Digitization an opportunity to propel African economies

Digitization an opportunity to propel African economies

The COVID-19 pandemic has hit hard the economies of many African countries, and pushed many more citizens into poverty, but some countries like Rwanda and Togo have used digitization to keep their economies running.

Speaking during the launch of a Pan-African peer exchange series on the benefits of responsible digital government payments, the Executive Secretary of the Economic Commission for Africa (ECA), Ms. Vera Songwe said the pandemic had a huge toll on African economies with GDP growth estimated to have dropped from 3.3% in 2019 to -2.6% in 2020. It is, however, anticipated that growth would return to 3.3% in 2021.



The ECA further estimates that about 100 million people have been pushed into poverty by the pandemic, Ms. Songwe said, adding the scars of COVID-19 were going to ‘remain with us for a very long time’.

Digitization, the ECA Chief said, presented opportunities for African countries to lift the poor out of poverty.

“Digitizing tax payments and related processes can raise additional resources for African governments to fight COVID-19 and help move countries back to growth,” said Ms. Songwe in opening remarks during the launch of the series that will see policymakers sharing challenges and successes and set a high bar for what can be accomplished on the continent through digitization of government payments.

“As economies digitalize, the benefits from digital payments and e-commerce multiply, thereby accelerating recovery from the COVID-19 pandemic, sustaining development, and facilitating achievement of the sustainable development goals, through taxes and wages, among others.”

The ECA has been in the forefront, nudging African countries to turn to and accelerate digitization to not only keep their economies running, but to also respond to the rise in poverty among marginalized citizens.

Ms. Songwe congratulated Togo and Rwanda for using digitization to manage the pandemic in a way that would have been impossible if there were no digital platforms, including social protection cash payments to cushion citizens from the effects of the crisis.

Sharing her country’s experience of using digital cash transfers to citizens during the pandemic, Ms. Cina Lawson, Togo’s Postal Affairs and Digital Economy Minister, said they built a USSD platform in 10 days, and people who registered, didn’t need Internet connection to connect.

“We had 1. 6 million Togolese registering on this platform. From onboarding to receiving cash, it was all digital. If the platform deemed you eligible, you would straight away receive an SMS with the money. It takes a minute from onboarding to receiving cash,” she said.

The number of people who registered onto the platform represented about 44% of the population, and 840,000 people became beneficiaries, which is approximately 22% of all Togolese, explained Ms. Lawson.

She said the platform guaranteed transparency as transactions were traceable. An independent firm was hired to audit the transfers daily. The country is using the same platform to register citizens for COVID-19 vaccinations.



For his part, Rwanda’s Minister of State, National Treasury, Mr. Richard Tusabe, in sharing his country’s experience with digitization, spoke about the ‘Ejoheza savings scheme’, an inclusive scheme which targets both salaried and non-salaried workers and has a social component.

He said about 95% of Rwandan citizens are not covered in any pension scheme hence the need for the savings scheme which came in handy during the pandemic.

“So, to capture the 95 per cent to start to save and be able to retire with dignity, Ejoheza was started in December 2018. It is also a USSD platform. The government then set up a matching fund, and when you save up to $18, the government gives you a matching equivalent,” said Mr. Tusabe.

The two ministers shared experiences, challenges, and good practices and undertook to keep learning from each other’s experiences in using digital innovations to improve the productivity of businesses and ensure positive economy-wide benefits.

In her remarks, Ms. Ruth Goodwin-Groen, Managing Director of the United Nation’s Better Than Cash Alliance, commended the two countries saying; “This is what we need. You understood what your citizens needed, and you responded quickly with responsible digital payments.”

Ms. Goodwin-Groen lauded the partnership with the ECA to launch the series, adding this was a unique opportunity for governments to convene and collaborate by sharing experiences, challenges, and key learnings from responsibly digitizing payments.

The launch will be followed by a series of three round-table workshops over the next two months for policymakers only. Each round-table workshop is specifically designed to focus on a critical aspect of digital government payment, such as Government to People (G2P) and People to Government (P2G), for example tax, pension, and healthcare. The final session will share insights and recommendations from the workshop participants and will be an open session.