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Africa Must Innovate Her Way Out Of Poverty – Fourth Industrial Revolution and Africa’s Opportunity to Close the Economic Gap

December 31, 2019

By Ben Kazora*

Industrial Revolution

The first industrial revolution dates back to the 1700s. This saw the transformation of agriculture societies into industrialized and urban ones. Thomas Newcomen’s design of the steam changed everything and allowed free movement of goods and labor. Goods that had once been crafted by hand started to be produced in mass quantities by machines in factories, thanks to the introduction of new machines and techniques in textiles, iron making and other industries.

Second Industrial revolution was marked by rapid industrialization and standardization. This took place between 1870 and 1914 and came with the expansion of the electronics, steel and textile industry. These advancements enabled the wide spread of technologies such as telegraph, railroad networks, water supply, sewage systems and all. It was actually the telegraph and railroad lines that started the mass movement of ideas and people leading to the first signs of globalization, a prelude to today’s society.

We are presently in the ending phase of the third industrial revolution better known as the digital revolution. This has seen the advent of super computers and rapid advancements in the internet that have further redefined how people and business transact.
It’s also safe to say that we are standing on the palisade of the forth industrial revolution. Unlike the previous other iterations, this revolution seeks to marry physical, digital, and biological spheres to foster an inclusive, human-centered future. Another stark difference with the former revolutions is the deep rooted desire to leverage technology to achieve the greatest good for the most number of people possible.

Moving forward we are expecting to see more prevalent use of technologies such as 3-D printing. This phenomenon has brought down the costs of labor and material. Fifth generation wireless technology (5G) capable of reaching 100Gbps is focused on increasing bandwidth to be smarter and faster than ever before. It’s this technology that will power the self-driving cars and internet of things (IoT) just to mention a few.

Self-Driving Cars

Since May of 2019 UPS has been using self-driving trucks to ship goods between Phoenix and Tucson, Arizona. Recently Land O’ Lakes announced that they delivered butter from Tulare, California, to Pennsylvania (almost 2,700miles) using self-driving trucks. These self-driving vehicles are designed to optimize traffic and fuel. It’s been reported that 1.24 million people die each year of collisions and this number is expected to reach 2.2 million in 2030 according to the World Health Organization (WHO), According to a study by the Eno Centre for Transportation, if about 90% of cars on American roads were autonomous, the number of accidents would fall from six million a year to 1.3 million and deaths would fall from 33,000 to 11,300.

Internet of Things (IoT) devices are taking human interaction out of the equation. Today, consumers are using the IoT to make restaurant reservations, monitor their exercise progress and overall health, and receive coupons for a store only by virtue of walking by the business in question. Take an example in agriculture, devices using IoT technology can sense soil moisture and nutrients, in conjunction with weather data, better control smart irrigation and fertilizer systems. If the sprinkler systems dispense water only when needed, for example, this prevents wasting a precious resource. In manufacturing RFID and GPS technology can help a manufacturer track a product from its start on the factory floor to its placement in the destination store, the whole supply chain from start to finish. These sensors can gather information on travel time, product condition, and environmental conditions that the product was subjected to. According to a Cisco report, the next decade will see IoT devices creating $14.4 trillion worth of value across several industries.

The Ghana and South Korea Development Disparities

In 1957, Ghana was the richest nation in sub-Saharan Africa with a per capita income of $490. That was nearly the same as South Korea which had a per capita income of $491. By the early 1980’s Ghana’s per capita income had been reduced to $400 while South Korea’s per capita income had grown to a whopping $2,000. By 1990 South Korea’s per capita income was ten times larger than Ghana ($4,832 versus $481). Today South Korea’s GDP per capita stands at $26,761 while that of Ghana is $1,807. So what happened here?
South Korea like many other Asian countries embraced innovation and creativity. The first step was to revolutionize the education standard. With this we saw the illiteracy rate falling from 80% to less than 10%. Towards the end of 1980s 37% of South Korean students had some form of higher education. South Korea notched top scores worldwide for manufacturing value-added as well as for tertiary efficiency – a measure that includes enrollment in higher education and the concentration of science and engineering graduates,” said a recent Bloomberg report. Companies such as Samsung and LG have become global leaders in the area of consumer electronics thanks to their cutting-edge technology and innovative product designs.
 
Coupling with education, innovation and technology are the key factors that have underpinned South Korean export competitiveness and fueled the country’s remarkable economic rise over the past decades. The growth rate has been so impressive that the East Asian nation went from being one of the poorest countries in the 1960s to becoming the world’s 12th largest economy in 2019, according to the World Bank. South Korea’s $1.63T economy is bigger than Saudi Arabia and Turkey combined. America’s global competitiveness is hinged on her innovative capacity and atmosphere. We have seen how digital technologies have been the vital factors of national security and economic growth. Additionally, these technologies are at the root of many advancements in complex sciences, healthcare, communications and industry to mention a few. Innovation and technology are the key factors that have underpinned South Korean export competitiveness and fueled the country’s remarkable economic rise over the past decades.
There is a clear correlation between GDP growth and investment in innovation, research and development. In the 15 years between 2000 and 2015 the US spend on research and development almost doubled from $268.6 billion to $496.6 billion. In the same period the US GDP grew from $10.28T to $18.12T. In the same time, India’s investment almost tripled while China’s increased tenfold and the results are similar. 
 
In addition, technological advances are helping to bring down the cost of renewable energies, such as solar and wind energy, handing them a greater role in the global economy’s energy mix, with significant effects for both producers and consumers of fossil fuels. A simple example of the benefits; in the developing countries a slight reduction to the cost of gas at the pump brought about by technology can mean lowered cost of transportation which means lower cost of food, cement, clothing just to mention a few. This also means additional savings at the pump allowing one to save more, invest in stocks and share just to mention a few. A new McKinsey Global Institute report, Beyond the supercycle: How technology is reshaping resources speaks to how technology can aide in the further unlocking of $900B to $1.6T in savings globally by 2035. This is more than the GDP of Spain.

What Can Africa Learn From South Korea?

In my humble opinion, most African countries with a few exceptions like Rwanda have decided to first become rich and then focus on people. This is the exact opposite of what nations like Korea did and in line with what Rwanda’s Kagame is doing with Presidential Scholars and other programs. It’s very true that we aren’t certain how the economies of the future will look like. So investing in people is the more ideal route to pursue.
South Korea is intent on joining the globes top 4 nations in artificial intelligence (AI) have invested $2B in programs to ensure this vision is realized by 2022. Some of the key initiatives include 6 new AI institutions that seek to churn out more than 5,000 engineers.
Like South Korea, Africa has to look inwards and seek homegrown solutions that work for Africa. South Korea resides in the same region with China and Japan. China low labor costs. Japan was leading the way with high tech and capital intensive industries. Today’s 10 youngest populations are all in Africa. Average ages include Niger (14.8 years), Uganda (15.9 years) and Zambia (16.9 years). By 2034 Africa will have the youngest working age population. Additionally, Times magazine has estimated Africa’s urbanization rate to be at 37%. This is more than India’s and at par with China and is expected to be the fasted between 2020 and 2050.

South Korea invested in building national consensus in with regards to the direction of the major economic policies. Concurrently, there was high level of government support of the local entrepreneurs that helped them optimize the business opportunities available. Above all, the key miracle of South Korea has been in the mindset of the population that allows the population to successfully adopt to challenges while minimizing risks.

The way forward

An IMF report released in April, 2017 confirmed that oil-exporting countries and other resource-intensive countries in Sub-Saharan Africa were showing the worst economic performance in the region. Even those that enjoyed good governance were also experiencing similar challenges. For long we as a continent have relied agriculture produce that remain vulnerable the instability of international market prices.
Even a country like Botswana that enjoyed a reputation for good governance and were regarded as models in Sub-Saharan Africa experienced problems related to a commodity-dependent economy. Traditionally, African economies which are primarily reliant on agricultural produce like cacao, coffee and tea have experienced vulnerability with the fluctuation of international market prices. While commodity prices have been recovering in 2018, various economic forecasts point to rather sluggish growth for the resource-rich African countries.
The African Union has come up with agenda 2063 that is intended to inspire nations to achieve a structurally transformed economy. This primarily leans on an industrialized Africa. It’s evident that without proper investment in human capital development and more in innovation and technology, this dream will never be realized.

Stephen Hawking once famously said, “Intelligence is the ability to adapt to change.” A decade ago terms such as internet of things, machine learning and artificial intelligence weren’t common phrases. When I graduated with my Bachelors from Purdue University in 2008 we were only then beginning to properly embrace nanotechnology and its vast applications. Today, most labor intensive tasks have been taken away from humans and are being dealt with purely by machines. The world is changing at such a high pace that in a few decade most of these novel technologies will also be obsolete. The only way to keep up is with heavy investment in human capital and constant investment in research and development. Labor force must be retrained, upskilled and transformed.

One way to achieve this would be strategic partnerships between academia and private sector to allow the effective transfer of knowledge. This allows university students to constantly keep up with evolving trends of the real world. Curriculums will also need to be constantly updated to this effect. A The McKinsey Global Institute’s report posited that Artificial Intelligence (AI) alone has the potential to add up to $13trillion to the current global GDP by 2030. Automation of labor alone is said to contribute around $9trillion and innovation in products and services could increase $6trillion.
The renown American economist Robert Shiller once said “you cannot wait until a house burns down to buy fire insurance on it. We cannot wait until there are massive dislocations in our society to prepare for the Fourth Industrial Revolution”. Indeed the time for Africa to prepare herself for the fourth industrial revolution is yesterday. African governments must also encourage experimentation. Like venture capitalists do with their investment, African governments should also take a portfolio approach to scripting policies. This way success balances failure and models that work can be scaled up. A November 2019 World Bank article has show has the Ethiopian government is developing “portfolio” of industrial parks as a means to making Ethiopian the continent’s manufacturing hub. We have also seen the Liberian government experiment with outsourcing school management to private sector entities. A recent report from poverty action has shown that, this has actually yielded positive results. After 3 years of this experiment these schools raised their test scores by 0.21 standard deviations in math and 0.16 standard deviations in English.

Conclusion

African must shift focus to creating more adaptive governments.
African private sector should be the driver of the innovative change while the government remains the enabler through creative adaptive governments as well as appropriate allocation of resources.
Business leaders and entrepreneurs should remain focused on a few key consumer behaviors:

  • Drive mass personalization of products and services
  • Focus on creating maximum value from a single transaction by using Artificial Intelligence (AI) and other technologies to best predict future needs and points of engagement.
  • There should be unwavering emphasis on collaboration with multiple partners beyond one’s supply chain network.
  • Companies must embrace risk to foster growth as well as providing the best value for the customers. Only in doing so will these companies keep up with or stay ahead of the competition.

*The author is  co-founder of Limitless Software Solutions and can be reached via emails ben.kazora@limitlesssoftwares.com and bkazora@alumni.purdue.edu.

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