Is a lack of tech skills hampering East Africa’s economic growth?

World Bank data suggests the digital economy contributes more than 15% of total global GDP. Over the past decade, the GDP contribution of the digital economy has grown at a rate two-and-a-half times faster than overall GDP growth.

Separate data has found that a 10% increase in mobile broadband access in less developed economies can yield a 2.5% increase in GDP.

For East Africa, the digital economy holds enormous opportunity, with the potential to power growth across every sector of the economy.

However, a pervasive lack of tech skills is impeding innovation efforts, hampering digital transformation initiatives and leaving organisations with a reduced capacity to deliver projects that could transform local economies.

 Tech skills in focus

Newly-released research conducted by SAP reveals that four in five African organisations were affected negatively by a lack of tech skills in the past year. In Kenya, the main impacts of a lack of tech skills included more pressure on existing staff (cited by 78% of organisations), a lack of capacity to take on new projects (72%), and delays with completing existing projects (67%).

A third of organisations also experienced a loss of customers as the lack of tech skills capacity forced customers to seek support elsewhere.

This is concerning news for East Africa’s burgeoning tech sector, which not only has to compete with the thriving tech sectors in West and Southern Africa, but increasingly competes with more developed markets where tech skills may be more readily available.

It is also interesting to note the types of tech skills that East African organisations seek. The SAP research reveals the most in-demand tech skills for Kenyan organisations are cybersecurity (in-demand at 67% of organisations), industry-specific tech skills (63%), data analytics (57%), and sales skills (47%).

The skills gap is all the more alarming when considering the youthful nature of the region’s population. More than 60% of Africa’s population is under the age of 25. Over the coming decades, 1.3-billion people will be born in Africa, pushing the continent’s population to over 2.5-billion by 2050. This will create the world’s largest youth workforce, which could – with the right investment – become a leading force powering the global economy.

Developing sustainable initiatives that use the region’s youth dividend to upskill and train a new generation of digital economy worker should be a top priority for East African governments and the private sector.

Filling the tech skills gap

In the short term, however, organisations have to take urgent steps to fill critical gaps and ensure their digital transformation and innovation efforts succeed.

Alarmingly, more than half (53%) of Kenyan organisations expect it likely that they will experience a tech skills gap in the year ahead.

While a lack of tech skills is a continent-wide challenge, East African economies can take bolder steps at addressing the ongoing skills shortage. Nearly three-quarters of Kenyan organisations rated the quality of tech skills emerging from the country’s education system as ‘excellent’ or ‘above average’, but previous research had found that only 58% of students agreed that digitalisation is supported financially at their institution. The same study found that only 53% of Kenyan students often or always had access to a computer.

In the short term, organisations in the region are turning to a broad range of measures to improve skills availability. Eight in ten East African organisations prioritise skills development for current employees, while 43% focus on redeployment or reskilling of their workforce to fill critical skills gaps.

Encouragingly, only a third of organisations in the region invest 10% or less of their HR and IT budgets in skills development training. Twenty percent spend 15% of more of their IT or HR budgets on training. And four in ten want to partner with educational or training institutions to fill skills shortages.

Here, the role of initiatives such as the SAP Skills for Africa initiative, which includes SAP Young Professionals Program and the SAP Dual Study Program, can play a vital role. The Young Professionals Program has already trained and graduated nearly 2000 young talents from 22 African countries, providing a steady stream of work-ready SAP-qualified tech skills to African public and private sector organisations.

Collaborating with broader digital transformation and skills initiatives is also vital. The African Union’s Digital Transformation Strategy and the World Bank’s Digital Economy For Africa initiative that supports it could help regional economies harness the digital economy as a driver of growth and innovation.

In the end, however, it will be the responsibility of all public and private sector role players to ensure East Africa unlocks its vast human potential and develops the skills needed to turn the region into a leading player in the 21st century digital economy.