Seeds of Opportunity: The African Growth Series
March 2023 | Issue 1
In this week's issue, you will learn more about:
- Revolutionising Economics with Artificial Intelligence in Africa
- Africa's Startup Funding
- Biofuel Opportunities in Africa
- Infrastructure Investment in Africa
- The Growth of Data Digitalisation in Africa
Revolutionising Economics with Artificial Intelligence in Africa
The potential economic benefits cannot be overlooked as the world continues to embrace Artificial Intelligence (AI) in various industries. Asanda Fotoyi, an economist with the non-profit research organisation, Trade & Industrial Policy Strategies, in a 2017 paper highlighted the significant impact AI could have on how macroeconomic policies are formulated in Africa. This is because many African countries face unique challenges, such as high informality levels, limited data access, and limited resources, which AI-driven solutions can address.
Gross Domestic Product (GDP) estimates are crucial for setting monetary policy and budget limits. However, policy decisions are often based on preliminary estimates due to the need for timely data. AI enables a more automated and efficient process of setting, implementing, and monitoring policies, resulting in real-time data analysis and better-informed policy decisions due to higher accuracy compared to human experts.
The adoption of AI in economics is still in its infancy, but the potential for growth is massive. According to a recent report, AI could contribute USD 1,5 trillion to Africa’s GDP by 2030.
As we look to boost economic growth and improve policymaking in Africa, AI provides an exciting opportunity for innovation and progress. The future of economics on the continent is undoubtedly bright with the possibilities of AI.
Africa's Startup Funding
African startups have the potential to outpace Latin America’s funding in the near future. In 2022, African startups raised US$4.8 billion, representing 1.2% of all global startup funding. Considering that Africa holds between 2.5% and 3% of global GDP, and the continent's population makes up 17% of the world's population- had the situation been proportional - African startups should have raised more than US$70 billion, almost 15 times more than the US$5 billion raised in 2022. Overall, Africa was the only region recording a positive year-on-year (YoY) growth in startup funding, growing at a rate of 5%, while other regions experienced double-digit declines. In comparison, Europe had a negative YoY growth of 17%, while Latin America experienced a 62% decline. As a result, the funding gap between Africa and Latin America has decreased fivefold, from US$16 billion in 2021 to nearly US$3 billion in 2022.
Biofuel Opportunities in Africa
In this video, I briefly discuss the opportunities for Biofuels in Africa.
Click here to see the video.
Also, in an exclusive interview this week on BDTV's Business Lunch with Bloomberg hosted by Noluthando Mthonti - Mlambo, I speak about biofuel opportunities in Africa, indicating which countries are progressing and how government mandates and policies are driving the application of biofuels.
Check out the video - https://lnkd.in/eDKUBhHg.
Infrastructure Investment in Africa
Despite the challenging global macroeconomic ecosystem, 2022 was a strong investment year in Africa. Despite slow growth in the second half of the year, the 2022 infrastructure landscape in Africa indicates over 400 ongoing and committed projects worth over USD 115 billion within the continent. Infrastructure investment is the cornerstone for growth in any region, particularly in Africa where there is a lack of modality. With only 5% of projects cancelled, and USD 291 billion announced in financing (68% tentative project status), the growth opportunity in Africa is strongly underscored. The continent's continued development is further indicated in consideration of the foreign direct investment (FDI) in Africa. The continent comprises only 5.2% of the global market share of FDI inflows and while this figure appears small, it has been growing and is currently the first time since 1974 that FDI in Africa is over 5%. One reason may be the macroeconomic climate, which is forcing investors to stray from their typical investment path. However, the latter half of 2022 indicated less activity. When considering H2, it is vital to note the underlying economic and fiscal pressures towards the end of the year through the lens of the world's condition. This is compounded by the fact that Africa’s economic recovery has been disrupted by external and internal shocks, including weather, the war in Ukraine, increasing interest, and softening demand in export markets. However, this is expected to ease, and Africa is expected to grow between 3-5% in 2023. It is vital to assess the trajectory of growth and the increased confidence about Africa’s competitiveness as a globally comparative investment destination.
The Growth of Data Digitalisation in Africa
Electronic medical record (EMR) systems are driving Africa’s transition to a healthcare system that is more efficient, data-driven, patient-focused and cost-effective. Administration costs account for 15–25% of total healthcare spending, but at least half of this spending is wasteful. EMR systems can change this, benefitting all players, or the four P’s, in the healthcare industry: Payers, providers, policymakers, and, patients.
The use of EMR systems dramatically reduces the administrative costs associated with healthcare financing through improving the efficiency and transparency of payment systems. Healthcare professionals also benefit, as spending less time on administration allows providers to focus on practicing medicine. Policymakers can use the data captured through EMR systems to formulate effective, data-driven public health policy. Lastly, EMRs improve the quality and accessibility of care, allowing patients to view their health records, manage prescriptions, view laboratory results, find new healthcare providers and access financing.
These systems are being adopted across Africa, albeit slowly. Nigerian-founded Helium Health has a sophisticated EMR system, having received about USD10 million in funding since its inception in 2015. On the other end of the continent, South Africa’s largest private hospital network, Netcare, aims to implement the CareOn EMR system in all of its facilities across the country by the end of 2023. The global EMR market is currently valued at about USD16 billion but is expected to grow to over USD32 billion by 2033.
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To find out more about opportunities in Africa, please get in touch with Lynne Martin.
