tralac’s Daily News Selection
African trade and regional integration events:
25th Session of the Intergovernmental Committee of Senior Officials and Experts of Southern Africa: Strategies and policies for the integration of micro, small and medium scale enterprises in the industrialization process in Southern Africa (10-13 September, Ezulwini)
Expert group meeting: Harmonization of Industrialization Strategies and Policies in Southern Africa (12 September, Ezulwini)
- The AfroChampions Green Industrialisation Boma (9-10 October, Kigali)
The African Union has published an pdf African Integration Booklet (3.25 MB) (English)
World Economic Forum Africa 2019: selected updates
The future of work in South Africa: Digitisation, productivity, and job creation. The advance of technologies such as machine learning, artificial intelligence, and advanced robotics will have a far-reaching impact on South Africa’s workplaces. Although digitisation will be disruptive, it has the potential to raise productivity and operational efficiency in businesses across sectors, to deliver better outcomes for both customers and citizens, and to create millions of high-quality jobs. These are the findings of a new McKinsey paper, The future of work in South Africa: Digitisation, productivity, and job creation, which shows that the accelerated adoption of digital technologies could triple South Africa’s productivity growth, more than double growth in per capita income, and add more than a percentage point to South Africa’s real GDP growth rate over the next decade. It could also result in a net gain of 1.2 million jobs by 2030 (see exhibit). A large proportion of those jobs would go to women, and digitisation could trigger a breakthrough in women’s empowerment. Extract (pdf):
Our research, including analysis by the McKinsey Global Institute and a survey of about 70 South African leaders, finds that technology could reverse these trends by unlocking greater productivity across many sectors of the economy. In metal beneficiation and fabrication, for example, robot-assisted production can reduce human error and greatly increase efficiency. In mining, underground mine automation can improve safety and reduce costs. In financial services, digitisation can improve customer experience and drive greater efficiency. Such productivity gains from digitisation and machine learning have the potential to drive substantial improvements of individual businesses – and the entire South African economy. We estimate that these technology-related gains could triple South Africa’s productivity growth, more than double growth in per capita income, and add more than a percentage point to South Africa’s real GDP growth rate over the next decade (Exhibit 2). [The authors: Nomfanelo Magwentshu, Agesan Rajagopaul, Michael Chui, Alok Singh]
Digitizing entrepreneurship for impact. There are many dimensions to empowering digital entrepreneurship for impact. This paper focuses on three (pdf): Effective entrepreneurial education – going beyond skills to include both an internal mindset and external ecosystems; Responsible and resourceful data use - leveraging the importance of data to serve as both a motivator and catalyst of new solutions; Inclusive digital platforms - filling gaps in budding physical hubs, whose entrepreneurs gain value from sharing insights and resources. Within each of these dimensions, this paper aims to clarify the changing role of the entrepreneur, identify the resources needed for success, and provide practical case studies, recommendations and metrics that serve as food for thought to anyone whose objective is fomenting entrepreneurial activity with impact.
Lwazi Bam (Deloitte’s CEO): South Africa’s SMEs should be first in line for a digital upgrade. According to the Banking Association of South Africa, SMEs make up 91% of formalized businesses, provide employment to about 60% of the labour force, and account for roughly 34% of GDP in South Africa. As we debate the “jobs” theme in South Africa, emphasis needs to be placed on supporting small businesses and entrepreneurs, enabling collective and inclusive growth. Undoubtedly, the 4IR context of automation and cognitive technologies will eliminate jobs; mostly in search of improved efficiencies and productivity, and to some extent to reduce reliance on expensive, rare and specialized skills. It is futile and economically reckless to think otherwise. The same technologies will, however, create demand for new skills and new jobs. The World Economic Forum (WEF) conducted an extensive study, leveraging insights from business leaders cumulatively responsible for 15 million people across a variety of sectors, skills and seniority levels globally. The study concluded that for every job that is lost to 4IR popularised technologies, 1.74 jobs will be created. This is a net gain in employment!
The Travel and Tourism Competitiveness Report 2019: travel and tourism at a tipping point. Sub-Saharan Africa outpaces the global average for growth in tourism receipts and arrivals, with the island nation of Mauritius (54th) outscoring last year’s top performer South Africa (61st) to rank as top scorer in the region. Due to historically lower levels of economic development, the region continues to face difficulties in health and hygiene, overall infrastructure and the effective selling of cultural and business travel. In the face of this, however, Sub-Sharan Africa shows great untapped potential for natural tourism, which can be better utilized with more development and investment. Some of the region’s greatest improvements came from areas where it traditionally has trailed, including ICT readiness, international openness and price competitiveness. Lesotho (128th to 124th) had the greatest growth in score since 2017; however, it was the average growth in the economies of Western Africa that generated the most subregional improvement (pdf).
- Botswana tells the world it wants to reduce dependence on diamonds. Botswana’s President Mokgweetsi Masisi told an audience at the World Economic Forum on Africa in Cape Town his country would embrace the 4th Industrial Revolution to reduce its dependence on diamonds. “Through our vision, we aspire to transform Botswana from a resource-based to a knowledge-based economy through digitisation and embracing the 4IR. We are committed to a modern Botswana that is not only open to but is also able to compete with the rest of the world.” He said this focus on quality above quantity also applied to the tourism sector, where Botswana had positioned itself as a premium destination for exclusive wildlife viewing, rather than attract a large number of tourists, who would have an impact on the environment. Turning to the geographical challenges, Masisi said the Kazungula Bridge over the Zambezi that would link Botswana to Zambia was being built and would be ready next year. “I cannot give you a specific month when the bridge will be completed, but it will be next year. With regards to the heavy haulage rail links to Namibia and South Africa, that is dependent on the economic viability. As coal is currently out of favour, those projects will not proceed, but the road to Walvis Bay in Namibia is operational and our exporters are making use of the port there.”
The WEF Africa ends tomorrow. The final day’s sessions:
Africa’s Economic Update [Speakers: Christopher Bishop, Albert G. Zeufack, Olusola David-Borha, Lesetja Kganyago]
Regional Strategy: Infrastructure [Speakers: Lois Auta, Vijay Iyer, Sabine Ulrike Dall’Omo, Ghida Fakhry, Popo Molefe]
Fighting Ebola [Speakers: John Nkengasong, Brian Chirombo, Oliver Cann, Neema Kaseje]
Banking the Unbanked [Speakers: Eraj Shirvani, Natalie Payida Jabangwe, Yinager Dessie, Shamina Singh, Gugulethu Mfuphi]
A $500m facility has been granted by Afreximbank to the Manufacturers Association of Nigeria to promote intra-African trade in the continent under the AfCFTA. This was disclosed at a luncheon organised by MAN, where Prof Benedict Oramah, President of the bank, announced his decision to support Nigerian manufacturers. The $500 facility is expected to support the manufacturers and improve their product offerings. It will also enable them to compete against other products that will benefit from the agreement and global brands. The implementation will begin in 2020.
African parliamentarians have been implored to take full advantage of the recently launched AfCFTA, in order to realize effective integration of the continent. “As legislators, we have to play our rightful and expected role to harness our continent through this historic milestone,” he told participants to the CPA Africa region conference. I am confident that together we will steer our various regions and the continent to the much-cherished unity and prosperity,” the EALA Speaker added.
The UN Conference on Trade and Development has released its first-ever Digital Economy Report that maps the flow, data and funds in the world’s digital economy. It outlines the enormous potential gains and possible development costs as more of the world moves, connects and buys online. Wealth creation in the digital economy is highly concentrated in the United States and China, with the rest of the world, especially countries in Africa and Latin America, trailing considerably far behind, according to the report. The United States and China account for 75% of all patents related to blockchain technologies, 50% of global spending on the Internet of Things (IoT), more than 75% of the cloud computing market and as much as 90% per cent of the market capitalization value of the world’s 70 largest digital platform companies. Global internet protocol (IP) traffic, a proxy for data flows, has seen dramatic growth. In 1992, there was about 100 gigabytes (GB) of traffic per day. By 2017 such traffic had surged to more than 45,000 GB per second. Yet the world is only in the early days of the data-driven economy. By 2022 global IP traffic is projected to reach 150,700 GB per second.
The report notes that 40% of the world’s 20 largest companies by market capitalization have a platform-based business model. Seven “super platforms” – Microsoft, followed by Apple, Amazon, Google, Facebook, Tencent and Alibaba − account for two thirds of the total market value of the top 70 platforms. The combined value of the platform companies with a market capitalization of more than US$100 million was estimated at more than $7 trillion in 2017 – 67% higher than in 2015, according to the report.
Strategies for digital enterprises in Africa (pdf): an extract from Chapter V – Assessing the scope for value creation and capture in developing countries. However, almost no African digital enterprises are creating digital infrastructure that is in wide use and becomes embedded. While software production for business customers and users is common, the enterprises seldom, if ever, create digital building blocks for innovators elsewhere in Africa or beyond. While the international expansion of some payment services (such as Paga and M-Pesa) and integrative platforms (such as Flutterwave) is encouraging, greater homogenization and integration of digital infrastructure are needed across African and other developing countries to set them on regionally suitable digital innovation paths. [Digital Economy Report 2019: overview (pdf)]