship are among the most favoured options as African countries explore several options to change the longstanding labels of poverty, insecurity and economic backwardness. The 21^st century business environment is highly dependent upon technology. However, most African businesses are lagging behind in their deployment of technology. This severely limits their growth potentials, making them less competitive on the global stage. Following a thorough consideration of recent studies on the roles of technologies in the African business climate, here are five key approaches through which African countries and African businesses can use technology to meet present economic challenges.

Develop Human Capital

It is clear that the presence of abundant natural resources does not necessarily make any country more competitive on the global stage. Many of the successful countries across the world did not achieve success merely because they have natural resources. Instead, they succeeded because they evolved systems that help their people make maximal use of the natural resources for their development. The progress achieved through human capital investments by some countries without natural resources underscores the fact that humans are more to be treasured than natural resources. It also shows beyond doubt that human capital development trumps mineral resource exploitation.

Governments in African countries must invest massively in the education and training of the citizens. This implies improving access to, and the quality of, education across all levels, from basic to higher education. African countries must create sustainable competitive advantage by developing and harnessing highly skilled individuals who are able to utilize natural resources to lead economic development in the continent. The convergence of both natural resources and a youthful population in Africa represents an immense potential that can be utilized for rapid growth and development across the continent.

Strengthen Formal and Informal Institutions

State ownership of enterprises and employment in the public sector should increasingly give way to expression of the entrepreneurial acumen and interests of the African population. This will reduce dependence on governments and allow individuals to create business solutions and economic prosperity. Bureaucracies and policies that suffocate new business formation and business expansion should be removed. Creators of innovations, especially technological improvements, should be able to benefit from their innovation through intellectual property laws that protect their work from being expropriated. For these changes to bring sustainable development, formal and informal institutions for facilitating, enforcing and monitoring them must be created (where they are non-existent), and strengthened (where they are existent but weak).

These will buoy the confidence of local investors as well as attract foreign investment. The effects of ensuing economic transactions and investments through the private sector within Africa will facilitate the continent’s movement towards a market-based economy, an economic system where private ownership of enterprises is dominant. This will engender creation of open buying and selling platforms, and competition will move the economy towards continuous efficiency and innovation. Since this process leads to the rise of private enterprise, more jobs will be created. Unlike artificial job creation by bloating the civil service (which ultimately increases the countries’ burdens), the new private sector jobs will be related to economic and productive enterprises.

Adopt and Diffuse Technology

Adopting a technology means deploying it just as it was developed/received from its original source. Recent advances in technology (especially mobile phones, both basic and smart) have shown that access to appropriate technologies can greatly enhance the livelihoods of people and move them from poverty to prosperity. Mobile technology should be used to bridge the information gap between entrepreneurs and government institutions. With this, the use of mobile phones will not only directly create business opportunities; it will help in indirectly overcoming challenges to doing business on the continent.

To diffuse a technology is to increase access of the society to the technology. African countries must identify best practices in facilitating the diffusion of new technologies for their mostly rural populations. These should be piloted locally and evaluated prior to large scale deployment. This will help to avoid costly mistakes, which can be counterproductive. An inappropriately deployed technology that fails can discourage the adoption of other technologies and erode trust in the improved tools that are introduced to citizens.

Adaptation and Emulation of Innovation

Innovation is an important driver of economic development. Innovation generally involves the creation of a new or significantly improved product (good or service), process, marketing method or organizational method in business practices, workplace organization or external relations. This implies that the product, process and marketing or organizational method must be either new or significantly improved to the company that created it. However, for developing countries, innovation is considered as the process through which companies perfect the design and production of goods and services that are new to them, whether or not they are new to their domestic or foreign competitors. This is called adaptation.

In lieu of this, African countries and African firms do not necessarily need to start their journey by reinventing the wheel of knowledge creation and advancing technology to speed up their development. They should adapt and copy innovations from other climes. After making good progress and catching up, they can begin extending the frontiers. This model was used by many countries that have today become leaders in the technology space.

Intra-African Collaboration and Trade

African countries must emerge from the shadows cast by the trees of suspicion, hatred and disdain sowed by European countries during the colonial era. They should come into the light of collaboration and collective pursuit for development, as exemplified in the African Continental Free Trade Area (AfCFTA), for instance. By this, the countries will be able to exploit the opportunities provided by globalization jointly. Negotiating collectively, for example, will greatly enhance their bargaining power.

Also, they should collaborate to leverage the technological competencies of one another in different sectors for their collective development. These collaborations should be geared towards putting major infrastructure (like road, railway network, aviation and electrification) in place within the continent, in ways that not only make technology adoption to flourish, but also create the conditions for the formation and growth of new businesses.

Conclusion

While there are several contemporary challenges to doing business in Africa, technology maintains a vantage position for helping the continent overcome the challenges. African businesses and governments should seriously consider immersive deployment of appropriate technology to ensure their growth and global competitiveness.

This article is based on:

Amankwah-Amoah, J., Egbetokun, A. and Osabutey E.I.C. 2018. Meeting the 21st century challenges of doing business in Africa. Technological Forecasting & Social Change https://doi.org/10.1016/j.techfore.2018.01.006