IFC Research launched a new book last week, "Digital Opportunities in African Businesses." You can download it here for free. https://lnkd.in/eUhZw-f7
Each day I will post the summary of a chapter for you. Today:
Chapter 1. Making Full Use of Digitalization: Where Do Businesses
in Africa Stand?
by Xavier Cirera, Marcio Cruz, and Santiago Reyes Ortega
In this opening chapter, the authors delve into detailed surveys of thousands of African businesses to explore several steps toward making full use of digitalization. Do firms have computers, mobile phones, internet? Do they have software, and what kind? Do they use it for productive purposes? Do they use just occasionally, relying on paper more frequently, or do they use it all the time?
The authors show that 86 percent of firms with five or more workers have access to one or more digital enablers (mobile phone, computers, or internet), but only 52 percent of firms have computers with internet. About 60 percent of firms face some level of incomplete digitalization: 23 percent have not adopted digital technologies for productive use while having digital enablers, and 39 percent do not use their technologies intensively as the most frequent technology to perform a task, despite having adopted them. On average, only 37 percent of firms have adopted an advanced digital technology to perform a specific business function, and only 11 percent use them intensively. The gap is even larger for microbusinesses (those with fewer than five workers).
We have all heard about the extraordinary leapfrogging with mobile phones and digital payments as entry points for firm digitalization in Africa. But they do not necessarily lead to digitalization across other business functions. Although 61 percent of firms have adopted digital payment options, they are the main payment method in only 7 percent of firms. Moreover, 2 out of 3 firms that use digital payments have not adopted a second digital technology for other uses within the firm.
Service-sector firms rely on digital technologies more often than firms in other sectors, and a wide gap exists across firm size. For firms in manufacturing and agriculture, the use of digital technologies to perform sector-specific tasks usually requires a large technological leap, one beyond the current capabilities of most firms in Africa.
More to come in the next few days on how this presents potentially profitable opportunities and how policies can help.
