In our recent report, we take a hard look at this question. Focusing on Africa’s current economic development challenge—how to speed up the process of economic transformation—we examine the potential of 4IR technology to support and accelerate this process. A reasonable expectation might be that 4IR technology has a lot to contribute since technological innovation has been one of the main drivers of economic growth and development since the invention of the steam engine and electricity. However, our report argues that for Africa, the key policy question is not “What can 4IR technology do for Africa,” but rather “What are Africa’s productivity bottlenecks, and could 4IR technology help relieve them?” In other words, for the owner/operator of a business or farm, the question is not “What about robots?” It is “What is my current productivity problem, and if I used this technology would it produce a quick and specific response to this problem?”
From this perspective, we do share the excitement for some of the potential of 4IR technology to help farms and also formal and informal firms in Africa to reduce production costs, grow their markets through productivity improvements, and increase employment and earnings. We are most optimistic about:
In the service sectors, 4IR presents an opportunity for technology-enabled new products and processes. Demand grows with income, so opportunities abound as African countries restart the economic growth process. In many service sectors where formal firms and employment dominate, technology mostly complements rather than substitutes for labor, so technology adoption should lead to the creation of new formal wage jobs for young and educated jobseekers. In the large nonfarm informal sector (63 percent of total employment), adoption of 4IR technology could also lead to improvements in job quality (e.g., earnings, income security)—for example, through the use of online marketplaces and platforms to find customers and meet their needs efficiently and safely.
In the agricultural sector, by reducing information frictions which increase risk, 4IR technology could support productivity gains, an increase in farm earnings, and a reduction in rural poverty, as well as bring important environmental benefits. But first, long-standing risks inhibiting technology adoption need to be overcome, leading us to conclude that technology-enabled agriculture will not be a feature of small- and medium-scale farming in Africa very soon. Technology adoption will not lead to a large expansion of employment, as this sector has been losing its share of employment for years owing to better opportunities elsewhere.
