How innovation can boost jobs creation

How innovation can boost jobs creation

2 April, 2020    

Digital technologies are reshaping economic opportunities in Africa

The spread of mobile phones has boosted access to digital financial services, information and networks. Increasing smartphone penetration has also created new income opportunities via digital platforms, social media and other apps where young Africans can connect, sell goods and services, or find employment opportunities. But how can we turn this increased access into more jobs or income opportunities? We believe that promoting innovation in digital business models is one avenue worth pursuing.

In the near term and beyond, productive digital skills (i.e. the skills required to earn an income by applying digital technologies) are necessary to access jobs and income opportunities. The difference between the productive digital skills required in the formal and informal sectors will relate to the device through which the business function is executed. For example, the current trend is to use smartphone apps for business purposes more extensively in the informal sector than in the formal sector.

The largest employment gains will be in innovative, digitally-enabled business models. The ability to communicate, transact and pay through digital platforms is introducing scale for businesses in Africa that did not exist before. The same goes for e-government models, which are essentially new public sector business models. Most of these jobs – e-commerce agents, selling goods or services online, e-hailing, etc. – will require basic productive digital skills, although a small portion will need developer skills (i.e. the digital skills required to create or modify digital technologies) to engineer and maintain the platforms and design customer-focused solutions. Furthermore, the application of data science to analyse customers’ and citizens’ increasingly digitised data to inform decision making by leaders can provide a leading edge for Africa. AIMS is positioned as a critical supplier of advanced data science skills in Africa.

Despite the hype, we don’t view the international gig economy as a major opportunity for African youth. The production of digital goods is likely to concentrate in economies with higher levels of developer skills and more competitive labour markets than those currently prevailing in Africa. Some countries, like Kenya, with higher levels of digital skills can exploit niche markets. However, the African opportunity lies in innovation within the local gig economies where the familiarity with local culture, preferences and practicalities provides a competitive advantage for the delivery of goods and services.

A low-wage, export-oriented development strategy is not available to African countries as they strive for middle-income status in the 21st century; robotics and its attendant change of the competitive advantage of nations has disrupted that pathway. To achieve middle income status, African countries will need to apply endogenous growth theory that stresses the critical role of innovation and human capital. This is the longer-term play for African economies and will require increasing levels of developer skills and e-leadership (i.e. the ability to lead structural change in a digital economy). The emerging sectors to focus on are services, the consumption-driven economy and digital agriculture. Africa’s comparative advantage in agriculture, as well as the continental population explosion up to 2100, suggest that Africa should cultivate centres of excellence in digital agricultural technologies.

Boosting job creation through innovation will require investment in digital skills, including data science, design and developer skills. But most of all it will require e-leaders to build businesses and platforms in the private and public sectors that apply innovative technology to better meet the needs of Africa’s people.

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