Could there be a silver lining to a pandemic that might be the most significant setback in decades in the global efforts to combat poverty and improve livelihoods? Although COVID-19 has had devastating effects everywhere and has caused a great deal of loss, it has also created incentives to reform and accelerated plans and practices to transform societies in positive ways.
Before the pandemic struck, many African countries had been enjoying above average economic growth fuelled by higher commodity prices, better governance, a rising middle class, and foreign and domestic private sector investment responding to the huge potential in Africa’s increasingly better educated and dynamic youth.
Underpinning much of that growth was the digital revolution that swept the continent in the past decade. By leapfrogging traditional communications technologies, Africans began to experience the benefits of a digital economy.
This is seen most clearly in the emergence of African digital platforms: technology-driven business models that create value by facilitating exchanges between two or more interdependent groups, predominantly consumers and producers. Even before the pandemic, digital platforms had begun to transform how people across the continent shop, conduct business, access education, receive health care, or engage in myriad other activities.
COVID-19 sped up this “platformization” of Africa. When stay-at-home orders went into effect, citizens turned to cell phones, tablets, and laptops to continue life as seamlessly as they could. There were clear limitations depending on the state of network infrastructure in various countries, telecom company usage fees, access to devices that enabled connectivity and even literacy levels. Nevertheless, the trend was clear.
Education is perhaps the best example. When African schools closed doors and students stayed home, educators had to consider alternative avenues for learning. Education technology companies that struggled to convince students, teachers, and parents of their value offering found themselves submerged with demands. The usage of digital platforms soared.
Siyavula in South Africa, for example, saw the number of questions its automated platform sent daily to students increase by 400%. In Kenya, the Zeraki Learning tool from Litemore had 100,000 downloads in the first month after schools closed, compared to a normal 1,000 downloads per month. The number of students using Ghana’s Eneza Education and its SMS-based school curriculum in Côte d’Ivoire, Ghana, Kenya, and Rwanda climbed to more than 10 million.
The pandemic helped digital platforms make existing supply chains better or created new ones. Temie Giwa-Tubosun, a Nigerian entrepreneur, founded LifeBank in 2016 to deliver blood and medical samples more safely and efficiently in Nigeria and Kenya. Hospitals use an online platform to order, for example, specific blood types from registered blood banks. LifeBank then handles delivery in a secure cold chain via bikes, boats, trucks, motorized tricycles, and even drones. Since the pandemic, the firm has expanded to ensure the timely delivery of oxygen tanks to hard-pressed hospitals and clinics. It uses AI and blockchain technology to organize its distribution system, as well as more accessible tools like USSD and SMS system for end-user ease.
Agriculture, which accounts for about one-quarter of the continent’s GDP, also benefited. Nigeria’s Farmcrowdy digital platform connects over 420,000 food value chain participants in a network that offers access to finance, reduces the cost of production, opens market access, and leads to better yields. In the first quarter of 2020, Farmcrowdy had a 20% increase in use, driven by consumers seeking on-line food solutions. Similarly, in Ghana, Farmerline uses mobile and web technology to provide farmers with agricultural advice and weather information to make them more productive.
The pandemic pushed governments as well to appreciate the value of digital platforms and change how they deliver services. Togo’s national government began a social welfare program delivered via a digital platform to help citizens, in particular women, affected by the pandemic. Dozens of other African countries followed suit. As the World Economic Forum observed, “digital tools are being used to overcome some of the biggest cash-transfer challenges for developing countries, particularly with communications, recruiting new citizens, digital ID, screening for eligibility, and delivering payments.”
The pandemic led to a surge in e-commerce activity across Africa. Jumia’s consumer goods platform saw an increase of over 50 percent (from 3.1 million to 4.7 million) in the volume of transactions during the first six months of 2020, compared with the same period in 2019. In areas such as manufacturing, logistics, health, energy, transport, real estate, financial services, and even waste management, the pandemic pushed African individuals or businesses to discover the benefits of digital platforms. This created employment directly through the operations of platforms themselves but also via increased demands on platform suppliers and their own sub-contractors.
Undoubtedly, digital technologies are a game-changer for Africa, not only in increasing productivity and improving the way people on the continent live, but also by becoming a sustainable source of economic growth and job creation. However, the rise of digital platforms in Africa in and of itself is not a panacea. The resulting gig economy exposes workers to long and unpredictable hours with little pay and sometimes no social protection benefits.
Furthermore, a recent report by the World Bank noted that this trend needs “to be complemented by investments in physical infrastructure, electricity, literacy, and smart regulations.” Impact investors must seize this opportunity to support Africa’s economic growth and support its ongoing digital revolution and platformization by:
- investing in innovative ventures;
- helping local SMEs access more liquidity or build their internal capacity; or
- supporting the digital and physical infrastructures that power these digital platforms
Such efforts will play an integral role in enabling widespread access and affordability of digital products and tools for individuals and businesses.