African businesses have not digitalised enough to reap the full benefits of technology, the International Finance Corporation has stated in its Digital Opportunities in African Businesses report.
- According to the report, fewer than one in three firms that have adopted digital technologies make intensive use of them for business purposes, a phenomenon known as incomplete digitalisation.
- The new evidence, based on nationally representative data from Burkina Faso, Ethiopia, Ghana, Kenya, Malawi, and Senegal, shows that 86 percent of firms with five or more workers have access to one or more digital enablers (mobile phone, computer, or internet).
- Even so, 23 percent of firms are digitally enabled but do not adopt digital technologies for productive tasks, such as business administration, planning, sales, and payments.
An overview of the report notes that opportunities in digitalisation can help firms in the continent reduce poverty and foster inclusive growth. This is not near reach as access to and utilization of digital technologies among businesses are uneven, with many firms in the continent being left behind.
“A multitude of firms can become more profitable by using digital tools more productively and more intensively. In addition, a few innovators may uncover profitable ways to provide African businesses with needed and affordable digital products,” notes Makhtar Diop, Managing Director, International Finance Corporation.
“If micro and informal businesses with high probability were to upgrade to new technologies, about 15 percent of all workers could gain access to some form of digital technology for productive tasks, switching from manual to digital technologies,” he argues.
- The report notes that 39 percent of firms adopt digital technologies for business administration, planning, sales, and payments, but not intensively—that is, as the most frequent technology used to perform a task.
- On average, only 24 percent of firms make intensive use of the most sophisticated digital technology they adopted in a business function.
- Only 11 percent make intensive use of advanced digitalisation for general business functions such as enterprise resource planning.
The bulk of firms continue to regularly rely on manual methods. Additional data from Ethiopia, Ghana, Kenya, Nigeria, South Africa, Tanzania, and Uganda show that this gap follows similar patterns and is wider among micro-businesses.
Some of the hindrance to digital access in the continent include poor digital and complementary electricity infrastructure, high prices of technology, low levels of human capital and firm capabilities-which constrains the development of digital solutions and their adoption by firms-and limited access to finance.
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