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Africa still trailing in quest for digital economies

Africa still trailing in quest for digital economies

Despite trending emerging digital technologies (including blockchain, 3D printing and IOT), Africa (and Latin America combined) represents just 1% of the market capitalisation value of the world's 70 largest digital platforms estimated at over US$7-trillion in 2017.

This is according to the Digital Economy Report 2019, released by the United Nations Conference on Trade and Development (UNCTAD).

The report examines the implications of the digital economy, especially for developing countries, and reflects the disparity between Africa & Latin America and the United States & China, which account for 90% and Europe 4%.

Hinting at widening digital divides that threatens to leave developing and least developed countries even further behind, UNCTAD decries the high concentration of the wealth created by digital disruptions in a small number of (developed) countries, companies and individuals saying if ignored, it will exacerbate existing income inequality.

The report says the US and China account for 75% of all patents related to blockchain technologies, 50% of global spending on IOT and more than 75% of the world market for public cloud computing through five providers − Amazon Web Services (AWS), Microsoft, Google, IBM and Alibaba.

The combined cloud traffic generated in North America, Asia Pacific and Western Europe amounts to approximately 90%, but the fastest annual growth rate (35%) in cloud traffic between 2016 and 2021 is expected to happen in the Middle East and Africa followed by Central and Eastern Europe and Asia Pacific at 29% each.

Of the existing 4,422 colocation datacentres for storing and processing digital data, 80% are in developed countries (about 40% in the US) while Africa (and Latin America together) account for less than 5%.

Sub-Saharan Africa is also behind in 5G wireless technology, crucial for IOT connection of more sensors and smart devices. While 25 of the 72 mobile operators that tested 5G in 2018 are expected to launch the service in 2019, and another 26 in 2020, the US, Europe and Asia Pacific are estimated to lead 5G adoption by 2025.

By then, the share of 5G connections is expected to reach 59% in Korea, but only 8% in Latin America and 3% in Sub-Saharan Africa.

The deployment of 5G - as well as Artificial Intelligence (AI) - may further increase the digital divide even as the rate of growth of new people coming online slows down especially in low-and middle-income countries due to inability to afford a basic Internet connection and relevant devices.

Limited internet use will hinder value creation in the digital economy, though China and the US (combined with Japan account for 78% of all AI patent filings worldwide) are expected to reap the largest economic rewards from AI while Africa and Latin America would be low.

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