South Africa hosted the 28th World Economic Forum (WEF) on Africa in September 2019. The WEF is well-known for its annual meeting in Davos, Switzerland, but this meeting held in Cape Town focused on Africa with the theme of “Inclusive Growth in the Fourth Industrial Revolution.” While Industry 4.0 offers exciting opportunities for African manufacturers and small and medium enterprises, a number of obstacles have to be address for Africa to benefit from and take advantage of Industry 4.0.
Current economic climate of Africa
The economic growth in Africa accelerated in the early 2000s thanks to a commodity price boom. Rising prices for industrial inputs such as copper, zinc, and nickel mainly driven by new demand in China resulted in meant higher incomes and more investment on the resource-rich continent. However, the growth stagnated since 2009 due to the financial crisis, slowing down of China’s growth, and slump of commodity price. African economy picked up again from 2017. The GDP growth rate of Africa in 2018 and 2019 was 3.1% and 3.4%, and the economy is projected to grow 3.9% and 4.1% in 2020 and 2021 (the estimate by African Development Bank was made before the Covid-19 pandemic. African Union recently announced that the African economy is likely to shrink in 2020 because of the pandemic).
Africa is a large and growing market. 1.27 billion people or 17% of the world’s population live in Africa in 2018. The continent’s population is projected to grow to 1.7 billion (20% of the world’s population) by 2030 and 2.5 billion (25% of the world’s population). Africa could become an important market for Japanese companies as domestic market in Japan continues to shrink due to decreasing population. Increasing population means that job creation is a top priority for Africa. It is a huge challenge for Africa to take advantage of the opportunities of Industry 4.0 while at the same time managing its unwelcome effects – such as jobless caused by automation. In 2018, Accenture warned that around 5.7 million jobs in South Africa, or 35% of country’s job, will be at risk over the next seven years due to digital automation (More recently, African Union warned that some 20 million jobs are at risk in Africa as the continent’s economies are projected to shrink this year due to the impact of the Covid-19 pandemic).
Drone to bypass the infrastructure challenge
Adequate infrastructure – road, railway, power etc. – is essential for manufacturing in any form to thrive, and it remains to be the key challenges for Africa. There has been much progress in cross-border efforts to expand and upgrade infrastructure network such as the Trans-African Highway network and West Africa Power Pool, but the high indirect costs (cost of logistics, energy and security etc.) continues to hinder development potential of Africa. Access to the Internet is also critical for digitization and adoption of Industry 4.0.
Having said that, this infrastructure challenge creates significant opportunities for new technologies such as drones which do not depend of roads or bridges. For example, the world’s first nation-wide drone delivery service was launched in Rwanda. In Rwanda, the US startup Zipline started the drone delivery of emergency medical supply. Hospitals can order blood via text message and have it parachuted to their location by drone which can carry up to 1.5kg of blood at a time. Today, Zipline is providing the drone-based delivery service in Rwanda and Ghana. Since April this year, the company also started to deliver Covid-19 test samples in Ghana.
Digitization of African agriculture
There has been significant growth in digitalization for agriculture over the last ten years thanks to rapid increase in mobile phone connections. The price for mobile internet in Africa dropping by 30% since 2015. In 2017, the number of mobile phone connections in Sub-Saharan Africa was around 747 million, representing a 75% penetration rate. Thanks to the mobile take-up, even smallholder farmers in rural areas across the continent are getting connected. Interests in the use of digital innovations to make farming in Africa more productive, profitable, sustainable and inclusive are accelerating. More than 2400 delegates from 89 countries attended African Green Revolution Forum 2019 held in Accra, Ghana, in September 2019 under the theme of “Grow Digital: Leveraging digital transformation to drive sustainable food systems in Africa.”
Agrix Tech, a startup based on Yaounde, Cameroon, developed a mobile app for farmers. Powered by AI, the app detects plant diseases at primary stage by analyzing photos of the sick crops, and offers both chemical and physical treatment as well as preventive measures. The diagnosis is delivered through text as well as voice so that it is readily understandable for less literate farmers. Users can also choose standard or pidgin English and French, as well as local languages like Hausa. There are also other apps that provide similar services such as Nuru and PlantMD. It is expected that by 2030, more than 200 million farmers in Africa will use some forms of digital services, ranging from planting advice, weather forecast, marketing of agricultural products to management of supply chain.
Booming AI research
Research capacity and community of experts that support the development of these solutions are also growing steadily in Africa. In April 2019, Google launched the AI Research Center in Accra, Ghana. The AI Research Centre will collaborate with local universities, research organizations and policy makers in Ghana and across Africa to deploy AI in solving challenges in the agriculture, healthcare, education, and other sectors.
InstaDeep, an AI startup founded in Tunis, Tunisia, in 2014, provides a set of AI products and solutions including optimized pattern-recognition, GPU-accelerated insights, and self-learning decision-making systems. Last year, it has raised $7 million in Series A funding – the largest of its kind as an AI startup in Africa. With a mission to democratize machine learning in Africa, its solutions are currently being used in different industries including logistics, mobility, manufacturing, and energy. In Kenya, AIKenya, a network of AI and data science, was established in 2017. With more than 3000 members, AIKenya hosts events, workshops and exhibitions on AI.
Toward inclusive and sustainable Industry 4.0
African industry today still faces many challenges – the lack of adequate infrastructure, slow and limited access to the Internet and skills of local labor. At the same time, the lack of legacy technology or system means that there are opportunities for African countries to leapfrog technology and embrace the trends of Industry 4.0 with a right set of policies and investment. M-Pesa is a good example. Thanks to this mobile-based money transfer, payments and micro-financing service, more than 80% of Kenya’s population have access to formal financial services.
A number of initiatives and action plans were launched at the 28th WEF on Africa, including Africa Growth Platform to help African startups, and drone challenge to demonstrate how drones can be used from cargo delivery to emergency response throughout Africa. Through ABE Initiative, Japanese government supports young African men and women to develop skills and knowledge in various fields for contributing the development of industries in Africa. New technologies may further concentrate wealth in the hands of the already wealthy and the poor may be left even further behind. How Africa addresses challenges and opportunities associated with Industry 4.0 and digitization of the economy will shape the future of Africa as well as the world.