Development finance institutions have a key role to play in ensuring Africa is not left behind
With the world fast approaching the fourth industrial revolution, the role of local development finance institutions (DFI’s) in terms of ensuring that Africa is not left behind will be crucial.
There are fears the world over that automation and artificial intelligence could lead to wholesale job losses which will further entrench inequalities particularly in Africa.
However, while some of the major regions are embracing new technologies which will come to define the world in the not so distant future, it appears that Africa’s education and labour system is not prepared for the radical changes that will come about, technology analyst Arthur Goldstuck observed recently.
Several studies have shown that the fourth industrial revolution, which involves a fusion of artificial intelligence and automated machines, has the potential to disrupt every industry.
“Neither our education or labour system is ready for the shifts that will come…we need frank engagement by these sectors with the necessities of the future, rather than the politicking that has already bedeviled them for decades,” Goldstuck said, adding that SA and the broader continent needs to respond to the technological changes on a long term basis.
“For the long-term, we have to change our entire education system to prepare students for a future that will require problem-solving skills and collaboration abilities. Because technology will evolve too fast to prepare for specific technologies in the education system, the approach must be one that evolves abilities like thinking, analytics, problem-solving and collaboration.”
Talent development and up-skilling will be crucial for the entire continent if we are to build a much more inclusive economy.
This is where DFI’s should step in.
DFI’s, such as the Land Bank and the African Development Bank aim to have a developmental impact in the markets in which they invest, alongside the requirement for sustainable returns. They are typically majority-owned by national governments and source their capital from national or international development funds or benefit from government guarantees.
For these institutions at the moment there should be an emphasis on bankable projects in the tech space, including improving Africa’s connectedness, and perhaps crucially, preparing future generations for a world in which tech skills will become the difference between success and failure.
A focus on education to develop those skills will benefit the continent immensely and eventually reduce inequalities.
Education systems require massive investments particularly in key subjects in the sciences and technology.
In a recent article, Prof Nicholas Biekpe the director of the Development Finance Centre and MCom Programme at the University of Cape Town Graduate School of Business, pointed out that over the years, such investments have proven to be the key driver of significant economic growth elsewhere in the world.
The four Asian Tigers (Hong Kong, Taiwan, Korea and Singapore) have been some of the fastest growing countries in the world in recent times. Some of the main factors driving their growth, noted Biekpe, has been human capital development, including significantly upgrading the educational standards of the workforce and investing in research and development. This is a model that Africa, with the assistance of DFI’s, should be looking to emulate. However, there is a need to improve the functioning of the DFI’s.
According to Biekpe, for DFI’s to improve their success rates and contribute to economic and social development, there is a need for clear and focused mandates, robust corporate governance standards, acceptable level of government control, appropriate lending and risk management technologies, and the ability to recruit and retain qualified staff.
David Meads, the president of Cisco Africa, recently wrote that in the context of the fourth industrial revolution and its disruptive effect on all economies, there are key things to consider as the continent aims to maintain its “Africa rising” narrative. He said, among other things, the development of digital skills will be paramount.
“As Africa becomes more driven by services and less dependent on commodities, the continent must foster digital skills as part of transitioning its population from low-skill and low-pay jobs to high-skill and high-pay jobs.”
If Africa focuses on improving the education system,there is no doubt that the continent can reach many of its developmental objectives and realise its full potential, which will benefit many Africans for generations to come.