Introduction

The concept of artificial intelligence (AI) was initially introduced by American science fiction writer Isaac Asimov in the early 1940s and found its roots in the “Three Laws of Robotics” (Haelein and Kaplan 2019). AI terminology was established in 1956 by scientists Marvin Minsky and John McCarthy at Dartmouth College (Butcher et al., 2021).

Artificial intelligence has evolved over the years and has various definitions. Enholm et al. (2021, p. 1) define AI as a “wide-ranging set of technologies that promise several advantages for organizations in terms of added business value. “ Artificial intelligence (AI) is the component of technology that enables machines to demonstrate human-like cognition, where the human-like capabilities are augmented by the ability to learn from experience and adapt over time (Access Partnership 2018). AI is expected to be used for industrial automation, disrupting modes of production and the delivery of services (Access Partnership 2018).

AI Global Investment Landscape

Global investment in AI increased by between $20 billion and $30 billion in 2016 (Gadzala 2018) – more than three times the value in 2013 (McKinsey Global Institute 2017). Ten percent of this investment has been expended on AI acquisition and 90% on research, development, and deployment, with the majority of investments made by Amazon, Baidu, and Google. Venture capitalists ($4 to $5 billion) and private equity firms ($1 to $3 billion) have also found their footing (Gadzala 2018; Tralac 2019).  According to Ndung’u and Signé (2020), advanced economies spend an average of 3.2% of their GDP on digital investment, while Africa spends 1.1%. An OECD Report (2021, p. 19) says that “Global spending on AI is forecast to double over the next four years, growing from $50.1 billion in 2020 to more than $110 billion in 2024”.

According to Ndung’u and Signé (2020), advanced economies spend an average of 3.2% of their GDP on digital investment, while Africa spends 1.1%. An OECD Report (2021, p. 19) says that “Global spending on AI is forecast to double over the next four years, growing from $50.1 billion in 2020 to more than $110 billion in 2024”. A report by PricewaterhouseCoopers (2017) estimates that, by 2030, the adoption of AI technologies could increase global GDP by $15.7 trillion (14%), with $1.2 trillion potentially being attributed to Africa, Oceania and other Asian markets (5.6% of GDP). The markets that are well positioned and expected to gain the most are those that are more digitally advanced, such as China (26% of GDP in 2030) and North America (14%) (Wairegi et al. 2021).

In Africa, the prospects of AI ride on the back of mobile technology (mobile phone usage/ ownership) and social media usage, have improved significantly over the years (Ighobor, 2020). The most widespread cases of AI adoption in Africa are found in Ghana, Ethiopia, Kenya, Nigeria, and South Africa (Gadzala 2018), with the rest of the continent still lagging behind (International Monetary Fund [IMF] 2020; Tralac 2019). AI initiatives in these countries are still small-scale but offer a promising future. Most African countries need the necessary reforms in data collection and privacy, infrastructure, education, and governance in order to exploit the economic benefits of AI technologies (World Wide Web Foundation 2017).

AI depends on a number of factors for its adoption to be meaningful. These factors include:

• the availability and accessibility of large data volumes (big data), and machines to decode, process, analyse, and synthesize data for decision-making (Adeniran and Osakwe 2021; Marwala 2019);
• the existence of the human knowledge and skills required to implement AI-enabled operations (Marwala 2019);
• a consumer market that is ready for and comfortable with AI usage (Candelon et al. 2021); and
• Good governance (Adeniran and Osakwe 2021; Besaw and Filitz 2019).

Africa’s Digital Economy

Internet infrastructure and Connectivity

Digital transformation has been on the agenda of many African governments, with the African Union (AU) and its development partners having developed a digital transformation strategy for the region (Akuetteh and Pisa, 2022). This strategy is projected to increase Africa’s GDP by two percentage points per year. The strategy is a roadmap for promoting a fully integrated and inclusive society by 2030. Although different African countries have their own digital transformation journey and initiatives, internet access still remains a weakness in light of further technology adoption. An average of 40% of Africa’s population has access to the Internet, thus lagging behind the rest of the world with a global average of 63% (Adeniran and Osakwe 2021; Tralac 2019).

The cost and quality of digital infrastructure and access to internet-enabled devices remain major barriers to digital development and adoption. Slow 2G still accounts for 59% of the available mobile technology, with 4G penetration at 6% (Adeniran and Osakwe 2021); advanced economies are already in the 5G era. A report by GSMA (2021) states that, by 2025, Sub-Saharan Africa will have 615 million mobile subscribers, who will constitute 50% of the region’s population, while 28% of all connections will be on 4G, with 3% on 5G and mobile technologies (GSMA 2021).

The cost to digitally transform Africa is estimated at between $80 and $100 billion over 10 years (Ndung’u and Signé 2018). Despite the many digital- and AI-adoption challenges confronting Africa, some level of AI-related solutions are already being deployed in Ghana, Ethiopia, Kenya, Nigeria, and South Africa in the health, agriculture, and financial services sectors (Ndung’u and Signé 2018; World Wide Web Foundation 2017). AI ecosystems also exist in these countries, with the main investors being multinational corporations, such as Amazon, Google, Facebook, IBM, Intel, Microsoft, and Salesforce (Gadzala 2018).

For AI to yield its fruits, supporting structures need to be developed, enhanced, and implemented. These include connectivity, access to stable internet, and infrastructure. Digital technologies are unavoidable inputs to Africa’s growth and development and those AI technologies will play a positive role in facilitating Africa’s structural reform.

Written by: Nokwanda Mathenjwa, President, Young Global Economists Society (YGES

Source: www.yges.org