Africa is going digital. Is this good or bad for employment?
By adopting a mixed digitalisation approach, African countries are more likely to regard the digital era as an inclusive rather than a divisive force.
The digital era is gathering speed, with an ever-expanding array of digital devices and applications changing the way people interact, work and learn. This has stimulated all sorts of discussions and debates. For example, how exactly is the digital era affecting employment? Is it an inclusive or a divisive force? And how should policymakers respond in the face of the unprecedented opportunities and challenges that lie ahead?
Africa has record-high levels of unemployment – at least in a formal sense. Informal, and thus vulnerable, employment is the mainstay of millions of people on the continent. While the need for employment-intensive growth is on most African countries’ policy agendas, relatively little empirical research has been conducted on the employment effects, both positive and negative, of digital developments.
Uneven digitalisation across the continent has made it difficult to determine how automation, artificial intelligence (AI)-powered apps and other digital technologies are changing the nature of work and people’s employment prospects, complicating the policymaking process.
To address this gap, North-West University’s TRADE research entity conducted a quantitative study on the effects of digital developments on employment in 33 African countries over 20 years (2000-19). The study was disaggregated according to sector (agriculture, industry and services), gender and country income group (low-income, lower middle-income and upper middle-income). This enabled the employment effects to be analysed from different angles and in different configurations.
The breakdown according to country income group was necessary because African countries are at different stages of development, with heterogeneous demographic characteristics, economic profiles and digital landscapes.
Training and capacity building and innovative business solutions will always be essential elements
‘Digital developments’ is a broad term. However, three indicators were selected for the study: digitally delivered services trade, ICT goods trade and number of internet users. The first two indicators acknowledged that a country’s technological progress is heavily dependent on its digital trade (both tangible and intangible). The third indicator acknowledged that the internet goes to the core of most digital applications.
The multi-dimensional nature of the study produced both expected and unexpected results. The researchers anticipated, with reference to earlier studies, that the study would show that an increase in digital developments would lead to an increase in total employment in Africa. (Although men would benefit more than women because of women’s greater vulnerability in the job market.) They also anticipated an increase in industry and services sector employment, and a decrease in agricultural sector employment.
The agricultural sector in Africa is dominated by subsistence farming, with relatively low levels of mechanisation and few digital enhancements. The researchers anticipated that digital developments would have a job-displacement rather than a job-creation effect. In contrast, businesses in Africa’s industry and service sectors, which would typically attract higher-skilled workers, are better equipped to use digital technologies to expand their markets and increase their production capacity, thereby creating new employment opportunities.
The overarching finding was that the effects of digital developments on employment in Africa is highly contextual, with notable differences across sectors, genders and country income groups. Unfortunately, the results for the different country income groups yielded a wide range of results, often with unclear patterns, which seems to suggest that other factors that hadn’t yet been considered could have played a role. However, the sectoral and gender-based findings were interesting.
Women make up some 70% of the workforce in the agricultural sector in low-income countries in Africa
Contrary to expectations, the study showed that an increase in the trade in digitally delivered services (which could include online financial services, downloadable software and various digital apps) and in the number of internet users would lead to a decrease in total employment in Africa. The negative impact of an increase in internet users is both surprising and disturbing. A certain level of internet connectivity is an essential companion to most formal and many informal workers and, from a policy perspective, is one of the keys to achieving a more inclusive society.
Deeper analysis, however, showed that the decrease in total (or overall) employment could be attributed to the extent of the decrease in agricultural sector employment, which overshadowed the increases in industry and services sector employment respectively. This suggests that the agricultural sector not only is the most important employer in Africa, but is also dominated by unskilled workers. These workers are more susceptible to job losses in the wake of digital advances than the more highly skilled and digitally literate, who are more easily drawn to the industry and services sectors.
Another key finding, which was largely expected, was that an increase in digitally delivered services trade and internet users would lead to a decrease in agricultural sector employment among both men and women. But women would be twice as vulnerable to job losses as men. Adding to women’s disadvantageous position in the job market (which is compounded by a lack of access to education) is the fact that they make up some 70% of the workforce in the agricultural sector in low-income countries in Africa.
It was interesting, though, to see that an increase in the third indicator – the trade in ICT goods (which could include mobile phones or solar energy equipment) – would lead to an increase in agricultural sector employment. Perhaps the fact that ICT goods are tangible and still require traditional handling and transportation could help to explain this increase in agricultural sector employment. However, more in-depth research would be needed to confirm or challenge this notion.
The fact that agriculture is falling behind in the digital race is concerning
The findings from the study suggest that Africa’s industry and services sectors are leveraging digital developments more effectively than the agricultural sector. This is despite frequently expressed concerns that advancing digitalisation is having a job-displacing effect in various industry and service sectors. Indeed, the study would suggest otherwise.
This is encouraging and augers well for the future of these two sectors in Africa. However, the fact that agriculture is falling behind in the digital race is concerning, particularly as the sector is often regarded as holding the key to enhanced industrialisation, cross-border trade via the African Continental Free Trade Area, and food security.
The core message that seems to emanate from the study is that Africa’s agricultural sector isn’t leveraging digital technologies either to enhance conditions for millions of (especially small-scale) farmers or to ensure sustainable employment opportunities. From a policy perspective, bringing African agriculture into the 21st century will involve more than simply investing more heavily in mechanised processes and efficiency-enhancing AI applications. This could accelerate job losses among scores of unskilled or manual workers. Women would undoubtedly bear the brunt of this.
Africa’s industry and services sectors seem to be leveraging digital developments more effectively than the agricultural sector
The solution rather lies in creating the right conditions for agriculture to grow and become more productive, using digital technologies responsibly to professionalise and scale farming activities but not at the expense of farmers’ livelihoods. The interests of large agricultural operations, which already supply sizeable local and international markets, need to be served alongside those of small operations which could, with assistance, make a more meaningful contribution to commercial output and regional value chains.
This will require a multi-pronged policy approach, harnessing the resources and expertise of several industry sectors (from rural development to energy, transport and ICT) and engaging in cross-border and regional initiatives. Training and capacity building and innovative business solutions will always be essential elements in the mix.
The study lays the foundation for further Africa-focused studies to be conducted aimed at uncovering, with greater precision, the digital factors impacting employment in specific sectors in different groups of countries, which will give policymakers more to work with.
The fact that Africa displays uneven development patterns and different digitalisation priorities shouldn’t compromise the continent’s digital future. By adopting a mixed digitalisation approach, African countries are more likely to regard the digital era as an inclusive rather than a divisive force. This would entail investing in a range of ‘frontier’ technologies to drive growth in high-productivity sectors and more ‘basic’ technologies to enable lower-productivity sectors to move up the productivity scale.
Interestingly, while the agricultural sector (an economic mainstay for many) would see jobs being shed in the face of digital advances and trade, the industry and services sectors would see job growth, thus highlighting the need for appropriately tailored policy responses.
Image: © REUTERS / Alamy Stock Photo
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