African cities can capitalize on digital technology to attract investment, generate faster progress and create high-quality jobs by following the proven playbook of cities across the world that have done the same.
A new article by Boston Consulting Group (BCG) outlines five types of digital job clusters that are particularly relevant for Africa’s cities.
“Our study of cities that have successfully created digital jobs shows that investors look for critical mass. Rather than a broad and random approach of trying to develop jobs in all digital realms, governments will be more successful if they focus their energies on a small number of promising areas and address the foundational requirements needed for success,” says Nihmal Marrie, Managing Director and Partner at BCG, Johannesburg and co-author of the article.
BCG has identified five major clusters of digital jobs that are particularly relevant for Africa. Some of these clusters are more relevant for certain African cities than others, based on factors such as local education levels.
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Information technology outsourcing and business process outsourcing (BPO)
This cluster includes call centers, document handling, and IT outsourcing (ITO) such as digital infrastructure management or application development.
Governments can kick-start clusters in these areas by outsourcing some of their own back-office functions to local ITO/BPO providers while developing a clear branding strategy to attract anchor clients from the private sector.
Notably, African ITO/BPO providers have an important advantage over competitors in Asia and some other markets: Africa has a minimal time difference with potential clients based in Europe.
“Governments can also ensure that broadband access and cybersecurity regulations are in place, and they can partner with companies on skills-based development such as online accreditations, in-person skills workshops, and on-the-job training,” says Gildemeister.
A relevant example of where else it has worked to create digital jobs is Bangladesh.
The country set out to create an IT outsourcing cluster by offering incentives and targeted promotions to big tech firms, starting with a pilot partnership with IBM.
The government of Dhaka, the capital and largest city in Bangladesh, launched centers of excellence to accelerate innovation and strengthen the ecosystem for emerging technologies.
Those efforts have now attracted multiple large ITO/BPO firms and generated more than 20,000 jobs in Dhaka.
Digital media jobs generally fall into two categories: animation and visual effects for the entertainment industry and game development for the videogame industry.
To support a digital media cluster, governments can ensure that critical infrastructure is in place, such as 4G connectivity, and then help local providers negotiate contracts with global media and entertainment companies, creating incentives for the transfer of intellectual property and upskilling to make the sector sustainable.
City governments interested in creating digital media jobs can look to examples such as Seoul, South Korea, which turned a former landfill into a vibrant digital media city with anchor multinational corporations, SMEs, and startups. Digital media businesses based in Seoul now generate approximately $30 billion in annual revenue and have created more than 40,000 high-quality jobs.
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Companies worldwide are implementing Industry 4.0 applications such as 3D printing, augmented reality, autonomous robots, the Internet of Things, and simulation to improve manufacturing productivity by up to 35 per cent.
Cities in Africa can capitalize on this trend to grow the local manufacturing industry where it exists and create jobs by promoting smart manufacturing practices, developing a roadmap for adoption, and establishing technological standards.
Governments can also provide incentives and technical assistance, with the goal of establishing local champions, including multinational corporations that can show the benefits of these applications and persuade other firms and suppliers to invest.
Local leaders can accelerate broader adoption by establishing coherent regulations and tax codes to allow business models that mix traditional channels and e-commerce.
Governments can also use their own procurement to provide foundational contracts to the local e-commerce industry and invest in infrastructure to support digital payments, logistics, efficient export, and last-mile delivery.
Broad startup ecosystem
Rather than focusing on one technology segment, countries can create the right conditions for startups in all segments to thrive.
Cities across Africa such as Cape Town, Lagos, and Nairobi, are launching innovation hubs with an enabling environment for startups across sectors to solve inherent consumer or business issues with a clear path to scale.
Counties looking to create jobs via a startup ecosystem can begin by putting the right connectivity in place and streamlining the administrative process required to launch a new business.
The writer is the managing director and senior partner at Boston Consulting Group.