Exports of information and communication technology (ICT) represented between 4 and 10% of service exports in sub-Saharan Africa in 2021, making tech companies key to the continent's digital transformation. However, despite the growing demand for digital services, these companies are grappling with challenges such as underdeveloped ICT infrastructure and a limited supplier base, according to the African technology services market trends: 11 country profiles, a new publication from the International Trade Centre (ITC) in its second edition.
The technical profiles of the countries cover: Côte d'Ivoire, the Democratic Republic of the Congo, Ethiopia, Ghana, Kenya, Nigeria, Senegal, South Africa, Uganda, the United Republic of Tanzania, and Zambia.
"Decentralization and outsourcing of IT services are set to accelerate"
Retail, financial services, healthcare, real estate, and agriculture offer the best opportunities for information technology and business process management companies.
"Decentralization and outsourcing of IT services are set to accelerate," said ITC Executive Director Pamela Coke-Hamilton. "This could represent a major turning point for many African economies. COVID-19 has brought greater confidence and normalization of remote work, which further benefits the proximity and outsourcing of IT services.
The rapid growth of mobile demonstrates African governments' efforts to build ICT infrastructure and African consumers' preference for mobile technology. Faced with pressure to create jobs for youth and reduce reliance on traditional agricultural, mining, and commodity exports, governments are promoting the digital sector – for example, by investing heavily through innovative public-private partnerships (e.g., with Huawei in South Africa and China International Telecommunication Construction Corporation in the Democratic Republic of the Congo).
"The AfCFTA also encourages governments to invest in digital infrastructure and technologies"
Governments are also developing ICT infrastructure, skills, and service capabilities, and offering incentives and concessions for foreign direct investment. Countries from Côte d'Ivoire to Ethiopia to Nigeria and Uganda are offering incentives such as tax breaks and exemptions to attract foreign investors to their digital markets. The African Continental Free Trade Area (AfCFTA) also encourages governments to invest in digital infrastructure and technologies, thereby stimulating innovation in sectors such as logistics and digital services.
The unique markets for goods and services of the AfCFTA help tech companies reach more customers across Africa, the report says. The integration of the Digital Trade Protocol into the AfCFTA provides a framework for the development of digital platforms. Policy harmonization on technology and data transfer promotes the development of digital infrastructure and connectivity across the continent.
African policymakers are striving to improve access to education, train and upskill graduates, and motivate their technology sectors and service providers to develop talent and capabilities. However, even as major economies like Kenya, Nigeria, and South Africa make significant strides – by piloting 5G connectivity and developing next-generation mobile and digital networks, for example – smaller African countries still have a long way to go in terms of technological infrastructure, according to the report.
Each country profile examines ICT infrastructure, government incentives, regulatory environment, and other factors supporting technology and business process outsourcing service providers.
Read the report