Martins Hile, Editor, Financial Nigeria magazine

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Can Africa escape the coming conquest of AI? 26 Nov 2018

Artificial Intelligence (AI) is no longer science fiction. Today, there are practical use cases of AI across the various sectors of banking, communication, transportation, healthcare, education, retail, manufacturing, among others. While a lot is still unknown about how AI and other technologies will transform the future of the global economy, one thing is certain: AI will enhance productivity and innovation. There is also a great degree of certainty that Africa will lag in the productivity gains that the rapidly-developing field of AI is set to bring.
The debate has been going on about the opportunities and risks that AI poses, especially as AI technologies are becoming more sophisticated and able to not only do what humans do, but also do it faster, more efficiently and cost-effectively. Foremost AI cynics include the late British theoretical physicist, Stephen Hawking, who said development of AI “could spell the end of the human race." Technology entrepreneur, Elon Musk, has warned that AI is "our biggest existential threat."

But AI proponents see enormous opportunities for the next frontiers of global development. In this context of development, the real question is how quickly the developing world, especially Africa, can leverage AI and digital technologies to bring about a convergence with the developed world.

For centuries, Africa has been on the back foot of development. In his seminal book, "How Europe Underdeveloped Africa," Walter Rodney argues that European nations deployed their superiority in technology to develop ships, which they used to dominate the world’s waterways and conquer other continents, including Africa. In effect, Africa has had a competitive disadvantage in technology and trade since the fifteenth century.

In the 21st century, developed countries have not only conquered the seas, their domains of conquest have reached the cyberspace. Inevitably, the countries and companies that dominate the cyberspace through technology today are ruling the world. Half a century ago, the industrial composition of the largest companies in the world used to be diversified. Today, the top five largest stocks on the S&P 500 – namely Apple, Amazon, Microsoft, Google's parent company, Alphabet, and Facebook – are concentrated in a single industry. The market capitalisation of these five companies is about $4 trillion, exceeding the GDP of the 54 African nations.

These companies are also at the forefront of the AI disruption. Google’s search engine has always been AI-driven. Amazon is creating edgy customer service experiences using AI. Apple's Face ID and Siri are AI-powered technologies. Facebook uses AI for targeted advertising, photo-tagging, among other services. To add to its use cases of AI, Microsoft launched AI for Humanitarian Action, an initiative the tech giant says will potentially save lives by better predicting when and where future famines will occur, thereby allowing development partners to respond earlier and more effectively.

The productivity increase that AI is expected to deliver surpasses that of previous industrial revolutions, as various studies have shown. According to a research from PwC, global GDP will be $15.7 trillion (or 14%) bigger in 2030, thanks to AI. This figure is more than the current aggregate output of China and India. In terms of regional economic impacts, the research shows that while North America, Europe and other developed regions would benefit the most, the economic impact on Africa and Latin America would be less than 6%. This suggests Africa will receive the short end of the stick.   

But AI is not a vehicle without a driver. It is an offshoot of the knowledge economy, a system that was first mooted in the 1960s. Ironically, this was the period many African nations gained their independence. The central themes of a knowledge economy are production and use of knowledge. Countries that shifted from traditional economic systems towards new paradigms underpinned by knowledge and innovation have become far richer and more technologically-advanced today, leaving African nations in the dust.  

In a knowledge economy, the engines of growth are not abundant natural resources and a large labour force. Human capital is what drives the knowledge economy. Even in an AI-dominated world where many low-skill jobs would be displaced due to automation, jobs requiring high-level skills are expected to rise by more than 50% by 2030.  

In its recently-published Human Capital Index (HCI), the World Bank lamented the productivity and income losses in Africa due to vast human capital gaps, resulting from underinvestment in the people. For instance, the index shows that the average Nigerian child has an earning potential of only 34% of what it could be if the country fully invested in human capital. Topping the index are Asian countries: Singapore, Korea, Japan, and Hong Kong. The earning potential of the average child in Singapore is 88%. In the United States, it is 76%.

This is not surprising given the low level of investment in education in Nigeria, where allocations to education in the last three annual budgets have averaged 6.5%, which is less than half of UNESCO's recommendation for governments to allocate to education in their annual budgets.

Nigeria and other African countries can reverse these negative trends through a transformative development strategy that promotes investment in a knowledge economy, just as several developing countries in other regions have done. China is a global power in AI. The country is already experiencing fast gains in AI and machine learning. From India to Brazil, farmers are using AI to monitor changes in weather patterns and take planting decisions, thereby increasing farm yield. Instead of relying on the traditional classroom teaching methods, Intelligent Tutoring Systems (ITS) are being used to promote ‘personalised learning’ to improve literacy rates, reduce dropout rates and boost learning outcomes.

Education is key to bridging the inequalities between Africa and the developed world. For Nigeria to be reckoned with in the global knowledge economy, it's time for its government, companies and educational institutions to support the drive towards human capital development.