Companies in South Africa are leading the African continent in the use of artificial intelligence by a wide gap. The country has advanced so much that there is about a 40 percent gap between it and Nigeria, which is in the second position, according to a new report by research organisation Finextra, in collaboration with Kora, a Nigerian fintech company.
This is coming against the backdrop of the growing relevance of AI across every sector of the economy. The global AI market is expected to reach a value of $1.35 trillion by 2030. AI also has the potential to contribute $15.7 trillion to the global economy in that same year.
“This is an important season in this era. A season of transition of humanity. If we miss out on getting in the driver’s seat of innovation and artificial intelligence, we will experience greater exploitation than ever before. I believe we need to ‘own’ technology to stay relevant,” said Osaretin Victor Asemota, growth partner at AnD Ventures and Africa partner for Alta Global Ventures.
Several reports have shown how AI plays an important role in sectors like the traditional banking sector, in particular where it has led to the creation of features such as voice recognition, natural language processing, and computer vision for user-account management and fraud detection, machine learning methods and deep learning networks for anti-money laundering and credit modelling.
The emergence of AI tools like ChatGPT has galvanised financial institutions and fintech companies to review how they deploy AI across their systems, and more importantly, how it is being leveraged to serve the customer and whether these individuals trust the services that are built using these technologies.
African companies are not left out. As investments in AI technology surge, there is a frenzy by startups in the continent to position themselves to attract these investors. However, there are genuine concerns the pace isn’t picking up as fast as it should compared to other continents. Also, the distribution of AI organisations in the continent is inequitable and the gap is widening among countries. Essentially, Africa is lagging behind. Very few countries have published national AI strategies including Egypt, Rwanda, and Mauritius, and collective action on a continental strategy is not moving as quickly as the technology has in a very short period.
South Africa, the most industrialised country on the continent, currently has 726 companies, compared with 456 startups in Nigeria. Other countries in the top five with AI companies include Egypt (246), Kenya (204), and Morocco (126).
“I’ve been researching the penetration of artificial intelligence in Africa and African ways of life and I could see that nothing much has been achieved with this new technology that is shaping the way we conduct business, and solving real societal problems,” said Olusegun Oladele, a machine learning engineer. “While conducting my research, I also discovered that this may be because of the naivety of decision-makers in business, politics, and socials on the enormous benefits of using AI.”
Experts at Kora, however, say while the penetration may be slow, it is rising and indicative of an increasingly connected world. The connectedness will significantly impact operators in the payments industry where the company operates. It could potentially also eliminate the ongoing challenge of lack of cohesion in the trans-border payment ecosystem in Africa.
“The rise of fintech companies across the continent presents an immense opportunity to transform cross-border payments and foster healthy competition to connect Africa under one unified API. Kora is at the forefront of building a pan-African payment infrastructure that enables businesses to enter Africa and connect with all 54 countries while supporting local enterprises in accessing global markets. While acknowledging the contributions of trailblazing companies like Interswitch, Cellulant, and e-transact, much work remains to be done,” the company said in the report.