ISS TODAY ANALYSIS: Strategic development in digital industrial hubs can unlock Africa’s economic transformation

Good policy and stable macroeconomics won’t drive industrial innovation — tech hubs, start-ups and manufacturers must be involved.

Even where there is progress, countries aren’t benefiting enough from new technology and innovation because of low absorptive capacity and lagging digital infrastructure. The average internet penetration in sub-Saharan Africa is 25% — half the global average. The impact of doubling internet penetration on manufacturing labour productivity is also significantly lower in these countries.

The African Center for Economic Transformation recently analysed seven countries to better understand where industrial innovation policies were in place. It found that the private sector had limited investments in innovation, digital, and the Fourth Industrial Revolution technologies. Governments were also doing little to promote smart technology and incentivise industrial innovation.

Good policies and a conducive macroeconomic framework are enablers but aren’t enough to drive industrial innovation. Governments were drafting policies but not engaging enough with industries, tech hubs and start-ups. Besides Tunisia and Morocco , there was little strategic contact with the private sector.Institute of Development Studies research in 2021 showed that projects such as digital industrial hubs must be implemented in partnership with local tech providers.

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