The Fourth Industrial Revolution, which promises an automated future for manufacturing methods and processes, is upon us! Like all previous industrial revolutions, policymakers and academics are asking whether Africa is well-positioned to benefit from it and what long-term impact it will have on the continent. For policymakers on the continent, it is essential that they find innovative solutions and leverage new technology to realise a myriad of different strategic plans and development agendas: The African Union Commission’s Agenda 2063, The Third Industrial Development Decade for Africa (IDDA3), and the Sustainable Development Goals (SDGs). There are several interesting academic and policy-relevant questions on how the proliferation of frontier technologies such as cloud computing, robotics, 3D printing and artificial intelligence will either help or hinder the industrialisation of African economies. Given the central role of industrialisation in structural transformation and ultimately, economic development, it is imperative that policymakers, entrepreneurs and academics alike, produce sustainable and efficient formulas that will allow Africa to compete with other regions of the world for the benefits that Industry 4.0 would offer.
Partners from prominent consulting firms, including Deloitte and McKinsey, foresee several economic advantages that Industry 4.0 has to offer African youths, governments and entrepreneurs – higher quality production of goods, lower transaction costs, higher revenue, energy efficiency and more consistent outputs. These opportunities, among others, present an opportunity to spark rapid industrialisation through greater global competitiveness. Nevertheless, there are many that worry about the marginalisation of African workers, in favour of machines. One of the worst kept secrets is the existing unemployment crises that currently plague the majority of African economies. With that in mind, would it be wise to exacerbate these crises by encouraging automation? Will the economic gains be worth it, if it leads to a polarisation of the labour force? Can African countries truly compete with the rest of the world? At a time when Africa is preparing its labour forces for outsourced jobs from Europe, the Middle East and Asia, will Industry autonomous manufacturing deprive African economies of essential manufacturing employment opportunities? These are some of the questions that need to be asked, and answered, before committing to the Fourth Industrial Revolution (4IR) paradigm.
Challenges facing African governments & entrepreneurs
Before engaging in discussions on how Industry 4.0 will change labour market dynamics in Africa, it is worth examining the challenges faced by the continent in adopting and absorbing the new generation of technologies. Some of these challenges in new technology adoption include interoperability, connectivity, accessibility and human capital. Addressing these issues will require a concerted effort by all stakeholders, as all seem to be inextricably linked to a lack of sufficient financing and political will – in some cases. Accessibility, for instance, includes the glaring infrastructure deficit and poor transportation links. Many potential investors lament the lack of infrastructure as a major reason for their reluctance to invest in African economies. Similarly, poor transportation links make it more expensive to deliver products. In addition to this, the poor energy infrastructure makes it more expensive and taxing, to produce manufactured goods in many parts of the continent. Energy, in the eyes of many, is arguably the biggest constraint to manufacturing on the continent, as indicated in a recent report by Deloitte. Specifically, the report highlights the lack of energy infrastructure “…as an obstacle for the digital transformation towards industry 4.0”.
Despite the popularity of the “leapfrogging theory” in discourse on Africa’s development, connectivity and human capital both continue to stand in the way of the region’s potential to leapfrog. In most countries across the continent, people still use old ICT systems and the cost of internet connection remains incredibly high for the majority of Africans. Evidently, to adopt the frontier technologies and digitally transform the continent, the ICT infrastructure needs to be upgraded to enable companies to keep up with the unprecedented speed and power of the new technologies. Harnessing the immense potential of young people, through human capital development is also essential. Currently, many in the older generations are technologically challenged and find it difficult to work with advanced systems. This usually means companies have to invest significant resources to train workers and make them “technology-ready”. Governments need to focus on creating viable digital workforces through a re-orientation of curricula in schools, and skills development courses/workshops.
Presently, mobilising financial resources to address the above-mentioned constraints is a challenge. Despite modest improvements in domestic resource mobilisation, many African governments cannot conceivably afford the amounts needed to sufficiently prepare for Industry 4.0’s adoption. Moreover, the widespread presence of natural resources on the continent is not as advantageous as it once was. Developed countries are becoming increasingly energy sufficient and therefore the demand for oil, gas and other natural resources, has generally been on the decline recently. Data is rapidly becoming the most valuable resource in the world economy, but African governments are not exactly as blessed with data sources as they are with natural resources. To make matters worse, experts from the World Bank highlight that “given current automation trends, there will likely be fewer entry points in global value chains for African countries, and industrialisation could become increasingly challenging.”
“The Future of Work”
The adoption of new methods of production will undoubtedly bring new opportunities, but there are still many questions around its long-term implication for employment – both in developed and developing countries. To minimise youth unemployment and create economic prosperity for their respective nations, some African leaders have invested time and money into building labour-intensive industries. Rwanda, Mauritius and Ethiopia have all had successes with this strategy, and many other states like Senegal and Nigeria are diligently working to do the same. The basic assumption behind this labour-intensive industrialisation strategy is that as Asian economies transition into a knowledge-based, and services-oriented economy, Africa would become an attractive destination for outsourced cheap labour, given the large youthful population. With the new possibilities of Industry 4.0, however, many fear that there will no longer be a need for outsourcing labour, as machines will essentially be preferred to African labour.
In a 2018 joint report by the largest development banks, there was concern, in the section on Africa, about the possibility that new technologies could hamper any future attempts at structural transformation in the region. It also highlights the risk of developing technologically-driven production models that will render traditional labour forces useless. Dr. Brahima Coulibaly, Director at Africa Growth Initiative, Brookings Institute, calls it “Africa’s Race Against the Machines” in his piece for Project Syndicate. He argues that “as the costs of automation fall relative to manufacturing wages, and as global industrial production becomes less labor-intensive, Africa will lose some of the advantages that it is currently counting on. In the future, it may not be able to attract manufacturers seeking to capitalise on abundant, low-cost labor.” Experts who make arguments similar to Dr. Coulibaly are often dismissed as “techno-pessimists” by “techno-optimists”.
C&H Garments employs thousands of women and youth in Ethiopia, Rwanda and Kenya.
An article in The Economist, probably written by an optimist, argues that actually “automation is less of a threat to workers in the emerging world than it is made out to be.” In providing evidence for this, the author uses the garment industry as an example, due to the current inability of machines to accurately sew clothing. Along with this specific argument, there are other more general arguments around the potential for increased job creation through technology, and the considerable productivity gains. Experts, on this side of the fence, argue that “technology in the past has tended to create more jobs than it destroys, at least in the long run”, so why should this time be any different? Susan Lund, Partner at McKinsey Global Institute, cites the statistic that only 5% of jobs can be entirely automated, and William Wilkes, Reporter at Wall Street Journal, claims that “robots seem to be creating as many, if not more, jobs as they’re killing.”
These arguments fail to holistically analyse evidence from the past thirty years. Dani Rodrik’s acclaimed paper, Premature Deindustrialization, postulates that “advanced economies have lost considerable employment (especially of the low-skill type) …the evidence suggests both globalization and labor-saving technological progress in manufacturing have been behind these developments.” More specifically, robots are projected to take up to two thirds of jobs in the developing world, because “everything African workers could have done, robots can do better and faster.” These are all projections and speculation though – as there is no evidence about the nature of work over the long term.
As a result of the knowledge gap in the future of work, the level of interest in this area has increased exponentially. For instance, the Bill & Melinda Gates Foundation has provided funding for a commission “…to research the future of work, examining how developing countries can leverage technology to improve governance and service delivery.” The commission, Pathways for Prosperity, boasts some of the biggest names in academia and the private sector from across Africa and around the world – Melinda Gates, Strive Masiyiwa, Benno Ndulu, along with academics, executives and analysts from Oxford University, Safaricom, Barclays, MIT, and the World Bank.
Foresight: Opportunities & Recommendations
In spite of the worrying trends and the historical evidence given in this piece, there are undoubtedly some opportunities that African countries can look to capitalise on. Firstly, in any industrial revolution, there is a chance to strategically position oneself to take advantage of the inevitable restructuring of global value chains and upgrading of production methods. With the right mix of technology transfers from global technology leaders, and innovative sources of sustainable funding, African governments can better position themselves for Industry 4.0. More than ever, there are opportunities for partnerships in capacity building, financing and infrastructure development. While the potential for leapfrogging is real, academics, entrepreneurs and policymakers should avoid overstating the expected benefits. African countries have to address age-old issues before any real talk of leapfrogging can be had, and this effort has to be spearheaded by the governments in the region. The increasing influence of private sector actors, as development partners and strategists, is somewhat worrisome and can at times lead to unwanted outcomes – “the socialisation of risk, and the privatisation of profits“.
Several initiatives already exist to promote concerted efforts to harness the potential of Industry 4.0 for structural transformation. Nevertheless, in order to reap the benefits of Industry 4.0, stakeholders on the continent need to consider some the following recommendations: Firstly,
- There is a need to increase energy production, drive down costs, embrace renewable energy and become as close to self- sufficient as possible. All options need to be explored – off-grid solutions, biofuels and even nuclear power generation – because energy is a prerequisite for Industry 2.0, let alone 4.0. Without cheap and sustainable sources of power, the dream of industrialisation in Africa will be nearly impossible to achieve.
- The financing gap for infrastructure needs to be filled by moving from development finance and short-term private capital investments, to more long-term investments. Three innovative methods for raising capital are development banks, sovereign wealth funds and pension funds. All of these have already yielded tangible results for numerous countries in the region and have the potential to do even more.
- The importance of science, technology and innovation cannot be understated, and this needs to be reflected in the academic curricula across the continent. In addition to this, initiatives such as the Next Einstein Forum should be encouraged, supported and funded, to bring together critical thinkers, innovators and policymakers for the development of new strategies in the age of the Fourth Industrial Revolution.
To conclude, it is my opinion that African countries simply cannot, and will not be able compete on the global scale when it comes to developing cutting-edge frontier technologies for autonomous, intelligent manufacturing. Therefore, it is imperative to find niches and capitalise on the continent’s strengths. One way to do this, is to focus on and maximise African countries’ advantage in labour-intensive light manufacturing and processing – garment-making and agro-industrial processing. This sub-sector of manufacturing, as discussed earlier in this article, is not currently under the threat of automation, and requires low-cost, semi-skilled labour, which is abundant on the continent. Although it is practically impossible to say what the future holds, it is incredibly important to prepare for it. Foresight is key!
First published in Future Africa Forum