## The Foundations of Technological Transformation in Africa

_IMF News, December 15, 2017_

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## Bibliographic details
- Authors: Christine Lagarde
- Published: December 15, 2017

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### 1. Introduction — framing and demographic context
- Speech delivered December 15, 2017, Addis Ababa, Ethiopia by Christine Lagarde, Managing Director, International Monetary Fund.
- Central premise: technological innovation requires a strong foundation — roads, education and health systems, public involvement, and public-private partnerships — to flourish.
- Demographics and opportunity:
  - Youth in Africa already comprise 75 percent of the working age population.[1]
  - By 2030, over half of new workers entering the global labor force will come from Africa.[2]
- Risks and macro context:
  - Global IMF projections: 3.6 percent growth for 2017 and 3.7 percent for 2018.
  - Africa-wide projections: growth expected to reach 2.9 percent in 2017 and 3.5 percent in 2018 and 2019.
  - Variation across countries: nearly one-third of nations growing at around 5 percent; many commodity exporters experiencing a slowdown.
  - On a GDP per capita basis, 15 countries are expected to see a decline this year (encompassing about 40 percent of the population).
  - Public debt concern: public debt has reached 50 percent of GDP in nearly half of sub-Saharan Africa’s countries.

### 2. Preconditions and enablers for innovation
- Foundational public goods and institutions highlighted as prerequisites for technology to deliver inclusive benefits:
  - Roads, education, health systems.
  - Access to electricity and reliable infrastructure.
  - Access to credit and financial integration.
  - Streamlined regulation and access to markets to encourage competition and innovation.
  - Public support for basic research.
- Financial inclusion and mobile money:
  - In 2015, nearly 35 percent of the adult population in sub-Sahara Africa had a mobile money account, the highest percentage in the world.[3]
  - In countries such as Côte d’Ivoire, Somalia, Tanzania, Uganda, and Zimbabwe, people were more likely to have a mobile account than a traditional bank account.[4]
- Energy and infrastructure:
  - Hundreds of millions of people live without access to power on any given day.[5]
  - Solar solutions (examples):
    - M-kopa sells solar panels with small deposits and pay-off over a year through mobile banking; the system has brought electricity to over half a million homes.
    - New solar stations in Burkina Faso, Zambia, Benin.
    - Morocco constructing a facility that will become one of the largest solar power plants in the world.
  - Infrastructure gap: estimated to be over $90 billion annually.[6]
- Local innovation examples:
  - Andela training and matching African workers for tech jobs.
  - A community innovation lab in Togo developed the first 3-D printer made entirely of electronic waste and plans to place 3-D printers in every school within a kilometer of the lab.[7]

### 3. Government use of digital tools — fiscal and service delivery gains
- Fiscal savings and efficiency from digitizing government payments:
  - IMF analysis in Digital Revolutions in Public Finance: countries across the developing world could save around one percent of GDP by updating government payment systems from cash to digital; in some places in Africa the potential is even higher.[8]
  - Nigeria example: digital payments could save between 5 to 9 billion U.S. dollars, or about 1.7 percent of GDP.[9]
- Service delivery and crisis response:
  - Sierra Leone: mobile wallet system during the Ebola outbreak saved lives and improved resource allocation.
  - Cote D’Ivoire: Ministry of Education (2011–2014) shifted all tuition payments from cash to digital — result: fewer lost fees, less fraud, and new investments in the school system.
  - Ghana pilot: blockchain platform bitland used to record land sales; note that approximately 90 percent of agricultural property is unregistered in Ghana.[10]
- Broader benefits of digitalization:
  - Potential to reduce corruption, increase revenues, generate investments in health and education, and contribute to meeting the 2030 Sustainable Development Goals.
  - Digital tools can enhance transparency, accountability, and citizen access to information.

### 4. IMF engagement: capacity building, innovation, and knowledge sharing
- Practical IMF support and examples:
  - 2016: sub-Saharan Africa was the largest recipient of IMF capacity development efforts.
  - Six IMF capacity development centers across Africa enable rapid response to emerging needs.
  - Free online courses have trained nearly 30,000 individuals worldwide, including many in Africa; courses cover public financial management, debt sustainability analysis, and other topics.
  - Example of creative problem-solving: 2016 Dakar “hackathon” with the Senegalese Ministry of Finance — 100 young entrepreneurs proposed solutions to improve tax collection (apps for offline filing, document-simplifying software, websites for taxpayer access).
- Role promoted for the IMF:
  - Support members in harnessing technology to improve economic conditions and strengthen institutions.
  - Promote best practices and knowledge-sharing across countries and continents.

### 5. Policy implications and recommendations
- Build and protect foundational public goods:
  - Invest in roads, education, health systems, and reliable electricity to underpin technological adoption.
- Promote financial inclusion and digital payments:
  - Encourage transition from cash to digital government payments to realize fiscal savings and reduce leakage.
- Support public-private partnerships and regulatory reform:
  - Create environments where entrepreneurs are rewarded, markets are accessible, and competition spurs innovation.
- Invest in human capital and skills:
  - Train youth in digital skills and support community innovation labs and tech training programs like Andela.
- Prioritize energy investment and closing infrastructure gaps:
  - Expand scalable solutions such as solar to reach unelectrified populations and enable manufacturing and digital services.
- Foster cooperation:
  - Strengthen cooperation between public and private sectors, between people, and among multilateral institutions (IMF, UNECA) to scale successful models.
- Continue capacity development and knowledge dissemination:
  - Use IMF capacity development centers and free online courses to spread best practices and technical skills.

*Source: Speech "The Foundations of Technological Transformation in Africa" by Christine Lagarde, Managing Director, International Monetary Fund, delivered December 15, 2017, United Nations Economic Commission for Africa, Addis Ababa, Ethiopia.*

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## Content in this bundle

- [Sreo0415 (PDF)](/external/pubs/ft/reo/2015/afr/eng/pdf/sreo0415.pdf){rel="external" type="application/pdf"}

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## References

- [Christine Lagarde](https://www.imf.org/en/About/senior-officials/Bios/christine-lagarde)
- [Benin and the IMF](http://www.imf.org/external/country/BEN/index.htm)
- [Burkina Faso and the IMF](http://www.imf.org/external/country/BFA/index.htm)
- [Ghana and the IMF](http://www.imf.org/external/country/GHA/index.htm)
- [Sierra Leone and the IMF](http://www.imf.org/external/country/SLE/index.htm)
- [United Republic of Tanzania and the IMF](http://www.imf.org/external/country/TZA/index.htm)
- [Uganda and the IMF](http://www.imf.org/external/country/UGA/index.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [when the sun is shining that we have to fix the roof.](https://www.imf.org/en/News/Articles/2017/10/04/sp100517-a-time-to-repair-the-roof)
- [I outlined how economic diversification is part of the solution](http://www.imf.org/en/News/Articles/2017/12/11/sp121117-md-benin-speech)
- [Digital Revolutions in Public Finance, IMF: 2017.](https://www.bookstore.imf.org/books/title/digital-revolutions-in-public-finance)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2017/12/15/sp121517-the-foundations-of-technological-transformation-in-africa_