Abstract
Two of the five fastest-growing economies in the world were in the East African region in 2019. The region’s share within the economic growth of Africa rose from less than 20% in 2018 to more than 32% in 2019. Despite the difficulties in 2020 the eastern part of Africa seems to be keeping its status as the continent’s fastest-growing region. Digitalization and the connected structural transformation is one of the main drivers of growth in the services sector worldwide. In this study we analyze the status and movements of industry 4.0 and Finance 4.0 developments and their effects on the employment in the East African region. We found three main approaches based on the literature sources on Africa’s future industrial development ways. In case of finance 4.0, countries like Uganda or Kenya reached considerable results in financial inclusion; thus, East African economies and societies now have an improved access to international financial markets. Another significant development is East Africa’s status as global leader in mobile money services, increasing broad access to financial services. With the help of digital solutions, entrepreneurs and businesses can reconsider their business models which can be more competitive, sustainable, and better connected to other sectors of the economy. In this paper we investigated the macro- and micro-level effects of the digitalization on the employment and identified the possible scenarios. Our conclusion is that with affordable and stable finance 4.0 solutions and a strong institutional framework, East African enterprises can reduce poverty, increase employment and stimulate inclusive growth.
Highlights
In 2019, two of the five fastest-growing economies in the world were in the East African region (Ethiopia and Rwanda)
In case of finance 4.0, countries like Uganda or Kenya reached considerable results in financial inclusion; East African economies and societies have an improved access to international financial markets
Smart contracts powered by blockchain technology Effects of finance 4.0 on the employment in East Africa Digitalization’s main benefit for economic growth is promoting inclusive finance and allowing the by banks not covered groups to join formal financial systems through electronic payments platforms and savings and credit supply technological platforms
Summary
In 2019, two of the five fastest-growing economies in the world were in the East African region (Ethiopia and Rwanda). In case of finance 4.0, countries like Uganda or Kenya reached considerable results in financial inclusion; East African economies and societies have an improved access to international financial markets. Another significant development is East Africa’s status as global leader in mobile money services, increasing broad access to financial services.
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