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Digitalization in Africa

A few years ago, the head of the Center for Middle East and Africa, Khaldoun Dia-Eddine, joined a team of experts asked by a leading credit card company to develop a social media communication strategy for the member states of the Gulf Cooperation Council (GCC). A need was identified for the company to change its business model or adopt new solutions based on market evidence, especially in developing markets. The digitization of customer relationships and the creation of customer experience through social media were seen as unique opportunities for increasing the company’s presence in markets where customer interaction is essential.

At the time, the social media were a key factor in the digitization of emerging countries, including GCC countries. Digitization allowed them to partially close their technology gap and be integrated faster into the global economy as a result.

Africa’s real GDP growth for 2017 is forecasted at 3.5 % a (Europe 1.9%). The continent has 1.2 billion inhabitants, 19.2% of which are between 15-24 years old. By 2030, this number will have risen to 25.8 % (compared to only 6.3% in Europe). Moreover, Africa is one place where the digitization phenomenon is happening despite a great delay in infrastructure development. To tap Africa’s huge natural and human potential, many elements need to be considered: higher stability, better and sound governance, a better education, the alleviation of poverty, a strong infrastructure, and connection channels to the world’s economy. Digitization may not be the answer to everything, but it should certainly be a factor in addressing all these issues.

What distinguishes digitization in Africa? According to Djembe Communications, a Moroccan consultancy, one element is the existing talent in Africa able to create innovative market content. Other elements include a growing market as a result of the growing middle-class, the existence of community leaders (influencers), and the ability to build and mobilize communities around ideas, causes, or brands. In a recent study, KPMG rated Africa as digitally mature. It suggested that it was ripe for all kinds of transformations and more open than ever for global business investment. On the other hand, the study also mentioned relatively slow Internet connections and low literacy rates, as well as a general lack of data, a weak banking sector, and the need to pay in foreign currency in some countries. According to KPMG, the real challenge will be to integrate all stakeholders and to collaborate more effectively towards digitization, which will require a shift in traditional thinking.

Many companies working in Africa have contributed to or benefited from the digitization wave. They have adapted their business models or solutions accordingly. For example, Djembe Communication bases all its customer communication campaigns on short videos. It also uses micro-targeting tactics, search engine optimization, discussion groups, community events, as well as influencers and video bloggers.

The pharmaceutical giant Novartis is active in 43 sub-Saharan countries. It wants to increase access to healthcare through mobile communication. Its challenges include limited data, people’s lack of health knowledge, the complexity of the supply chain, and the increasing burden of non-communicable diseases. Novartis benefits from the fact that many African markets are still untapped. Local entrepreneurship is booming. Other advantages are the relatively low entry costs concerning new technologies and the reasonable reliability and affordability of mobile communication. Taking these factors into account, Novartis has established a number of applications to tackle the supply chain cycle challenges of essential medicines and build capabilities, such as Health Africa and “SMS for Life”.

Another example of a company benefiting from the digitization wave in Africa is Rack Centre, a company launched in 2013. It is the leading data center provider in West Africa offering a colocation and disaster recovery service. Its services allow companies to avoid fixed infrastructure investments and the growing complexity of managing power issues in many regions in Africa. Rack Centre’s ultimate objective is to improve Internet penetration in Africa, raising it from 29% to the global average of 54%.

These few examples give an indication of the future of this region and the opportunities offered to companies riding the digitization wave.