Digital Africa: How Big Tech and African Startups Are Reshaping the Continent

Abstract

Over the past two decades, Africa has become increasingly connected as more and more Africans gained access to the internet and mobile phones. Building on this enhanced connectivity, a new wave of African startups has emerged, tackling some of the continent's biggest challenges with "homemade" digital technologies. There are growing signs that these new technologies could provide a leapfrogging opportunity for Africa. Africa has seen massive improvements in internet access and mobile phone adoption, due to investments in the continent's digital infrastructure, particularly mobile broadband networks. At the same time, there are significant connectivity gaps between Africa and the rest of the world as well as between and within African countries. These may widen as Africa's digital infrastructure faces capacity pressures from a rapidly expanding internet user base. Tech giants, primarily from the United States, have recognised a business opportunity in Africa's existing connectivity gaps and have begun investing heavily in subsea data cables, data centres, and technology hubs. It is critical that these investments bridge Africa's connectivity gaps - a growing body of evidence shows the wide-ranging positive socio-economic impacts of improved internet and mobile phone access. Africa's enhanced connectivity has led to the emergence of a new wave of growth-oriented technology startups, building innovative and "homemade" digital technologies for widespread use. Digital platforms in particular are increasingly disrupting Africa's major, mostly informal service, retail, and agricultural sectors. Anecdotal reports suggest that digital technologies from African startups can be transformative for individuals, businesses, and farms, but there is very little systematic empirical evidence on their local impacts. Such evidence is urgently needed to harness their full potential for inclusive economic development in Africa. As Africa's digitalisation accelerates, African governments must develop policies that simultaneously harness the benefits of new technologies and ensure that lagging countries and segments of society do not fall further behind. Policies should incentivise private investment in Africa's digital infrastructure and encourage entrepreneurship and innovation, while preventing unregulated new technologies from harming consumers. In addition, digital skills need to be strengthened to prepare African countries for the coming digital century.