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South Africa has been described as having the most ‘developed digital economy’ in Sub-Saharan Africa. This is according to a global index by The Fletcher School at Tufts University. Dubbed the ‘Digital Intelligence Index’, it measures “the progress countries have made in advancing their digital economies, fostering trust and integrating connectivity into the lives of billions”. Of the four available categories, South Africa was classed as a ‘watch out’ economy, with other African states such as Nigeria, Uganda and Namibia receiving the same classification. According to the Intelligence Index, connectivity in Sub-Saharan Africa is lagging behind other regions. However, “digitalisation is advancing fast and being embraced by those who do have access”, says the report. Despite the ‘watch out’ status, the study found that countries like South Africa have young people who show “enthusiasm for a digital future with increased use of social media and mobile payments”, despite various infrastructure gaps. – Jarryd Neves
Digital economy – new global index
- The Fletcher School at Tufts University media statement
The Fletcher School at Tufts University, in partnership with Mastercard, unveiled the Digital Intelligence Index, which charts the progress countries have made in advancing their digital economies, fostering trust and integrating connectivity into the lives of billions.
Building upon earlier editions in 2014 and 2017, this year’s index paints a picture of global digital development, sheds insight on key factors driving change and momentum, and unpacks what this means for economies facing the challenges of a global pandemic and a post-pandemic future.
In Sub-Saharan Africa, South Africa has the most developed digital economy, Kenya demonstrates strong momentum and growing digital demand, while Nigeria is classified as a high-performing digital economy of the future.
While connectivity in Sub-Saharan Africa still lags behind other regions, digitalisation is advancing fast and being embraced by those who do have access. The Sub-Saharan African region has led a mobile money revolution, making up two-thirds of the world’s 37 billion mobile money transactions in 2019, while Internet penetration has grown tenfold since the early 2000s, compared with a threefold increase in the rest of the world.
Improved infrastructure, connectivity and access combined with young, digitally savvy populations have driven wide mobile payment adoption and broader financial inclusion in Africa, which is emerging as a hotspot for digital demand with nations like Kenya leading the way.
Countries like Nigeria, which exhibits a high level of digital engagement today and driven by active social media use and mobile-payment adoption, could be high-performing digital economies in the future. With an improved, more inclusive digital environment and infrastructure, small business owners such as farmers and self-employed delivery drivers are better positioned to succeed in the digital economy.
Bhaskar Chakravorti, Dean of Global Business at The Fletcher School, said: “The pandemic may be the purest test of the world’s progress towards digitalisation. We have a clearer view on how dynamic digital economies can contribute to economic resiliency during a time of unparalleled global turmoil, and can be positioned for recovery and change.”
With nearly two thirds of the world’s population online today, the study highlights that the digital revolution is entering an “after access” phase, where access alone is not enough. Aspects such as the quality of access, effective use of digital technologies, accountable institutions, robust data governance policies and fostering trust are now greater factors in determining digital competitiveness and sustainability.
Ajay Bhalla, president, Cyber & Intelligence, Mastercard, said: “Never before has there been such an acute need to understand the factors that drive digitalisation and digital trust. With that knowledge, businesses and governments can work together to help all 7.6 billion people around the world benefit from the vast opportunities a digitally-advanced economy can bring. While much remains uncertain today, it is clear that digital success will be a key building block in our collective recovery.”
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A Global Outlook on Digital Evolution and Trust
This year’s index looks at two components: Digital Evolution and Digital Trust. Digital Evolution captures an economy’s historical momentum from the physical past to the digital present. Digital Trust is the bridge that connects its journey from the digital present to an intelligent and inclusive digital future.
Mapping 95% of the world’s online population and drawing on 12 years of data, the Digital Evolution scorecard measures 160 indicators in 90 economies across four key pillars: institutional environment, demand conditions, supply conditions, and the capacity for innovation and change. These segment into four categories:
- Stand Out economies – Singapore, United States, Hong Kong, South Korea, Taiwan, Germany, Estonia, UAE, Israel, Czech Republic, Malaysia, Lithuania and Qatar – are highly digitally advanced and exhibit high momentum. They are leaders in driving innovation, and building on their existing advantages in efficient and effective ways.
- Stall Out economies – such as Sweden, United Kingdom, Netherlands, Japan and Canada – are mature digital economies with a high state of digital adoption despite slowing digital momentum. They tend to trade off speed for sustainability and are typically invested in expanding digital inclusion and building robust institutions.
- Break Out economies – such as Kenya, Cameroon, Ivory Coast, Rwanda, Tanzania, Ghana , China, India, Indonesia, Poland and Russia – are evolving rapidly. With such momentum and significant headroom for growth, they are often highly attractive to investors.
- Watch Out economies – such as South Africa, Nigeria, Uganda, Ethiopia, Namibia, Colombia, Peru, Pakistan and Sri Lanka – have a number of infrastructure gaps. Despite this, young people are showing enthusiasm for a digital future with increased use of social media and mobile payments.
The Digital Trust scorecard measures 198 indicators in 42 of the index’s economies across four key pillars: behaviour, attitudes, environment, and experience.
- Economies such as Brazil, Colombia and Mexico are beginning to build momentum on behaviour scores, demonstrating substantial engagement on social media and other new technologies.
- Economies such as China, Indonesia and Vietnam have increasingly favourable attitudes about their digital future, buoyed by rapidly expanding digital adoption and opportunity.
- Economies with more mature approaches to digitalisation and related policy making such as Sweden, the Netherlands and Denmark share measures that strengthen the trust environment, such as privacy, security and accountability policies. Citizens in these countries tend to have more optimistic attitudes around the future of digitalisation.
- Economies such as the United States, Hong Kong, Taiwan, South Korea and Singapore provide citizens with a near seamless experience, delivering the holy grail of advanced infrastructure, broad access and unparalleled interaction. This experience is matched by high levels of engagement, offering these economies a clear advantage in a “beyond access” future.
The link to the full report and methodology can be found here.
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