Mobile technology transforming Africa, manufacturing needs to step up

Mobile technology transforming Africa, manufacturing needs to step upMobile technology has been a transformative factor for various sectors across Africa and could bolster the manufacturing industry across the continent, according to former GE Africa senior leader Vishal Agarwal.

Addressing the Manufacturing Indaba in Kempton Park on Wednesday, Agarwal noted that, over the next decade, smartphones will have a 50% penetration rate in Africa, adding that it has already started transforming the continent’s banking, retail, utilities, healthcare, education and agriculture sectors on the continent.

He pointed out that East Africa had emerged a global leader in mobile payments while in South Africa, smart meters have taken off and will permanently revolutionise electricity billing and collections.

According to Agarwal, overall revenues were up across all consumer sectors in Nigeria, owing to various e-payment platforms launching daily, from ambulance services to matching farmers with export markets.

“Technology is revolutionising the continent,” he said.

Agarwal pointed out that, despite indications that Africa’s gross domestic product growth had declined over the past five years, if you “strip the effect of Arab spring countries and discount the slowness in oil-producing countries, Africa has experienced 4.5% consistent growth”.

He highlighted, however, that South Africa and the Arab north were worrying, as growth remained slow and unemployment, in the case of South Africa, was rapidly increasing.

“Slow economic growth in South Africa, together with large-scale unemployment, is frightening. South Africa has not done a good job in cross-pollinating and leading Pan Africa in investments,” he noted.

He added that South Africa had not played a leadership role in getting a manufacturing supply chain across the continent – something that must change as soon as possible.

Agarwal further noted that challenges with infrastructure, scale and the ability to service multiple countries from a single country hub remained significant obstacles that manufacturers on the continent still needed to overcome.

Meanwhile, Agarwal highlighted a recent McKinsey Study confirming that there would be one-billion people in the African workforce by 2034 – larger than both China and India – while in most countries over a third of the workforce is ready to retire, with most western countries facing the challenge of an ageing workforce.

He added that Africa had a continued abundance of natural resources, with over 60% of the world’s unutilised, but available, cropland.

“Africa has the largest reserves of diamonds, gold, phosphate, platinum, aluminium and a host of other minerals and commodities. Despite the low global commodity prices, the continent’s cost structure continues to be competitive,” he said, adding that investments would show a return as long as there was an enabling environment from various governments and regulators, as well as sufficient collaborative efforts between the private sector and local governments.

Agarwal believed that if Africa invested in manufacturing, it would develop a ready and growing market that had the potential to create 14-million jobs in the next decade.

He further noted that if Africa was able to leverage smart and emerging technologies, cheap labour and a deepening consumer market, it would become a valuable manufacturer as opposed to a “value manufacturer”.

“International collaborations, such as with the Chinese, can help develop the continent’s talent and open up export markets to create new sources of regional supply chain manufacturing activity,” he said.

Agarwal believed it was possible for Africa to double its manufacturing-related output in the next decade – from $500-billion to $1-trillion.
“The effects of this on local economies in tax receipts, skills building, productivity and national wealth will be a game changer. The fastest route to scale in all socioeconomic areas is manufacturing,” he said.