Investment in ICT infrastructure and inclusive growth in Africa

Abstract

The Information, Communication, and Technology (ICT) sector has now more than ever become a critical driver of sustained inclusive growth in Africa, especially given the post-Covid-19 recovery efforts. The digital economy can serve as a veritable tool to help drive poverty reduction, inequality, and unemployment in Africa. However, limited investment in the ICT sector has not generated the expected inclusive growth effect. Therefore, this paper investigates the impact of ICT infrastructure on inclusive growth in Africa. Predicated on inclusive growth analytics, the Blundell-Bond system generalized method of moments estimator was used to analyse data covering 46 African countries between 2000 and 2019. The main finding from the empirical analysis is that ICT infrastructure exerts a positive and significant impact on inclusive growth in Africa generally and specifically across sub-regions within the continent. On average, an increase in ICT infrastructure investment stimulates inclusive growth by an average of 0.4% to 0.7%. The results were robust to using higher moments of residuals and subsample considerations. Our empirical outcome makes a strong case for increased ICT infrastructure investment especially in rural areas to generate growth that is inclusive in the region as well as to take full advantage of emerging opportunities such as the Africa Continental Free Trade Area Agreement.