A robust digital infrastructure is critical to enhance industrialisation in Africa, participants at a high-level dialogue of the ongoing annual Conference of African Ministers of Finance, Planning and Economic Development stressed on Monday, March 22.

The future of growth will be digital, it was empathised during the two-day meeting running under the theme: "Africa’s sustainable industrialisation and diversification in the digital era in the context of Covid-19," in Addis Ababa, Ethiopia under virtual participation.

Opening the meeting, Abiy Ahmed Ali, the Prime Minister of Ethiopia, first noted that this timely topic points to the need for African economies to respond effectively to the accelerating pace of digital transformation and the generational challenge of climate change.

Abiy stressed that" Among rapid global technological and environmental shifts, and a new normal introduced by the Covid-19 pandemic, African leaders at every level are tasked with developing innovative responses."

These innovative responses, Abiy said, need to respond to the livelihood needs and prosperity aspirations of a growing youthful population - particularly, one year into the Covid-19 pandemic.

Abiy said: "Each country and its circumstances may be different, but in this disruption-prone world, each one of us must get at least three critical agenda items right: the digital transformation; the climate-smart economy; and, an institutional framework for implementation and accountability."

Young Africans creating e-solutions, e-commerce growing

Rwanda’s Minister of Finance and Economic Planning, Uzziel Ndagijimana, who was lead speaker during a panel discussion noted that digitization as one of the key aspects of the meeting's theme is timely.

Africa is making progress embracing digital technologies and has talented and enthusiastic youth already doing a good job, he said, but more efforts are needed in terms of hard and soft infrastructure, capacity building, and ease of access to finance for young entrepreneurs.

A report launched March 20 on the impact of Covid-19 on e-commerce in Africa, shows that the pandemic, bad as it is, has opened up new opportunities for the continent’s digital economy.

Ndagijimana said: "We have all seen how digital technologies have been helpful in ensuring some business continuity during lockdowns. Digital payments increased significantly; young Africans are creating various e-solutions and e-commerce is growing, although still at infant stage."

In Rwanda, he said, pre-pandemic inventions in IT infrastructure and capacity building proved very useful during the pandemic.

For example, the Minister noted, 62 local e-commerce platforms have been instrumental in this period "supporting thousands to do business."

The value of mobile payment services in the country increased by 87 percent while the value of mobile banking rose by 131 percent, he noted. As noted, retail e-payments also increased from 34 percent of GDP in 2019 to 76 percent in 2020.

More liquidity

Vera Songwe, the Executive Secretary of the UN Economic Commission for Africa (ECA), said most African countries are projected to lose two to three percent GDP to climate change by 2030, in conservative estimates.

The ECA estimates that between 49 million and 161 million Africans have fallen into poverty due to the pandemic, with an estimated 100 million as the most likely scenario.

Songwe, who is advocating for international financial institutions and others to provide more liquidity to allow African countries build forward better said "we need more liquidity" to respond to the crisis by, for example, creating more jobs, and enhancing social protection on the continent.

In an effort to improve access to global financial markets for African countries, the United Nations Economic Commission for Africa (ECA) has been pushing for a Liquidity and Sustainability Facility (LSF) which would lower borrowing costs for governments and give them access to funding to make it through the crisis.

Songwe noted that the LSF is an opportunity to be transformational.

The continent, she also said, needs a comprehensive package - including better public finance management, SDG linked bonds, debt sustainability, and its own financial institutions - to build forward.