9 Leapfrogging

Leapfrogging is a well-established phenomenon in human history. The invention of the wheel, the plough, the printing press and the steam engine each allowed large shifts in productivity. It is the story of technological innovation in one place that, once copied by others, allows the latecomers to bypass intermediate stages of technology and sweep aside the old in a process often described as creative destruction — think of handwriting duplicators of books replaced by the printing press, the horse-drawn carriage by the car, and the mechanical typewriter by the personal computer.

What distinguishes the 21st century from previous periods of development is the rapid rate at which scientific advances are turned into practical applications — in other words, the rate at which we are leapfrogging. Each new generation of technology builds on its predecessors, and at a sufficient scale, technology can have a transformative effect on nations’ development paths, although what is technologically possible is not always commercially feasible.

In addition to the lack of basic infrastructure to provide potable water and sanitation in Africa (explored in Theme 5 on health/WaSH ), the continent trails behind in every dimension of infrastructure, with the largest deficits being the lack of reliable electricity and transport networks such as roads and rail.

The International Monetary Fund (IMF) estimates that Africa’s deficit in physical infrastructure reduces growth by two percentage points a year. [1International Monetary Fund, Is it time for an infrastructure push? The macroeconomic effects of public investment, in World Economic Outlook (WEO) Legacies, Clouds, Uncertainties. Washington, DC: ILO, 2014, 75–114.] The drag on economic growth is particularly evident in the continent’s low- and lower middle-income countries, but less severe for upper middle-income countries as graduation to an upper middle-income status is generally associated with and is dependent on improved infrastructure.[2Within IFs, multifactor productivity is composed of physical, social, human and knowledge capital.]

But today’s infrastructure needs involve much more than roads and railways; it is increasingly about digital infrastructure — the ability to transact globally through the access provided by the Internet. Digital infrastructure can even partly compensate for a lack of physical infrastructure.

The potential for leapfrogging in physical infrastructure is generally underestimated because of our thinking being locked into a particular way of doing things. [3T Frey, The curse of infrastructure.] Once a country has invested and built an elaborate network of railway lines, pipes, wires, roads, bridges and buildings, it becomes difficult to take the risk of investing in a different way of doing things. Every piece of existing infrastructure creates vested interests, which are subsequently difficult to uproot. The result is a tendency towards ‘path dependency’, where governments and the private sector do things in a particular manner because it seems to be the way things should be done; it is difficult to get the public to change their ways and to undo sunk investments.

Consider, for example, the extent to which production and consumption subsidies have locked the world into its current carbon-intensive development pathway. According to one estimate, about half a trillion dollars is poured into subsidising fossil fuels every year — more than triple what renewables receive. Production subsidies provide tax breaks or direct payments that reduce the cost of producing coal, oil or gas and lock in infrastructure such as oil pipelines and gas fields. Consumption subsidies (common in oil- and gas-producing countries in Africa) subsidise fuel prices at the pump so that it is below the market rate.[4J Timperley, Why fossil fuel subsidies are so hard to kill, Nature, 598, 20 October 2021, 403–405.]

But innovative thinking can open possibilities and create greater independence and more choice for people in the long term. For example:

• Wireless bulk-delivery systems using drone technology can enable on-demand deliveries to people without the need for asphalt roads. A partnership between drone manufacturer Zipline [5Zipline launched in Rwanda in 2016, doing blood deliveries. See: Zipline, Zipline celebrates five years in flight, 28 October 2021.] and Walmart [6T Ward, Walmart and Zipline team up to bring first-of-its kind drone delivery service to the United States, 14 September 2020.] already demonstrate the potential. In 2020, Zipline was given emergency permission to fly long-range delivery drones in the US with its highly regulated air space and then later that year also at night. Operating from a Walmart store, a Zipline drone can service an 80 km area. In 2021, the company signed partnerships with the Cross River and Kaduna States in Nigeria and also closed an agreement capable of serving 90% of Ghana’s population. This is the same company that famously started blood deliveries by drone in Rwanda some years earlier.
• Technology that requires no energy input other than sunlight and uses readily available adsorbent material can be put to use to extract drinkable water directly from the air, even at humidity levels as low as 20%. [7N Carne, A new attempt to get water from the air, Cosmos, 15 October 2020.] Consider how this could provide drinking water or even water to livestock across Africa’s vast arid regions without the need for boreholes, pipes or other heavy infrastructure.
• Using waste as biomass, households can become steadily more independent from the need for delivery of electricity.
• The powerful Agulhas current along the east coast of South Africa has the potential to generate 50.4 GW of power — roughly equivalent to South Africa’s total domestic electricity generation capacity. [8ZLM Project Engineering, The case for offshore energy in KwaZulu-Natal, 2018 Draft Integrated Resource Plan released by the South African Department of Energy, 26 April 2019.] Instead of importing power from coalfields further inland, the KwaZulu-Natal province could generate all of its electricity needs offshore from a renewable source with limited environmental impact.
• Contour crafting — a layered fabrication system similar to 3D printing — can be used to rapidly construct buildings and other large pieces of infrastructure using local materials (such as soil), without requiring building supplies having to be transported by trucks to building sites. [9Sculpteo, 3D printing for construction: What is contour crafting?, 2018; Also see: S Saunders, Contour crafting will develop concrete 3D printer for disaster relief, thanks to DoD contract, 2018. Contour printing is currently being funded on an experimental basis by the US Department of Defense to construct buildings rapidly in disaster relief projects.]
• If upscaled, technology to remove deadly bacteria such as Escherichia coli from water can significantly improve the rapid treatment of large volumes of water and be integrated into current solar water disinfection technology in countries with limited access to fresh water. [10Using a photocatalyst method that prevents secondary pollution of leached metal ions during the filtration system. See: Monash University, Engineers devise new method to remove harmful E. coli from water, 22 October 2020.]
• The 2008 financial crisis provided a huge boost to cloud computing and the COVID-19 pandemic has accelerated new technologies for vaccine development, as well as the expansion in digital and e-commerce sectors. The African e-commerce platform Jumia, for example, reported a 50% jump in transactions during the first six months of 2020 when the COVID-19 pandemic hit. Home delivery of food and remote working will lead to further innovation in the future.
• The online education market, also accelerated due to COVID-19, is set to expand rapidly. The culture change with online learning is here to stay although it is likely to deepen inequality, as it generally requires access to electricity, the Internet, a smartphone, desktop or suitable computer and funds to maintain access.

Changes like these inevitably start modestly but gradually permeate into our lives at scale. It is only when we look back that we realise the journey that has been travelled. Think of how smartphones transformed the way people socialise, work and play.

But perhaps the best recent example of technology’s shape-shifting potential is the way in which the US shale and oil gas revolution has reshaped the global energy market and politics.

By 2005, US domestic oil production had declined for 35 years after its 1970 peak at 9.6 million barrels per day. The US was importing almost half of its total petroleum consumption. The future appeared to consist of growing imports of oil and gas from unstable countries such as Venezuela and dictatorships such as Saudi Arabia. To the chagrin of the Americans, Russia was also rapidly emerging as an energy superpower. The situation with natural gas was only marginally better.[11R Rapier, How the shale boom turned the world upside down, 21 April 2017.]

Then came the fracking revolution.

Fracking has been around for several decades and has been used extensively to increase production rates from conventional oil and gas wells. It involves injecting a mix of water, chemicals and sand under high pressure into shale deposits to release more of the gas and oil trapped within the rock. The original mode of fracking entailed drilling vertically through a deposit, but today horizontal drilling and other improvements in technology are commonly used. Once in the permeable layer of rock, where the gas or oil is locked up, the drill is turned horizontally to access a greater portion of the deposit. In this manner fracking is able to harvest large stores of gas and oil, which could not be commercially extracted previously.

Gas suppliers were the first to benefit. From 2005, US natural gas production increased year on year for a decade, and by 2015 the US was the world’s largest gas producer. Increases in oil production followed from 2008. Both trends are reflected in Chart 1. By 2018, domestic US crude oil production was running at about 11.6 million barrels per day, a little ahead of Russia, the world’s second largest producer.

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In just a few years, the shale oil and gas revolution in the US has changed geopolitics. It reduced the price of energy and thus broke the stranglehold of the Organization of Petroleum Exporting Countries (OPEC) on energy production. It also led to a severe slump in the prospects of many oil-exporting countries such as Venezuela, Angola, Nigeria and those in the Middle East. [12R Rapier, How the shale boom turned the world upside down, 21 April 2017. See also: E Crooks, Opec strikes a deal, CO2 emissions rise but Shell targets cuts, historic US oil exports and the positives of electric scooters, Financial Times, 7 December 2018.] By 2025, US oil production could equal the combined output of Saudi Arabia and Russia and, according to the head of the International Energy Agency (IEA), ‘completely change the balance of oil markets.’ [13C Sertin, IEA: US oil production will equal Saudi Arabia and Russia’s combined output by 2025, 26 December 2018.]

In the process, the Middle East and Africa lost much of their strategic relevance to the US. However, the law of unintended consequences took its toll. Low energy prices have pushed up domestic demand as consumers flock to gasoline-guzzling vehicles and consumption of liquid fuels may soon be back to the 2005 peak at 20.8 million barrels of oil a day. [14E Crooks, US energy independence is not the shining prize it seems, 29 December 2018.] Then the COVID-19 crisis of 2020/21 collapsed energy demand and the profitability of many shale gas and oil operators. With insufficient oil and gas storage, prices plummeted. For a while it was unclear how long it would take for prices to regain their previous levels — until Russia invaded Ukraine in February 2022 and gas prices spiked, again illustrating the dangers of reliance upon a few countries to provide fossil fuels for the rest of the world. [15Fracking for gas is, of course, a surefire way to compound the world’s carbon crisis, examined in the theme on climate change.] 

Whereas the shale gas revolution in the US is based on a large industrial infrastructure system that is difficult to replicate elsewhere, rapid advances in technology mean generating energy from renewable sources requires a much smaller footprint, which will have a significant impact in Africa.

Producing power from renewable energy sources has the potential to revolutionise electricity access in Africa in a way not dissimilar to fracking in the US, and with the result of empowering both local communities and those further away.

New forms of electricity access are facilitated in three ways, namely through: distributed local systems using renewables, mostly solar, wind and geothermal energy; improved and distributed installation of electricity storage systems such as new types of batteries; and new technologies such as harnessing the energy in ocean currents and waste-to-biomass conversion.

In addition to its large hydropower schemes, Ethiopia has the potential to generate up to 10 GW of power from its geothermal resources. Power Africa, an initiative started under former US president Barack Obama, already supports 15 geothermal projects with a total of 1 GW generation capacity. [16USAID, Power Africa 2018: Annual Report, 2018; ZLM Project Engineering, The case for offshore energy in KwaZulu-Natal, 2018 Draft Integrated Resource Plan released by the South African Department of Energy, 26 April 2019.] Different from the fluctuating energy supply from wind and solar, ocean currents and geothermal energy can probably provide near-stable baseload electricity generation comparable to that provided by hydropower, coal, oil, gas and nuclear production facilities.

In 2019, about 11% of global primary energy came from renewable technologies (mostly hydropower, although generation capacity from wind, solar and other renewable energy sources is growing rapidly). However, primary energy must not be confused with electricity. Electricity (or power) is just one component of total energy demand — the other two being transport and heating. Despite a rapid increase in the share of electricity that comes from renewable sources, transport and heating are still very dependent upon fossil fuels. The share of oil, coal and gas, the three components of fossil energy in the global energy mix, has remained at above 80% for the last two decades and is declining much more slowly than required to avoid rapid climate change (see Theme on climate change ).

The IFs Current Path forecast shown in Chart 2 points to a plateauing of fossil fuel use in the 2030s, followed by a steady decline after 2040. Non-fossil fuel sources are set to overtake coal around 2038, oil in 2042 and gas in 2048. By 2050, solar and wind would constitute around 32% of energy production. Leaving the huge challenge of the environment and climate change  aside for the moment, this will be a world where electricity for households will likely be provided by individual supply or decentralised mini-grids powered by renewables and stored for use and not from large-scale coal or hydropower schemes. Once the challenge of energy storage is resolved, renewables and adequate storage will be able to provide both base and peak electricity demand. According to a 2019 report, [17Solar Power Europe, Digitalisation and solar in emerging markets, Task Force Report, 2019.] about 47 million people — mostly in rural areas — already access electricity through 19 000 mini-grids across 134 countries. It will be a world of potential energy abundance at a time when the lack of electricity is generally considered one of the largest constraints on Africa’s development.

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Electricity is often an unaffordable luxury in much of Africa, even where connections exist. The average retail price for electricity in Africa varies hugely. It can be as high as US$4.90 per kilowatt hour (kWh) in Liberia (due to the high cost of running a backup generator during regular power outages) or as little as US$0.24 in Ethiopia. [18See: Statista, Average retail electricity prices in Africa in 2016, by select country.]

High electricity prices and intermittent supply means that many households in Africa do not even try to access electricity from a central system. Those homes that have an electricity connection often find the supply is inconsistent and expensive. Lack of electricity supply also acts as a strong disincentive to private investment, especially in sectors where a dependable supply is crucial, such as cold storage for food distribution systems and mineral beneficiation and manufacturing.[19African Development Bank Group, The high cost of electricity generation in Africa, 2013.]

In 2019, only about 53% of Africa’s population had access to electricity (Chart 3), in contrast to about 87% in South Asia and over 98% in Latin America, the other two developing regions that we benchmark against. Rapid electrification of the African continent would improve both human development and economic prospects.

Among its obvious economic benefits, affordable and reliable electricity supply eliminates the need to use traditional fuels inside homes for cooking and heating, thereby reducing respiratory ailments and also allowing children to study longer at night. Dependable electricity access would speed up education, improve health and allow for farming and micro-manufacturing.

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Currently, Africa generates very little electricity. The continent had about 254 GW of installed capacity, but more than half of this is concentrated in three countries: South Africa, Egypt and Algeria. Together these countries account for only about 15% of the continent’s total population. China has about 2 207 GW of installed capacity — eight times that of Africa. At current rates of growth, China’s installed solar capacity will shortly equal Africa’s total installed capacity.

However, a number of large hydroelectric schemes are currently being built in Africa. For example, Ethiopia completed the US$5 billion Grand Ethiopian Renaissance Dam (GERD) on the upper reaches of the Blue Nile close to its border with Sudan. Once the dam is filled and the turbines start turning, it will have the third largest installed hydroelectric capacity in the world, capable of generating almost 6.5 GW in peak operating conditions. However, the project threatens livelihoods further downstream in Egypt, whose survival depends on the waters of the Nile. [20Ethiopia capitalised on the chaos following the Arab Spring to start construction and intends to start filling the 74 billion cubic metre reservoir shortly, equivalent to roughly a year-and-a-half’s flow of the Blue Nile.] Ethiopia’s ambitions are to alleviate its own electricity shortages and eventually to emerge as the hub of a regional distribution network that sells electricity in the larger Horn of Africa.

There are also a number of other large projects underway, such as the Julius Nyerere hydropower project in the Rufiji River basin in Tanzania, which, once completed, should deliver 2.1 GW. [21Staff writer, Tanzania allocates over 600 mln USD for mega hydropower project in 2020/2021, Xinhaunet, 9 May 2020.]

Wind and solar electricity generation are already having a transformative effect on well-being in parts of the continent. In 2017, Kenya finished construction of the Lake Turkana Wind Project, the largest wind project in Africa and which is capable of delivering 310 MW (17% of Kenya’s installed capacity) to the grid. This is small by international standards, but still more than the installed capacity of several African countries, including Chad and Liberia. [22B Bill and S Kimuge, Lake Turkana wind power project set to come on line by September, 3 June 2018; Installed capacity in Chad is 130 MW and 126 MW in Liberia – see: USAID, Chad Power Africa Fact Sheet, 2018.]

At the same time, Lake Turkana is emblematic of the governance failures that hamper technological adaptation and economic growth on the continent. Although the wind farm was completed in 2017, it was connected to the grid only the following year as the connecting infrastructure, which was the responsibility of the Kenyan government, was not in place in time. In the interim, the Kenyan government had to pay royalties in lieu of electricity sales to the investors.[23B Bill and S Kimuge, Lake Turkana wind power project set to come on line by September, 3 June 2018; Installed capacity in Chad is 130 MW and 126 MW in Liberia – see: USAID, Chad Power Africa Fact Sheet, 2018.]

In 2020, global capital investment in renewable energy replaced oil and gas as the top sector, accounting for US$87.2 billion out of US$528.2 billion total capital investment. [24The fDi Report 2021: Global greenfield investment trends, Financial Times.] China’s impact on global solar markets has been well documented. In 2020, the country had about 253 GW of solar capacity and added 56 GW in 2021, taking total solar installations beyond 300 GW. [25M Xu and D Stanway, China's solar power capacity set for record increase in 2022 - industry body, Reuters, 23 February 2022.] Uptake has also been rapid elsewhere, including in developing countries. Rapidly falling prices (US$0.03/kWh) have allowed countries such as India, Mexico and Chile to offer electricity from photovoltaic solar at a fraction of the cost of electricity in Africa.

We are only at the start of the solar energy revolution. According to the United Nations, the greater Sahara, which is one of the most uninhabitable places on the planet, has solar potential equivalent to approximately 13.9 billion kWh/year; consider that, in 2016, global electricity consumption was 0.02 billion kWh/year, implying that the Saraha could power the world several times over![26United Nations, UN support plan for the Sahel: Working together for a prosperous and peaceful Sahel, New York: United Nations, 2018.] A solution to the current challenge of effective storage of large amounts of energy would unlock much of this potential, and the geostrategic incentives are substantial, such as enabling Europe to shift from imported gas from Russia to renewables from Africa.

Beyond the need for technological innovation, the most important impediment to this opportunity is the lack of stability in North Africa and the animosity that characterises relationships between its constituent states, particularly Morocco and Algeria regarding the dispute about the Western Sahara.

Solar energy prices have dropped to less than US$0.05/kWh in some regions and levelled costs that can now compete with those of electricity generated by burning fossil fuels. In Africa, solar energy could significantly change the overall picture of electricity supply. Biomass, biogas and gas from municipal waste sites also have considerable potential in complementing other energy sources.

Electrifying rural areas would make many other development goals easier to achieve such as access to clean water, independent economic activity, the use of electric appliances in general, and access to information via communication technologies.

However, without a breakthrough in storage capacity, off-grid renewables do not provide enough thermal energy for cooking and space heating or cooling. Consequently, electricity grids that include a large component of renewables currently have to allow for large redundancies (surplus capacity) to meet demand on a guaranteed basis.

Once the storage problem has been resolved, renewable energy could also fundamentally change the political landscape in many countries, leading to a redistribution of political and economic power as rural communities, towns and cities become less dependent on central governments.

Off-grid solutions could reach consumers in rural areas without the hefty expense of large coal-, oil- or gas-powered electricity plants that are linked to the hinterland through massive transmission lines and complex distribution systems. In sub-Saharan Africa, roughly 60% of the population lives in rural areas and electricity access is, on average, about 28% cross the region,[27Rural electricity access is below 8% in Central Africa, around 30% in West Africa, and slightly better in East and Southern Africa.] compared with almost 98% in the highly urbanised and developed region of North Africa (see Chart 4).

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In this context, solar- and wind-powered mini-grids that are independent of the larger national grid could provide many opportunities. These technologies can also be deployed much more rapidly than traditional methods of electrification, with the potential to dramatically increase access to electricity as seen from a study in Kenya in 2018.[28J Cilliers, Z Donnenfeld, S Kwasi, SR Shah and L Welborn, Shaping the future: Strategies for sustainable development in Kenya, Pretoria: Institute for Security Studies, 2018.]

Kenya moved from about 20% electricity access in 2010 to about 70% in 2018, an increase that is similar to that of Bangladesh and Laos, two countries widely cited as having expanded electricity access particularly rapidly.[29Bangladesh increased access by about 50 percentage points in 20 years, while Laos increased it by approximately 60 percentage points in 25 years]

The inability to store excess energy supply at large scale during periods of relatively high production and low demand for access during periods of lower production and higher demand is possibly the largest obstacle in harnessing the development potential of renewable energy.

Some systems do support this, for example the various water storage schemes that use surplus electricity to pump water into an upstream dam when electricity demand is low, so that it can be released to generate surge electricity when demand increases. South Africa, Africa’s largest electricity producer and consumer by a substantial margin, has two pumped-storage hydroelectricity schemes. [30One facility is at Palmiet near Grabouw in the Western Cape and another is the Drakensberg Pumped Storage Scheme in KwaZulu-Natal.]

Other energy storage technologies include flow batteries, thermal cells, compressed air, energy conservation efforts (such as using flywheels), thermal storage (such as molten salt) and gravity solutions (using cranes and wires to lift and stack heavy bricks using surplus energy and then unstacking them to generate electricity).

There is substantial innovation in this field at a large-scale industrial level, generally known as ‘power-to-X’, the ability to convert and store energy and then reconvert it through decoupling of power from the electricity sector for use in other sectors (such as transport or chemicals), possibly using power that has been provided by additional investments in generation. Examples include power-to-chemicals, power-to-fuel, power-to-gas, power-to-heat, power-to-hydrogen, power-to-liquid, power-to-methane, power-to-mobility and power-to-food.

In Africa, the leapfrogging potential for energy storage lies in the widespread application of these technologies in a decentralised and dispersed manner, where individual households, buildings and businesses manage their own energy production and consumption. In the era of intelligent energy management, efficiencies can be designed into buildings and production processes. In this vision, rural dwellers will be able to produce their own electricity through renewable systems as part of thousands of mini-grids.[31E Crooks, The year in energy, Financial Times, 23 December 2018.]

The transition to renewable energy will accelerate dramatically once the challenge of affordable energy storage has been resolved. Huge resources are being poured into this challenge. For example:

• In 2016, Bill Gates launched the Breakthrough Energy Ventures, a US$1 billion fund for new energy technologies, which prioritises investments in energy storage companies, nuclear fusion power and geothermal systems. [32E Crooks, The year in energy, Financial Times, 23 December 2018.]
• Lithium-ion battery technology, as currently used to power most mobile devices and electric cars, is currently still too expensive for large-scale grid application. However, production costs have been falling rapidly as more production facilities have come online and economies of scale came into play.[33BloombergNEF estimates that the capital costs of a utility-scale lithium-ion storage system will fall by 52% by 2030.] Battery costs are expected to achieve parity with petrol engines by 2023.[34H Sanderson, Hydrogen power: China backs fuel cell technology, Financial Times, 1 January 2019.] Tesla recently announced a new modular energy storage system (the Megapack) and, together with Pacific Gas & Electricity, will build an energy storage park in California that will consist of 268 modular Megapack units with a total capacity of 730 MWh. Each Megapack unit can store 12 times more power than its predecessor, the Powerpack 2, which was launched just two years before, illustrating the rapid progress in battery storage technology.[35O Rosane, Tesla, PG&E to help build world’s largest energy storage facility in California, Ecowatch, 28 February 2020.]
• In March 2021, Tesla’s subsidiary, Gambit, hooked 100 MW into Texas’ electric grid after about two million Texans lost access to electricity as a result of unusually cold weather.[36D Hull and NS Malik, Tesla is plugging a secret mega-battery into the Texas grid, Bloomberg, 8 March 2021.]
• China will soon complete a virtual power plant with the capacity to store 720 MWh of unused electricity for four hours.[37D Robitzski, China is building its first huge battery storage facility, 27 December 2018.]

Massive investments are being made in fuel cell technology, which involves using hydrogen fuel cells as an alternative to batteries, particularly to power heavy-duty long-distance road transport and providing a decarbonisation pathway away from diesel for non-electrified trains. Fuel cell technology requires platinum, of which there is abundant supply especially in Southern Africa.

China alone spent US$12.4 billion on supporting fuel cell powered vehicles in 2017 and, in 2021, Chinese automaker Great Wall Motors (GWM) unveiled plans to develop hydrogen fuel cell vehicles for private use, joining Japan’s Toyota and South Korea’s Hyundai.[38W Bosun, Chinese automaker GWM plans to develop hydrogen fuel cell vehicles, Global Times, 29 March 2021.] Already, by 2030, around 40% of vehicles sold in China will be electric.[39NW Stauffer, China’s transition to electric vehicles, MIT News, 29 April 2021.]

An advantage of fuel cell technology is that surplus electricity can be used during off-peak times to produce hydrogen, which, in turn, can be stored to generate electricity during peak demand or be used in off-grid energy applications. This is a particularly useful application of surplus electricity in a country such as China, where an estimated 150 GW of generating capacity from renewables is lost every year because it cannot (yet) be integrated into the grid.[40H Sanderson, Hydrogen power: China backs fuel cell technology, Financial Times, 1 January 2019.]

Annual demand for hydrogen is forecast to increase from its current 90 million tons to 140 million tons in 2030, with green hydrogen having a 20% share.[41S Liedtke, Hydrogen demand to rise to 140m tonnes in 2030, Mining Weekly, 17 November 2021.] Africa has huge potential, for example by reconfiguring the proposed Grand Inga scheme on the Congo River (discussed in the theme on Infrastructure ) to produce hydrogen and then ship it by sea to investment-grade markets estimated to reach US$300 billion by 2050.[42P Benoit, Unlocking green energy in Africa can impact climate change globally, The Hill, 9 June 2021.]

The potential for hydroelectric power on the Congo River in the Democratic Republic of Congo (DR Congo) is equivalent to nearly a quarter of the entire installed capacity of Africa. The full series of dams could eventually yield up to 50 GW at full operating capacity, according to the World Bank.[43International Rivers, Grand Inga Hydroelectric Project: An overview.]

However, the Grand Inga project has been perpetually held back by uncertainty, poor planning, delays, inefficiencies and corruption, illustrated pointedly by the World Bank pulling out of support to Inga III because of transparency issues. The requirement for a transmission network extending from South Africa to Nigeria and beyond to reach enough customers to purchase its electricity is an important constraint on a project located in one of the most unstable regions of Africa. The network would be vulnerable to physical and political disruption as it would cross many countries and some of the end users have all kinds of creditworthy issues. But using its massive electricity output to produce hydrogen through electrolysis could unlock the potential of Grand Inga, much like liquefied natural gas did in the US.[44P Benoit, Unlocking green energy in Africa can impact climate change globally, The Hill, 9 June 2021.]

Among other things, distributed energy from renewables will facilitate the rapid expansion of communications and the Internet, important enablers for leapfrogging across dimensions as diverse as education and infrastructure.

All ICT improvements impact positively on the economy, from more fixed telephones, more mobile phones, better Internet use, fixed broadband and, most positively, access to always-on mobile broadband (typically defined as download speeds of 256 kB/s or greater).

When the price of mobile technology fell — prices dropped by about 40% globally and nearly 60% in Africa in the last five years of the 20th century alone — so did demand for costly fixed telephone lines. This led to rapid improvements in the proportion of the population with access to a mobile phone without much additional cost to the consumer. It also allowed governments to focus on other priorities.

In 2000, Nigeria had just more than 553 000 fixed-line phone connections among a population of 122 million. The number of fixed-line phones has roughly doubled since, a ratio of just over 1:100 people. In contrast, mobile phone subscriptions have skyrocketed, and the ratio is now at 99 per 100 people, largely owing to a South African company, MTN, that has provided access at a fraction of the cost of fixed-line installation. This has allowed people to access digital education and online advisory services in health and agriculture. Leapfrogging means the democratisation of knowledge.

Chart 5 compares fixed telephone lines and mobile phone subscriptions in the European Union with Africa’s five regions. Although mobile phone subscriptions are increasing rapidly year on year, the number of fixed-line connections are actually declining as users migrate from fixed lines to mobile connections.

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In 2000, fixed telephone lines were still relatively rare in the developing world. People in sub-Saharan Africa were more than 90% less likely to have access to a fixed telephone than people in East Asia or Latin America. That gap continued to widen until about 2005, when there was a clear shift away from fixed lines towards mobile subscriptions.[45Europe and Central Asia were excluded from Chart 5 because their significantly higher access distorts the trends evident in less developed regions.]

Young Africans in urban areas are well connected, with about 80% owning their own mobile phone and most using it daily.[46Mo Ibrahim Foundation, Africa's Youth: Jobs or Migration?, London: Mo Ibrahim Foundation, 2019, 75.] More than half of households in Morocco, Mauritius, South Africa and Seychelles have Internet access at home, but in Liberia, the DR Congo, the Republic of the Congo, Guinea Bissau and Eritrea that number is below 3%. [47Mo Ibrahim Foundation, Africa's Youth: Jobs or Migration?, London: Mo Ibrahim Foundation, 2019, 75.] Despite the number of mobile connections in Africa still trailing the rest of the world, the gap is much narrower now than it was when fixed-line technology dominated the world of personal connectivity — a clear illustration of how modern technology allows countries to leapfrog.

Although only about half of Africans own a mobile phone, another 15%–20% have access to one even if they do not own it, making the mobile phone access rate about 65%–70%. The paradox of poverty is that more Africans have access to mobile phones than to other basic services such as electricity or improved sanitation.[48O Johnson, United Nations Economic Commission For Africa Conference of Planning, Economic and Finance Ministers Adebayo Adedeji Lecture 2019, Marrakech: United Nations Economic Commission for Africa, 2019.]

The greater flexibility of mobile phones and associated technology have allowed users to access all the opportunities of Internet connectivity via smartphones. The result is that Africa and Asia were able to leapfrog over expensive and time-consuming technologies and achieve a degree of catch-up with other parts of the world. Moreover, much of the mobile network in Africa was built by the private sector, illustrating the potential of markets here to attract foreign investment under the right conditions. The continuation of these investments would, in time, enable mobile phone and Internet access rates in sub-Saharan Africa that would have seemed unthinkable a few decades earlier.

Broadband, always-on Internet connectivity is a powerful general-purpose technology although it requires a certain threshold of penetration before significant impact is discernible. Generally, a 10% increase in national broadband penetration results in an increase of 0.6%–2.8% of GDP.[49M Minges, Exploring the relationship between broadband and economic growth, Background paper prepared for the World Development Report 2016: Digital Dividends, January 2015; Also see: H Edquist, PR Goodridge, J Haskel, X Li and E Lindquist, How important are mobile broadband networks for global economic development?, 2 June 2017, Imperial Business School; A Czernich, O Falck, T Kretschmer and L Woessmann, Broadband Infrastructure and Economic Growth, The Economic Journal, 121:552, 2011, 505–32.] Once that threshold is achieved, it allows for services such as cloud computing and mobile apps. Furthermore, there is no clear finding about diminishing returns at higher levels as it influences innovation across many sectors, including health, transport and government.

Phone connectivity is not only about allowing people to speak and text one another. Increased cellular phone penetration guarantees further innovation and additional investment. Internet access in and to Africa is set to explode, following initial efforts, such as Google’s Project Loon, which endeavoured to send a fleet of balloons into the stratosphere to beam Internet service to people (although the effort was abandoned two years later). A host of other examples exist:

• Plans by technology giants such as by Facebook and SoftBank-backed start-up Altaeros involve satellites and blimps, to provide Internet access. [50K Houser, Alphabet will bring its balloon-powered internet to Kenya, 19 July 2018; For SpaceX, see: V Tangermann, SpaceX is now taking requests for Starlink beta testers, 16 June 2020.]
• Facebook and a group of partners are involved in installing a 37 000 km undersea cable around Africa that will connect 35 countries in Africa, the Middle East and Europe. The project, dubbed 2Africa, will provide nearly three times the total network capacity of all the subsea cables that currently serve Africa and is scheduled to be completed in 2024.
• Google is involved in installing an underwater cable, called Equiano, that will connect Africa with Europe.[51L Prinsloo, Facebook’s giant African internet cable will now be even bigger, News24, 16 August 2021; N Ahmad and K Salvador, Building a transformative subsea cable to better connect Africa, Facebook Engineering, 13 May 2020.]
• Telecommunications firm AST & Science,[52Africa News Agency, Africa to benefit as AST, Vodafone launch plans for space-based network, Engineering News, 18 December 2020.] in partnership with Vodafone, plans to establish a space-based mobile network to connect directly to 4G and 5G smartphones without any need for specialised hardware such as terrestrial antenna systems. The first phase of the project aims to transform mobile network coverage north and south of the equator, where Vodafone will integrate its technology into existing brands in the DR Congo, Ghana, Mozambique, Kenya and Tanzania.
• In May 2022 US technology billionaire Elon Musk announced that users in Nigeria and Mozambique will soon be able to access the Internet using the Starlink satellite-based service. Starlink uses a constellation of low earth satellites that can provide reliable internet speeds in excess of 100 megabits per second, regardless of the the state of local infrastructure.[53Nanyang Technology University, Starlink to begin operations in Africa, 22 June 2022.]

Providing household electricity and then Internet access to all of Africa could unlock unimaginable progress.

Not only does mobile phone and Internet technology rapidly expand communication and information, it also spawns new innovations.

It is, for example, notoriously difficult to obtain credit in Africa, even for qualified borrowers, in part because currencies and markets are so vulnerable, but also because many institutions lack the capacity or resources to run large-scale lending operations. Mobile telephony makes it possible for people who formerly had no access to bank accounts to transfer and withdraw money, take out loans or get insurance. Today, mobile money has become a significant driver of social inclusion. Much of it started with M-Pesa (pesa means money in Kiswahili, widely spoken in East Africa).

The M-Pesa mobile money service was launched in 2007 by Vodafone for Safaricom (Kenya) and Vodacom (Tanzania), the largest mobile network operators in their respective countries. It allows users to store and exchange money on their mobile phones. Orange, Airtel, and MTN followed suit with their own versions a few years later, and operators outside the telecommunications sector, such as Paga, Firstmonie, Ecobank and Standard Bank also joined the fray, adding diverse models to the business environment. The result is that, by 2021, at least 11 countries in sub-Saharan Africa had multiple mobile money services, from five in Kenya to 17 in Nigeria. More than half of the 310 live mobile money services in the world are in Africa.[54A Onukwue, How mobile money grew in sub-Saharan Africa in the last 10 years, Quartz Africa, 28 September 2021.] In 2020, sub-Saharan Africa was responsible for almost half of mobile money activity in the world, with a transaction value of US$490 billion and some of the world’s largest financial institutions (e.g. Mastercard) are hedging their bets by investing in mobile money given the convergence between mobile wallets and traditional credit and other plastic cards.[55F Zandt, Where money goes mobile, Statista, 7 September 2021.]

The success of M-Pesa[56By the end of 2021, M-Pesa had 50 million customers across seven countries in Africa and the service processes more than 15 billion individual transactions per year. See: What is M-Pesa.] has created an entire mobile banking industry. Mobile money and the ability of digital solutions to coordinate a range of public, private and civic stakeholders are driving inclusion and enabling informal-sector workers to ascend the formality stairway. For example, Uganda’s National Water and Sewerage Commission Services utility company has basically gone cashless. They have digitised their utilities, including water, sanitation and electricity. Kampala almost exclusively relies on pit latrines, septic tanks and a bucket system instead of waterborne sewage, and today the Kampala city platform combines a call centre with a mobile application that allows for the payment and scheduling of the services. Pay-as-you-go solar electricity supply is also expanding.

The impact of the mobile money service on people’s livelihoods is impressive, with M-Pesa estimated to have lifted nearly 200 000 households out of poverty by 2016 since its inception, and the number was projected to increase substantially thereafter.[57T Suri and W Jack, The Long-run Poverty and Gender Impacts of Mobile Money, Science, 3546317, 2016, 1288–292.] The improvements were more significant for female-headed households and helped about 185 000 move from agriculture to some other business venture. Access to mobile money helped borrowers navigate uncertainties caused by drought, adverse health conditions or other unforeseen events.[58A Leke, M Chironga and G Desvaux, Africa’s Business Revolution: How to Succeed in the World’s Next Big Growth Market. Brighton: Harvard Business School Press, 2018.]

The money service also drove an increase in savings rates of more than 20%, because the more secure method of storing money gives people confidence that the future is worth investing in. [59A Leke, M Chironga and G Desvaux, Africa’s Business Revolution: How to Succeed in the World’s Next Big Growth Market. Brighton: Harvard Business School Press, 2018.]

Although national mobile payment systems are seeing rapid progress, cross-border payments are often still slow, expensive, opaque, cumbersome and inaccessible to many. Linking systems between countries is still at an early stage but is recognised as an important factor in realising the potential of mobile money systems to drive change and empower people, although macro-financial instability is acknowledged as potentially derailing safe cross-border systems.[60Speaking on the importance of getting the incentives for cross-border integration right, IMF Managing Director Kristalina Georgieva noted: ‘Imagine a virtual marketplace where payment providers across countries can meet to transact according to common rules and procedures, and a common technical infrastructure. Or a platform that allows households and firms to send Central Bank Digital Currencies directly to each other, immediately and without going through multiple costly intermediaries.’ However, she acknowledged that significant risks exist, given the ‘tension between open and interoperable cross-border payments – a technical objective – and countries’ policy objectives to manage capital flows, limit volatility, and retain control over monetary policy and exchange rate regimes.’ See: K Georgieva, Enhancing digital and global infrastructures in cross-border payments, Bank of Italy, 27 September 2021.]

Yet mobile money can also be used in nefarious activities For example, following the terror attacks in Palma, Northern Mozambique in 2021, during which terrorists robbed and destroyed two banks, a technical mission set up by the Southern African Development Community (SADC) found that the insurgent group received funding through mobile money transfer platforms such as M-Pesa, M-Kesh and e-Mola from sympathetic individuals and private organisations across the region. Currently mobile money transfer services generally fall outside the purview of national financial regulations, which results in poor monitoring and oversight.[61A Lucey and J Patel, Paying the price: Financing the Mozambican insurgency, Institute for Justice and Reconciliation, October 2021.]

Beyond their direct impact on economic growth and prosperity, Internet access and mobile phones have also become tools for social transformation. They allow small-scale farmers to link up with markets; citizens can record and report instances of the abuse of state power; election officials and observers can document and report results instantly; and citizens can identify crime incidents. For example, shoppers in Dubai regularly posted photographs of luxury purchases by African leaders, including Grace Mugabe, wife of the former Zimbabwean president Robert Mugabe.

In today’s world it is much more difficult to hide and conceal wrongdoing:

• Thousands of confidential US government and private sector correspondence were released by the website Wikileaks in 2010.
• The alleged money laundering by relatives and other close associates of Equatorial Guinea’s President Teodoro Obiang Nguema Mbasogo has also been disseminated to a wide audience.[62Open Society Justice Initiative, Corruption and its consequences in Equatorial Guinea, 2010. For reports on Mrs Grace Mugabe and her shopping behaviour, see: G Martin, Zimbabwe’s Grace Mugabe: How her addiction to luxury caused her fall from power, Forbes, 18 November 2017. ]
• In South Africa, whistle-blowers released troves of emails that documented the extent to which the Guptas, a family of Indian nationals, and their associates had used former president Jacob Zuma and others in the ruling African National Congress party to defraud South Africans of hundreds of millions of dollars.

The impact of Internet access and mobile phone technology on elections, government accountability and potentially on the spread of democracy has been profound. For example, after no candidate received the required 50% in the first round of presidential elections in Ghana on 7 December 2008, the run-off between former foreign minister Nana Akufo-Addo and former vice-president John Atta Mills on 28 December resulted in fewer than 31 000 votes separating the winner from the loser (a margin of less than 0.4%, with 73% of registered voters voting). Despite a history of coups and social turbulence in Ghana, the country and the region accepted Mills’ victory. The practice was maintained when, in December 2020, Nana Addo Dankwa Akufo-Addo narrowly won with 51% of the valid votes.[63S Knott, Close election shows maturing democracy, Ghanaian analysts Say, Voice of America, 10 December 2020.] The reason was that civil society was able to place thousands of trained election monitors armed with mobile phones and an SMS-based coding system to check, report and tabulate results. In this manner, a parallel civil society system could verify official tallies and ensure a credible result.[64H Dugmore, The impact of new media on recent sub-Saharan Africa elections (and African democracy in general), personal communication (slide presentation), 26 November 2010. Dugmore is MTN Chair of Media and Mobile Communications at the School of Journalism and Media Studies, Rhodes University, South Africa.]

This pattern has been emulated in various forms across the continent, reducing the ability of incumbents and special interest groups to manipulate and distort results to their own advantage — although not always successfully so.

The International Labour Organization (ILO) regards the transition to formality as ‘a central goal in national employment policies.’[65International Labour Organization, Women and men in the informal economy: A statistical picture, Geneva: International Labour Organization, 2018, 3.] All things being equal, reducing the size of the informal sector has distinct advantages as long as it does not detract from economic activism, is carefully managed, serves to incentivise employment and does not stunt growth. The informal sector has an important role in providing employment and incomes for millions of poor Africans and will continue to do so for many future decades.[66Theme on work/jobs deals, at some length, with the relationship between the formal and informal sectors and examines the potential benefits that the more rapid formalisation of the informal sector would have on Africa’s economic and developmental prospects.]

Chart 6 shows the estimated size of the informal sector in IFs as a portion of GDP and a portion of the total labour force for different country income groups globally.[67The data in IFs is blended from the UN Economic Commission for Europe, and F Schneider and D Enste, Shadow Economies Around the World: Size, Causes, and Consequences, International Monetary Fund Working Paper WP/OO/26, 2000.]

Click for interactive version

Whereas the trends on the size of the informal sector are all, on average, downward for low-, lower middle- and high-income African countries, the trend for the portion of the labour force for upper middle-income countries, globally and in Africa, is different. Instead of a decline in the portion of the labour force that forms part of the informal sector, it increases because the portion of the working-age population (aged 15–64) in these countries is significantly higher (and growing). Because the large cohort of working-age individuals cannot find employment in the small formal sector, they survive in the informal sector.

The Internet, mobile phones and digitisation allow African governments to break down the barriers between the formal and informal sectors and facilitate more rapid development. Steadily and incrementally lowering the barriers to access to credit could allow governments to ‘crowd in’ the informal sector and even raise taxes (at very, very low levels) for all types of services. This needs to happen incrementally and carefully. Zimbabwe introduced a 2% transfer tax in 2019 that proved hugely unpopular, followed by Cameroon at a rate of 0.2%. From 1 May 2022, Ghana introduced an e-levy of 1.5% to electronic transactions above US$13 but only after the debate in parliament had come to blows with opposition members of parliament staging a walkout.[68T Naadi, Ghana’s e-levy adds 1.5% tax to electronic payments, BBC, 2 May 2022.]

Kenya is one of many countries where the government is rolling out a biometric identity card, the Huduma Namba. Once distribution is complete, Kenyans will need the card — which holds their fingerprints, contact details and occupational information — to access government services. According to the World Bank, Africa is home to roughly half of the estimated 1 billion people in the world who are unable to prove their identities. To help remedy that, the World Bank has mobilised more than US$1.2 billion to support identity projects in 45 countries. Nearly every African country with a stable government now has active biometric identity programmes in place or underway, according to ID4Africa, with South Africa and Nigeria’s biometric systems among the most developed.[69M Speed, Activists sound alarm over African biometric ID projects, Al Jazeera, 10 December 2020.]

Using the digital economy and modern technology is generally an unexplored avenue through which to look at the potential of leapfrogging to increase government capacity and more rapid economic growth.[70See: A Gelb, A Mukherjee and K Navis, Citizens and states: How can digital ID and payments improve state capacity and effectiveness?, Center for Global Development, 31 March 2020.] Normally, as GDP per capita increases, the size of the informal sector decreases; put differently, the informal sector gradually ‘formalises’, as shown in Chart 7. This is positive because workers in the formal sector in African countries are four to five times more productive than those in the informal sector.[71International Monetary Fund, Chart of the week: The potential for growth and Africa’s informal economy, 8 August 2017.]

Chart 7: The informality staircase

Source: Source: Amolo Ng’weno and David Porteous, Let’s Be Real: The informal sector and the gig economy are the future, and the present, of work in Africa, 15 October 2018, www.cgdev.org/publication/lets-be-real-informal-sector-and-gig-economy-are-future-and-present-work-africa.

Using the IFs forecasting platform, we find that the size of Ghana’s economy increases by roughly US$1 billion dollars (in purchasing power parity) over a 10-year period for every 1% decrease in the size of the informal sector as a portion of GDP. The benefits keep on growing thereafter. In other words, if Ghana could use digitisation to draw people into the formal sector and hence reduce the size of the informal economy as a portion of GDP by five percentage points from 2023 to 2033, it would gain US$5 billion in the size of its economy by 2033. Because the size of informal labour as a portion of total labour is about 22 percentage points higher than the GDP share, the intervention reduces the size of the informal sector more rapidly.

A larger economy translates into higher average incomes and the result of a one percentage point decline in the informal sector is an increase of US$31 of GDP per capita above the Current Path forecast by 2033, at which point Ghana’s population would have increased to 40 million. That is an enormous improvement. Other livelihood improvements that follow are decreases in poverty and inequality.

Modern technology therefore provides the opportunity to leapfrog through the incremental formalisation of the informal sector.[72GSM Association, Digital solutions for the urban poor, 2020.] A report by the GSM Association notes that pay-as-you-go models, as one example, allow low-income customers to make small, incremental payments towards otherwise unaffordable goods. It had great results when applied to rural electrification and is now also unlocking a range of urban services such as water, clean cooking gas and sanitation.[73According to Max Cuvellier, as in: GSM Association, Digital solutions for the urban poor, 2020.] Pay-as-you-go leverages the ubiquity of mobile money to make goods and services more affordable in low-income communities, particularly in urban areas that have a higher density of mobile money agents than rural areas and where populations are more likely than their rural counterparts to use mobile Internet.

The provision of digital identification, for example, unlocks access to banking, government benefits, education and other critical services, in that it enables ‘the precise identification of all parties to an interaction; low-cost communications; and accurate, accountable, and convenient payment processes.’[74A Gelb, A Mukherjee and K Navis, Citizens and states: How can digital ID and payments improve state capacity and effectiveness?, Center for Global Development, 31 March 2020.] A study of seven focus countries (Brazil, China, Ethiopia, India, Nigeria, the UK and the US) by McKinsey found that extending full digital identification coverage to citizens could unlock economic value equivalent to 3%–13% of GDP in 2030 — if the digital identification programme enables multiple high-value use cases and attains high levels of usage.[75The average potential for improvements for emerging economies is, according to the report, roughly 6% of GDP in 2030. McKinsey Global Institute, The value of digital ID for the global economy and society, 2019.]

The Leapfrogging scenario illustrates the impact of African governments taking full advantage of the potential of new technologies and the digital economy to extract development benefits for their societies:

First, the first set of interventions emulates a more rapid transition to efficient energy solutions. This includes more solar and wind power and better energy storage, which is then used in intelligent power systems in decentralised micro-, mini- and off-grid solutions. To model such a scenario, we reduce the capital cost-to-output ratio for renewables, implying even more rapid technological progress than aggressive the forecast within the IFs forecasting platform. An example of such progress would be reductions in electricity transmission loss such as achieved by China in rolling out ultra high-voltage direct current transmission technology on a large scale.[76The intervention lowers the capital-to-output ratio for renewables by 30% between 2020 and 2040. See: Staff writer, Electricity now flows across continents, courtesy of direct current. The Economist, 14 January 2017.]

Second, a next step is to improve rural and urban electricity access. The size of the interventions range from 3%–27% additional rural electricity access by 2033 compared with the Current Path forecast and an additional 3%–8% in urban areas. On average, electricity access in low-income African countries improves by 15% above the Current Path forecast by 2043, by 8% for lower middle-income countries and by 7% for Africa’s seven upper middle-income countries, with quite large country to country differences.

By 2043, 84% of Africans will have access to electricity compared with 73% in the Current Path forecast. Instead of 342 million Africans with electricity connections in the Current Path forecast, the number by 2043 is 395 million. By 2043, the Leapfrogging scenario realises an improvement of 530 million barrels of oil equivalent from other renewables (wind and solar), an improvement of 32% relative to the Current Path forecast. However, because renewable energy production comes off a low base, it only improves the contribution to energy production by one percentage point (to 18%). The modest result should be seen in the context of an African economy that is almost nine percentage points larger in the Leapfrogging scenario than in the Current Path forecast.

The third intervention is faster roll-out of mobile broadband and general improvement in ICT. Despite rapid uptake, Africa trails significantly behind other regions in this regard. Fixed broadband access increases to 48 instead of 28 persons per 100 by 2043, a difference equivalent to 451 million additional people. Because mobile broadband already increases very rapidly in the Current Path forecast, the Leapfrogging scenario realises an improvement of only two additional persons per 100 people, a difference of 41 million people. It is not only the number of connections that is important but also their speed and reliability. 5G mobile networks will have almost no delay, be at least a hundred times faster than 4G networks and be able to serve a hundred times more devices within a square kilometre. It will allow driverless cars to make decisions through the cloud, medical robots to become more common and doctors to perform more complex operations remotely as precision transforms healthcare, enabling health systems to provide more targeted and accurate diagnoses and treatments.[77In 2020, South Africa became the first country in sub-Saharan Africa to offer 5G services. See: P Gilbert, Rain will launch 5G in early 2019, ITWeb, 13 November 2018.] Moving to 5G will require a step change in the roll-out of infrastructure and much more rapid shifts in technology. However, without efforts to increase uptake of 4G networks, 3G will likely remain the dominant network (58%) for the 1.05 billion mobile connections projected for Africa by 2025.[78Quoted in Y Kazeem, The 5G “revolution” is underway in Africa – but it remains a long way off from reality, Quartz Africa, 2 October 2020.] Indeed, 4G connections are expected to account for only 27% of mobile connections by 2025 — up only 4% from today.

As a result, the contribution of the ICT sector to African economies increases by roughly US$59 billion in 2043 above the Current Path forecast (equivalent to about 0.1 percentage point of GDP), although, even then, the ICT sector will constitute less than 7% of the African economy. Imagine what a more aggressive investment and determined government implementation could deliver!

Fourth, we emulate the impact of digitisation and modern technology on more rapidly formalising the informal sector, building on the example of Ghana discussed earlier. By 2043, the average size of the informal sector, as a portion of GDP, is 5% smaller for low-income African countries, 4% smaller for lower middle-income African countries and 1.2% smaller for upper middle-income African countries. The reduction in the portion of the total labour force employed in the informal sector is slightly larger.

On the one hand, the impact of digitisation would be to improve the ability of African governments to raise taxes, provide services and oversee regulatory implementation, hence improving effectiveness. On the other hand, benefiting from the opportunities of the digital economy requires providing greater space for small business and entrepreneurship, implying that the exploitation of these opportunities would need to go hand-in-hand with greater economic freedom.

On the World Bank’s index of government effectiveness,[79Government effectiveness captures perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies. ] the intervention in the Leapfrogging scenario improves the average score for Africa by 8% — with low-income Africa doing slightly better, on average, than lower and upper middle-income Africa. Madagascar gains the most from this intervention and Sierra Leone the least.

Chart 8: Modelling the Leapfrogging scenario

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The result is that the average growth rate for Africa for the period 2023–2043 improves from 5% in the Current Path forecast to 5.4%, resulting in an African economy that is US$740 billion larger in 2043 than would otherwise be the case. The result is a substantial increase in GDP per capita, reflected in Chart 9.

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In the Leapfrogging scenario, all countries experience an increase in the size of their economies (Chart 10).

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Six countries’ economies grow by more than 15 percentage points, including Malawi (at 15 percentage points), Somalia, Mali, Uganda and Madagascar (at 30 percentage points). Of course, considerable additional work is needed to verify these very large increases, but the forecast does indicate the extent to which leapfrogging can unlock potential. Increases are generally in the range of five to eight percentage points. Because the economies being compared are quite different in size, the absolute numbers are more impressive. For example, the Nigerian economy will, in 2043, be US$198 billion bigger than in the Current Path forecast — the largest increase in absolute terms among the 54 countries from Africa in IFs, followed by Ethiopia at US$68.2 billion. The corresponding figures for Egypt and South Africa, Africa’s other large economies, are US$61 billion and US$27 billion, respectively.

Leapfrogging is not only about improving growth, infrastructure and income, but also reduces poverty in Africa. Relative to the Current Path and using US$1.90 as benchmark:

• Madagascar, a low-income country, will benefit the most, reducing its 2043 poverty headcount by 13 percentage points
• Zambia, a lower middle-income country, will reduce its poverty headcount by three percentage points
• Africa’s seven upper middle-income countries do not experience significant decreases in poverty.

This theme started by examining the notion of leapfrogging and then moved on to present examples of how different technologies offer opportunities for Africa to start closing the gap with developed countries. It noted that modern technology may even obviate the requirement for traditional infrastructure, such as large electricity grids, to provide household electricity. It has therefore examined both the notion of stage-skipping, where a country bypasses traditional stages of development, such as using mobile phone connections instead of landlines, and it also explored the potential of forging an alternative path of technological development involving emerging technologies with new benefits and new opportunities (path-creating), such as the use of renewables instead of carbon fuels for energy.

Many areas of leapfrogging were not examined in this theme, of which health and education are the most important. General improvements in medical science could curb malaria, HIV infections, respiratory infections, tuberculosis and other diseases that currently ravage large populations in Africa, modelled in the Health/WaSH  scenario. The theme on manufacturing and transfers  explores the potential to use digital technology as an effective means towards targeted cash transfers to their citizens.

Whichever example we wish to use, technological innovation and leapfrogging will shape development on the African continent in many and fundamental ways, particularly if governments decide to actively pursue those options in a deliberate manner. Should African leaders seize the opportunities offered by modern technology, they need to build the productive structures of their economies in a way that will unlock rapid growth, alleviate poverty and improve incomes in a manner that is sustainable in the long term. Writing for the Center for Strategic and International Studies, Erol Yayboke offers an important insight in this vein: ‘Enthusiasm for taking advantage of leapfrog opportunities,’ he cautions, ‘should not distract developing nations from what should be their overarching goal: becoming producers in their own right, rather than simply consumers of technologies and services developed elsewhere.’[80E Yayboke, The Need for a Leapfrog Strategy, Centre for Strategic and International Studies, 10 April 2020.] Leapfrogging is therefore not merely copying high technology from others. It is a sequential process of learning by latecomers, building the skills such as in product design and acquiring the capability to create new products — particularly to overcome the extent to which the developed world locks in patent and intellectual property rights to their exclusive use.[81The rules-based global system, with its developed system of codification and legal code tends to increase already existing differences in incomes between rich and poor nations, as extensively researched by the Swedish economist Gunnar Myrdal.] The real drivers of economic growth, after all, are innovation, new knowledge and new technology.

The primary challenge that Africans and international finance institutions face is therefore twofold. First is the ability of African governments to apply innovative business models and flexible regulatory approaches to growth — an agile approach to regulation, perhaps most evident in Rwanda where the country has provided 4G mobile phone coverage to 95% of its (admittedly small) territory within just four years and established a domestic drone start-up to establish itself as an international supplier of delivery services.[82E Yayboke, The Need for a Leapfrog Strategy, Centre for Strategic and International Studies, 10 April 2020.] The second challenge is for governing elites in poor countries to lever the policy space to carve out space for industrialisation policies that do not run foul of the dictates of the World Trade Organization, among others.

Levering the potential of leapfrogging is therefore not merely asking regulators to get out of the way but about flexibility and a willingness to embrace experimentation, reflecting ‘the bottom-up nature of most instances of leapfrog development and the need for policymakers to proactively engage with entrepreneurs and technologists to ensure that growth in new technologies isn’t stunted by regulations meant for a different age.’[83E Yayboke, The Need for a Leapfrog Strategy, Centre for Strategic and International Studies, 10 April 2020.] It is the development and application of a deliberate industrial strategy aimed at this exclusive goal, not unfettered free markets or laissez-faire economic policies. Erik Reinert cautions poor countries to learn from the real causes of American and European prosperity instead of taking advice from their forgetful successors. ‘Rich countries got rich,’ he writes, ‘because for decades, often centuries, their states and ruling elites set up, subsidised and protected dynamic industries and services … having moved through a stage without free trade, which — when successful — subsequently made free trade desirable.’[84ES Reinert, How Rich Countries Got Rich … and Why Poor Countries Stay Poor, Constable, London, 2007, xxviii and xxix.] Eventually, if Africa is to benefit from leapfrogging, it needs to produce new technologies, not merely consume the high technologies of others. That, the United Nations Conference on Trade and Development warns, requires strategic innovation policies to promote and facilitate the deployment and adaptation of frontier technologies to their production needs and to build capacity for developing them further.[85SN Sirimanne, Leapfrogging: Look before You Leap, Policy brief no 71, December 2018, 4.]

This theme touched on a wealth of innovation that is already available for electricity provision, for example through off-grid solutions using wind and solar energy, which can take power to remote locations across the continent. Above all, it requires governments to be willing and able to seize these opportunities. The impact of digitisation and the Fourth Industrial Revolution will be magnified by efficient markets, clear and transparent regulatory frameworks, and effective governance in the public and private sectors.

For those reasons, the hurdles to leapfrogging may largely also come from African governments themselves as some shut Internet access down, particularly ahead of elections, worried that social media platforms could be used to remove them from power.[86L Prinsloo and M Cohen, Tech giants' dreams of free internet wither in African backlash, Bloomberg, 11 March 2021.]

Technology alone is therefore not a silver bullet. Countries have to invest in people and institutions to establish an infrastructural base for economic development. New technologies may make it possible to provide more and better education to more people but cannot replace the institutions bound together by social capital and public trust that is a prerequisite for development. The installation of CCTV cameras to monitor crime will not work in an environment where basic policing services are not provided.