The original Industrial Revolution was powered by steam; the second by electricity. The rise of digitisation and automation generally defined the Third Industrial Revolution, which was largely powered by oil. Today, we find ourselves in the Fourth Industrial Revolution (4IR), which is largely powered and characterised by data. It can hardly be contested that data is central to today’s global economy in ways which it never has been before. Data flows across borders far more frequently than at any other point in time. Most importantly, these flows are creating or have created immense value (at least on aggregate) and are, therefore, central to businesses and business practices. They have fundamentally changed what and how much is traded, as well as with whom and how trade is conducted. Put differently, cross-border data flows have increased the scope, scale, and speed of trade.

The debt situation in many low-income countries (LICs) following the COVID-19 pandemic has deteriorated considerably. While many LICs had participated in the G20’s Debt Service Suspension Initiative (DSSI) by April 2022, only three countries have taken part in the Common Framework for Debt Treatment beyond DSSI. To better operationalise the Common Framework, the G20 should incentivise private and public creditor participation including those of Non-Paris Club members. In addition, G20 members should encourage the application of the comparability of treatment clause and urge multilateral creditors to participate in the debt restructuring process. The G20 should encourage full disclosure of debt among creditors by promoting the OECD Debt Transparency Initiative and by adopting the G20 Operational Guidelines. Moreover, the G20 should support local capacity building for public financial management in LICs and should promote that debt treatment under the Common Framework is subject to scaling up sustainable investments in debtor countries. Finally, the G20 should use its weight in the managing boards of the international financial institutions to push IMF-WB debt sustainability analyses to better include sustainability criteria.

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Nigeria is the economic powerhouse of Africa. As the largest economy of the continent at US$ 440,777 (in 2021, using the World Bank’s atlas method for calculations) and the most populous country at 211 million (in 2021), it has a significant potential and critical role to play in economic revival of the entire continent. Undoubtedly, Nigeria can provide an added momentum to the process, with its growing middle class, expanding labour force and market opportunities.

In the last 20 years, Nigeria’s economic growth has mostly been positive, peaking at an impressive 15.3% in 2002, with periods of mild recession in 2016 (-1.6%) and 2020 (-1.8%). The country has witnessed a steady decrease in poverty since 1995, however, the poverty ratio remains high at 39.1% (2018) of the population living below the poverty line of $1.90 a day. Performance varies markedly between the northern and southern regions. While the poverty level stands at around 30% in the South, it hovers above 60% in the North, with states, such as Zamfara and Sokoto, with poverty rates above 80% (in 2020). Human capital underdevelopment is also prevalent in these high poverty regions, signalling a connection between poor education, poor health access and poverty. This is reflected in the disparities in Human Development Index, with Lagos at 0.686 (2019) – a medium human development and comparable to that of Morocco, and Yobe, Sokoto and Kebbi states at 0.368, 0.340 and 0.339, respectively – a low human development and comparable to that of Somalia.

Pressing Economic Challenges
When we look at the overall performance of the Nigerian economy, it becomes apparent that there are structural and institutional challenges that need to be addressed. Nigeria’s economy is oil dependent with 90% of exports is attributable to fossil fuels. Although brings substantial revenue to the State, this makes the country excessively vulnerable towards external economic shocks in the form of the fluctuation of the international price of oil and, secondly, inhibits the country’s ability to diversify its economy, create new employment opportunities and advance structural economic transformation to reduce poverty. At the same time, the services account for 46% of GDP (in 2020),
though largely dominated by the informal sector, which limits state revenue and negatively affects proliferation of decent jobs. Agriculture continues to be important, contributing about 24% of GDP, but it is concentrated around subsistence farming. Poor productivity in the service and agricultural sectors inhibits strong and inclusive growth as well as structural economic transformation. The oil sector which accounted for 8.8% of the GDP between 2010-2020, contributed about 60% of the government revenue in the same period. Recent revenue shortfalls have increased deficit, raising public debt from 27.6% of GDP in 2019 to 35% in 2021. With the COVID-19 pandemic, the revenue
problem is aggravated, and fiscal sustainability is emerging as a major concern to the long-term growth.

A closer look at some aspects of Nigeria’s economic development and related indicators reveals pressing challenges. First, the largest economy in the continent ranks 18th in Africa in terms of per capita income. This is not only the result of sheer population size but an indication of the prosperity (or lack thereof) of the population and contributions of citizens to the national wealth. By enhancing productivity of labour, through training and technological catch up, the GDP per capita of Nigeria could be improved. Second, being extractive sector-driven economy, Nigeria has inherent rigidities in terms of absorbing labour in the national economy. This is because, extractive sectors by their nature are capital intensive and generate relatively small employment opportunities. Third, as the Nigerian economy is dependent on natural capital and export of raw or unprocessed commodities, it is subject to the vagaries of external shocks- be they economic, political or health related. Due to the COVID-19 pandemic, Nigeria’s economy is expected to face the most severe recession in decades: GDP dropped by nearly 4% in 2020 and the recovery for 2021 and 2022 has remained sluggish, particularly when compared with the growth rate of the population. As a result, the gains in poverty reduction achieved after several decades have started to reverse. Some estimate puts that extreme poverty is expected to increase with the number of poor likely to grow by 15-20 million by the end 2022. Finally, as with most economies of Africa, these are the results of weak economy-wide productive capacities and lack of structural economic transformation.

PCI of Nigeria or where does Nigeria stand in its productive capacity development?

Using UNCTAD’s innovative productive Capacities Index (PCI), it is possible to measure Nigeria’s performance and capacity to grow and develop. With its eight components – Natural capital, Human capital, Energy, Private sector, Institutions, Structural change, ICT and Transport – the PCI draws a broad multidimensional picture of countries’ domestic capacities. Nigeria’s PCI estimates revealed serious gaps and limitations which need to be urgently addressed. On the overall composite index Nigeria’s score was at 21.65 in 2018 (prior to the COVID-19 pandemic), and it positions the country at 185th place in the world and 44th in Africa – which is not reflective of its economic might and national aspirations. With the exception of Natural Capital and Private Sector components, Nigeria fares low in other key components, such as Human Capital, Energy, Transport, ICT, Institutions, which are critically important for accelerating inclusive and sustainable growth as well as kick-starting the process of structural economic transformation.

What is the way forward?
The development challenges Nigeria faces call for a new policy approach and the formulation and implementation of new generation development policies centred on the fostering of productive capacities. This should signal a shift away from short-term, sector and project specific interventions. The analysis of Nigeria’s PCI clearly indicates an urgent need to refocus policy interventions and national development strategies towards fostering domestic productive capacities, which will enable structural transformation and economic diversification. Furthermore, they will ensure that the country participates in value added segments of the global economy, rather than serves as a commodity supplier.

Building domestic economy-wide productive capacities requires special attention to be paid to building institutions which will govern the rules of economic conduct. This is needed to make it attractive for business to invest, develop and operate. For this, improvements in the quality of human capital are also necessary, and only possible through the implementation of an adequate educational policy able to cater for the needs of the market and one which anticipates changes and shifts in the assortment of output of the national economy. Lastly, a focus on infrastructure development - that is transport, energy, and ICT -is imperative, as it facilitates economic interactions. The challenges are significant, the opportunities available, and the success within reach.

About the authors

_{Mr. Paul Akiwumi, Director, Division for Africa, LDCs and Special Programmes, UNCTAD}

_{Dr. Chukwuka Onyekwena, Executive Director, Centre for the Study of the Economies of Africa, Abuja, Nigeria}

This article was first published on Businessday

Africa is quickly becoming the new data frontier in the face of continued increase in the deployment of digital technologies. A proportionate data governance ecosystem is, however, still lacking. The available governance ecosystem is characterised by a lack of relevant institutions or in most cases non-functional institutions for effective data governance implementation. As part of the bid to understand how to create a functional and responsible data governance ecosystem that can play a vital role in Africa's competitiveness in the global data economy, this report explored the questions; what are the institutional gaps impeding responsible and sustainable data governance in Africa and what are the peculiar institutional capacity needs of existing institutions? To answer these questions, we used a multidimensional research approach to study five African countries namely Nigeria, Morocco, Kenya, Mauritius and South Africa. In this study, we identified clear institutional gaps and capacity needs that require significant attention.

Today, the increasing value of digitalisation and data to global development has received widespread attention. A great number of structural transformations have been driven by means of digital technologies. Digital technology has provided a marked boost to world economic output and created innumerable jobs. Following the recent COVID-19 disruption on the global scene, many other developmental impacts that digitalisation can perform have actually come to the fore. Data, the resource that drives digitalisation, has been figuratively described as ‘the new oil’, and its commoditisation necessitates a reliable data governance framework to make it retain its value. Data governance has the potential to enhance data value, as well as safeguard data-related harms/threats.

The big platform-based firms, regarded as ‘Big Tech’ monopolies that are established in Europe, the United States and China have dominated the global digital market space and their data governance models are defining modalities for interaction and trade in the digital space. For example, most African countries have modelled their respective national standards of data protection after the EU’s General Data Protection Regulation (GDPR). Consequently, the presence of these dominant players has made the global digital economy imperfect, as they tend to reap the most benefits from the digital economy, leaving less for developing economies like Africa. This imperfection has the potential to limit the gains to Africa from digitalization. Its digital economy is imperilled by highly worrisome threats which are causing a  crisis of trust in the digital space.

• Africa’s efforts in the fast-rising global digitalisation era

There is obviously no gainsaying that Europe, the US and China, as formidable digital governance models, have each made their mark in the global digital economy. Data, in the hands of these digital economy tsars, has been utilised for multidimensional purposes, such that it is now crystal clear that the use of data does not have implications, only for trade and economic development but also for human rights, peace and security. These nations’ approaches to governing the digital economy, and the regulatory frameworks developed by them to manage cross-border data flows truly distinguish them as the digital economies to beat. On its own, the United States, has an innovative entrepreneurship approach which promotes the private market-driven initiative in the global digital market. Through its liberal regulatory framework for cross-border data flows, the United States has succeeded, quite remarkably, in bringing about far-reaching innovations which have enabled it to maintain its leadership position in the global digital market. While China has a sophisticated blend of both security-oriented and digital development-oriented approaches, the European Union has human rights-oriented approach. While still building a multilateral support for its data governance model, the EU has demonstrated commitment towards championing the cause of digital justice for the victims of digital harm. One amazing outcome of this initiative is the mitigation, to some extent, of the risk of abuse and misuse of data in the digital space.

Notwithstanding the giant strides which these digital governance models have taken in their respective approaches to digital economy, each of them (the models) is not without its shortcomings, which is why Africa needs to look beyond patterning its own digital economy approach after any of them. Basically, each of these models, in its manner of approach, reflects the contextual peculiarities of its economy. If not properly controlled, the United States’ free-market approach that Africa has been trying to replicate, will remain a wind that blows no economic good. For example, Africa has yet to develop a strong data governance framework capable of ending the current digital market inequality, whereby private companies and platforms enter the digital market and reap all the economic gains of the data economy, with little or no constraints. This type of development has made the African digital market susceptible to a wide range of threats and poor competition which are the bane of the continent’s long overdue structural transformation. So, for Africa to emerge as a digital market leader, it must do its  best to look inwards. For instance, there is a domestically unique way in which Africa can coordinate the private sector for strategic expansion in the digital space.  It is crucial for the continent to channel its data governance pillars towards supporting local or domestic experimentation of ideas that will  essentially drive its digital transformation. The truth is, Africa can leverage its enviable status as a champion of mobile technology to harness the potential of digitalisation for its economic transformation.  

• Africa’s steps towards being digitally governed

Africa needs to steer its states towards addressing, very thoughtfully, the issue of data protection legislation. Each of these states, in its own space, must demonstrate unflagging commitment towards enacting data protection and privacy laws which would regulate its domestic digital market. Data, as the ‘new oil’, must be effectively commoditised by the means of a well-thought-out and context-sensitive regulatory framework for its values to be unlocked in each state and, by extension, Africa. If the commoditisation of data is not effectively regulated by laid down laws, there are bound to be unhealthy outcomes. But how can effectively regulated commoditisation of data be ensured when there are still many African states that have yet to pass their respective data protection laws and regulations? The truth is that, for the African continent to have very strong data protection, all  policymakers and the private sector in each African state must, collectively work together. There must be collaborative efforts between them to create regulations and put in place  measures to ensure compliance with such regulations. In this regard, regulatory agencies need to be set up and  empowered to discharge their statutory duties very efficiently.  In addition, data policies which can guarantee best practices in the business of generating, storing and using data should be formulated, as well as well-monitored mechanisms for implementing these policies

Furthermore, African states must support the African Union (AU), the umbrella body for all African states, in its concerted efforts towards facilitating trust in the digital space, promoting regional digitalization and accelerating the achievement of the African Continent Free Trade Area (AfCFTA). Another impediment to the continent’s economic transformation , is the crisis of trust in the African digital space. As the strategic institutionalisation of intra-regional trade in Africa, AFCFTA necessitates  the development of an effective regional data governance framework. In the few African states where efforts have been made to enact a legislation/legal framework for data protection and privacy, the implementation of such legislations appears to be disparate, lacking a unified approach. Suffice it to say that Africa as a region has yet to produce a centralized data legislation which generally supports the concept of data protection in all states. While the AU Malabo Convention on Cyber Security and Personal Data Protection (the  comprehensive document which covers electronic transactions, privacy, and cyber security) promises to bridge this gap, the ratification of the outcomes of the Convention has not been fully achieved by the required number of states.

• Conclusion

African digital transformation is a catalyst for sustainable regional growth and development. The time for the continent to rise above the tide of economic backwardness, technological obscurity and digital inequality is overdue. Africa needs digital transformation which will grow economies, improve  service delivery and produce jobs and incomes for human survival. To improve digital revolution and inclusion, the necessary environment must be created. This development would stimulate organisations, businesses, institutions, and governments to move their operations, processes and practices to the digital space. When digital technologies are exclusively utilised to guarantee the provision of products and services, the expansion of existing services, generation of revenues and exploitation of opportunities for all, achieving transformation becomes seamless. To make all these possible, all  African digital economy stakeholders and change-makers must create the change needed for digital transformation to occur.

This blog was written by  Kunle Balogun