Digitalization set to develop Africa, not disrupt

·    New report from Siemens South Africa benchmarks the digitalization maturity of four countries in Africa

·    Findings show digital technology drives development rather than disruption 

Siemens have conducted an African Digitalization Maturity Report to better determine a digitalization benchmark across four countries namely South Africa, Nigeria, Kenya and Ethiopia as well as key vertical industries – transport, manufacturing and energy.

CEO Siemens Southern Africa Sabine Dall’Omo says the four countries were selected as some of the fastest growing economies in Africa, as well as having made great strides in ICT (Information and Communications Technology) adoption.

“Africa’s rapid urbanization represents an immense opportunity for the extension of ICT and improvement of digital maturity to help urban hubs such as Johannesburg, Lagos, Nairobi and Addis Ababa cope with the influx of inhabitants.

“There is an opportunity for government as well as the private sector to roll out services for digital access and use, exactly as they do with traditional basic services infrastructure,” says Dall’Omo.

For us, digitalization means using new technologies like data analytics, the cloud and the Internet of Things to merge the virtual and real worlds. This enables us to offer our customers substantial productivity increases across their entire value chain, from design and engineering to sales, production and service.

In concrete terms, this means faster time-to-market, greater flexibility and enhanced availability of our products and systems for our customers.

In Africa, the challenge lies in applying digitalization in the context of various macro-economic factors such as regulation and infrastructure,” says Dall’Omo.

The report measures the extent to which each country has a business, legal and regulatory environment that supports and protects the development of digitalization in key industries. This includes indicators such as the overall ease of doing business, the presence and regulation of ICT-related laws, the protection of intellectual property and evidence of ICT-related innovation and start-up activities.

Quality of infrastructure indicators include access to international bandwidth, mobile-network coverage, internet and mobile phone penetration and the costs of broadband and mobile-phone access.

Skills are another vital component of maturity. We believe that Digitalization can bridge the blue and white collar worker, to create what is termed the ‘grey collar’ worker added Sabine. 

“This implies humans and machines not competing for jobs, but rather working together and creating the need for a new type of talent. The challenge is whether or not government and industry are investing enough into the development of these skills.”

Country Analysis

While the larger and more developed economies tend to be more digitally mature the analysis shows there are many indicators that can influence a country’s ability to capitalize on digitalization.  If done correctly it can drive entrepreneurial competition in market. 

While Ethiopian and Kenyan economies are of a similar size and are growing at similar rates, Kenya is ahead in terms of digital maturity.  This is attributed to the country having far more extensive ICT infrastructure and mobile internet or 3G infrastructure to access and secondly because it is much more diverse and services-oriented economy, which typically drives the expansion of digital services.

Nigeria has a relatively undiversified trade profile beyond oil and is therefore highly reliant on imported technology, however it is benefitting from extensive investment in ICT, including 3G network coverage and is expanding into hardware manufacturing and software development. 

South Africa with its relatively large and diverse economy and extensive and high quality mobile broadband infrastructure, remains the leader of the four countries in most areas. 

Industry Analysis

The manufacturing, energy and transport industries showed varied levels of maturity and was reviewed based on the culture of innovation, digital operations and digital customer and offerings. 

Manufacturing was the most mature.  The adoption level of smart technologies that can accelerate the next industrial revolution globally termed Industry 4.0 remain at a foundation stage, however awareness of the significance and potential of this exponential technology is high.

In the energy sector, it is noted that without stable electricity it is challenging to do anything digitally.  Some of the main challenges facing the African power industry are related to unreliable generation capacity, costly transmission, limited skilled workforces and underdeveloped customer and billing management systems.

Digitalization can assist in enabling decentralized power generation to work using alternate energy sources combined with intelligent grid management

In the transport sector, new ways of using existing infrastructure more efficiently are being enabled through digitalization.  The rail and road sectors need to move beyond electrification and automation to true digitalization and focus on extending and integrating islands of excellence to solve the real mobility needs of citizens. 

Key recommendations from the report to accelerate digitalization include:

·         In an African context, disruptive technology drives development rather than disruption. Developed economy solutions are not necessarily going to work in more under-developed economies. In Africa, especially, true innovation comes from necessity.

·         Glocalized digitalization – conventional global views of digitalization are being re-imagined for local-fit. Advanced technologies offer the opportunity to solve great socio-economic problems and should be considered in Africa’s diverse and developing countries.

·         Digital in Africa is poised to happen in small isolated areas unless governments drive overarching policies to ensure consistency of standards.

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