Digitalization, AI and the SDGs

The Sustainable Development Goals (SDGs), particularly Goal 8, emphasize the need to promote sustained, inclusive, and sustainable economic growth, along with full and productive employment and decent work for all. This goal is critical for Africa, where the employment landscape is marked by significant challenges, with high levels of unemployment and poverty persisting across the continent. According to the International Labour Organization (ILO), sub-Saharan Africa has the highest rate of unemployment in the world, with an estimated 7.2% of the labor force unemployed. For instance, South Africa’s unemployment rate in 2024 is a staggering 32.1%, the highest on the continent, according to the International Labour Organization. This is particularly concerning given that the youth population in Africa is growing rapidly, with an estimated 60% of the population aged below 25.

The unemployment crisis is further exacerbated by the fact that many young people are entering the labor market without the necessary skills to secure decent employment. The informal sector plays a significant role in Africa’s employment landscape, accounting for an estimated 85% of total employment in sub-Saharan Africa. This significant percentage highlights the informal sector’s importance and its potential as a driver of economic growth. While the informal sector provides a vital source of income for many households, it is often characterized by low productivity, low income, poor access to financial and business support services and limited access to social security and labor protection. The significance of SDG 8 lies in its emphasis on promoting sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. In the context of Africa, achieving this goal requires a multifaceted approach that addresses the root causes of unemployment and poverty. Harnessing digitalization, data, and AI present unique opportunities to address these challenges, especially by focusing on the informal sector as a primary engine for job creation.

Digitalization and AI can play a critical role in increasing the informal sector’s productivity, improving working conditions, and creating more decent jobs. By leveraging these technologies, Africa can transform the informal sector into a more sustainable and inclusive driver of economic growth, ultimately reducing poverty and inequality and achieving the SDGs. These technologies can empower youth to innovate, create start-ups, and expand employment within existing small and medium-sized enterprises (SMEs). Moreover, they offer pathways to formalize the informal sector, integrating it into the broader economy. One of the significant barriers informal businesses face is accessing finance and supportive services due to their lack of formal recognition. Digital technologies, particularly in the FinTech space, can revolutionize financial inclusion. By leveraging AI and digital platforms, informal businesses can streamline company registration, enhance their bankability, and improve their creditworthiness. This will enable them to secure funding, expand operations, and create more jobs.

Furthermore, AI and digital technologies can help young entrepreneurs develop social enterprises addressing key issues like climate change, healthcare accessibility, education and waste management. For example, the following African social enterprises are leveraging AI and digital technology to address various social and environmental challenges in Africa, including poverty, inequality, climate change, and access to healthcare and education.

Zipline, a drone delivery service that uses AI to deliver medical supplies and blood to remote areas in Africa, particularly in Rwanda and Ghana.
M-KOPA, is a pay-as-you-go solar energy provider that uses AI to manage its solar panels and provide clean energy to off-grid communities in Africa.
FarmDrive is an AI-powered agricultural platform that provides financial services and market access to smallholder farmers in Africa, particularly in Kenya and Nigeria.
Sendy a logistics company that uses AI to optimize delivery routes and provide affordable transportation services to small businesses and individuals in Africa.
Hello Tractor uses AI to connect farmers with tractor owners, improving agricultural productivity and addressing food security.
WeCyclers in Lagos employs technology to enhance waste collection and recycling, tackling urban waste management issues.

In conclusion, embracing digitalization and AI is crucial for Africa to transform its informal sector and achieve SDG Goal 8, which aims for sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. By leveraging these technologies, Africa can address critical barriers in the informal sector, enhance financial inclusion, streamline business operations, and create new job opportunities. This transformation will not only reduce unemployment but also foster economic resilience and inclusivity. However, to realize these opportunities, African governments must create an enabling environment. Some governments are already leading in this effort. For instance, Egypt has a national AI strategy focused on exploiting AI technologies to support SDGs and establishing Egypt as a key actor in regional and international AI cooperation. Kenya has a national AI strategy centered around four pillars: AI for government, AI for development, capacity building, and international activities. Mauritius has an AI strategy focused on developing a thriving ecosystem for innovation-driven entrepreneurship, job creation, and national development. Rwanda has set up a Center of Excellence in the Areas of Digitalization and AI, aiming to develop a national AI policy focused on ethical AI use. Ghana has collaborated with IBM and actively participated in ethical AI policy frameworks. Nigeria has established a National Center for AI and Robotics to create a thriving ecosystem for innovation-driven entrepreneurship and job creation. Other countries on the continent are also in the process of developing AI and digitalization strategies. These initiatives are steps in the right direction, but more work is needed to ensure that the continent truly leverages these technologies, to unlock new opportunities, create jobs, and promote sustainable economic growth.

Other sources and further reading:

The Technological Pulse