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Inclusion, inequality and the fourth industrial revolution (4IR) in Africa

The adoption of Fourth Industrial Revolution (4IR) technologies in Sub-Saharan Africa could lead not only to substantial economic growth and social benefits, but also to social and economic disruption, including increased inequality if compensatory policies are not followed. adopted, as indicated in our recent report. . With a large proportion of the workforce working informally—a trend that is expected to continue for several decades—African education and industrial policies must strike a balance between encouraging investment needed to create new formal jobs using advanced technologies and ensuring that any new labor force entrants have the basic skills and infrastructure to earn a decent living.

Much has been written about the current and potential disruptive effects in advanced economies of the suite of new technologies called the Fourth Industrial Revolution (4IR) – a group of technologies that merge digital, biological and physical innovation in applications such as advanced robotics using artificial intelligence, CRISPR digital gene editing, and sensor and computer networks called the Internet of Things. Studies have estimated that globally, in manufacturing alone, 4IR technologies could create 133 million jobs by the end of 2022, but displace 75 million jobs, leading to a net gain of 58 million jobs.

The researchers demonstrated that in the United States, the skill bias of technological change in the sphere of production disproportionately affected routine and middle-skilled occupations, creating an asymmetry of opportunities, earnings, and earnings among low-skilled workers. and highly educated, and exacerbating trends in inequality. However, the researchers also argue that the economic policies of the past decade could have moderated these effects instead of amplifying them.

Despite this experience, the skills bias of 4IR technologies has led to recommendations, from international financial institutions and private think tanks, that African countries should act urgently to create more high-level STEM skills. level in their future workforce. While there is no doubt that Africa will need to continue upgrading the skills of its future workforce, the question is how to organize and finance this upgrading fairly?

Sub-Saharan African countries already spend about 4.5% of their GDP on education (including public and private expenditure), but in many countries education systems are often inadequate to meet the needs of current students, even less for those who are about to enter the educational system. system. Of total education expenditure, 1% of GDP (22% of the total) is devoted to higher education, with a gross enrollment rate of less than 10%. The African Union suggests that member countries devote an additional 1% of their GDP to developing STEM skills at secondary and post-secondary levels. In today’s fiscal environment, the private sector and global partnerships will be needed.

The rapidly growing labor supply and the challenges of structural transformation suggest that most new labor market entrants will find work as low-skilled or semi-skilled employees or work for themselves- themselves and their families (on farms or in informal micro-enterprises); they will not work as software developers or digital engineers. To be more productive, these young people need better access to (i) higher quality primary and secondary education, including the development of problem-solving and fundamental digital and STEM skills, and (ii) the access to cheaper mobile phones and tablets, mobile internet and digital services to grow their farms and businesses. Providing an inclusive platform for job creation for these workers through public investment in basic skills and internet access should remain the priority of government spending.

Low income inequality within a country is not only an inherently desirable economic characteristic; it helps to support economic growth and development in various ways. More egalitarian countries are more politically stable, less likely to be fragile or to erupt into violence or civil strife. They also show more resilience in the face of external shocks. Leaving out large swaths of the population actually reduces future economic growth by stifling aggregate demand potential and increased consumer appetite from a growing middle class to fuel growth, while reducing support for public investment. needed to support development.

Inequality has increased in many countries in sub-Saharan Africa. Five of the ten most unequal countries in the world are in sub-Saharan Africa. Africa cannot afford to let technology exacerbate this trend. Policies to contain or reduce inequality involve action across sectors and policy areas, and ensuring equal access to quality education and other human capital development services is a good start. Other policies and programs needed to counter a possible increase in inequality in the context of the 4IR include:

  1. Encourage the provision of ICT services at lower cost, so that they are accessible to households and businesses outside the capitals (including by extending the coverage of the energy network).
  2. Additional policies to reduce the gender gap in access to and use of mobile and internet services.
  3. Continue to expand coverage of mobile banking and other fintech services, including the development of interoperable payment systems within countries and across the continent.
  4. Avoid the temptation to subsidize the adoption of non-essential labor-saving technologies in the private sector.

Meanwhile, aggressive policies to attract more private investment in higher education to meet projected needs for highly skilled labor will be essential.

The experience of OECD countries, particularly the United States, suggests that 4IR technology is not an inherently benign agent of change. Uneven employment and pay outcomes have been observed. African countries cannot – and should not – avoid 4IR technology given the potential to accelerate economic transformation in Africa. However, countries should also consider their options for increasing inclusion, especially in countries where the level of inequality is already high. Some factors, such as labor saving, skill bias of these technologies, are beyond the control of African countries. But economic policies can still direct economic development towards greater equality.

Want to know more? Tune in to Louise and Landry’s webinar at Brookings Africa Growth Initiative at Monday, September 26, 2022 @ 11:00 a.m. – 12:15 p.m. ET (GMT-5). register here

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