The information economy and Africa's current status

Information Technology for Development 9 (2000) 205–221 IOS Press

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Downloading or uploading? The information economy and Africa’s current status Alemayehu Molla ∗ Addis Ababa University, Ethiopia Abstract. While Africa is confronted with the urgency to provide its citizens with the basic requirements of life such as peace, food, education, health, shelter, safe drinking water, etc., the rest of the world and the developed nations in particular are fast heading towards a globally networked information economy. This raises questions about what the information economy holds for Africa and specifically what opportunities, challenges and impacts it may have. This paper attempts to provide an overview of the current state of affairs of the information economy in Africa by implementing a generic conceptual framework that includes ICT hardware, software and services, informatization and e-commerce. The paper also identifies the basic challenges that Africa faces in developing and benefiting from the information economy.

1. Introduction The industrial revolution brought a tsunami of changes in the global socio-economic and political landscape. It marked the gradual shift of both global society and economy from an agricultural to an industrial basis. However, such transitions are hardly noticeable in most parts of Africa. Rather, for Africa, the period marked an era of relegation and alienation to the periphery of the world system through forces both internal and external to the continent. As a result, the continent is a home for almost all of the very poor and highly indebted countries. The majority of its inhabitants are living without access to basic education, clean drinking water, basic health facilities and at times even shelter and food. HIV/AIDS is already causing a major social and economic calamity. It is within such wide disparity in social, economic and human development that the global environment is going through another revolution – the information revolution [20,32]. At the peril of being a terrible simplifier, this revolution is motored by the advancements in information and communications technology (ICT) and the innovative and pervasive applications of such technologies in all aspects of life including business and development practices. The information revolution is a global wave. It affects all countries, albeit unevenly, and respects no boundaries. It permeates all dimensions of economic, social and political activities and touches social institutions, perceptions and thought processes. It is changing and challenging most of the centuries – old traditions, assumptions and axioms of doing business, wealth creation, work organization, production philosophy and development. This on-going shift and the nature of the emerging economy and society have many names: post industrial economy [3], knowledge economy [9], network economy [10,20], information economy [7,13], digital economy [38] and E-conomy [33]. * Present address: Center for Information Technology and National Development in Africa, Department of Information Systems, University of Cape Town, Private Bag, Rondebosch 7701, South Africa. E-mail: [email protected], [email protected].

0268-1102/00/$8.00  2000 – IOS Press. All rights reserved

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A. Molla / The information economy and Africa’s current status

The information economy is full of promises for the advancement of developing countries. It is often attached with the potentials of economic empowerment, leapfrogging stages of development, equitable participation in the global market, economic growth and better and improved quality of life [5,7]. Cases from Singapore, Malaysia, Korea, Thailand, etc., are cited to support such claims [19,28]. Following such promises and claims, one is tempted to ask if Africa has a place in the global information economy? What is the state of affairs of this economy in Africa? What are its effects, challenges, opportunities and impacts? Do we see evidences of John Naisbitt’s paradox of “the bigger the world economy, the more powerful its smallest players” working in (and for) Africa? Is Africa “down loading” only or does it have the chance to “upload” as well? Little formal research exists to sufficiently address the above questions. This paper does not claim to provide sufficient answers to the above questions or to the gamut of issues that surround these questions. On the one hand, there might not be unequivocal answers; on the other, to provide answers for the entire continent of Africa is a mammoth task that cannot be achieved in a short paper. Hence, the paper attempts to provide an overview of the current status of the information economy in Africa. The rest part of the paper is organized in four parts. The next section provides a conceptual framework for the information economy. A generic assessment of the status of the global and African information economy in part three is followed by the last part, which undertakes the challenges that African countries face in the development of the information economy. 2. Conceptualizing the information economy Despite much hype both in the academic and popular media about the shift to the global information economy and the euphoria following the boom in e-commerce and e-business undertakings, no dominant framework has emerged that helps to define and understand the overall structure of the information economy. Hence, the first step in attempting to define the information economy should be to build a conceptual framework that allows a practical and comprehensive understanding. In this vein, it is relevant to view the information economy from two angles. One as a metaphor to describe the ongoing general economic and social transformations that follow the panoply of (information and communications) technology developments and their innovative and pervasive applications in all sectors of the economy; and two as an economic sector that has its own value-adding components and a complete structure. This paper works mainly within the paradigm of the second view. Industrial production and agriculture will continue as long as humans need food, housing, shelter, clothing, mobility, etc., but the convergence of content, computing and telecommunications has created a new economic sector – the information economy sector. According to Cohen et al. [33], “there has been many such leading sectors in the past: air transport in the 1960s; television in the 1950s; automobiles in the 1920s; organic chemicals in the 1890s; railroads in the 1870s and so on”. What is special about the information economy is that apart from creating new possibilities in a leading sector of economic growth, it is changing the standard dynamics of economic growth and affecting every single economic and social activity. What constitutes the structural decomposition of the information economy is subject to many interpretations and analyses. Following the early conceptual foundations of Machlup [11] and Lamberton [8], two sub-sectors emerged: the primary information sector which consists of transactions on information goods and services markets and the secondary information sector comprising of “in-house” information and information services production [28]. This however was considered a rather broader conceptualization. As a result subsequent works [12,27,38] dropped the notion of the secondary information sector


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but differ in what constitutes the primary information sector. For the US department of commerce, the sector constitutes the production of electronic manufacturing, software and IT services, telecommunications and broadcasting/cable TV services. Robinson [12], on the other hand, considers computer and communications hardware and software only. OECD’s [27] understanding excludes the content industry and focuses on the processing, transmission and display of information, but still treats IT and communications services industries separately. Recently, following the growth of the Internet and e-commerce, there is also an attempt to define the Internet economy and e-commerce as a complete economy with characteristics such as input, output, size, value added, efficiency and labor productivity distinct from the other sectors of the information economy [1]. But, some contest the notion of the Internet economy and argue that it will be impossible to talk about such a thing, as the Internet will be so much a part of daily life that it will make as little sense to talk about the Internet economy as to talk about the telephone economy [33]. Predictions are that the Internet will emerge as a global market place networking both small and big economies in all sectors and from all corners and that there will be no slice of the economy that can be carved out of the rest and assigned to the Internet. Attempts to conceptualize the information economy, therefore, need to be parsimonious enough whilst allowing some flexibility. Therefore, (1) through synthesis of works that have hitherto been conducted; (2) taking note of the convergence of computing, telecommunications, contents and professional services; and (3) following Wong [28], information economy, in this paper, is conceptualized to include the following: (1) the design, production and distribution of ICT goods, software, content and professional services; (2) the development and operation of network backbones and infrastructure and other telecommunications services; (3) e-commerce related activities, and (4) the informatization of the economy and society through the application and use of ICTs. The framework in Fig. 1 indicates how these components are yoked with each other and with the physical economy. From the above conceptualization, it is possible to identify two sides of the information economy. On the one hand, there is the design, development and movement of information and communication technology goods, products, infrastructure, content and services and the corresponding benefits to an economy in the form of jobs, value added, trade balance and competitiveness. On the other hand, there is the application and use of the above products in all sectors of the economy and in all spheres of social life or what is normally known as informatization. For the sake of analysis, while the former is referred to as the supply side of the information economy, the latter will be referred to as the demand side of the information economy. The fate of developing African countries in the information economy is an issue that attracted a plethora of debates and discussions [6,15,22–26,30,34]. However, most of such discussions focus on the various issues that surround the demand side of the information economy and fail to give equal emphasis to the supply side of the equation. Yet, it is both the supply and demand sides that define the structural composition of the information economy and together the two form mutually reinforcing relationships and rarely does one succeed in isolation from the other. For example, the extent of the application of ICT in the economy defines the business, governance and other components of the environment and induces the demand for such products and services. Though

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Fig. 1. A conceptual framework of the information economy.

there are a few exceptions, (such as the growth of the Indian software industry) the composition, size and growth of local ICT demand is one of the necessary conditions for the inception, development and competitiveness of the supply side information economy. In the same vein, the development of the supply side information economy, besides directly contributing to economic growth and competitiveness, provides local support and services to other sectors of the economy and boosts confidence and awareness about the value and benefits of ICT. This, in turn, contributes to the improvement and efficiency of the different sectors of the economy and eventually paves the way to wider applications of ICT. Thus, by incorporating both the demand and supply sides of the information economy, the framework in Fig. 1 allows an emphasis not only on the current status of Africa’s supply side information economy, which is thus far under-researched, but also on the demand side of the game thus allowing a complete coverage of the topic. In addition, the framework can be used to identify the horizontal structural composition of the information economy; the generic value-adding chains that contribute to the overall economy; the importance of the ICT network in providing the platform for the functioning of the information and physical economy sectors; the strategic routes of progressing in the information economy based on global, regional and local realities and the need for the convergence of policies and initiatives to improve the information economy.


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3. Overview of the information economy in Africa 3.1. The big picture Statistical authorities both in the developed and developing world are slow in responding to and capturing the information economy, especially on the supply side. Moreover, divisions in the conceptualization and understanding of the information economy have compounded the problem of assessing the exact size of this emerging economy [13]. Having that difficulty in mind, according to the report released in June 2000 by World Information and Technology Services Alliance (WITSA) [44], the global information economy (supply side) has surpassed the US$ 2 trillion mark in 1999 with an annual growth rate of 9% and is expected to reach US$ 3 trillion by the end of 2004. In terms of geographical distribution, the 1998 European Information Technology Observatory (EITO) [39] report indicates that more than 81% of the worldwide ICT market was in Europe, USA, Japan and the four Tigers, leaving the rest of the world with a very low 19%. This estimate is seconded by the WTO [45] statistics which indicates that in 1998, 20 countries accounted for 89.5% of the total IT products imported worldwide with the USA alone importing 22.4% while the percentage share of the rest of the world was only 4%. In terms of sectoral division, the telecommunications service market constitutes the largest portion (more than 41%) of the global information economy. The other aspect of the information economy, with a phenomenal global growth, is e-commerce. E-commerce means many things to many people. It is subject to a plethora of views and definitions with some groups strongly arguing for a difference between e-commerce and e-business. The differences in defining e-commerce range from a difference of which network platforms to include as e-commerce platforms (proprietary, non proprietary, open, closed, internet, intranet, extranet, etc.) to the complexity of the applications, and the business functionality they support (ranging from basic business communications using as simple a tool as e-mail, to sophisticated applications like Electronic Data Interchange, Customer Relationship Management, Supplier Relationship Management, Auction, e-procurement, etc., that actually virtualizes the whole business process in real time). In addition, despite the environment and domain (i.e., business, consumer, and government), e-commerce might take a variety of business models ranging in complexity, functionality, target audience, etc., from brochureware to e-storefront, trust and infomediation, infrastructure provision and closely tied virtual communities of interest [2,29]. One of the major problems following such wide conceptualizations of e-commerce and lack of consensus of views is reflected in the figures that describe the size, growth and composition of e-commerce. Generally, there is a lack of reliable and internationally comparable statistics that measure the level, growth and composition of e-commerce. Categorically speaking, e-commerce growth parallels the growth in the Internet. Hence, e-commerce is mainly a North-American and European phenomenon with the United States accounting for more than 93% of online revenues, according to UNCTAD [42]. The same source estimated that, in 1998, the rest of the world outside OECD countries accounted for scarcely more than 2% of global revenues from e-commerce. To get a glimpse of the global picture of e-commerce (and the variation in the statistical figures1 ) and its expected impact consider the following paragraph. In March 1999, ITU reviewed the estimates of electronic commerce revenues. The figures reveal projections for business to business transactions in the period 2001/2002 ranging between US$ 100 1 The US Department of Commerce predicts that electronic commerce will account for more than 70 billion USD in sales in the year 2000. Forester Research more optimistically projects that over 327 billion USD will change hands by 2002, while WITSA project Internet purchase to reach 2.5 trillion USD by 2004.

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billion and US$ 400 billion. Corresponding revenues from business to consumer transactions are much smaller with again a large spread of projections from US$ 25 billion to US$ 90 billion in 2001/2002. These figures relate to the expected values of actual transactions, that is Internet based sales, and produce low end projections of some US$ 125 billion in the next two years and a high end projection of about US$ 500 billion. Since at present a major function of electronic commerce, as actually used by many economic agents, is to facilitate the search for information, a broader estimate of the impact of electronic commerce would include the estimated value of transactions, which are initiated online, though concluded in more traditional ways. Here, the high-end projections for 2001/2002 suggest that the figure might be of the order of US$ 1.23 trillion, meaning that roughly 40% would be transactions fully completed online and about 60% would correspond to deals facilitated by the Internet but not concluded on it [42]. In terms of the demand side, that is informatization, even if there is a general growth and in some cases like that of the Internet, the growth is characterized as little short of phenomenal, a considerable disparity between the high-income and low-income regions is observed (see Table 1). Especially, compared to the rest of the world and even those in the developing world, Africa’s progress is very slow. It is worth noting here that informatization indicators are commonly used among the development circles such as the World Bank [36,37] to describe the “penetration of the information economy” and the information age in the global society. Generally, on both the demand and supply sides of the information economy, a huge gap is observed between high income and low-income groups indicating the extent of the digital divide. Actually, the so-called digital divide should not be surprising as it clearly demonstrates an already existing difference in some of the backbones of the “bricks-and-mortar” economy (like electricity and roads). In addition, the gap is considerable amongst low-income groups with South Asia and Sub-Saharan Africa lagging behind the rest of the developing world in almost all of the indicators. Table 1 Global indicators of informatization2

High income Europe and Central Asia East Asia and Pacific L. America and Caribbean Middle East and North Africa South Asia Sub-Saharan Africa World average Source: [37].

Main tel. lines 506 204

Mobile phones 189 13

Newspapers

Radios

287 104

411

Television set 647 384

50

11

110

26

75

Cable TV

264.4 17.7

Internet hosts 374.89 10.55

184

229

39

0.4

7.4

0.60

74

398

264

31.3

1.9

32.8

7.65

6

37

268

140

1.5

15.4

0.23

18 16

1 4

12

99 196

69 44

16.4

0.2

2.1

0.11 2.32

118

40

295

277

55.4

9.2

64.2

63.10

165.3

Fax machines 49.7 1.1

PC

2 All the indicators are per 1000 people except the Internet hosts which is per 10,000 people. The figures reflect the status in 1997 and 1998 for the Internet hosts.


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3.2. The case of Africa The discussions in the preceding section provide a birds-eye-view of the global information economy. It indicates that a few countries dominate the economy both on the supply and demand sides. This asserts the earlier suggestion that being a leading edge user requires being a leading edge producer as well. The gap between the African and the rest of the world indicators is very huge and frustrating. Africa’s share of the global information economy market is insignificant and e-commerce activities and applications are yet to be seen. Though the preceding discussions suffice in outlining Africa’s position in the information economy, a closer look into the continent unveils additional insights that are hidden in the generalizations. 3.2.1. Demand side indicators In terms of the demand side of the information economy, especially Internet hosts and telephone lines (both fixed and mobile), significant regional difference can be observed on the continent. Though the number of Internet hosts on the entire continent shows a “significant growth” from 27,296 in January 1995 to 185,379 in January 2000, and almost all countries are connected to the Internet, the picture outside South Africa is very bleak (see Fig. 2). According to data from the ISC, the number of Internet hosts in the entire African continent grew by more than 679% between January 1995 and January 2000. However, during the same period, the growth rate for the entire continent outside South Africa stands at 125% only while in South Africa the number grows by more than 620%. Now, South Africa has 10 times the number of Internet hosts (more than 90% of Africa’s total) than the rest of the continent distantly followed by Egypt with 3% of the total figure. Table 2 summarizes the remaining demand side indicators by regional sub categories. The figures tell that South Africa has a very good profile from the rest of the continent in terms of informatization. 3.2.2. Supply side indicators Statistical systems in the continent has yet to catch up with reporting the supply side of the information economy and relevant indicators have to be worked out. Official statistics are not available and most countries are not reporting the performance of their supply side information economy (except for telecommunications) separately and use the old systems of primary, secondary and tertiary classifications. It appears that the sector is lost within the manufacturing, commercial (whole sale and retail trade)

Fig. 2. Internet hosts growth in Africa. Source: ISC.

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A. Molla / The information economy and Africa’s current status Table 2 Africa’s informatization indicators3

Sub-Saharan Africa Excluding South Africa South Africa North Africa All Africa Low income World average Source: [36,37].

Main tel. lines 11 5 100 47 18 16 118

Mobile phones 4

Newspapers

Radios

12

37 1 3 1 40

32

172 162 316 273 190 99 295

Television set 44

Fax Machines

PC

Internet hosts

125 124 59 57 277

3.5

41.6

34.2

0.2 9.2

2.2 64.2

0.10 63.10

2.32

and service sectors. The following sections provide an overview of the supply side status of Africa’s information economy based on data drawn mainly from South Africa and other countries like Egypt, Morocco and Tunisia. ICT hardware, software and telecommunications services. Although Africa’s share of the global information economy is very low, figures from some countries indicate a growing market and an economy that is gaining momentum. This follows the global trend that even if the North American market accounts for the lion’s share of the total ICT spending, regions with the smallest ICT base are outpacing the others with mature ICT infrastructure hence indicating where the future potential market might be. One trend that is observed in the African market is that despite the global trend, which is dominated by software and professional services, hardware still constitutes the largest proportion, accounting for as much as 60% of the total market revenues. Within the software and professional services categories, the strongest performing market segment is packaged software, which accounts for as much as 70–80% of the total revenues in the sub sector. This trend shows Africa’s obvious dependence on imported ICT and the infancy of its own indigenous industry. Plus, this may imply something about the nature and complexity of ICT applications and use in Africa (see Table 3 for the summary of some of the ICT market figures in Africa). But when shifting to the percentage growth of the components of the ICT market, the path follows the global trend with ICT services being the fastest growing followed by software products. South Africa is by and large the biggest market of ICT on the continent followed by North Africa. The South African ICT market has experienced a relatively high growth path, both in terms of real value and ratio to the GDP, with annual real growth rates closing to 10%. It is estimated that by the end of 2003, the combined market for IT hardware, software and services excluding telecommunications will more than double the 1998 figure, and is expected to reach a high of 6.6 billion USD. Table 4 illustrates the revenue from the South African ICT market and Fig. 3 shows the growth of IT/GDP ratio. The obvious dependence of Africa on imported ICT is evident from the South African experience. For example, in 1998, imported and redistributed software accounted for more than 92% of the total revenue from the software market and almost all of the revenue from the application development tools market, thus indicating the technological capability and sophistication of the local software industry. The industry is limited to reworking, customizing and local integration of internationally designed packages [41]. 3 All the indicators are per 1000 people and reflect the 1997 status except the Internet hosts, which is per 10,000 people and reflects the 1998 status. For a more detailed discussion of the informatization indicators, refer to “The Status of African Information Infrastructure” By Mike Jensen, A report presented to the first meeting of the Committee on Development Information (CODI), Available from http://www.un.org/depts/eca/adf/codipap1.htm.


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Table 3 ICT market in selected African countries

ICT market (in million USD) Percentage of hardware market Expected percentage growth No of companies

Egypt (1995) 400.8 65 35 (bln 96–98) 714 (98/99)

Morocco (1998) 300 55 17 512

S. Africa (1997) 9690 40 17

Table 4 IT spend in South African IT industry (in millions of USD) IT spend IT hardware IT software IT services Office equipment Internal Telecommunications Total IT spend IT/GDP ratio (%) Source: [41].

1992 1227 287 876 131 1212 2666 6400 5.4

1993 1321 330 938 138 1295 12847 6869 5.9

1994 1558 386 1100 170 1328 3023 7564 6.2

1995 1525 456 997 158 1446 4068 8649 6.5

1996 1631 633 1202 148 1485 4185 9283 7.3

1997 1717 669 1472 155 1526 4149 9690 6.9

Fig. 3. IT/GDP ratio of South Africa. Source [41].

However, 3% of the 1995 software revenue was generated from exporting mainly imported packages and a limited amount of locally produced software. In terms of IT hardware, more than 95% of revenues by local distributors are from imported products and components. As a result, rather than a component manufacturing industry, the PC assembly industry has flourished partly due to the loophole in the import tariff laws which used to allow components to be imported as spares at zero tariff rates [15]. Such indigenous capability has allowed South Africa to export its locally assembled personal computers to the rest of the continent, which in 1995 accounted for 35% of the total export in the sector. Due to earlier policies directed at encouraging local production and market guarantee of locally produced products, the South African telecommunications equipment industry has a better performance and skill base with imports in a non-cellular sector accounting for under 40% of the industry revenue in 1995.

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The telecommunications reform and privatization drives have started to open the African telecommunications market, which was mostly run under public telephone operators (PTO) monopoly, for competition. So far, 9 countries (Cape Verde, Central African Republic, Guinea, Guinea Bissau, Ghana, Cote D’ivoire, Madagascar, Sao Tome, South Africa and Senegal) have sold part of the share of the PTO (which ranges from a high of 60% in Guinea to 30% in Ghana and South Africa). More countries are expected to follow suit and some are in the process of preparing the sector for offering. Mobile cellular telephony is another area within the telecommunications services sector, which has demonstrated a rather significant growth within a span of five years. Cellular services are now available in 42 countries and outside South Africa comprises about 20% of the total phones on the continent. The market ranges from pure monopoly by the PTO (in Ethiopia and Mauritius), to up to five providers as in Tanzania, 2 being the most common. The service is gaining ever-wider popularity and market. Another telecommunications related service is the growth in Internet service providers (ISPs). Though it is far from being satisfactory and is insignificant compared to the rest of the world, Internet connection in Africa is increasing from only 12 countries in 1996 to almost all countries now. This has primarily opened Internet service provision as a new form of business and revenue generation. The number of service providers on the entire continent now stands at more than 367 up from 200 in 1998. The market structure varies from one where the PTOs are the sole (monopolistic) service providers (like in Ethiopia, Mauritius, Cameroon, Niger, etc.) to a competition between PTOs and other ISPs (as in South Africa and Mozambique) and to a situation where the PTOs do not have any involvement (like in Egypt). Other structures also include a government authorized sole agency (in Mali) and a joint venture between PTO and commercial ISP. E-commerce. In terms of E-commerce, although some organizations have established a web presence, e-mail is slowly being diffused and storefronts, mostly targeting overseas market, are scarcely scattered throughout the continent, figures estimating e-commerce revenue in Africa are not easily available except in a few countries. Thus far, there does not seem to exist any published study that assesses the diffusion of e-commerce in Africa. However, from the little that is known it can be seen that e-commerce also follows the general patterns in informatization and ICT market, making South Africa an e-commercesavvy country within the continent. Even in South Africa, according to a study conducted by BMI-T [4], despite a relatively ubiquitous internet diffusion within the business community4 e-commerce uptake is characterized to be very slow with more than 44% of companies not seeing e-commerce as a strategic business imperative at this stage preferring a “wait and see” approach. However, it is estimated that South Africa’s e-commerce will generate a total of 1.1 billion USD by the end of 2000 (with 657 million USD from B2B and 444 million USD from B2C) which is a significant leap from 84.7 million USD in 1997. This figure is expected to reach a high of 4.1 billion USD in 2005. In the past, the South African e-commerce market was dominated by B2C segment and B2B is expected to exceed B2C for the first time by the end of 2000. In addition to the low level of informatization on the rest of the continent, access to payment technologies like the credit card (which is only operational in 12 Sub-Saharan African countries) rules out domestic B2C initiatives until reliable and affordable payment technologies are introduced. 4 It is estimated that excluding micro and survivalist companies there will be approximately 320000 Internet connected companies in South Africa by the end of 2000. It is estimated that by the end of 2001 87% of the smaller companies (50 employees or less) will be online which is a relatively higher percentage even when compared to the USA, where at the end of 1999 the figure stands at 61.5%.


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4. Conclusion The discussion hitherto has provided an overview of the global information economy viz. Africa’s current position. In both the supply and demand sides, Africa’s overall status is bleak even when compared to other developing countries. At the cost of gross oversimplification, Africa’s poor performance in the information economy could be attributed to a number of interrelated variables. Chief among them are lack of awareness about the importance and role of the information economy; lack of national vision and leadership to lead the information economy by example; lack of both local and foreign investment to speed up the development of the information economy, low levels of ICT ingression in the economy (especially poor infrastructure), limited ICT skill base and technological and researching capability to support the information economy. Although Africa is not currently a significant player in the information economy, the global trend offers a number of opportunities. Whether these opportunities could be turned into actual benefits so that a vibrant information economy develops on the continent, among other things, depends on Africa’s readiness and capability to successfully overcome the above problems. Social, political and economic differences of individual African countries are at times so profound that it is difficult to suggest recommendations that work equally for all countries. In addition, in the sense that the information economy sector is the reflection of the level of socio-economic development of a country and is related to other sectors of the economy, the forces that define the development, survival, competitiveness, success and failure of the other sectors also affect this sector. Even if there does not exist a ready made formula that can be applicable across countries, and each African country needs to follow a strategy that best suits its own economic development philosophy, vision and capabilities, as a way forward, African countries need to work in the following broad areas towards developing their information economy. Also, Table 5 summarizes examples of initiatives taken by some African countries to address the challenges. 4.1. The awareness challenge Lack of awareness about the potential benefits of information and communications technology is one of the chief problems that the continent is facing. The information economy, its nature, structure, composition and benefits are not well recognized in both the public and private sectors. There is too little policy appreciation of the value to be obtained from this emerging economy. Such lack of awareness affects the policy environment and the demand for ICT, and does not provide the condition and motivation for the development of the information economy. Hence, raising the awareness and understanding of policy makers and industry players about the demand and supply sides of the information economy and its direct, supporting and enabling roles in the overall economy is an important and crucial challenge that most African countries have to overcome. This, among other things, requires launching sectoral and national awareness upliftment programs and the implementation of a holistic national information economy policy. The AISI (African Information Society Initiative) with the vision of building a sustainable African information society by the year 2010 and the implementation of the National Information and Communications Infrastructure (NICI) plans, policies and strategies within the AISI framework, could be one way of addressing the awareness challenge at the policy makers level. On the other hand, Egypt’s much hailed Cabinet’s Information and Decision Support Center (IDSC), Tunisia’s Internet Caravan 99 and South Africa’s Info.com 2025 are some examples of tackling the awareness challenge (see Table 5).

Challenge Awareness

Human Capital

Egypt

Country Mauritius

Tunisia

• Formulates national ICT plan • National workshop on e-commerce • Offered free internet service to raise local awareness

• Government Information Infrastructure

• Internet Caravan 1999 • Commission for e-commerce and EDI • National ICT workshop • Plans to implement a “strategy of awareness”

• Enact legislative changes to encourage investment • The Sinai Valley project • Provide investment incentive and guarantee for software development companies

• The government invested directly in software production and export (State Informatics Ltd)

• Open the market for ICT for competition

• Establish Regional Information Technology (RITI) and E-commerce institutes • Egyptian University Network • The Mubarak Project which is set to improve ICT use in schools

• Establish State Informatics Training Center (SITRAC)

• EDUNET (which connected 87% of secondary schools) • IRSIT (Institut de Recherche Scientifique en informatique et telecommunication)

Ethiopia


Investment

South Africa • ICT is recognized as a serious problem that impedes socioeconomic development • Commissioned a Foresight Study to scan international ICT trends and the state of ICT in the country • Sanction IT industry strategy baseline study • National debate on e-commerce • Government Information Technology project • The department of trade and industry has instituted a number of incentives such as tax, industrial development finance, import tariff protection and tariff relief, competitiveness fund, sector partnership fund, ect. • Open the ICT market for competition • Audited its law for compatibility with e-commerce and in the process of formulating e-commerce policy • Establish an academy to train IT professionals (Howteq, IT and Telecommunications Software Training and Development Center) • Technology enhanced learning initiative (TELI) • Distance learning • Telkom Center of excellence • School Net SA which linked so far 400 schools and plans to provide every school with access to the Internet • UniNet which allows more than 500,000 tertiary students to have Internet access

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Table 5 Examples of African initiatives to tackle the various challenges of the information economy

Table 5 Continued • Provide support for collaborative research in ICT (THRIP) • National Research Foundation • Institute National System of Innovation and innovation fund which promotes information society is a prioritry

• Promotes research through the Egyptian Information Technology and Training Institute • ASRT

• SITRAC

• IRSIT • Institut Massmedia (studies the impact of new ICT technologies)

Informatization

• School Net, Info.com 2025, UniNet, Smart City • Universal Service Agency • Community Information Centers • Public Internet Terminal • Internet 2000 (linking schools with internet) • State Information Technology Agency to meet the IT need of the pubic sector

• IDSC linking 200 governorate with internet • Egyptian Information Highway project • Technology Access Community Center

• Central Informatics governorate with automate the public sector • Remove customs on IT import and provide loan for citizens to purchase computer

• Push ICT utilization in the public sector (IRESA, CIMSP, ATI)

Leadership

• Lead the applications of ICT through various projects directed at the public sector such as schools, public service and regional and local administration • Launch information communication 2025 project with the aim that every citizen must be offered cheap Internet access at public kiosks using a pre-paid card • National debate on ICT • Encourage local content in technology • Government encourages ICT investment and utilization • Institute State Information Technology Agency (SITA) • Facilitate the environment for private sector participation • Motivates and supports research and development in ICT (THRIP, NIF)

• IDSC – the governorate project • IDSC and RITSEC pioneered the development of Internet backbone and motivated its utilization • Encourage local content in technology

• Government played a direct role through CIB, SITRAC and SIL

• Appoint a national commission for e-commerce and EDI • Establish ATI (Agence, Tunisienne Internet) to manage internet service

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Data source: [40,41,43].

• The government established a taskforce to work on a policy strategy paper in 1998 • Establish National Computer and Information Center (NICI) to undertake the computerization of the public sector but its accomplishment is so far too small to make any impact


Research and Development

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4.2. The investment challenge The ability of a nation and its firms to invest aggressively or attract foreign investment within the economic and social systems is among the important ingredients to promote the information economy. The African private business sector consists of mainly survivalist and micro-enterprises that have limited capability to lead the investment in developing the continent’s information economy. In the same vein, except in a few cases (such as telecommunications, mobile and Internet services), Africa has thus far not been successful in attracting large-scale foreign investment in the sector. However, without investment in the production, distribution and application of ICTs, development of the information economy and society cannot bear fruit. Experiences from other countries indicate a number of strategies for overcoming this challenge. These range from direct government investment as in the case of Romania, China and Mauritius to central planning of the sector as in Malaysia, and encouraging multinationals to invest in the IT sector like in Singapore. Therefore, African policy makers need to lead the investment attraction in the information economy at the highest level of government involvement by lobbying, establishing contacts, and encouraging and supporting their realization. Moreover, this also requires establishing a conducive and nurturing environment for investment in the information economy and a preferential treatment for those who exercise this option. 4.3. The human resource challenge The information economy draws heavily on well-trained and skilled human resources. The level and spread of technological capabilities related to ICT in a given society and/or easy access to the desired capabilities through import and other arrangements affect both the supply and demand sides of the information economy. However, skilled human resources is one of the challenges that Africa is facing and Africa’s ICT capability more often than not is not even sufficient to make effective use of the technologies, let alone, engage in their production. Experience from India shows that addressing the human resources challenge could go a long way in developing a successful information industry. The relatively large number of technical graduates, who were easily converted to software developers, and the annual output of IT professionals from India’s educational and training institutes gave India a competitive advantage to emerge as the developing world’s leading software hub and exploit the global software market. Therefore, African countries need to address this crucial challenge by investing in ICT education, establishing national institutions, such as the Egyptian Information Technology and South African Software Development Institutes, that are dedicated to producing ICT cadres and introducing compulsory courses on ICT as early as possible into the school curricula. In addition, the tertiary education curricula should reflect changes in the global environment and tertiary level ICT education needs to be expanded. Moreover, private investment in ICT training has to be encouraged and organizations have to be motivated and encouraged to provide ICT skills to their employees. 4.4. The research and development challenge The effort to build ICT capacity should be conjoined with an equal effort of promoting ICT related research. Research can be instrumental in redressing the lack of indigenous capacity in the design, production and use of ICT and its status determine whether Africa is going to continue downloading and be dependent on imported technology only or whether it has a proactive role to play in the global information


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economy. The research and development challenge ranges from establishing and setting up appropriate policies and institutional frameworks to identifying research areas, prioritizing them, to ensuring their conduct and dissemination of findings. In this regard, establishing national institutional frameworks that encourage innovation in information economy, instituting regional collaboration in research and development and providing various incentives for the private sector’s research and development expenditure are some of the ways in which this challenge can be tackled. 4.5. The informatization challenge The use of ICT, apart from improving the productivity, performance and competitiveness of the economy and social players can also create local demand. This is one of the factors that determine competitiveness in the information economy. Hence, encouraging and empowering local use of ICT can provide a double-edged advantage. In this respect, attempts must be exerted to increase the ICT awareness of local economy players, and to establish national demonstration and help desks to assist small and medium enterprises in ICT selection, implementation and maintenance. Moreover, in the long-term, directives could be instituted that require organizations to use certain minimum applications of ICTs in their engagement. 4.6. The role of the state The commitment of African governments to influence and regulate both the demand and supply sides of the information economy and provide national leadership is critical for the development of the information economy. This can be clearly seen from the experiences of various countries. The information economy development in the United States is a classic example where the government played a significant and heavy-handed role in both dimensions of demand and supply [33]. The government invested heavily in technology development and in the creation of a pool of highly trained scientists and engineers to facilitate the development of the sector. The semi-conductor (transistor) was developed at Bell Atlantic labs, which was then a heavily funded and subsidized research arm of the publicly regulated telephone monopoly. The first civilian application of computer (UNIVAC) came from the Census Bureau, which is a government agency. Even the Internet was the result of a government-funded project. In East Asia, Japan, the Republic of Korea and Taiwan developed a very successful semi-conductor industry through extensive collaboration between firms and government [18]. The governments of these countries (through their different arms) were involved in initiating the industry through public sector research institutes, forming a research and development consortium, shifting government funds into the joint effort and allocating different aspects of the work involved to different companies. The result is that all three countries have developed a successful semi-conductor industry, now standing respectively at second, third and fourth places in the world. Although it is difficult to establish causality between the involvement of the state and the success of these countries, the role that the state played on both the supply and demand dimensions and in leveraging the sector to new levels of technological sophistication cannot be downplayed. This story of the commitment of the government to play an active role in leading the information economy through various strategies and its successful outcome is repeated elsewhere. The involvement ranges from market reserve in Brazil [14,17] to central planning of the sector in Malaysia, Romania, and China [19,21,31], and encouraging multinationals to invest in the IT sector as in the case of Singapore [28], to subsidizing and offering various incentives to encourage the development of export oriented information economy sector in India and Pakistan [31,35]. In this respect, even the debatable market reserve policies of Brazil and Romania, which were practiced at the expense of local customers,

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have cultivated an information economy platform for later liberalization of the sector in the 90’s. Therefore, African governments need to take an active part in addressing the challenges identified in this paper, providing national leadership and leading the information economy by example.

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About the author Alemayehu Molla is a lecturer at the Faculty of Business and Economics of the Addis Ababa University and currently a doctoral candidate at the University of Cape Town. His research focuses on ecommerce readiness and e-commerce success in developing countries, information technology in national development and the adoption and diffusion of ICT in the public and business sectors.