Rwanda recently announced that it requires around USD76 million for implementation of its AI policy. This is exciting indeed and the right way to go. What will be key is that policymakers have a full grasp of the potential impact of the adoption of AI technologies in developing economies, especially with regards to how AI can affect the achievement of the socio and economic objectives of Vision 2050.

Artificial Intelligence (AI) is now a hot topic worldwide, as countries seek to incorporate it in their developmental agendas. It is however important that AI does not put at risk long term social and economic objectives especially in developing economies, but rather expedites them. There is certainly no doubt that AI, if rightly implemented, can significantly expedite socio economic development and leap frog economies into the digital age.

AI is a term used to describe machines performing human-like cognitive processes such as learning, understanding, reasoning and interacting. It can take many forms, including technical infrastructure (i.e. algorithms), a part of a (production) process, or an end-user product. AI looks increasingly likely to fundamentally transform the way in which modern societies live and work and Africa will not be immune from its effects.

AI can indeed be an engine of productivity and economic growth. It can increase the efficiency with which things are done and vastly improve the decision-making process by analysing large amounts of data. It can also lead to the emergence of new products and services, markets and industries and consequently boost consumer demand and generate new revenue streams. However, it is a fact that AI may also have a highly disruptive effect on economies and society as a whole. It is also most likely prone to widening the gap between developed and developing countries, boosting the need for workers with certain skills while rendering others redundant. The latter could have devastating consequences for the labour market. Experts have also warned of its likelihood to increase inequality, depress wages and shrink the tax base. For Rwanda, we therefore need to be careful that we seriously think through what AI we need and ensure that we maximise its benefits without self-sabotaging, especially when it comes to achieving inclusive growth and development as per Vision 2050.

There is a lot of research on the potential economic impact of AI out there and the common findings are that AI will significantly boost economic growth through increased productivity due to the adoption of new innovative technologies and the emergence of new innovative products and services. AI will also see the emergence of a new virtual workforce in a creator economy that will result in the rapid spread and adoption of new ideas and knowledge without borders. The spill over effects will be the emergence of a dynamic knowledge economy where those best prepared with high cognitive and analytical skills will rule. For example, a study by PricewaterhouseCoopers (PwC) estimates that global GDP may increase by up to 14 % (the equivalent of US$15.7 trillion) by 2030.

For developing economies such as Rwanda, the adoption of AI can indeed increase agricultural productivity and therefore regional exports and food security significantly, but we may see less people being involved in manual labour in the sector and this poses a risk of redundancy for the millions who currently are involved in small scale agriculture (70% of population). This is because increased productivity through use of technology will, for example, attract new investors and innovators to the sector possibly leading to market surpluses and cheaper food prices on the one hand, but this can, on the other hand, crowd out small scale farmers who are currently in the majority. A balance will therefore have to be sought but not at the expense of the smaller players whose survival is important if we are to alleviate poverty in the long term.

With regard to industry, AI can definitely expedite Rwanda’s industrialisation leading to more local value addition and beneficiation in the mining sector and thus create wealth and income for local producers, entrepreneurs and workers. This will be welcome for the economy especially our unemployed youths and women, however the adoption of AI will require a highly skilled workforce. (See my article "Towards a knowledge based economy”). Serious efforts and investment will therefore need to be in place in education and in the building of a skilled labour force. An industrial revolution (Industry 4.0) will be driven by automation of routine tasks, which is likely to affect capital-intensive sectors such as manufacturing and transport.

Rwanda’s services sector, which is currently the largest contributor to GDP and growing fast, is also likely to see increased productivity mainly driven by automation and the emergence of new products and services. Areas such as marketing and sales, supply chain management, logistics will be the key drivers. AI will, of course, also have a significant impact on the delivery and access to education, health and other social services where internet connectivity will determine the extent of that impact to the broader society. The education sector in particular poses some challenges where AI can either be destructive through abuse or it can enhance standards. It will therefore be important to monitor how it is used at all levels so that it does not replace learning capacity.

There is no doubt that AI is going to increase competition in the economy in every sector as it will remove barriers to entry as new innovators and adopters will enter new economic spaces without high set up costs. We are going to see new idea and knowledge driven entrepreneurs emerge both from within and outside our borders and have a huge impact on the economy.

It is however important, to acknowledge the reality that although AI has significant potential to boost economic growth and productivity, at the same time it creates equally serious risks of job market polarisation, rising inequality, structural unemployment and emergence of new undesirable industrial structures dominated by a few early adopters of new technologies. Rwanda’s policymakers need to be very careful here to ensure that AI compliments the efforts and resources that have been invested to date in transforming the economy. Continuous debate analysis and a clear grasp of the matters on hand is critical, so that we do not sabotage the human capital potential of the country and the need to alleviate poverty and unemployment while creating new employment opportunities for our youths.

In conclusion, it is agreed that AI can expedite development and economic growth but there is a danger that it may also result in high income inequalities and increasing poverty. Rwanda must carefully consider how to address the risks AI involves, especially when it comes to the distribution of incomes, wealth and opportunities. I am, however, certain that this will be paid attention to.

Vince Musewe is an economist and you may contact him on vtmusewe@gmail.com