BY ABEBE WOLDEGIORGIS
Africa is one of the richest continents in the world when it comes to natural resources. The continent has vast resources of valuable metals such as cobalt, gold, platinum, and Colton. However, at the same time, it is also one of the least developed regions in the world, as years of colonialism, strife, political uncertainty, and conflicts have hampered the continent with the world’s youngest population from growing.
However, Africa’s young population and the continent’s mineral resources are crucial to unlocking growth in the continent. This is due to the fact that there is strong potential for several industries in Africa to grow in order to the continent to wean off from exports and produce its own food. For instance, research from the Brookings’ institutions highlights that Africa has one of the strongest consumer goods industries in the world. This growth, as of 2018, had ended up outpacing the overall African Gross Domestic Product (GDP) growth, as consumer expenditure grew by a compounded annual growth rate (CAGR) of 3.9 percent between 2010 and 2015 as it touched USD 1.4 trillion.
This growth won’t stop there, as by 2025 and 2030; the expenditure is slated to grow to USD 2.1 trillion and USD 2.5 trillion, respectively. Most of Africa’s consumer goods companies are located in South Africa with some present in Nigeria as well. Notable examples are Tiger Brands Limited, RCL Foods Limited and Flour Mills Nigeria.
Another key African growth industry is agriculture. According to Oxford Business Group, the majority of the African population is employed in agriculture, and the sector’s massive potential is simply evident in the fact that 60 percent of the world’s uncultivated arable land is in Africa. To capitalize on this growth, agriculture technology companies are also growing in Africa, with estimates suggesting that for the first half of this year, African Agro-tech startups received 95 million Dollars in funding – which marked a 58 percent annual growth. These startups are using a host of different technologies to stimulate the African agricultural sector, to enable farmers to easily access finance, conduct data analysis, secure their inputs at the right time and the right price, access the right markets, and use global best practices in their plantations.
Some great African agricultural startups Agro- Pretoria which transforms organic waste into animal feed; Relief, which connects farmers with large companies; Cow tribe, which delivers livestock vaccines to farmers using last mile delivery; and Hello Tractor, which uses the Internet of Things digital monitors on trucks that allows tractor owners to provide their equipment to farmers.
Finally, the growth in the African population will naturally lead to more users requiring access to communications services. For instance, a research report from Mordor Intelligence estimates that the African telecommunications market will grow at a Compounded Annual Growth Rate (CAGR) of 11.2 percent between 2021 and 2026. It estimates that close to 300 million Africans use a mobile phone, with the market generating USD 90 billion in annual revenue.
Sub-Saharan Africa is witnessing aggressive infrastructure rollout as well, as 3G coverage stood at 70 percent in 2018. The use of telecommunications is not only for entertainment purposes, but it also allows farmers to pick out the right markets for their produce and for people in general to access better healthcare. Some of the largest Africa-based telecommunications companies are MTN Group Limited, Safari-com PLC, and Ethio-telecom.
The Global Innovation Index (GII) ranks world economies according to their innovation capabilities. Consisting of roughly 80 indicators, grouped into innovation inputs and outputs, the GII aims to capture the multi-dimensional facets of innovation
The Global Innovation Index captures elements of the national economy that enable innovative activities: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication, and (5) Business sophistication. Two output pillars capture actual evidence of innovation outputs: (6) Knowledge and technology outputs and (7) Creative outputs.
According to the global innovation index 2022 ranking, the Republic of Côte d’Ivoire is a West African country with a USD 173 billion GDP in terms of purchasing power parity. The economy relies primarily on agriculture, and the country exports different products such as cocoa beans, gold, and petroleum products. It is ranked 109 on the Global Innovation Index, making it relatively better off than some other countries such as Solomon Island which still primarily rely on tribal systems. Additionally, the Republic of Côte d’Ivoire also ranks in the second percentile of countries when it comes to infrastructure, business sophistication, and institutions.
The Republic of Zimbabwe is a landlocked South African country with a USD 38 billion GDP ranked 107 on the global innovation index. Its economy is primarily fueled by the services sector, due to low levels of industrialization. Additionally, Zimbabwe also has the world’s second largest informal economy according to the International Monetary Fund (IMF). These are economies that remain undocumented as their transactions are generally conducted outside the formal banking system, which keeps them off of the authorities’ radar. Zimbabwe is also rich in natural resources such as gold, coal, and iron ore.
The United Republic of Tanzania is an East African nation with a considerably large economy that is worth USD 207 billion ranked 103 on global innovation index. In nominal terms, Tanzania is the seventh largest GDP on its continent. Mining is an important part of the country’s economy, with a strong gold mining sector and several different mines. Tanzania’s 103rd ranking on the Global Innovation Index comes primarily through its creative outputs, market sophistication, and institutions – all of which are in the second percentile of global scores.
The Republic of Senegal is a West African country with a USD 72 billion GDP ranked 99 on the global innovation index. Agriculture is a major part of the economy, with fish forming a large part of its exports. This is however, overshadowed by mining which is Senegal’s largest source of foreign exchange, with gold being the dominant export production. Senegal also exports petroleum products, and the country has flipped flopped on the Global Innovation Index. Its highest rank in the past three years was 96 in 2019, which dropped to 105 in 2020 and now it’s back at 99. Senegal’s institutional strength contributes heavily to its ranking, as it is the only sector that is in the third quartile of global rankings – outpacing several other African nations.
The Republic of Namibia is a relatively younger country that gained independence in 1990 from South Africa. It has a USD 26 billion economy ranked 96 on the global innovation index, which due to a small population, lends it a high GDP per capita of USD 10,448 by African standards. Manufacturing is a strong contributor to the Namibian economy, with the government offering subsidies to small and medium enterprises (SME) and opening export processing zones. The country also has an automotive parts supplier for big ticket car companies such as BMW, Audi, and Opel. It also has diamond cutting and polishing factories. Cumulatively, these make it one of the most advanced African countries. Namibia also relies on tourism to generate revenue, with sport hunting being an important constituent. Namibians are among some of the wealthiest people in Africa, with the country having more than 3,000 U.S dollar millionaires in 2017.
The Republic of Ghana is a West African country with a USD 226 billion GDP ranked 95th on the global innovation index. Its major exports are gold, cocoa beans, and crude oil. The country’s manufacturing sector is quite developed, with Ghana making its own phones, electronics, and even electric cars. In fact, the country has made electric cars for close to a decade now. It is also one of the few countries in the region with some involvement in the space sector. The country launched an Earth observation military satellite in 2015, and large chunks of its electricity are generated through wind and solar power. Space exploration and renewable energy require significant scientific know-how. Therefore, Ghana is perhaps one of the most advanced African nations because of them.
The 15th edition of the Global Innovation Index, which was released recently, also saw Ethiopia jump nine spots from 2021, with a score of 16.3 out of 100. Globally, Ethiopia ranked 117th among the 132 countries evaluated in the report.
Ethiopia’s highest performance was in the infrastructure category and Institution category, which includes business, political, and regulatory environments, while the country’s lowest performance was in the human capital, research, and creative output categories.
2022 is the year Safaricom Ethiopia, the nation’s first private telecom operator, launches its network and services. Meanwhile, its competitor, the incumbent Ethio Telecom, also diversified into providing digital financial services.
The Global Innovation Index, issued by the World Intellectual Property Organization (WIPO), aims to help policymakers around the world improve their understanding of the strengths and weaknesses of their national innovation systems.
The report identifies Mauritius as the most innovative country in Africa, followed by South Africa and Morocco, whose growth is pushing them closer to developed economies in the index.
On the other hand, Guinea is the least innovative country this year in an index that surveyed 31 African countries.
THE ETHIOPIAN HERALD SUNDAY EDITION 8 JANUARY 2023
