How digital technologies can deliver inclusive growth in Africa

Digital technologies have become the most pervasive human invention in history, offering unprecedented opportunities for inclusive growth across the African continent. In a recent interview on CNBC Africa, Raghav Prasad, the Division President for Sub-Saharan Africa at Mastercard, and Bhaskar Chakravorty, the Dean of Global Business at The Fletcher School, Tufts University, discussed the potential of digitalization to transform Africa's economy. Prasad believes that digital technologies offer the best chance to drive inclusive growth compared to other catalysts that have been tried before. He highlighted the significant benefits that digitalization can bring to the economy, citing a Moody's study that found every 1% increase in digitization adds about $70 billion to the global GDP. In Africa, where over 95% of all payments are still made in cash, digitization can boost efficiency, productivity, and employment opportunities while accelerating economic growth. Chakravorty emphasized the transformative power of digital technology, noting that it provides access to resources, information, and networks, particularly through mobile phones. While there are disparities in digital access between rural and urban areas, the widespread availability of mobile phones is empowering individuals to create their own opportunities for entrepreneurship and employment. The seamless integration of payment systems into digital platforms ensures that participants in the economy can receive rewards for their contributions, closing the loop of economic transactions. By leveraging digital technologies, Africa has the potential to undergo a radical shift in growth patterns and foster widespread economic development. To unlock this potential, a multi-stakeholder approach is essential. Governments play a crucial role in creating an enabling environment through policies that support digital innovation and market development. The private sector, including technology companies and micro-entrepreneurs, is driving digital transformation across various African countries, from Ethiopia to Nigeria. By extending digital solutions to small-scale entrepreneurs and farmers, a self-sustaining ecosystem can be created, connecting communities and fostering economic growth. It is important for digital products to cater to users with feature phones, ensuring inclusivity and accessibility for all segments of society. Additionally, investors are key players in supporting digital ventures with the necessary capital, from micro-loans to venture capital, to kickstart new businesses and initiatives. The proliferation of digital data generated by these systems presents opportunities for value creation and innovation, attracting a diverse range of players to the digital economy. As Africa continues its digital transformation journey, collaboration among governments, the private sector, investors, and entrepreneurs will be vital in harnessing the full potential of digital technologies for inclusive growth and economic prosperity.