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Africa Forum, Paris 5 June, 2009

UNECA. Africa Forum, Paris 5 June, 2009. “Innovation and ICTs to build tomorrow’s Africa”. Laura Recuero Virto Economist OECD Development Centre. Aida Opoku-Mensah Director ICT, Science & Technology Division UN Economic Commission for Africa. Key issues.

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Africa Forum, Paris 5 June, 2009

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  1. UNECA Africa Forum, Paris 5 June, 2009 “Innovation and ICTs to build tomorrow’s Africa” Laura Recuero Virto Economist OECD Development Centre Aida Opoku-Mensah Director ICT, Science & Technology Division UN Economic Commission for Africa

  2. Key issues African innovation is building tomorrow’s Africa African innovation to build tomorrow’s Africa • ICTs contribute to Africa’s development • by overcoming traditional infrastructural constraints • and reducing business costs • Attainment of the Millennium Development Goals • Creation of new business models • Establishment of simplified public Financial Management Information Systems • Attraction of large volumes of investment, extending reach to poorest populations

  3. phoner~1.gif ICTs and the Millennium Development Goals Innovation • Innovation in ICTs is enabling many African to access basic services for the first time and hence, • to increase countries’ performance on the Millennium Development Goals for 2015 Best Practice • The Pan-African e-Network initiative

  4. phoner~1.gif Bringing people and markets together in agriculture Innovation • Esoko collects price information on crops in local markets and distributes it using SMS and internet to farmers and buyers in 10 West and Central African countries Bakin Birgi (Monday) Zinder (Thursday) Tanout (Friday) Niamey (Sunday) Home market Farmer in Niger 2 mins 65 km ~ 3 hours 20 km ~ 1 hour 750 km ~ not accessible 2 mins Source: Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in Niger, Jenny Aker, 2008, African Economic Outlook 2009, OECD Development Center, 2009.

  5. Mobile payments for migrants Innovation Size of distribution networks % Demographic bank branches Demographic cash machines Mobile phones The key success of mobile payments is the size of their distribution networks Source: Wireless Intelligence (2008), Beck, Demirguc-Kunt and Martinez Peria (2005)

  6. Mobile payments drop transaction costs Innovation Transactions costs in Africa (% for USD 200) 12 % 10 % • Transaction costs for domestic transfers have been cut by 10 times in Kenya with mobile-payments •  To send 9 €, Western Union asks a commission of 50 %, M-Pesa mobile service requests 5 % •  M-Pesa has won over 5 million users in less than two years Source: World Bank (2008), OECD Development Center 2009

  7. E-trade: The reform not to miss Innovation European importers are going paperless from January 2011  African countries must convert to e-trade to continue exporting to Europe • On paperless trade • In Ethiopia, with the EU CP3 group the time between the initial transmission of data from the exporter to the permission from the importer will be minutes rather than 30 days • In Senegal, the local company Gainde2000 provides full end-to-end secure paperless customs • On health requirements of importing countries • Radio tracking systems for cows in Botswana, Namibia and Kenya avoid the spread of diseases

  8. E-trade: Sub-Saharan Africa can benefit the most Innovation Import and exports Sub-Saharan Africa is currently the worse in terms of cost and time in trade activities Source: World Bank 2009

  9. Innovation E-Government for donor support • Aid Management Systems (AMS) are found in Ethiopia, Egypt, Rwanda, Sudan, Tanzania and Zambia • Cape Verde’s government exchanges with citizens are paperless • South Africa, Kenya and Rwanda implement e-taxation with positive impacts on revenue collection United Nations E-Government Readiness Indicator (2008) Sub-Saharan Africa is lagging behind in e-governance  governments’ ICT skills, ICT infrastructure access and online presence Source: United Nations (2008), “The United Nations E-Government Survey 2008: From E-Government to Connected Governance,” United Nations Press

  10. Innovation in ICTs enables to reach the poor Investment Africa’s Exponential Growth in Mobile Telephony • Africa is the fastest growing mobile market in the world  • Today, 4 out of 10 Africans have a mobile phone line; by 2012 they will 6 out of 10 Source: OECD Development Centre, based on Wireless Intelligence, 2009. Source: Wireless Intelligence (www. wirelessintelligence.com), 08, African Economic Outlook 2009

  11. Reaching the poor through new business models Innovation Trickling down the Global Income Pyramid 6.1 billion mobile users in 2012 4 billion mobile users in 2008 3 billion mobile users in 2007 Postpaid 2 billion mobile users in 2005 Phone Sharing Microfinance Micropaid Prepaid 0.8 billion >US$40/day 1.5 billion people with US$4-40/day 1.3 billion people with US$4/day 1.4 billion people with US$2/day 1.3 billion people with US$1/day • By 2012, there will be 6,1 billion mobile subscribers reaching ever lower income populations Source: New Growth Markets, Nokia Siemens Networks, 2008, Wireless Intelligence, 2009

  12. Innovation Africa pioneer in networks without boundaries Networks without boundaries Africa is the first continent in the world to implement a service where any user in a foreign country to receive and send calls and messages at local rates Zain MTN Safaricom - Vodacom - MTN Forthcoming Source: African Economic Outlook 2009

  13. ICTs are resilient to the global financial crisis in Africa Investment Impact of the crisis on ICT investment commitments % • Like in the dot.com burst in 2000-2001, ICT investment will be less affected by the crisis in Africa than other regions • Big deals in late 2008 and early 2009 • About half of ICT investments are from the South: Kuwait, China, India, Egypt and South Africa • User mobile phone consumption still increases in Africa With private investments resilient to the crisis, new business models should multiplydespite the crisis Source: World Bank, 2009, African Economic Outlook 2009

  14. How to further reach the poor Connecting Africa to the world in 2009-10 Investment As of March 2009 SAT3 THE MISSING LINK Source: World Bank Group 2008, www.manypossibilities.net (Steven Song), African Economic Outlook 2009

  15. How to further reach the poor Connecting Africa to the world in 2009-10 Investment MULTIPLE SOLUTIONS AT LEAST ONE LINK Wholesale prices should start decreasing between 4 to 10 timesfrom June 2009! Source: World Bank Group 2008, www.manypossibilities.net (Steven Song), African Economic Outlook 2009

  16. Business climate has room for improvement Connecting Africa to the world in 2009-10 Investment Contribution of taxation on mobile operators (% of government revenues) Perceived ICT regulatory environment While it is legitimate to raise taxes through mobile phone revenues in countries with on average 70 % of informal labour force, private investment has not to be neglected for this strategy to be sustainable Source:Esselaar, S., Gillwald, A. and C. Stork (2007), “Towards an Africa e-Index: Telecommunications Sector Performance in 16 African Countries,” Research ICT Africa, GSM World, 2006, “Taxation and Growth of Mobile Services in Sub-Saharan Africa”.

  17. Will Africa ever be connected to Internet? Connecting Africa to the world in 2009-10 Investment In Africa, there are extremely few fixed lines.. % Urgent need to attract private investment and knowhow to fixed-line operators if Africa is to be connected to high speed internet  many fixed-line operators are close to bankruptcy in Sub-Saharan Africa! Source: International Telecommunications Union 2009, African Economic Outlook 2009

  18. Policy recommendations 1 The role of governments ICTs in Africa are at the innovation frontier, combining state-of-art technologies with African reality through incremental innovations • This has been possible through ICT investment, and still more can be done to • move forward in delivering value added services to the poorest population : • Inland high capacity networks need to be supported • Wholesale price drops have to be passed on to consumers • Connect Africa Summit • Private investment and knowhow has to attracted to the fixed-line

  19. The role of donors and NGOs Policy recommendations 2 • Donors and NGOs have a key role in.. • Complementing private initiatives in the provision of access to basic services • Raising awareness on regulatory bottlenecks to.. • drop user prices in the short run • continue attracting private investment • allow the growth of mobile payments • Raising awareness on financing bottlenecks to provide service to all,not only to urban population in profitable areas • ICT and Innovation are not fully integrated in broader development strategies: • Donor targets, Poverty Reduction Strategy Papers • and Millennium Development Goals

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