AfricaGrowth Agenda

The advent of the Fourth Industrial Revolution (4IR) is envisaged to have serious disruptive effects, especially in the developing countries, companies, governments and broadly, the welfare system. Despite the current sluggish economic growth and the low employment levels, the 4IR has a potential to replace thousands and millions of workers with machines such as robots, 3D printers and artificial intelligence. This implies a major shift from labour-intensive to capital intensive sectors. The proponents of the 4IR argue that some of the current skills will be deemed obsolete and learners pursuing various careers would end up doing different jobs. Considering that Africa still grapples with the basic challenges of water, electricity, broadband connection and access to internet, it will be difficult to adapt to the Fourth Industrial Revolution which requires investments in the new technologies. Apart from all the bread and butter challenges, the developing countries have limited alternatives, either to ‘adapt or perish.’ On the other hand, the potential rise in unemployment would mean the reduction in fiscus or revenue collection and poor service delivery. Small businesses and most people at the low end are likely to become poorer, while the inequality gaps widen in a speed unprecedented in the history, due to mass production and dumping of cheap goods. Given that most developing countries have smaller markets, consumption is likely to drop due to the potential displacement effects. In the past, the developing world used to attract investments based on the cheap labour as a competitive advantage and they are likely to lose it. “Reshoring” will further exacerbate the current economic woes. Countries with low skill levels, low investments and lack of creativity are more likely to trail behind, while investors and inventors are likely to be winners in this equation.

On a recent trip to Morocco to attend a conference, I had the pleasure of being seated next to and in front of two young families on the aeroplane, both returning home to Morocco after visiting friends and family abroad. One father I chatted to was born and raised just outside Casablanca. An actuary by profession, he was quick to rattle off some facts and figures about his home country.

The conversation and attending the conference did get me thinking about the thematics synonomous with the African investment narrative, one of which is urban dwelling. In turn, the theme of urbanisation is synonomous with infrastructure.