Authors: Chux Daniels, Benedikt Erforth, Rob Floyd, and Chloe Teevam
Affiliated organisation: European Think Tanks Group
Site of publication: ETTG
Type of publication: Policy paper
Date of publication: October 2020
As in other parts of the world, digitalisation is on the rise in Africa. Tech hubs here are multiplying exponentially. The start-up and innovation scene is becoming increasingly anchored in societies, and demand for trained professionals is growing. The rise of financial technology enterprises, or fintechs, and mobile money have been particularly notable in Africa, though the digital revolution is transforming productive sectors too. The strides being made are helping to grow economies, improve service delivery and generate jobs and incomes. Many organisations, businesses and governments have already moved, or are moving, their operations and processes to the digital space, using digital technologies to provide new products and services, expand existing services, increase revenues and exploit new value-producing opportunities.
Against this backdrop, the present policy brief identifies areas of opportunity, common objectives and potential for collaboration between the African Union (AU) and EU on digitalisation. At the same time, it recognises the significant disparities between the AU and EU, particularly in relation to capacity and regulatory powers. Three crosscutting recommendations to African and European leaders emerge from this discussion:
- Improve relations between the private sector and regional and continental institutions in both Africa and Europe.
- Create specialised forums for the AU and EU to transparently and honestly discuss particular bottlenecks and geopolitical implications of digitalisation.
- Conduct a robust analysis of why and how digitalisation, innovation and recovery efforts work or do not work, particularly in the era of COVID-19
Digital Revolution and Development
It will be critical for renewed efforts between the AU and EU to refocus D4D approaches to tackle innovation and digitalisation in ways that help improve relations between the private sector and regional and continental institutions. A partial or piecemeal operationalisation of EU D4D policies and of the AU Digital Transformation Strategy for Africa (2020-2030) will only hinder equitable growth, deterring innovation and leading to missed opportunities for effectively transforming the AU-EU partnership.
Digitalisation and Geopolitics
The digital economy is a key realm of geopolitical competition, particularly between the two tech superpowers, the United States (US) and China. The increasing decoupling between the two threatens to create two separate digital spheres.
One of the key actions of the EU’s ‘Shaping Europe’s Digital Future’ agenda is to make Europe a global leader in digital technologies.8 This objective recognises that the EU lags behind others in the digital world, and that African markets will be important for the EU in changing that. For the AU and African countries, perceptions of technology quality and superiority, scale, and price are important when considering where to engage when purchasing technologies and in seeking support to develop digital economies. Current evidence shows that the US and China “account for 75 per cent of all patents related to blockchain technologies, 50 per cent of global spending on IoT [the internet of things], and more than 75 per cent of the world market for cloud computing… [as well as] 90 per cent of the market capitalization value of the world’s 70 largest digital platforms”.9
The AU and its member states have largely tried to avoid allying themselves fully with either geopolitical camp. Many African policymakers emphasise that Africa’s priority is economic development, and warn that US-China rivalries could be detrimental to Africa. By and large, African governments focus on working with whichever actors can best help to speed up the digital transformation of their economies, and the building of an African digital market in line with the AU digital transformation strategy.
It is against this backdrop that the EU hopes to work more closely with the AU and African countries, sharing its experience both in developing its own DSM and in putting in place high regulatory standards for user privacy and data protection (e.g., the General Data Protection Regulation, or GDPR). Regulation remains one of the EU’s greatest areas of expertise in the digital realm and an area where it aspires to have international influence. Yet, the EU is not well known as a digital actor beyond the regulatory sphere. A recent study for DG DEVCO observes that to build its reputation the EU will need to expand its investment in critical infrastructure, develop better contacts with the private sector and mainstream digitalisation throughout its broader development cooperation.
It was clear from the expert meetings that there are concerns among some stakeholders in Africa that if Europe does not improve its offer in terms of both investments in digital infrastructure, skills, services and products and access to the common market, African governments will find it economically and politically more attractive to turn to China as their principle digital partner. We believe that specialised forums can be created for the AU and EU to transparently and honestly discuss geopolitical implications of digitalisation and how their respective strategies can lead to mutual benefits.
COVID-19 and Digitalisation
In the context of COVID-19, the urgency of investing in digitalisation is stronger than ever, and prioritisation of digitalisation in the AU-EU partnership becomes even more relevant. In the face of the crisis, clear and solid steps are now needed to make this a reality and to prevent backsliding on prior agreements and commitments. The way forward will require well-defined guidance and support for businesses, smart programming of EU external funds, strengthened capability and skills, and effective governance and regulation. The pandemic is already showing early indications of driving digital transformation and disruptive technologies, such as telemedicine, AI, robotics, 3D printing, (big) data and analytics, and online commerce.
Past and present AU-EU dialogues on digitalisation
There have been numerous AU-EU dialogues relating to digitalisation, resulting in more than a dozen agreements concerning topics such as digital technology, digital policy, information and communications technology (ICT) and trade. These agreements can inform the next round of dialogues. At the AU-EU Commission-to-Commission meeting in February 2020, on the topic of sustainable growth, trade, investment and digitalisation, the AU and EU “agreed to maximise synergies between European and African private sectors… and to promote actions focused on the diversification of African economies”. In addition, the European Data Strategy mentions EU-Africa cooperation on data, stating that “the EU will support Africa in creating an African data economy for the benefit of its citizens and businesses”.
Their commitment to an Africa-EU digital economy partnership notwithstanding, the two regions face a series of challenges. For the EU, a primary challenge is the need to strengthen its own DSM. This will include improving competitiveness and innovation to foster more European technology leaders and less dependence on US and Chinese technologies. As discussed earlier, the EU’s share of the global digital market is less than that of the US or China. Data protection and cybersecurity are two other challenges. These have gained in importance in response to online misinformation and disinformation, with their potential ramifications for democracy and human rights. In addition, the need to use personal data in contact tracing to limit the spread of COVID-19 has raised new issues for the EU’s data privacy agenda, given the strong privacy sensibilities of many EU member states.
In the context of COVID-19, the urgency of investing in digitalisation is stronger than ever, and prioritisation of digitalisation in the AU-EU partnership becomes even more relevant. In the face of the crisis, clear and solid steps are now needed to make this a reality and to prevent backsliding on prior agreements and commitments
These challenges, if not adequately addressed, will impede progress towards the EU’s D4D and geopolitical aspirations in digitalisation, and hinder Africa’s achievement of the goals set out in the AU digital transformation strategy, including having a DSM in place by 2030, as well as the objectives of the AfCFTA. There are many success stories, but we cannot forget the magnitude of the challenges related to digitalisation in Africa. For example, despite the progress recorded in improving digital infrastructure in Africa, “700 million people in Africa still do not have access to the internet”,32 and some 300 million Africans live more than 50 kilometres from a fibre or cable broadband connection.33 Connectivity, universal access and skills development must be priorities in Africa34 to harness the full potential of the AU-EU partnership to their mutual advantage.
D4D and innovation ecosystems
Prioritisation of Digital4Development (D4D) and thoughtful development of innovation ecosystems are a prerequisite for success in the AU-EU digitalisation partnership. They are important because if digitalisation is not truly mainstreamed as part of the development agenda it will continue to be fragmented and have limited impact. The programming of the NDICI offers the perfect opportunity to ensure that digitalisation is mainstreamed throughout the EU’s cooperation with partner countries. D4D must work to integrate the needs of innovation ecosystem development, bringing in the private sector, entrepreneurs, academia, research organisations, civil society, government and development partners.
Digital capability and skills
The EU can do more to help build the AU’s digital capability and skills. The EU’s experience in operationalising a European DSM means that the EU has much to share with the AU in terms of digital capability and skills related to design, development and supporting operations for a DSM. Expertise from individual EU countries can be of value too, such as Estonia’s capability in digital public service delivery and electronic identity systems (eID).
Data and taxes
There is an imperative to ensure data sovereignty in Africa and in Europe. It is essential to focus on data as a new commodity, considering its importance in areas such as health, education, research, industrial innovation and agriculture. Africa needs to own its data. A lack of frameworks and regulations that provide clarity on data impedes investment, digitalisation and development. There is also an urgent need for African data governance and data centres. Data sovereignty must be enshrined in the appropriate frameworks, regulations and governance structures in the AU and EU.
Digitalisation and COVID-19
While COVID-19 presents many challenges, the pandemic also offers opportunities for digitalisation, science, technology and innovation. The AU-EU partnership on digitalisation must identify and take advantage of these opportunities. The pandemic is changing much of life as we know it, in areas ranging from education and learning to commerce and medicine. The key message to the AU and EU is that both partners should take advantage of lessons learned, innovations from the pandemic and new approaches in, for example, governance and regulations, to further the digitalisation agenda.
There is an urgent need for the AU and EU to ensure that strategic investments have adequate financing to succeed. Access to finance, particularly during the post-pandemic recovery period, for tech start-ups and digital innovators in Africa, can lead to greater markets for EU products and services, while deepening industry linkages between Africa and Europe.
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