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Title page

Contents

Foreword 14

Acknowledgements 16

Overview 18

Abbreviations 26

Introduction 28

Background 28

Turning Global Trends into Opportunities 31

What Are the Main Contributions of This Book? 32

Notes 34

References 34

PART 1. Digitalization of Businesses in Africa 36

CHAPTER 1. Making Full Use of Digitalization: Where Do Businesses 37

Key Messages 37

Introduction 38

Setting the Stage: What Is Firm Digitalization About? 38

Measuring Incomplete Digitalization 39

Three Layers of Digital Gaps across Firms 44

Digital Payments as Entry and End Points 51

Low Digital Use among Microbusinesses and Informal Businesses 55

Digitalization of Sector-Specific Technologies 58

Summing Up 61

Notes 62

References 63

CHAPTER 2. Economywide Effects of Digitalization 65

Key Messages 65

Introduction 66

Economic Impact of Digitalization: What Are the Channels? 66

Potential Effects of Digital Upgrading in Africa 72

Summing Up 86

Notes 86

References 87

CHAPTER 3. Drivers of Adoption and the Cost of Technology 90

Key Messages 90

Introduction 90

Drivers of Digital Adoption by Firms 91

Digital Infrastructure and Electricity 93

Cost of Technology Upgrade in Africa 96

human Capital and Access to Finance 101

Competition, Demand, and Trade Costs 108

Firm Capabilities 110

Summing Up 112

Notes 113

References 113

PART 2. Mobilizing Private Investment to Boost Digitalization and Development 116

CHAPTER 4. Investment Opportunities in Digital Infrastructure 117

Key Messages 117

Introduction 117

Addressing Gaps in Digital Infrastructure in Africa 118

Strengthening Digital Infrastructure Can Improve Service Affordability for End Users 121

Investment Opportunities in Middle- and Last-Mile Digital Infrastructure 124

Regulatory Reforms Can Maximize the Impact of Digital Infrastructure Expansion 131

Summing Up 134

Notes 134

References 135

CHAPTER 5. Tech Start-Ups and Digital Platforms 137

Key Messages 137

Introduction 138

Role of Digital Tech Firms in the Success of Mobile Payments in Africa 138

Landscape of Digital Entrepreneurship in Africa 140

Are Digital Tech Firms Enabling the Use of Disruptive Technologies? 145

Boosting the Pipeline of Meaningful Projects in Digital Tech 154

Summing Up 159

Notes 159

References 160

CHAPTER 6. Financing Digitalization of Businesses in Africa 164

Key Messages 164

Introduction 164

Financing the Digital Transformation in Africa 165

Investment in Digital Infrastructure 167

Funding of Disruptive Tech Start-Ups 168

Financing Firms' Digital Upgrade 176

Reducing the Cost of Financial Capital 178

Notes 182

References 182

CHAPTER 7. Policies to Unlock Digital Private Investment 186

Key Messages 186

Introduction 187

The Role of Policies 187

Trade and Market Integration Policies 189

Broader Regulatory Reforms and Public Programs 193

Priority Actions for Countries and DFIs 198

Concluding Remarks 199

Notes 200

References 200

APPENDIX A. Firm-level Adoption of Technology and Research ICT Africa Surveys 203

Tables

TABLE 4.1. International Internet Bandwidth Projections 126

TABLE 4.2. Geographical Disparities in Investment Opportunities 127

Figures

FIGURE O.1. Degrees of Incomplete Digitalization 19

FIGURE O.2. Prices of Digital and Nondigital Products, by Region, Relative to the United States 22

FIGURE O.3. Incomplete Digitalization, Investment Opportunities, and Policies 23

FIGURE I.1. Mobile Telephony Diffusion in Africa-A Rare Example of Leapfrogging 28

FIGURE I.2. Reaping the Digital Dividend-From Availability to Productive Use 30

FIGURE 1.1. Digitalization Is a Continuous Process across Business Functions 39

FIGURE 1.2. Degrees of Incomplete Digitalization 41

FIGURE 1.3. Completing Digitalization and Productivity 42

FIGURE 1.4. Degrees of Incomplete Digitalization, by Country Group 43

FIGURE 1.5. Percentage of Firms Adopting Digital Enablers 45

FIGURE 1.6. African Firms' Mobile Phone, Computer, and Internet Uptake Gap as Compared to Other Regions 46

FIGURE 1.7. Adoption of Digital Technologies Varies across Business Functions 47

FIGURE 1.8. Intensive Use of Digital Technologies Varies across Business Functions 49

FIGURE 1.9. Incomplete Digitalization in Productive Use of Advanced Digital Technologies 50

FIGURE 1.10. Digitalization Classification by Adoption of Advanced Digital Technologies in Each GBF 51

FIGURE 1.11. Digital Payments as the Entry and End Points for Digitalization 52

FIGURE 1.12. Use of Digital Technologies by Business Function across Size Groups in African Businesses 53

FIGURE 1.13. Intensive Use of Digital Technologies by Business Function across Size Groups in African Businesses 54

FIGURE 1.14. Adoption of Digital Technologies in GBFs by Informal and Microbusinesses 56

FIGURE 1.15. Digital Diffusion across Large Firms in Africa, by Sector 59

FIGURE 1.16. Sector-Specific Digital Technologies Adopted in Agriculture and Food Processing 60

FIGURE 1.17. Sector-Specific Digital Technologies Adopted in Services 61

FIGURE 2.1. Firm-Level Digitalization Is Associated with Higher Productivity 67

FIGURE 2.2. Arrival of Fast Internet Improves Firm Entry and Greenfield FDI 70

FIGURE 2.3. Market Potential for Digital Upgrading and More Intensive Use for Business Administration Technology 80

FIGURE 2.4. Estimated Gains in Workers' Access to Digital Technology for Business Administration in Africa, through Upgrading of Potential Firms 83

FIGURE 2.5. Estimated Gains in Worker Access to Advanced Business Administration Technology, Burkina Faso 84

FIGURE 3.1. Drivers of Technology Adoption 92

FIGURE 3.2. Cost of Mobile and Broadband Internet as a Percentage of Per Capita Gross National Income 94

FIGURE 3.3. Price-Level Indices for Goods and Services, in Sub-Saharan Africa and North Africa, Relative to the World Average 97

FIGURE 3.4. Prices of Digital and Nondigital Products, by Region, Relative to the United States 98

FIGURE 3.5. Correlation between Per Capita GDP and Price for Standard Software 99

FIGURE 3.6. Access to Finance and Digitalization 107

FIGURE 3.7. Competition Is a Key Driver of Technology Upgrading 108

FIGURE 3.8. Digitalization and Firm Capabilities in Africa 110

FIGURE 4.1. Digital Infrastructure 119

FIGURE 4.2. Digital Infrastructure Gaps and Trends in Africa 120

FIGURE 4.3. Average Revenue and Capital Expenditure per User in the Telecom Sector, 2022 123

FIGURE 4.4. Capex Needs Associated with Growth in International Internet Bandwidth 129

FIGURE 4.5. State of Telecom Regulation in Africa, 2020 132

FIGURE 4.6. Enhancing Effects of Regulatory Reforms on Mobile Broadband 133

FIGURE 5.1. Mobile Money Accounts and Mobile Subscriptions 140

FIGURE 5.2. The Tech Start-Up Ecosystem in Africa Is Booming 141

FIGURE 5.3. Almost Half of Africa's Tech Firms Focus on IT Services 144

FIGURE 5.4. Use of Disruptive Technologies in Africa, Latin America, and Frontier Locations 149

FIGURE 5.5. Age Profile of Disruptive Technologies 150

FIGURE 5.6. Being Disruptive Attracts 40 Percent More Funds for African Firms 151

FIGURE 5.7. Probability of Obtaining Funding on the Basis of Founder and Firm-Level Characteristics in Africa 153

FIGURE 5.8. Number of Agtech Services in Low- and Middle-Income Countries, by Use Case, 2009-19 158

FIGURE 6.1. Private Investment in ICT Projects 167

FIGURE 6.2. Investment Levels in ICT Projects, by Region 168

FIGURE 6.3. Funding of African Tech Firms, by Funding Type 169

FIGURE 6.4. Early-Stage African Tech Firms Are Less Well Funded Than Their Peers in Other Regions 170

FIGURE 6.5. Funding in Africa Is Fueled from Abroad 171

FIGURE 6.6. African Firms Find It Harder to Get Loans for Tech Upgrades 176

FIGURE 6.7. Financing Gap for Formal Firms' Digitalization 177

FIGURE 6.8. Average Sector-Specific Risk across Emerging Markets and Developing Economies Using Industry Betas 179

Maps

MAP 2.1. Current Market Size of Technology Adoption for Business Administration 77

MAP 2.2. Percentage of Firms Using One Type of Business Administration Technology That Could Upgrade to the Next Level 81

MAP 3.1. High-Skill Human Capital in Sub-Saharan Africa Is Expensive 104

MAP 5.1. Geographical Concentration of Tech Firms 143

Boxes

BOX 1.1. The Digital Gap among Rural Microbusinesses 57

BOX 2.1. How Does Digitalization Occur in the Firm When Internet Access Improves? 68

BOX 2.2. Digitalization Spillovers from Formal to Informal Firms 71

BOX 2.3. How Many Firms Are There in Africa? 73

BOX 2.4. Estimating the Potential Market for Digital Adoption across African Firms 78

BOX 2.5. Estimating Firm and Worker Access to Technology in Africa 85

BOX 3.1. Is Digital Upgrading by Firms in Africa an Optimal Decision? 93

BOX 3.2. Digitalization and Access to Electricity 95

BOX 3.3. Digital Investment Escalator in Kenya 100

BOX 3.4. Barriers to Technology Adoption in Agriculture 102

BOX 3.5. Tech Talent Migration 105

BOX 3.6. Digital Technology Adoption: Subsidizing Learning Costs for Firms in India 111

BOX 4.1. Methodology of the Study on the Impact of Submarine Cables on Internet Access Price 123

BOX 4.2. Selected Success Stories of Digital Infrastructure Expansion in Africa 125

BOX 4.3. Total Investment Needs-Why Do Estimates Vary? 128

BOX 4.4. Cloud Computing and Enterprise Technology Solutions in Africa 130

BOX 5.1. What Are Disruptive Technologies? 146

BOX 5.2. How Can African Firms Best Leverage Artificial Intelligence for Their Success? 147

BOX 5.3. Turning Market Gaps into Opportunities: E-commerce 154

BOX 6.1. Mobilizing Finance for Digitalization 166

BOX 6.2. What Do Start-Ups in Africa Want and Need? 173

BOX 6.3. Combining Mobile Money with Traditional Financial Services Boosts Productivity 180

BOX 7.1. Policy Priorities: Diagnostic Checklist to Facilitate Technology Adoption 188

BOX 7.2. Will the African Continental Free Trade Area Reduce Prices and Increase Trade of Digital Goods in Africa? 191

Box Tables

TABLE B3.5.1. Migration of Tech Skills 106

Box Figures

FIGURE B1.1.1. Use of Digital Enablers and Digital Technologies by African Microbusinesses 57

FIGURE B2.2.1. Closer Proximity to Formal Firms Increases Digital Adoption among Informal Firms 71

FIGURE B2.3.1. Correlation of Firm Density and GDP per Capita 74

FIGURE B2.3.2. Market Size: The Universe of Businesses in Africa 75

FIGURE B2.4.1. Estimated Propensity Scores for Adoption and Intensive Use of Digital Technology 79

FIGURE B3.2.1. Internet Use and Access to Electricity in Africa 95

FIGURE B3.4.1. Agricultural Technologies Are More Expensive for Firms in Sub-Saharan Africa 103

FIGURE B6.2.1. Funding Preferences of Start-Ups 174

FIGURE B6.3.1. Effects of Finance and Mobile Money on Productivity 181

FIGURE B7.2.1. Expected Change in Tariffs after Implementation of the AfCFTA by 2030 192

Appendix Tables

TABLE A.1. FAT Survey: Number of Observations per Country, by Firm Size and Sector 204

TABLE A.2. RIA Survey: Number of Observations per Country 204

출판사 책소개

알라딘제공
Adoption of digital technologies is widely acknowledged to boost productivity and employment, stimulate investment, and promote growth and development. Africa has already benefited from a rapid diffusion of information and communications technology, characterized by the widespread adoption of mobile phones. However, access to and use of digital technology among firms is uneven in the region, varying not just among countries but also within them. Consequently, African businesses may not be reaping the full potential benefits offered by ongoing improvements in digital infrastructure. Using rich datasets, Digital Opportunities in African Businesses offers a new understanding of the region's incomplete digitalization--namely, shortfalls in the adoption and effective use of digital technology by firms to perform productive tasks. The research presented here also highlights the challenges in addressing incomplete digitalization, finding that the cost of machinery, equipment, and software, as well as the cost of connectivity to the internet, is significantly more expensive in Africa than elsewhere. Digital Opportunities in African Businesses outlines ways in which the private sector, with support from policy makers, international institutions, and regulators, can help bring down these costs, stimulating more widespread digitalization of the region's firms, thereby boosting productivity and, by extension, economic development. This book will be relevant to anyone with an interest in furthering digitalization across Africa. ------------------------------------------- It is clear that new digital technologies are opening up new opportunities for economic growth. But will African firms be able to take advantage of them? If so, how? To gain traction on these questions, we first need careful empirical research on what firms are currently doing, and rigorous thinking about what is getting in the way of greater adoption. This book delivers on both dimensions. It marries carefully collected new evidence with thoughtful, no-nonsense analysis of firm behavior and how markets are evolving. It is highly recommended reading for researchers and policymakers alike. -- Eric Verhoogen, Professor of International and Public Affairs and of Economics, Columbia University