According to a World Bank assessment, digitalization might enhance fiscal policy, the standard of public administration, and the prosperity of the private sector in some of the poorest nations in Africa.
High-speed internet in Sub-Saharan African nations “increases the probability of employment by between 6.9 and 13.2% as well as increasing the growth of output per worker and reducing poverty,” according to the annual Country Policy and Institutional Assessment (CPIA) report, which rates countries eligible for International Development Association (IDA) on their policies and institutional arrangements.
Expanding information technology in the area has the potential to be revolutionary on the digital front, the research says, opening the door to major structural changes in a variety of economic activities.
Countries that fall below a certain threshold, which was $1,315 in the fiscal year 2024, are eligible for IDA assistance.
According to the research, digital technology may facilitate the development of jobs in a number of ways, such as by connecting employers and employees, facilitating activities that increase productivity, facilitating better market access and sales, and lowering informational barriers.
Increased digitization may also make it possible to integrate customs processes across several regional agencies. Knowledge exchange and transfer would be possible, increasing the possibility for intraregional trade—which the paper claims presents a significant opportunity for IDA-eligible nations.
In recent years, trade integration via one-stop border crossings has increased significantly, often using digital technology for expedited processing and
trade administration cooperation,” the paper says.
Many CPIA categories, including fiscal policy, might see ratings improvements as a result of digitalization.
Reducing human interference in tax collection, eliminating opportunities for bribery solicitation, and enabling large-scale data collecting that improves analysis and identifies tax violations are all advantages of revenue collection automation.
Apart from its immediate effects on private sector operations, digital infrastructure offers a chance to tackle mandatory regulatory limitations, such as reducing corruption and
increasing income generated domestically.
Expanding the scope of taxes is an additional possibility. If Sub-Saharan African nations could collect property taxes at a level comparable to industrialized nations, estimates indicate they might bring in an extra $60 billion in domestic income annually. Togo recently implemented a computerized fiscal cadaster, lowered land registration costs from five to one percent of the property’s assessed worth, and developed a communication plan emphasizing the advantages of paying property taxes.
Digitalization may also be used to improve the quality of public administration. Kenya and Tanzania are testing the use of technology in the legal system, while Ghana and Nigeria have implemented computerized procurement. About 80% of personnel files in the public sector in Burundi have been digitalized, while mobile payments for government services have been implemented in the Central African Republic.
In many nations, the development of technology has made advancements in public administration possible. The improvements in property and contract rights, the enhancement of public sector performance, and the augmentation of executive
accountability, notably via active participation by civil society.
Even though Africa has one-fifth of the world’s population, the continent only receives 3% of global energy investment, according to the International Energy Agency (IEA). This indicates that a lack of supporting infrastructure continues to be a major obstacle to the continent’s adoption of digital technology.
Achieving a successful digital transition will need providing everyone with inexpensive energy. According to the research, “electricity outages in the region have a negative impact on the productivity of existing firms and reduce the entry of both domestic and foreign firms.”
According to the research, Sub-Saharan African nations fared rather well during 2023 as a result of reputable social and economic policy changes. The aggregate CPIA scores remained unchanged from the previous two years; however, fewer nations suffered a fall in their ratings from the CPIA evaluation of the previous year, and more countries had gains in their overall scores relative to those that got downgrades.
Nevertheless, not everyone will see an improvement, and governments with tight budgets due to high debt servicing costs will have to work harder to entice private sector investment to spur economic development. According to the research, debt has supplanted foreign shocks as the main danger to the region’s economic stability.
“After years of growth in public sector investments, private sector investments will need to pick up.” The public sector can no longer do the heavy lifting due to high interest rates and public debt, but there are enormous potential in commerce and the digital economy, according to Nicholas Woolley, the primary author of the CPIA research.