Report : digitalization in Africa, a springboard for investments and growth
Digitalization in Africa offers considerable opportunities for local and international businesses. By adopting digital technologies, African companies can increase their productivity and profitability while integrating more fully into global value chains. However, challenges remain, particularly in terms of infrastructure and access to financing, requiring innovative solutions and adapted policies. These are the conclusions of a report published by the IFC.
By the editorial staff
To what extent do African businesses use digital technology, for what purposes, and how can they be encouraged to adopt it more widely? This is the question addressed by the IFC in its recently published report, « Opportunities for Digital in African Businesses. »
The report, financially supported by the Japanese government and based on surveys conducted with over 20,000 companies, aims to be « a roadmap for broader and more effective adoption of digital technologies. »
According to the report, digital transformation could benefit over 600,000 formal businesses and 40 million microenterprises in Africa, highlighting its crucial role in improving productivity and creating quality jobs.
86% of African businesses have access to digital tools such as mobile phones and the internet, but only a minority fully utilize them
The study reveals that 86% of African businesses have access to digital tools like mobile phones and the internet, but only a minority fully utilize them. « The startup ecosystem in Africa is one of the most dynamic in the world, » says Makhtar Diop, Managing Director of the IFC. « This unprecedented report, backed by an innovative set of business data, clearly demonstrates the considerable potential of the startup market and digital infrastructure. These investments could boost technology adoption in local businesses, leading to greater productivity, competitiveness, and inclusive growth—conditions necessary for a flourishing economy. »
To support businesses in their digitalization efforts, the report’s authors emphasize that every step counts. For most companies, it starts with integrating basic technologies, such as digitizing payment operations. Companies that heavily utilize technology show significantly higher productivity, translating into increased competitiveness and efficiency, contributing to sustained economic growth and job creation.
$6 billion in annual investments needed for infrastructure, $2.7 billion for business digital transformation
Several challenges remain, starting with the high cost of technology, one of the main obstacles for African businesses. The report highlights that these companies must pay up to 35% more for similar software and equipment compared to other regions of the world. Furthermore, the lack of infrastructure, gaps in digital skills, and limited access to financing hinder the widespread adoption of digital solutions.
However, the needs to bridge the technological infrastructure gap in Africa and support a dynamic startup ecosystem offer numerous opportunities for investors. The report estimates annual investment needs for infrastructure at $6 billion and for business digital transformation at $2.7 billion. The financing needs of startups operating in high-impact sectors add to these amounts.
Reforms and global integration
The institution takes this opportunity to advocate for regulatory reforms that promote competition and equal opportunities for businesses to attract investments and encourage foreign investor participation. The report suggests that better integration into global markets would result in more affordable prices. Specifically, extending the reduction of customs duties on digital goods to non-member countries of the African Continental Free Trade Area could benefit companies in the poorest countries, where imported technologies and software are subject to high tariffs.
For more information, consult the report.
