AI Can Add $1.2 Trillion to Africa’s GDP

The all-pervading Artificial Intelligence (AI) technology, which has the potential to contribute up to $15.7 trillion to the global economy in the next six years, is spreading to every nook and corner of the globe and Africa is no exception.

Of this, AI could generate $1.2 trillion to Africa’s economy by 2030, Theo Watson, a commercial Lawyer with Microsoft Africa, said this while making a presentation “AI Opportunity in Africa” at the African AI Journalists Academy via Microsoft Team in April this year.

“This contribution to the continent’s GDP represents a 5.6% increase by 2030 but there is a need to capitalise on this opportunity by accelerating a responsible regulation of AI and reap its benefits,” Watson explained.

According to him, as the world navigates this AI-powered future, and their journey must be underpinned by responsible and sustainable innovation. This would ensure that the progress of AI in the nation remained aligned with human values and societal norms.

Responsible and sustainable innovation will ensure that AI progress aligns with the needs that define Africa’s vastly diverse cultures. This involves a deep engagement with the continent’s unique challenges, recognising their complexity and prioritising those that AI can help solve.

“Also, collaborating with relevant stakeholders will be key to ensuring that AI solutions are not just technologically advanced but also culturally attuned and genuinely beneficial to African societies,’’ Watson added.

According to Statista, the market size in the AI market is projected to reach $3.7 billion in 2024 and expected to show an annual growth rate (CAGR 2024-2030) of 28.34%, resulting in a market volume of $16.53 billion by 2030.

The growth of AI industry across Africa is confirmed with data from the Centre of Intellectual Property and Information Technology Law (CIPIT) showing that the continent has more than 2,400 organisations working on AI innovation, 41% of which are start-ups operating in various industries, including health, agriculture, education, law, and insurance.

At present, only 42% of the African population currently have access to internet and less than 100 data centres in the continent.

To overcome these challenges, many countries in Africa have initiate steps to adopt AI and use it to their advantage as is evident from the number of technology-led investments, both domestic and foreign direct investments via bilateral deals.

Continental AI Strategy

The African Union, a continental union of 55 member states which has ratified the Continental Artificial Intelligence (AI) Strategy, as part of its Agenda 2063, in July this year, said that AI presents enormous opportunities and is a driving force for positive change as well as economic growth, social progress and cultural renaissance.

Evidence on the social and economic impact of AI on Africa is lacking. A study by McKinsey estimates Generative AI could increase productivity by 40% and add between $2.2 to $4.4 trillion a year to the global economy.

“If Africa is able to recoup 5% of this opportunity, generative AI could add between $110 to $220 billion to African GDP a year, thus the marginal economic benefit will be very high. If applied judiciously, AI could also play a critical role in fostering industrialisation, accelerating access to jobs, better government services, health and education, and more importantly, in managing climate crises, saving lives and reducing the cost of drought, cyclones and wildfires,” the African Union added.

African Union Commissioner for Infrastructure and Energy Dr Amani Abou-Zeid said that AI presents unique opportunities to accelerate Agenda 2063 aspirations and the Sustainable Development Goals (SDGs), stimulate economic growth, and create employment, particularly for women and youth. “The adoption of AI is growing across Africa. Google reports a 270% rise in AI-related searches in Africa over the past year, and research from the 2024 Stanford AI Index shows that 27% of Kenyans use ChatGPT daily. Several African universities, including those in Ghana, Uganda, and South Africa, have developed notable AI labs focusing on social impact,” he said.