DigitalOpportunities
in African Businesses
JUNE 2024

Why is digitalization so important?
Firm digitalization is associated withProductivity

Jobs and Wages

Growth Performance

31%

16%

14%of firm-level
differences in
productivity are
explained bytechnology
adoptionmore employment

increase inrevenues

8%
increase inaverage wages

How do we measure digital adoption by firms?
1. AccessMobile2. Productive Use Administration

Computer

MANUALBASIC
DIGITAL

 Sales Marketing
 Payments

Source: World Bank’s Firm-level Adoption of Technology Survey.
Over 20,000 establishments, representing a universe of 2 million
firms in 15 countries.

example Planning Procurement

InternetSophistication and intensity of use:

Business functions:

ADVANCED
DIGITAL

Handwritten
processes

Standard software(Spreadsheet, text)
ERP systems
Specialized software
Mobile apps

Is digital tech adopted?
Is digital tech intensively used?

Yes

No

Productive use of digital technologies
in business functions

AccessDigital enablers

Share of firms (%)

No enablers

Adoption
No adoption,
23%

Basic
Mobile orcomputer

Intensive Use

Basic

86%

Standard software,
email

Advanced
Computers andInternet

Advanced

63%

Specialized softwareand platforms(e.g., ERP, CRM, AI)

No intensive use,
39%

BasicAdvanced

Source: World Bank’s Firm Adoption of Technology Survey.
Countries: Burkina Faso, Ethiopia, Ghana, Kenya, Malawi, and Senegal. Over 6,000 establishment, representing a universe of 330 thousand firms.

24%

Barriers todigital adoptionin Africa

Internet Use is associated withAccess to Electricity

Common factors across the globe:
Infrastructure

Human capital and firm
capabilities



Access to financeSources: International Finance Corporation calculations based on data from the World Bank and ITU (2022).
Note: Larger circles indicates higher broadband prices as a share of GNP per capita. The four circle colors represent four groups ofAfrican countries ranked by per capita gross national income.

Barriers todigital adoptionin Africa

Prices of Digital Equipment and Software byRegion Relative to the United States
Sub-Saharan Africa

35

Latin America and the Caribbean

27

Common factors across the globe:

East Asia and the Pacific15North Africa

13

Infrastructure

Human capital and firm
capabilities
Access to finance

South Asia
Europe and Central Asia
Middle East

But in Africa, technology is moreexpensive than anywhere else in theworld.

8-105-20102030
Differences in price relative to the United States (%)

40

Where to invest? Infrastructure
Digital Infrastructure

Investment opportunities
Up to $32 billion investment needs in middleand last-mile digital infrastructure. These
investment are twice the historical average, driven
by the expansion of submarine cables by 2027.

Africa has experienced fastest expansion indigital infrastructure over the past few years. It
is expected to increase its capacity by sixfold
between 2022 and 2027.

Cumulative number of submarine cables..
2828International (bilateral)
International (multilateral)
11

12,4

TOTAL: $32 Billion

Domestic (within country)

Capital expenditure needs*, 2022, $Billion..
Backbone &backhaul

Fiber to the home

104,9 Data centers
2,5 Base stations
2,1 Towers

1993

1998

2003

2008

2013

2018

2023

02

4

6

8

10

12

14

* Estimates do notinclude additional
investment needs inskills, policy, andoperations to achieve
universal access, whichgoes beyond $ 100
Billion (UN BroadbandCommission).

Where to invest? Startups
Tech Startups
The Tech Start-Up Ecosystem in Africa is booming ina few hubs and is picking up elsewhere. It is among
the fastest growing in the world with $3 billion
VC investments in 2022.

Investment opportunities
Innovative tech startups in Africa do better than theirpeers. But early-stage startups still struggle to obtainfunding, compared to other regions.

Geographical..
Concentration of..
Tech Firms..

Kigali, Rwanda

Median amount of funding/GDP per capita (ratio)

5040

Frontier
Latin
America

3020

100*Start-ups defined as firms less than 5 years old.

Early-stage startupsin Africa get around
40% less funding
than in Latin America,
relative to theirrespective income.

AfricaDigital Opportunities in African Businesses
Investment opportunities:
 Digital Infrastructure (middle- and –last-mile)

Over 600,000
formal firms and40 million
microbusinessesin Africa potentially
ready to benefit fromdigital upgrades Tech startups (digital solutions) Financing digital adoption by firms

Policies to unlock private investments:
 African Continental Free TradeArea:

2.3 million formal firms

 Regulatory reforms toenable:
Infrastructure
sharing and dataprotectionForeign investment

Competition(5 or more workers)
240 million microbusinesses(less than 5 workers)Reduce tariffs on digital goods
Integrate market for digitalsolutionsDownload

Thankyou