Development solutions: There’s an app for that

By Benoit Denis

Africa is the world’s most youthful continent. According to UN World Population Prospects, about 60% of the population of Africa is less than 25 years old, compared to 25% in Europe.

The rapidly increasing youth population, especially in Sub-Saharan Africa, represents a major opportunity for the African continent and the world. To reap the economic benefits of this demographic dividend, while maintaining social cohesion, we need to digitalize Africa now.

Digitalisation is the great leveller of opportunities. In a digital society, access to entrepreneurship is democratic. A smart mind in Africa, like a smart mind in Silicon Valley, only needs a computer and an internet connection to turn a good idea into a successful start-up. We should therefore be investing in education to make digital skills available, in digital infrastructure and digital services serving entrepreneurs, and making financing available for these start-ups to get off the ground, and scale up – a major concern for a continent this size.

Culture of entrepreneurship in Africa

The culture of entrepreneurship is perhaps stronger in Africa than anywhere else in the world. Of Africa’s working-age population 22% are starting new businesses, the highest rate of any region in the world, according to the African Development Bank Group. Harsh conditions have raised generations of risk-takers who pursue self-sustainability.

And the ambition of young Africans is growing. Increasingly, more want to become entrepreneurs and use their creativity to improve life around them.

Digitalisation can help the climate

The digital businesses that can be born and grow as a result of these infrastructure and services will create jobs and economic growth. They can also create potential innovation that improves lives across the world, just like digital solutions born in the US, Asia and Europe.

In addition to all that, investments in digital would have four other positive outcomes.

First, reduced impact on the climate, and improved resilience to climate change. If developing countries were to develop in a similarly CO2-intensive manner as the course taken by industrialised countries over the past century, the effects would be detrimental to the entire world. The more advanced economies thus have an additional incentive, even a moral obligation, to support more sustainable economic development in Africa and elsewhere. This more sustainable economic development can only be achieved through digitalisation and the use of renewable energy.

Digitalisation is the basis for increased energy efficiency, by providing real-time information about demand and supply and bringing those together. Digitalisation replaces physical products with virtual products and services, with a much shallower environmental footprint—for example, replacing travel with online communication.

Digitalisation also allows efficient access to physical goods by optimising commerce. Digitalisation allows for smart farming, which does away with the spraying of pesticides when and where digital sensors say they are unnecessary. The range of sectors where digital solutions can abate greenhouse gases goes on and on.

Additionally, digitalisation can help monitor for climate change risks. For instance, solar-cell-powered sensors that are connected to a mobile network can send real-time information about extreme weather events and help create better climate risk models. The findings can then be distributed efficiently to communities in high-risk locations through fixed and mobile networks.

Third, cross-continental integration. Universal access to affordable connectivity and fully digital services should increase the integration of the continent, allowing for the best solutions to emerge regardless of borders. This should allow for the most promising services and products to gather the necessary consumer base for growth. The African continent represents a tremendous untapped market opportunity for start-ups, before conquering markets elsewhere in the world.

We are already the international financial institution with the largest commitment to the digital economy, with a portfolio exceeding €15 billion globally. In Africa, investment in the digital sector has started to pick up as well. We have approved more than €430 million in the last two years alone. Together with our partners among development finance institutions and in the private sector, we can achieve a lot on our neighbour continent.

Benoit Denis is a senior economist on digital infrastructure at the European Investment Bank