potential and risks for Africa


Klaus Schwab, founder of the World Economic Forum, valorize that the most important challenge facing humanity today is to understand and shape the new technological revolution. What exactly is this revolution, and why is it important, especially for Africa?

The “Fourth Industrial Revolution” captures the idea of ​​the confluence of new technologies and their cumulative impact on our world.

Artificial intelligence can produce a medical diagnosis from an x-ray faster than a radiologist and with pinpoint accuracy. Robots can make cars faster and more accurately than assembly line workers. They can potentially base metal mines such as platinum and copper, essential ingredients for renewable energy and carbon cleaning technologies.

3D printing will change manufacturing business models in almost inconceivable ways. Autonomous vehicles modify traffic flows avoiding bottlenecks. Remote sensing and satellite imagery can help locate a blocked storm drain in minutes and prevent city flooding. Vertical farms could solve food security problems.

Machines are still learning. But with human help, they will soon be smarter than us.

The first industrial revolution spanned from 1760 to 1840, embodied by the steam engine. The second began at the end of the 19th century and made mass production possible. The third began in the 1960s with mainframe computing and semiconductors.

The argument for a new category – a fourth industrial revolution – is compelling. New technologies are developing with exponential speed, breadth and depth. Their systemic impact is likely to be profound. Policymakers, academics and businesses need to understand why all of these advances are important and how to fix them.

So why is the Fourth Industrial Revolution so important – specifically for Africa? And how should the continent approach the risks and opportunities?

Exciting opportunities

The most exciting dimension of the revolution is its ability to deal with negative externalities – hidden environmental and social costs. Like Schwab wrote:

Rapid technological advancements in renewables, energy efficiency and energy storage are not only making investments in these areas increasingly profitable, boosting GDP growth, but they are also helping to mitigate climate change, l one of the great global challenges of our time.

The growth trajectories of some countries may follow the hypothesis Environmental Kuznets curve, where income growth generates environmental degradation. Part of the reason is that natural capital is treated as free and carbon emissions as free in our global national accounting systems.

The hypothetical environmental Kuznets curve.

New technologies make it possible to truncate this curve. It becomes possible to switch to a “circular economy», Which dissociates production from constraints linked to natural resources. Nothing that is manufactured in a circular economy becomes waste. The “Internet of Things” allows us to track material and energy flows to achieve new efficiencies along product value chains. Even the way energy itself is generated and distributed will change dramatically, relying less and less on fossil fuels.

Perhaps more importantly for African countries, renewables therefore offer the possibility of decentralized, deep and broad access to electricity. Many have yet to reap the benefits of the Second Industrial Revolution. The fourth can finally provide electricity because it no longer depends on a centralized grid infrastructure. A smart grid can efficiently distribute energy to a number of homes located in very remote locations. Children can study at night. Meals can be cooked on safe stoves. In essence, indoor air pollution can be eradicated.

Beyond renewable energies, the Internet of Things and blockchain technology express a vision of financial inclusion that has long been elusive or subject to exploitative practices.

Risks

No revolution comes without risks. One in this case is rising unemployment.

Developing countries have moved from manufacturing to services well ahead of their more developed counterparts, and to fractions of per capita income. Dani Rodrik calls this process “premature deindustrialisation”.

The shares of employment in the manufacturing sector, as well as its added value to the economy, have long been declining in industrialized countries. But it is also declining in developing countries. This is unexpected, as the manufacturing sector remains the main channel for modernization, job creation (especially by absorbing unskilled labor) and poverty reduction. Manufacturing industries that were built under a wall of post-independence protectionism are starting to decay.


Rodrik D, “Premature deindustrialisation”, Journal of Economic Growth, 21, 2016, p. 19.

The social effects of unemployment are devastating. Demographic modeling indicates that the African population is grow up quickly. For optimists, this means a “dividend” from young producers and consumers. For pessimists, this means a growing problem of youth unemployment that is hampered by poor governance and weak institutions.

New technologies threaten to amplify current inequalities, both within countries and between countries. Mining – usually a large employer – may become more characterized by the keyhole than by open heart surgery, to borrow a medical metaphor. This means driverless trucks and robots, all fully digitized, performing non-invasive mining. A large proportion of almost 500,000 people employees in South African mining alone risk losing their jobs.

Rising inequalities and stagnating income are also socially problematic. Unequal societies tends to be more violent, have higher incarceration rates and have lower levels of life expectancy than their more equal counterparts.

New technologies can further concentrate the benefits and value in the hands of the already wealthy. Those who did not benefit from earlier industrialization risk being further left behind.

So how can African countries ensure that they exploit this revolution while mitigating its risks?

Look ahead

African countries should avoid a propensity to return industrialization of import substitution early independence programs. The answer to premature deindustrialisation is not to protect infant industries and manufacture expensive at home. Industrialization in the 21st century has a totally different vibe. In terms of policy, governments should employ systems thinking, working in concert rather than silos.

Rapidly improving access to electricity should be a key political priority. Governments should view energy security as a function of investments in renewable energy and the foundation for future growth.

More generically, African governments should be proactive in adopting new technologies. To do this, they must stand firm against the potential political losers which constitute obstacles to economic development. It pays off – in the long run – to create inclusive institutions that promote widespread innovation.

There are serious advantages to being a technology pioneer. Governments should develop clear strategies that have all the benefits of a fourth industrial revolution. Otherwise, they risk being left behind.

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