African Digitalization Maturity Report 2017 - Digital Asset ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
African
Digitalization
Maturity
Report
2017
Click to enter
Disclaimer
INDEX (Click on categories to navigate)
Disclaimer
Foreword
Introduction
Research Methodology
This document is based on statistical research and contains
prognoses and personal views. The statements made in this
Country Analysis
document furthermore are of a general nature and not intended
as a guideline for business decisions.
Industry Analysis
Siemens neither assumes responsibility for the correctness or
completeness of the statements made in this document, nor any Industry Analysis: Manufacturing
liability for loss or damage suffered in reliance on any of the
statements made in this document. Industry Analysis: Energy
Industry Analysis: Transport
Key insights and recommendations
Conclusion
Glossary of terms
References
Foreword
Driving African development through smarter technology
The world has never been so closely linked customer offerings is to be expected. a broader energy mix is the distribution of
– or as digital – as it is today. Digitalization While we are seeing growing adoption of populations across African countries. The
has found a home in everything from advanced analytics within certain industry cost of transmission to customers is excessive INDEX (Click on categories to navigate)
personal devices to complex industrial sectors, such as the automotive sector, the real and there is therefore a bias to decentralized
systems. Our world is taking on a digital opportunity lies in sectors where it has not yet distributed power. Disclaimer
dimension wherever you look. been explored.
In the transport industry, digitalization can Foreword
But what does this digital world look like Manufacturing, while the most mature in facilitate the moving of people and goods from
in the African context? Is it on the same its transformation and adoption of digital an efficiency, customer experience and safety Introduction
trajectory as developed economies? Is it right technologies in Africa, remains a marginal perspective. Never before has technology
to assume it is playing catch-up or is there an player struggling to make a bigger impact on complemented transport so eloquently.
Research Methodology
opportunity for digitalization on the continent country GDPs. The question governments Data, and the ability to interpret it is as much
to create its own route to developing new and need to ask themselves is how they align a a part of the transport ecosystem as roads
transformative technologies that ultimately ‘here-and-now’ emphasis on job creation with and rails. Digitalization has the potential to Country Analysis
increase the competitiveness of Africa’s the necessary focus on digitalization. This turn predictive maintenance into real-time
economies? will enable Africa to create a niche within the monitoring and allow transport operators Industry Analysis
global economy. If we fail to pro-actively select across the continent to deliver services
If Africa is to compete in the digital our place within the global manufacturing efficiently and safely. Industry Analysis: Manufacturing
age, we need to shift our traditional industry we run the risk of continuing on this
thinking. Competing against each other path of non-industrialization. For Siemens, digitalization is much more than Industry Analysis: Energy
is counter-productive. The collaboration a business field; it is a growth driver. With
between government, business (local and In the energy industry, a stable supply of our broad range of offerings across energy,
Industry Analysis: Transport
international), labor and academia has the electricity is critical for digitalization to flourish. manufacturing and transportation, we’re
ability to change mindsets, implement policy By providing high levels of infrastructure and ideally equipped for the era of digitalization.
and create an environment for knowledge power supply Africa will be able to attract the We have much to offer Africa. Key insights and recommendations
Sabine Dall’Omo sharing and execution. necessary investment across various industry
sectors. Diversification of energy is critical. It is against this backdrop that Siemens has Conclusion
Siemens CEO, Southern and With these shifts it is possible and highly likely collaborated with an external service provider
Eastern Africa that digitalization will happen quite rapidly Based on the report’s findings, the to conduct a Digitalization Maturity Report Glossary of terms
in Africa, and bring about developmental understanding of energy diversification in Africa. The findings from the study are
changes on the continent. One need only look across the continent is not very high. In some just a starting point. We hope it will begin a
References
at the impact of cellphone technology and countries, paraffin lamps are considered as dialogue and provide a frame to some of the
smart phones in Africa to see how innovation alternative energy sources indicating the unique opportunities that exist. We hope you
can leapfrog older technologies at an almost level of gaps in infrastructure which exist. enjoy reading through the findings and look
breathtaking speed. However, to a greater extent, countries are forward to sharing further insights related to
beginning to realize they can no longer rely on specific countries and industries.
Varied levels of maturity across industries and one primary source of energy. This thinking
markets and the extent of cultural innovation, is opening up opportunities for a diversified
adoption of digital operations as well as digital energy ecosystem. Also driving the need for
Introduction
Digitalization refers to leveraging digital business models, are integrating their digital
technology and insights from data for concrete strategy with the organization’s overall strategy1.
customer benefits.
Organizations in Africa are digitalizing, although
In today’s ever-changing business world, competitors the level of digital maturity is not the same in INDEX (Click on categories to navigate)
are no longer the traditional large organizations. all countries. The purpose of this report is to
They are agile organizations and entrepreneurs that understand the relative degree to which digital is Disclaimer
are embracing new and exponential technologies to present within organizations in Africa and assess
compete and disrupt markets through digitalization. maturity across different industries (manufacturing, Foreword
Large, established organizations need to create energy and transport) and countries (Ethiopia,
a business construct and culture that is quick to Kenya, Nigeria and South Africa). Introduction
recognize these challenges; to adapt, innovate
and compete successfully in an ever-accelerating Ultimately, the question we asked was: “What is
Research Methodology
business environment. the state of digital maturity in Africa?” The research
methodology used has been tailored to assess
Mass market disruption was considered fringe digitalization-relevant macro-economic, micro- Country Analysis
science for a long time. However, disruptive economic and industry-specific indicators for Africa.
technologies and business models have become Industry Analysis
a common discussion around the boardroom There is an opportunity for developing nations
table. These technologies need to be enabled to understand how digitalization can assist in Industry Analysis: Manufacturing
by strategically aligning the development of solving challenges which are often unique to the
digital capabilities of the organization’s people, continent. The findings from this report can be used Industry Analysis: Energy
culture, activities and structure to fundamentally by industry professionals, and government-owned
dematerialize traditional concepts of products, entities operating within industry, to understand
Industry Analysis: Transport
services and knowledge. Digitally advanced considerations when approaching digitalization in
organizations, where digital technology has Africa
transformed processes, talent engagement, and Key insights and recommendations
Conclusion
Glossary of terms
References
Research Methodology
5
Macro-
Economic Infrastructure
Indicators INDEX (Click on categories to navigate)
9 7 10 Disclaimer
Environment Digital Literacy Manufacturing
Foreword
4 10
Micro- Economic Digital
Transport Introduction
Economic Industry
Indicators Maturity Indicators (Road & Rail)
4 4
Products
8 Research Methodology
Culture of
& customer Energy
innovation
engagement KEY: Country Analysis
4 Country Specific
Core Organization specific Industry Analysis
operations
Industry specific
Industry Analysis: Manufacturing
Number of Digital indicators #
Industry Analysis: Energy
Figure 2: Research methodology overview
Industry Analysis: Transport
Digital Maturity Assessment (DMA) Approach
The research conducted combined both primary and C-suite, engineering and technical roles across the Key insights and recommendations
secondary methods within Africa. The primary research manufacturing, energy and transport industries. Limited
tool was made up of an assessment that included responses from the other African countries were received Conclusion
questions to understand organization and industry- and were discounted from the findings. Qualitative
specific digital indicators. The assessment was sent interviews were conducted with industry representatives Glossary of terms
to existing and potential Siemens’ customers across from Siemens and an external service provider across
South Africa, Nigeria, Kenya and Ethiopia. The method South Africa, Nigeria, Kenya and Ethiopia. The purpose References
of contact included both email and SMS with the was to validate research findings and gather insight into
assessment being accessible for completion on PCs or the relative potential state of digital maturity in Africa.
mobile devices.
Respondents’ and interviewee’s inputs and insights were
105 responses were received from South African kept confidential and as such stakeholders have not been
organizations with respondents being in ownership, cited nor directly referenced in this report.
Continue
Research Methodology
Country Analysis
To assess the readiness of South Africa, Nigeria, Kenya and Ethiopia and publications produced by the following international
to capitalize on digitalization, we created a macro-economic digital organizations and firms:
maturity assessment (DMA) comprising of 26 individual indicators INDEX (Click on categories to navigate)
International Monetary Fund (IMF)
grouped into four pillars:
World Economic Outlook, October 2016 Disclaimer
1 Economic Maturity: size, growth and sophistication of the
economy. World Economic Forum (WEF) Global Information Technology
Report, 2016 Foreword
2 Environment: the extent to which the business, legal and
regulatory environment is conducive to digitalization. United Nations Development Programme (UNDP) Human
Development Index, 2015 Introduction
3 Infrastructure: the extent of Information and Communication
Technology (ICT) infrastructure that is currently in place for GSMA Mobile Intelligence, various publications
Research Methodology
connectivity as well the affordability and use thereof. World Bank, Doing Business Survey 2016
4 Skills and Digital Literacy: the extent and quality of a Facebook penetration rate
Country Analysis
country’s human resources and current use of digital ITU, various publications
technology and platforms.
Alliance for Affordable Internet (A4AI) Industry Analysis
Data for the individual indicators were sourced from surveys
Harvard Atlas of Economic Complexity, 2014
The computation of the overall DMA score is based on the following formula: Macro-economic DMA = Average Industry Analysis: Manufacturing
(Economic Maturity + Environment + Infrastructure + Skills & Digital Literacy)
Industry Analysis: Energy
Industry Analysis
The industry-specific analysis looked at digital capabilities 3 Established: countries/organizations have reliable digital Industry Analysis: Transport
which contribute towards digitalization of the industry across adoption but with room for important advances in some
a micro-economic and industry-specific perspectives. Levels of areas. Where quantified, agreement or strong agreement Key insights and recommendations
digitalization were classified into four maturity levels: to indicators were found to be between 65 and 90 percent.
4 Advanced: countries/organizations were categorized as Conclusion
1 Emerging: countries/organizations are facing critical
having very high-levels of digital maturity and adoption.
challenges in pursuing digital transformation in basic
Where quantified, Agreement or Strong Agreement to Glossary of terms
aspects. Where quantified, agreement or strong agreement
indicators were found to be >90 percent.
to indicators were found to be
Research Methodology
Industry Analysis continued
digitalization objectives. Performance frameworks, and
In this state of maturity, organizations create a culture setting of associated personal and business objectives that
of innovation according to a defined digital vision across take into account both linear/analogue/legacy and new digital INDEX (Click on categories to navigate)
executive leadership. The vision includes direction and elements of the organization, are defined and supported by
clarity about the position the organization seeks within the activities related to the training and increasing of awareness Disclaimer
digital ecosystem (e.g. platform, provider, retailer, etc.). needed to deliver in a digitalized environment.
Furthermore, buy-in and oversight from executives for Foreword
developing a leading digital business is present and includes Agile and proactive development of new and existing products
visible commitment, linkage to overall corporate objectives with a focus on innovation is found. In Advanced maturity Introduction
and executive metrics linked to digital initiatives. organizations, these product approaches are taken in relation
to customer or consumer billing and account management to
Research Methodology
Once executive leadership is aligned, there is a transition to ensure a well-coordinated product and service strategy. These
digitalization that is supported by a strategic approach and strategies are in turn supported by coherent and consistent
roadmap that balances transitioning from the legacy business approaches to process and workflow, across the core value Country Analysis
to the digital business. These advanced organizations typically chain, in order to support the creation and distribution of
engage with outside entities to shape standards and practices both legacy and new products. Inclusion of digital strategy in Industry Analysis
to support the business’s product and market objectives. The overall technology and infrastructure planning and decision
organization has robust financial budgeting and support and making is also paramount. Underpinning the process, is Industry Analysis: Manufacturing
prioritizes digitalization business cases as they emerge. a technology architecture that considers both digital and
physical strategy architecting for agile, extensible and open Industry Analysis: Energy
The organization’s business model is defined and matches technology environments. Architectures are designed to
product offerings coordinated across digital and physical evolve as required by the organization including rapid scaling
Industry Analysis: Transport
platforms, to avoid cannibalization. There is often a strategy in support of new business models, products and platforms.
for pricing digital offerings across channels and/or platforms,
taking existing, new, and future offerings as well as routes to Finally, Advanced maturity organizations within the energy, Key insights and recommendations
market into account. The business model strategically targets transport and manufacturing industries have industry-unique
customer segments and includes cross-segment marketing characteristics. Assessment of digital maturity was based on Conclusion
campaigns with separate but coordinated physical and understanding the extent of individual and combined states
digital segmentation approaches. Business model evolution of Electrification, Automation and Digitalization per industry. Glossary of terms
is supported by analysis of customer and consumer data and This concept to approach digitalization is used by Siemens and
behavior to identify and realize revenue, margin or other practically allows organizations to progress their maturity.
References
brand-value opportunities across all customer engagement
platforms. As an example, digitalization of the manufacturing industry
has progressed through different levels of industrialization.
Employees in Advanced state organizations are a key Once production is electrified and automated, digitalization
ingredient to their success. These organizations are able to can be achieved by connecting machinery in a ‘smart’ way and
proactively evaluate, determine, acquire, retain and reward allowing software to intelligently improve productivity, speed
the roles and responsibilities required in order to meet and flexibility of production.
Country Analysis
Much has been said, in recent years, about the influence related and knowledge-intensive activity takes place
of information and communication technology, or ICT, which in turn, drives the demand and uptake of digital
on economic growth and social development. The World technology.
Economic Forum Global Information Technology Report2
suggests that the global economy is entering a fourth The second pillar, Environment, is a measure of the INDEX (Click on categories to navigate)
industrial revolution, driven by exponential growth in extent to which the country has a business, legal and
the adoption of digital technology and unprecedented regulatory environment that supports and protects Disclaimer
increases in access to knowledge and innovation in data the development of digital business. Here we have
processing and storage capabilities. included indicators such as the overall ease of doing Foreword
business, ability to enforce contracts, the presence
Countries that embrace new technological developments and enforcement of ICT-related laws, the protection Introduction
and deal with risks strategically are more likely to prosper of intellectual property and evidence of ICT-related
and achieve inclusive growth. However, those who do innovation and start-up activities.
Research Methodology
not foster an environment in which digital technologies
can flourish are likely to fall behind. They run the risk The third pillar, Infrastructure, assesses the extent to
of facing increasing inequality and greater chances of which the country has invested in the ICT infrastructure Country Analysis
economic divisions. that is required to support the digital economy. Here
we have included indicators on access to and use of Industry Analysis
The aim of this chapter is to assess the ability of selected infrastructure, as well as affordability. Indicators include
sub-Saharan economies to capitalize on digitalization access to international bandwidth, mobile-network Industry Analysis: Manufacturing
given the prevailing macro-economic and business coverage, internet and mobile-phone penetration, the
environment. The countries that have been included are costs of broadband and mobile-phone access. Industry Analysis: Energy
the largest economies in Sub-Saharan Africa (SSA) viz.
Nigeria, South Africa and two East African economies The fourth pillar, Skills and Digital Literacy, reflects the
Industry Analysis: Transport
(Kenya and Ethiopia, which were identified as countries human capital endowment of a country. The rationale for
that had recently made great strides in ICT adoption). including this pillar is that digital technologies flourish in
knowledge-based economies which also typically boast Key insights and recommendations
Composition of the Macro-economic Review higher levels of educational attainment and provide
better quality education. The current use of common Conclusion
The first pillar, Economic Maturity, is an assessment of digital platforms such as social media also provide an
the size, growth and sophistication of the economy. indication of how ‘digitally literate’ the population is. Glossary of terms
The rationale for the inclusion of this pillar is that digital
technologies are likely to be more rapidly adopted in The computation of the overall DMA score is based on
References
larger and faster growing economies that boast an normalized scores of individual indicators.
established or growing middle class (proxied roughly as
GDP per capita). This is done by taking an average across the respective
categories. Categories are aggregated into the four sub-
In addition, the more sophisticated the economy indices which are then averaged to produce the overall
the more likely it is that a diverse range of services- DMA score.
Continue
Country Analysis
Where possible, the country scores per indicators Global benchmark depending on the indicator. Equal
have been normalized relative to the minimum and weighting has been assumed on all indicators within
maximum score for the full assessment sample, a category, and all categories within a sub-category.
which varies between a group of between 14
African countries (e.g. for GSMA indicators3), or The only exceptions are the scores for GDP and
185 international countries (e.g. World Bank Doing GDP per capita. These were multiplied by 10 to give INDEX (Click on categories to navigate)
Business Survey4). them a reasonable weight in the Economic Maturity
Disclaimer
pillar score, as all four countries were very distant
The normalized score out of 100 therefore from the Global benchmark in terms of size of the
represents the distances from either the African or economy and per capita income. Foreword
Introduction
Pillar Sub-category Indicator
Economic maturity Size and growth GDP, current prices, $US billions. Research Methodology
Forecast GDP growth rate (2017 to 2012).
Complexity Economc complexity index. Country Analysis
Environment Digital protection Laws relating to ICTs. To what extend does the regulator Industry Analysis
and/or competitions commission enforce the country’s
ICT licencing requirements and regulations?
Industry Analysis: Manufacturing
Business and Intellectual property protection. Judicial independance.
regulatory environment Overall ease of doing business. Number of procedures
to enforce a contract. Number od days to enforce a Industry Analysis: Energy
contract. Number od active tech hubs. Tech start-up
funding landscape ($US million).
Industry Analysis: Transport
Infrastructure Access and use International internet bandwiths bit/s per internet user.
Unique mobile subscribers, % population. Key insights and recommendations
Mobile Netwotk coverage, % population. 3G network
coverage. Percentage of households with internet.
Conclusion
ICT affordability WEF NRI ICT affordability score.
(prices for mobile, broadband and competition).
Glossary of terms
Skills and Digital Literacy Digital training Internet access in schools.
Digital tools usage Use of IP messaging. Facebook penetration rate. References
Skills Secondary and Tersiary education gross enrolement rate.
Population with some secondary education.
Primary school teachers trained to teach.
Table 1: Summary of the macro-economic assessment indicators
Continue
Country Analysis
Overall results
A summary of the overall DMA scores by country, and South Africa emerges as the country with the highest
scores for each of the four pillars and sub-categories is potential to realize digital maturity followed by Kenya,
provided in Chart 1. Nigeria and Ethiopia. INDEX (Click on categories to navigate)
Disclaimer
100
90 Foreword
80 82
70
Introduction
60
60
50 55 53
49 Research Methodology
40 43 46 44
30 33 33
38 Country Analysis
20 26 27 35
18 20
10
0
Industry Analysis
Economic Matirity Environment Infrastructure Skills & Digital Literacy
Ethiopia Kenya Nigeria South Africa Industry Analysis: Manufacturing
Chart 1: Overall DMA Results Results from the above chart are discussed in greater detail under each pillar.
Industry Analysis: Energy
Economic Maturity pillar 100
Industry Analysis: Transport
90
The Economic Maturity pillar takes the size, 80 36
Key insights and recommendations
growth and complexity of the economies 70
into account. Overall, South Africa ranks 60
29 Conclusion
number one, followed by Kenya, Ethiopia 50 30 51
and finally, Nigeria (Chart 2). 40
30 37 31 Glossary of terms
There are three components to the size and 20 22
growth indicator - GDP (current prices, US$ 10 References
billions), expected GDP growth between 0
4
Ethiopia Kenia Nigeria South Africa
2017 and 2021, and finally, GDP per capita
(current prices, US$). Economic Complexity Size and Growth
Chart 2: Overall economic maturity pillar results
ContinueCountry Analysis
Forecast GPD growth (2014 to 2017)
100
90
80
70 $686.59 , 7.4 INDEX (Click on categories to navigate)
60 $1 434.36 , 6.4
50
Disclaimer
40
Foreword
30
$2 763.14 , 2.5
20
10 Introduction
$5 726.88 , 1.8
0
Research Methodology
$1 000.000 $2 000.00 $3 000.00 $4 000.00 $5 000.00 $6 000.00 $7 000.00
GDP per Capita $US/anum
Country Analysis
Ethiopia (GDP $62B) Kenya (GDP $63B) Nigeria (GDP $494B) South Africa (GDP $315B)
Chart 3: Three components (GDP, GDP growth and GDP per Capita) of the Economic Size and Growth indicators Industry Analysis
The relative performance of the four countries in terms worldwide. On this basis it clarifies why a sizeable economy Industry Analysis: Manufacturing
of these three measures is summarized in Chart 3. While like Nigeria would be lagging. Unlike South Africa, Kenya
Nigeria has a larger economy than South Africa and is and Ethiopia, Nigeria has a relatively undiversified trade Industry Analysis: Energy
forecast to grow at a slightly faster rate over the next five profile. It is currently experiencing several policy challenges
years, it has a much lower per capita income so comes in diversifying the economy beyond oil. Industry Analysis: Transport
second to South Africa. The Ethiopian economy is roughly
the same size as the Kenyan economy but scores slightly McKinsey & Company6 report that Nigeria’s economy, like
Key insights and recommendations
higher as it is expected to achieve faster average annual real South Africa, is highly reliant on imported technology.
GDP growth (7.2% over the next five years). However, as part of government’s support for local content,
Conclusion
Nigeria is expanding into hardware manufacturing and
The economic complexity indicator provides an indication software development. Nigeria manufactures laptops, and
of the sophistication and diversity of economic activity in is looking to expand into affordable mobile phones for the Glossary of terms
a country and is taken from the Harvard Atlas of Economic domestic and regional market.
Complexity5. On economic complexity Kenya is strides ahead References
of both Ethiopia and Nigeria. The Harvard Atlas on Economic Kenya is the largest economy in East Africa. It acts as a
Complexity measures how a country’s total trade dynamics port of entry for goods destined for most East and Central
(imports, exports, growth and emerging industries, etc.) African countries6. Despite this it too faces high levels
change over time. The atlas further explores a country’s of unemployment and inequality. Due to it being a hub
potential for trade growth over the next five to ten years, for trade in the region, it carries a higher ranking than a
and measures this against more than 100 countries country like Ethiopia, which is land-locked and therefore
ContinueCountry Analysis
dependent on neighboring countries to support trade. significant demographic dividend, means that opportunities
Ethiopia’s geographic position on the continent means that exist for these countries to grow exponentially. Much of
it is highly reliant on Kenya to facilitate its trade. Eritrea, this, however, is highly dependent on developing and
Djibouti and Somalia are in conflict (and in most instances implementing the right polices, legislation, and institutions
under sanction), and extremely under-developed in terms to take advantage of this potential. These aspects, when INDEX (Click on categories to navigate)
of industry and trade. It is unclear whether Kenya’s score grouped with the ICT ‘revolution’, mean that countries like
in the atlas has been adjusted for the trade that would be Kenya, Ethiopia, Nigeria and South Africa, have the opening Disclaimer
in-transit to Ethiopia. The 2016 African Economic Outlook7 to leapfrog economic development and compete with more
states that over the next three to five years, economies developed economies across the globe. Of course, bear in Foreword
on the continent are expected to continue to strengthen mind that there are several context-specific indicators that
their business environments, and expand regional markets work together to create favorable outcomes. Findings in this Introduction
to benefit from increased intra-regional trade, economies report should not be taken outside of consideration of these
of scale and lower transaction costs. This, along with a indicators.
Research Methodology
Environment pillar
Country Analysis
100
90 Industry Analysis
80
70 Industry Analysis: Manufacturing
60 67
53 53 58
50 Industry Analysis: Energy
50
40 42
30 30 Industry Analysis: Transport
Environment
20 pillar 23
10 Key insights and recommendations
0 Digital Protection Business and Regulatory Environment
Ethiopia Kenya Nigeria South Africa Conclusion
Chart 4: Overall results for the environmental pillar
Glossary of terms
Environment in this instance refers to the kind of regulation that simply by the nature of their lower income status, and
that exists to enable a prosperous ICT sector, as well as sometimes poor human development indicators, countries
References
the ease of doing business in the country. Investors need like Nigeria, Ethiopia, Kenya and South Africa do not offer
an environment that allows them to engage in business the best returns for investors and entrepreneurs. Chart
activities with a tolerable amount of risk and favorable 4 indicates the rankings of the four countries for digital
return. Ideally, there should be stable institutions, low protection and the business and regulatory environment.
transaction costs and a flexible regulatory environment that Digital protection combines indicators for (i) laws relating
lends itself to opportunities for foreign direct investment to ICTs, (ii) the extent to which regulator or competition
and social entrepreneurship. Anecdotally, it is often believed commission enforces the ICT licensing requirements
ContinueCountry Analysis
and regulations in the country, and (iii) intellectual property telecoms, retailers, etc.) have stepped in to fill the gap. As a
protection. result, many services such as bank payments and transfers,
billing, and so on are available through mobile and digital
Overall South Africa ranks first, followed by Kenya, Nigeria and technology.
then Ethiopia. On digital protection South Africa and Kenya both Existing policies relating to the ICT sector in Nigeria, as stated INDEX (Click on categories to navigate)
score 53 and sit tied at number one (Chart 4). The government in the National ICT policy (2012)8, require a review. There are
of Kenya has done a lot towards improving the regulatory currently, various uncoordinated policies guiding different Disclaimer
environment for ICT, including removing VAT and import duties facets of the Nigerian ICT sector. Ethiopia still faces a gap
on handsets in 20096. The private sector, namely Safaricom, between its ICT ambitions to support economic growth and the Foreword
has also played a key role by investing in affordable access and policy and regulatory instruments to enable fulfilment9.
technology literacy6. Introduction
According to the World Bank Group’s Doing Business survey4,
Similarly, the South African government’s Department of Trade South Africa ranks 74 out of 190 countries. Nigeria received a
Research Methodology
and Industry (dti) has implemented initiatives to improve the ranking of 169; Kenya 92; and Ethiopia 159. A high (i.e. closer
ICT environment, albeit within a rather fragmented policy to one) ease of doing business ranking means the regulatory
environment. For example, the dti partnered with the Business environment is more conducive to starting and operating of a Country Analysis
Trust to increase the availability of skills, provide incentives and local firm. The rankings are determined by sorting the aggregate
attract new investment to launch a successful business process distance to benchmark scores on ten topics, each consisting Industry Analysis
outsourcing industry6. This may have partly assisted, but high of several indicators, giving equal weight to each topic4. The
connectivity costs and poor access in many parts of the country rankings for economies are benchmarked to June 2016. Industry Analysis: Manufacturing
mean that ICT development does little to lower inequality in the
country. While this survey considers different indicators than what Industry Analysis: Energy
has been included above, it does provide a snapshot of the
Due to several challenges within the ICT policy environment likelihood of improved digital maturity and its influence on the
Industry Analysis: Transport
in South Africa, as well as service delivery issues experienced ability of the ICT sector to create the foundation for inclusive
by government, several private sector organizations (banks, and rapid economic growth.
Key insights and recommendations
Infrastructure pillar
Conclusion
There are two dimensions to the Infrastructure pillar – Access 4 3G network coverage
and Use, and ICT Affordability. In terms of Access and Use,
5 the percentage of households with internet access Glossary of terms
South Africa ranks first, followed by Nigeria, then Kenya, with
Ethiopia lagging far behind with a score of 7 (Chart 5). The
Access and Use measure takes account of: The World Economic Forum’s Global Information Technology References
Report (2015)2 explains that initiatives taken by countries
1 international internet bandwidth bit/s per internet user to expand inclusive internet can be broken down into two
2 unique mobile subscription as a percentage of the groups. The first group is made up of initiatives that facilitate
population investments in networks in existing and new areas. These
3 mobile network coverage also measured as a percentage of may be urban or rural, but mostly urban. The second group
the population comprises plans and projects that increase the unconnected
ContinueCountry Analysis
100
90 94
80 INDEX (Click on categories to navigate)
70
70 Disclaimer
60
60
50 55 55
Foreword
40 43
30 33
20 Introduction
Environment
10
pillar
0
7 Research Methodology
Access and Use ICT Affordability
Ethiopia Kenya Nigeria South Africa Country Analysis
Chart 5: Overall results for the infrastructure pillar
Industry Analysis
population’s demand for internet services. In many parts inhabitants, let alone providing internet connectivity.
of the continent, a huge divide exists between well- The United Nations Human Rights Council passed Industry Analysis: Manufacturing
connected urban centers and off-the-grid rural areas. a resolution in June that condemns countries that
intentionally take away or disrupt its citizens’ internet Industry Analysis: Energy
While several individuals in SSA may own more than access. Central to this resolution is the argument that
one phone, most mobile phones are still of the older internet access is a basic human right10. There is therefore Industry Analysis: Transport
generation. The 2016 smartphone penetration for Africa is a role for government and the private sector to roll-out
30% compared to a 51% global average3. internet access to rural centers in the same way that
Key insights and recommendations
traditional infrastructure – like basic services, sanitation,
This creates limitations around the penetration of more transport and energy – are delivered.
modern applications and uses for mobile technology. Conclusion
Places like Kenya, however, have progressed towards Furthermore, ICT infrastructure providers need to be aware
creating old-generation-friendly services to facilitate more that as urbanization happens, population growth takes Glossary of terms
inclusive infrastructure for the population. off, progressively opportunities become available through
city development and the urban-rural mix changes11. References
Africa’s rapid urbanization represents an opportunity for This means that the needs of the population change. As
the extension of information technology and improvement a result, ICT infrastructure foundations should be flexible
of digital maturity. However, as we have seen in places enough to provide for these opportunities and take
like Johannesburg, Lagos, Nairobi and Addis Ababa, advantage of changes in the structure of economies (both
urban hubs are often unable to cope with the influx of formal and informal).
ContinueCountry Analysis
The second element of the Infrastructure pillar is ICT the information technology sector.Even though South
Affordability. According to the World Economic Forum’s Africa ranks number one in this category in comparison
Networked Readiness Index ICT12 affordability score, to more developed countries, the cost of internet access
South Africa also ranks number one, followed by is still relatively high particularly in relation to mobile
Ethiopia, and Kenya and Nigeria tied in third. data and broadband. Service providers argue that, in INDEX (Click on categories to navigate)
terms of the mobile network, prices are kept high to
This may very well have to do with the penetration maintain connectivity speeds. Disclaimer
of smart phones in the South African and Nigerian
market, as well as the number of service providers. This The cost to service providers is minimal but by lowering Foreword
ranking includes measures of the price for mobile and the price, the network would be unable to support the
broadband connectivity, as well as competition within demand for access. Introduction
Skills and Digital Literacy pillar Research Methodology
100 Country Analysis
90
80
Industry Analysis
70
60 65 Industry Analysis: Manufacturing
50 58
40 45 48 47 43
Industry Analysis: Energy
30 33 37
20 23 24
10
Industry Analysis: Transport
13
2
0
Digital Training Digital Tools usage Skills Key insights and recommendations
Ethiopia Kenya Nigeria South Africa
Chart 6: Overall results for the skills and digital literacy pillar Conclusion
The Skills and Digital Literacy pillar consists of three measure of the availability of internet at schools, but Glossary of terms
categories, Digital Training, Tools Usage and Skills which educational attainment in Ethiopia is quite low. For
is a measure combining educational attainment with example, only 12.5% of the population over the age
References
some indication of the quality of education provided in of 25 years reported that they have some secondary
each country. (high school) education. Use of digital tools such as
Internet Protocol (IP) messaging and Facebook is also
South Africa ranks first once again, followed by Kenya relatively low. Only 5% of the population of Ethiopia are
then Nigeria and finally Ethiopia. Ethiopia does relatively reported to use Facebook while less than 10% use IP
well in providing digital training which is proxied by a messaging services which is one of the lowest figures
ContinueCountry Analysis
among the 14 African countries surveyed by GSMA3 international benchmark for educational attainment.
(hence the low normalized score of two). This calls This is particularly evident in the gross tertiary
for action to be taken to provide access to the internet education enrolment rate which is 4% for Kenya and
and make the shift to smartphones more affordable 20% for South Africa compared against an international
in these countries. Kenya and South Africa fare much maximum score of 98% and minimum score of 2%.
better than Nigeria and Ethiopia when it comes to INDEX (Click on categories to navigate)
educational attainment with scores of 43 and 65 Kenya achieved the highest score in Digital Training
Disclaimer
respectively. The scores however are well below 100, which was reflective of the high indicator scoring found
meaning that both countries are still quite far off the in relation to internet access in Kenyan schools.
Foreword
Summary of DMA scores by country
Introduction
Summary of DMA scores Ethiopia Kenya Nigeria South Africa
Research Methodology
Economic Assessment of size, growth and
Maturity sophistication of the economy 27 55 46 60 Country Analysis
Industry Analysis
Extend to which the country has a
business, legal and regulatory
Environment environment that supports and protects 33 44 49 82 Industry Analysis: Manufacturing
the development of digital business
Industry Analysis: Energy
Infrastructure: extent to which the
Infrastructure country has invested in ICT infrastructure 20 39 37 55 Industry Analysis: Transport
required to support the digital economy
Key insights and recommendations
Digital literacy and skills: assessment
Digital
Literacy reflecting the human capital 26 33 18 43 Conclusion
endowment of a country
Glossary of terms
Country Macro-economic DMA 26 43 37 60 References
Figure 3: Summary of country macro-economic Digital Maturity Assessment
A summary of each country’s DMA scores relative to the international or regional benchmark (i.e. score of 100) as
well as the average score achieved by the four countries is provided in the figures that follow
ContinueCountry Analysis
South Africa
Digital
access to the internet (which is defined as access any time over
protection mobile phone or computer).
INDEX (Click on categories to navigate)
Business and Despite the roll-out of initiatives to connect schools to broadband
Complexity regulatory by government in Gauteng and Western Cape, most schools Disclaimer
environment
do not have internet access in the classrooms. The Gauteng
government’s ‘Gauteng Online Schools Programme’13 project Foreword
launched in 2002 aimed to connect 100% of schools in the
Size and Access
province. However, an internal audit of the R1 billion programme Introduction
Growth and Use revealed that the appointed contractor fell short of delivering
0 on its mandate in many respects. The Gauteng Government
Research Methodology
is currently busy with the roll-out of a provincial broadband
20 network to several government buildings and hopes to migrate
the school programme onto the new network in time. Country Analysis
40
Skills ICT
60 Affordability The Western Cape government in partnership with Neotel and Industry Analysis
the Cape Digital Foundation (a government agency) aims to
80 connect all schools in the province with broadband. By March Industry Analysis: Manufacturing
Digital Digital
2016 it had connected over 692 schools and created 3,300 smart
100
Tools Usage Training classrooms. Industry Analysis: Energy
Average South Africa South Africa is relatively close to the international benchmark
Industry Analysis: Transport
in the areas of ICT Affordability and the general Business and
Chart 7: Summary of South Africa’s DMA Scores in each
category relative to four-country average Regulatory environment. South Africa scores close to 70 out
of 100 on both counts. The WEF’s ICT Affordability measure Key insights and recommendations
South Africa scores above the four-country average in all areas includes prepaid mobile cellular tariffs in PPP $/min* , fixed
except for Digital Training (internet access in schools). South broadband Internet tariffs in PPP $/month** and a measure of Conclusion
Africa’s score is very close to the international benchmark in competition in the internet and telephony industry12.
the area of Access and Use. This is largely because of very good While mobile data and broadband costs in South Africa have Glossary of terms
mobile network access. The South African population has 100% fallen substantially in recent years, an assessment by the SA
mobile network coverage and 93% have 3G coverage. Institute of Race Relations in 2015 suggested that the average
References
monthly mobile broadband fees in South Africa were still 10
In terms of mobile phone usage, South Africa also does well times higher than those in the United Kingdom and 5 times
by international standards. The number of unique mobile higher than American fees with lower levels of service offered14.
subscriptions are 71% of the adult population. However, when it * Prepaid mobile cellular tariffs in Purchasing Power Parity (PPP) $ per minute
comes to internet access, only 37% of households have consistent ** Fixed broadband Internet tariffs in Purchasing Power Parity (PPP) $ per month
ContinueCountry Analysis
Nigeria
Digital
A survey by GSMA on the mobile economy in Africa3
protection suggested that nearly 50% of Nigerians make use
of Internet Protocol (IP) messaging services (e.g. INDEX (Click on categories to navigate)
Business and WhatsApp, Snapchat, and WeChat), while 12% make
Complexity regulatory use of Facebook. Disclaimer
environment
It is interesting to note that while Nigeria scores much Foreword
lower on the access and use measure than South
Size and Access
Africa (a score of 44 as opposed to 94), the proportion Introduction
Growth and Use of Nigerians using IP messaging is the same as it is in
0 South Africa (close to 50%).
Research Methodology
20 Taking a closer look at the access and use indicators
for Nigeria, it is apparent that close to 100% of the Country Analysis
40
population has mobile network coverage in Nigeria
Skills ICT
60 Affordability while 55% have access to a 3G network. Industry Analysis
80 Internet penetration in Nigeria (defined as consistent Industry Analysis: Manufacturing
Digital Digital
access all the time to the internet via mobile or fixed
100
Tools Usage Training line) is relatively low at 8.5% of the population. Industry Analysis: Energy
Average Nigeria Nigeria performs particularly poorly when it comes to
Industry Analysis: Transport
the sophistication or complexity of its economy, with
Chart 8: Summary of Nigeria’s DMA Scores in each category a score of less than 10 out of 100. This suggests that
relative to four-country average it remained too heavily reliant on a single commodity, Key insights and recommendations
Nigeria only scores above the four-country average in one oil, for export revenue.
area – Digital Tools Usage. Nigeria however scores close to, Conclusion
or on the four-country average in the areas of Business and
Regulatory Environment, Digital Protection, ICT Affordability Glossary of terms
and Size and Growth.
References
ContinueCountry Analysis
Kenya
Digital
exports, growth and emerging industries and so forth)
protection change over time. Kenya has a well-diversified economy
with services accounting for roughly 60% of GDP. INDEX (Click on categories to navigate)
Business and
Complexity regulatory Tourism is Kenya’s largest services industry and a Disclaimer
environment
mainstay of the economy but the country also has a
relatively large and diverse agricultural industry. As the Foreword
largest economy in East Africa, Kenya is also a vital port
Size and Access
of entry for goods destined for most East and Central Introduction
Growth and Use African countries6 and while its manufacturing industry
0 only accounts for 14% of GDP it is the largest in the
Research Methodology
region.
20
Kenya is recognized as one of the most computer Country Analysis
40
literate societies in Africa and for the adoption of
Skills ICT
60 Affordability mobile-based services such as mobile money. This is Industry Analysis
reflected in part in relatively high scores for Digital
80 Training and skills. However, in this context the relatively Industry Analysis: Manufacturing
Digital Digital
low scores on Access and Use and Digital Tools Usage
100
Tools Usage Training are quite surprising and may reflect unequal access Industry Analysis: Energy
between people living in the relatively affluent urban
Average Kenya areas and poor rural communities.
Industry Analysis: Transport
Chart 9: Summary of Kenya’s DMA Scores in each category
Data from GSMA suggest that only 23% of Kenya’s
relative to four-country average Key insights and recommendations
population use IP messaging services (as compared to
Kenya scores relatively well (above the four-country average) in the nearly 50% in Nigeria and South Africa) while 15% use
areas of Business and Regulatory Environment, Digital Protection, Facebook. 89% of Kenya’s population have access to Conclusion
Complexity (or sophistication of the economy), Skills and Digital a mobile network but this was the lowest of the four
Training. The country performs relatively poorly when it comes to countries. As a result, Kenya received a normalized Glossary of terms
Access and Use, Digital Tools Usage as well as the Economic Size and score of zero. This in part explains the oddly low overall
Growth indicator. access score. 64% of the population have access to a 3G
References
network which is relatively high compared to Ethiopia
As noted above, Kenya is ahead of both Ethiopia and Nigeria on and Nigeria. Kenya is also well ahead of Ethiopia and
the economic complexity measure. The Harvard Atlas on Economic Nigeria when it comes to internet penetration – 16% of
Complexity measures how a country’s total trade dynamics (imports, the population have consistent access to the internet.
ContinueCountry Analysis
Ethiopia
Digital
uptake of digital services. Ethiopia’s score on the
protection Access and Use measure is only 7 out of 100.
INDEX (Click on categories to navigate)
Business and While 90% of the Ethiopian population have access
Complexity regulatory to a mobile network, access to the internet (fixed or Disclaimer
environment
mobile) is very limited. Only 7% of the population
have access to a 3G network while only 2.9% of Foreword
households have consistent access to the internet
Size and Access
(fixed or mobile). Introduction
Growth and Use
0 As a result, less than 10% of the Ethiopian
Research Methodology
population currently make use of IP messaging
20 services and less than 5% use Facebook.
Country Analysis
40
Ethiopia does relatively well on the ICT Affordability
Skills ICT
60 Affordability measure where based on the WEF measure it scores Industry Analysis
slightly higher than both Kenya and Nigeria but
80 less than South Africa. The WEF’s ICT Affordability Industry Analysis: Manufacturing
Digital Digital
measure includes prepaid mobile cellular tariffs in
100
Tools Usage Training PPP $/min, fixed broadband Internet tariffs in PPP $/ Industry Analysis: Energy
month and a measure of competition in the internet
Average Ethiopia and telephony industry12.
Industry Analysis: Transport
Chart 10: Summary of Ethiopia ’s DMA Scores in each category
Ethiopia achieves a similar score to Nigeria in the
relative to four-country average Key insights and recommendations
World Bank’s Ease of Doing Business survey4, with
Ethiopia is the smallest and least developed of the four a relatively low score of 47 out of 100 and tech
economies assessed. It is not surprising to find that it is innovation scores show that it currently attracts Conclusion
the laggard in most areas of the DMA. The exceptions very little tech start-up funding relative to the other
are ICT Affordability and Digital Training where it slightly four countries; although there are evident signs of Glossary of terms
outperforms the average. government driving activity in this space.
References
The lack of supporting ICT infrastructure in Ethiopia is likely
to be one of the major indicators hindering growth and
ContinueCountry Analysis
Conclusion of Macro-economic findings
The DMA provides an overview of the readiness of supports and drives the expansion of digital services.
selected Sub-Saharan African countries to capitalize on While the Nigerian economy remains heavily reliant on
the digitalization in four key areas – Economic Maturity, oil for export revenues and on that basis is a relatively INDEX (Click on categories to navigate)
ICT Infrastructure, Skills and Digital Literacy. unsophisticated economy, it has also benefitted from
extensive investment in ICT and particularly 3G network Disclaimer
While larger and more developed economies tend to coverage. This infrastructure appears to have supported
be more digitally mature. The analysis has shown that widespread uptake and the use of digital tools such as IP Foreword
there are many other indicators that can influence a messaging and social networking.
country’s ability to capitalize on digitalization. If done Introduction
correctly it can drive entrepreneurial competition in the South Africa with its relatively large and diverse
market. economy and extensive and high-quality mobile
Research Methodology
broadband infrastructure, remains the leader of the four
For example, while the Ethiopian and Kenyan countries in most areas. There remains significant room
economies are of a similar size and are growing at for improvement when compared to the international Country Analysis
similar rate, Kenya is ahead of Ethiopia in terms of benchmark in the areas of consistent and affordable
digital maturity. This is attributed firstly to Kenya having internet access and the provision of digital training Industry Analysis
far more extensive ICT Infrastructure and particularly (internet in schools) and skills.
mobile internet or 3G infrastructure to support Access Industry Analysis: Manufacturing
and Use and secondly because it is a much more South Africa therefore has the highest digitalization
diverse and services-oriented economy, which typically Maturity of the countries assessed. Industry Analysis: Energy
Industry Analysis: Transport
Key insights and recommendations
Conclusion
Glossary of terms
ReferencesIndustry Analysis
The manufacturing, energy and transport industries to provide a relevant comparative understanding for
showed varied levels of maturity across micro- Africa. South Africa’s digital maturity can be classified
economic digital indicators. Focus should be placed as Established. It has a reliable digital adoption but
on better customer engagement through orchestrated with room for important advances in areas which will
digital solutions to drive revenue generation with be explored in this section. INDEX (Click on categories to navigate)
digitally enhanced product offerings.
The micro-economic indicators were structured to Disclaimer
The research conducted yielded 105 qualified assess digital maturity across three dimensions:
responses around micro-economic digital indicators Foreword
from various industries. While responses were received 1 Culture of Innovation
from outside South Africa, these were removed from 2 Digital Operations Introduction
the analysis as the number was not significant enough 3 Digital Customer and Offerings
Research Methodology
Select research outcomes: Manufacturing Energy Transport Other Cross-industry
Country Analysis
Leadership indicators included the existance of a
Culture of long term plan for how digital will help to deliver
Industry Analysis
organizational objectives. There was also agreement
Innovation among respondents that leaders embrace digital
change within their organizations. Established Established Established Established Established Industry Analysis: Manufacturing
Near unanimous agreement that digital skills were required Industry Analysis: Energy
in order to be successful and that their organization fully
Digital enabled employees by providing them with the digital
Operations tools they needed. Below average maturity in Energy and Industry Analysis: Transport
Transport with reference to integration of systems Established Established Developing Established Established
Key insights and recommendations
On average 4 in 10 respondents from the entire sample
Digital agreed to having launched revenue generating digital
Customer & solutions into the market. Around single view of customer, Conclusion
Energy was aligned with the industry norm, Manufacturing
Offerings was 10% higher and Transport 20% less than the average. Developing Developing Emerging Developing Developing
Glossary of terms
Micro-economic Digital Maturity 2.8/3 2.6/3 2.2/3 2.6/3 2.7/3 References
Focus should be placed on better customer engagement through
orchestrated digital solutions and to drive revenue generation with
digitally enhanced product offerings.
• • • • •
Delta from Cross-
+0.1 -0.1 -0.4 0.1 indistry Average
Figure 4: Micro-economic Digital Maturity (South Africa)
ContinueYou can also read
