Is Africa’s Workforce Ready for Industry 4.0? (The 4th Revolution)

Industry 4.0 represents the fourth industrial revolution in manufacturing and industry. It is the current industrial transformation with automation, data exchanges, cloud, cyber-physical systems, robots, Big Data, AI, IoT and (semi-) autonomous industrial techniques to realize smart industry and manufacturing goals in the intersection of people, new technologies and innovation.

To Africans most of these terms are like words from science fictions. Africa is still struggling to adopt Industry 1.0 technologies like mechanical production; and Industry 2.0 technologies like electricity, specialization and mass production. Industry in Sub Sahara Africa (SSA) specifically is actually 1.0, 2.0 and a bit of 3.0.

Not being successful in effectively adopting 1.0 and 2.0 technologies, technologies of big singular massive machines and equipment whereby production is achieved by cranking out millions of identical products (Specialization, mass and mechanical production), SSA has however been able to leapfrog to adopt ICT (digital and mobile technology), an Industry 3.0 technology, as it is more social, transferable, and less a hardware technology.

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Industrial Revolution | Image credit: Spacenews

This is leading to many jobs in the region becoming more intense in their use of digital technologies. In a World Economic Forum (WEF) report “The Future of Jobs and Skills in Africa” it was reported that in South Africa there is 26% increase in average ICT intensity of jobs over the last decade, while 6.7% of all formal sector employment in Ghana and 18.4% of all formal sector employment in Kenya occurs in occupations with high ICT intensity. This makes ICT, the region’s most advanced technology.

WEF reported that the region boasts of the world youngest population, with more than 60% of its population under the age of 25; the region’s working-age population is set to increase by two-thirds, from 370 million adults in 2010 to over 600 million in 2030; the share of this population with at least a secondary education is set to increase from 36% in 2010 to 52% in 2030; and that 15 to 20 million increasingly well-educated young people are expected to join the African workforce every year for the next three decades; but despite these impressive statistics, presently SSA still is under-prepared for the impending disruption to jobs and skills brought about by the Fourth Industrial Revolution.

Employers across the region already are identify inadequately skilled workforces as a major constraint to their businesses, including 41% of all firms in Tanzania, 30% in Kenya, 9% in South Africa and 6% in Nigeria. It is suggested that this pattern may get worse in the future as in South Africa alone, 39% of core skills required across occupations will be wholly different by 2020.

The statistics in the report suggest that the human capital in the region is underutilized. For instance, the WEF’s Human Capital Index, which measures the extent to which countries and economies optimize their human capital through education and skills development and its deployment throughout the life-course, finds that Sub-Saharan Africa, on average, currently only captures 55% of its full human capital potential, compared to a global average of 65%, Mauritius, Ghana and South Africa top the ranking ranging from 67 to 63% while Mali, Nigeria and Chad where are the bottom with indexes ranging from 49 to 44%.

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The World Economic Forum’s analysis indicated that the region’s capacity to adapt to the requirements of future jobs (measured by assessing the quality and extent of its education and staff training systems, post-basic education attainment and breadth of skills) relative to the region’s exposure to these future trends (measured by assessing the impact of latest technologies, local economic diversification and complexity, employee productivity and unemployment) is low and worrisome.

According to the analysis, Kenya is best prepared for the Industry 4.0 in the region. It has the highest exposure and also a high-capacity, however its capacity is still lower than those of Mauritius, Rwanda, Ghana, which are all countries that along with Malawi have high capacity countries with low exposure.

Though, there is little disparity between countries’ capacity to adapt to the requirements of future jobs, African giants like South Africa, Senegal and Nigeria, all have low capacities far behind Kenya, Mauritius, Rwanda, Ghana and Malawi, which are all high-capacity countries. However, among South Africa, Senegal and Nigeria, only South Africa has a high exposure, along with Kenya and Namibia.

South Africans high exposure to future trends somewhat increases their chance to adapt. Ghana, Rwanda and Mauritius, have a relatively high-capacity to adapt to the requirements of future jobs and are comparatively well-positioned to prepare themselves.

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The case of Nigeria is very bad, being the largest economy and the most populated country in the region. Despite having a young generation with primary education above 80% of the country’s population, Secondary education about 70% (4th highest in the region) and the highest percentage with tertiary education in the region, the country is still far low in capacity and exposure —suggesting that student is not acquiring the knowledge and skills required for today’s economies and societies.

Insufficient understanding of the disruptive changes underway was identified as the single biggest obstacle to future workforce planning, followed by resource constraints and insufficient alignment of firms’ talent strategies with their broader innovation strategies.

Collaboration between business and the education sector is also limited. In addition, there is relatively little collaboration among the firms that are seeking to address skills gaps in their own workforces as well as the communities around them, resulting in uncoordinated, potentially wasteful, efforts.

In order to build a workforce for Industry 4.0. SSA countries with low capacity should particularly focus on strengthening basic education as well as building a strong TVET. They should embark on urgent reskilling and upskilling, focusing in particular on strengthening higher education and adult learning.

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Congo is to Electric Vehicles what Saudi Arabia is to Internal Combustion Engine

First, Volvo announced it would begin to phase out the production of cars that run solely on gasoline or diesel by 2019 by only releasing new models that are electric or plug-in hybrids. Then, France and the U.K. declared they would ban sales of gas and diesel-powered cars by 2040. Underscoring this trend is data from Norway, as electric models amounted to 42 percent of Norwegian new car sales in June, 2017.

China already leads globally in EV sales. Sales of new-energy vehicles, or NEVs (EVs, plug-in hybrids, and fuel-cell vehicles), may top 700,000 units in 2017 and 1 million in 2018. Almost all those cars are Chinese brands. The government has set a target of 7 million vehicles by 2025. To reach that goal, it’s doling out subsidies and tightening regulations around fossil-fuel cars.

What does this mean to the Democratic Republic of Congo?

Electronic vehicles and electronic devices store electricity in batteries. Cobalt’s efficiency in conducting electricity has made it essential for rechargeable Lithium-ion batteries used in electric vehicles; and due to the growing popularity of electric vehicles and a near-insatiable demand for rechargeable batteries, there is a huge growth in demand for rechargeable Lithium-ion batteries.

Presently the battery industry uses 42 % of global cobalt production, a critical metal for Lithium-ion cells. The remaining 58 % is used in diverse industrial and military applications (super alloys, catalysts, magnets, pigments…) that rely exclusively on the material.About 1,300 metric tons of cobalt were used in electric vehicles in 2014, Morgan Stanley estimates. The total is expected to rise to 11,320 tons this year and 62,940 tons by 2025.

Approximately 97 % of the world’s supply of cobalt comes as a by-product of nickel or copper (mostly out of Africa) and Congo produces more than half of the global supply. According U.S. Geological Survey (cobalt production); Benchmark Mineral Intelligence (cobalt sulphate, production forecast), Congo alone accounts for 54 % of global production of raw cobalt, which according to Statista was 66,000 metric tons in 2016 and 64,000 metric tons in 2017.

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The market value went up to more than $8 billion and London Market Exchange price went above $75,000 in December 2017.

Presently, there is a world-wide race to lock up the supply chain for cobalt, which will likely be in even greater demand as electric-car production rises. So far, China is way ahead and China is by far the biggest consumer of cobalt from Congo. Chinese refiners import about 94% of their cobalt from the African nation, according to Darton Commodities.

Few commodities have had more dramatic increases in demand than cobalt, despite it being a by-product of copper and nickel mining. Global cobalt production has quadrupled since 2000 to about 123,000 metric tons a year, according to the U.S. Geological Survey.

Demand is growing even faster and is expected to reach more than 200,000 tons by 2025, according to researcher Wood Mackenzie. Such expectations have caused cobalt prices to more than double in the past year in London trading. Cobalt prices are up more than 230% since the end of 2015, according to Thomson Reuters.

As reported by Bloomberg, some companies and battery experts say technological shifts to make rechargeable batteries with less cobalt—or none at all—could make cobalt less important in battery production, but China is lining up behind nickel manganese cobalt batteries. They have a higher energy density than batteries without cobalt, giving cars greater driving range while taking up less space.

Global battery manufacturing capacity is about 110 gigawatt hours a year, mostly for consumer electronics, electric vehicles and electricity storage. In the past year, China has announced plans to add more than 150 gigawatt hours of production in the next three to four years, tripling current capacity.

“The Chinese manufacturers have targets set by the government,” says Luis Munuera, an analyst with the International Energy Agency. “It is not a market response. It is the amount of battery capacity the government wants to have.”

Most Chinese battery production is now focused on low-end, low-density batteries, and many battery makers are relatively small. But the Chinese government has made offers of support contingent on the energy density of the battery. That means more nickel manganese cobalt batteries.

Nigerians Now Making Cash Withdrawals Using PoS Machines

A Point of Sales (POS) Terminal is a portable machine used to accept bank cards of payments for goods and services. It allows you, as a card holder, to have real-time online access to funds and information in your bank account through debit or cash cards.

The Central Bank of Nigeria (CBN) introduced the PoS system in 2012 to further drive home its cashless policy for enhancing Nigeria’s payment system. The initiative since its introduction has recorded remarkable success; with 146 million transactions in 2017 worth N1.41 trillion conducted on about 155,462 active terminals that had been made available to retailers by mobile money merchants. The statistics made available by Nigerian Bureau of Statistics indicated that this was the highest value recorded since it was introduced.

According to the statistics, PoS transactions rose by 85.75 % from N758 billion the country recorded in 2016 and this payment system was used 146 million times, a 130% rise from 64 million transactions in 2016. while the lowest payment of N91.29 billion on the PoS was done in January, the highest transaction valued at N167.58 billion was recorded in December.

While PoS transaction is growing in the country, an informal Roadside PoS Terminal cash withdrawal industry is also growing. This service providers make money by selling mainly convenience to people who don’t want to pass though the unnecessary and avoidable stressful process of access a Human Teller or Automated Teller Machine (ATM) common with Nigerian Banks.

This business came to life when small businesses who already use PoS machine to accept bank cards of payments for goods and services, started using their PoS terminals to debit customers account in exchange for the equivalent cash and a fee. This way the small business reduces the risk of having too much cash to worry about and at the same time make money from the transaction.

Currently, there are standalone businesses offering this service and even more: you can make cash withdrawals from your bank account using a PoS machine and make cash deposit into any account using the traditional mobile banking app, which serves as the source of cash for the withdrawals.

These businesses are mostly found around markets making them very convenient for traders in the market who no longer have to go far from their shops or spend long time on queues to use any of these services in an actual Bank.

To access the services of a roadside `banks` in Karimo Market in a poor suburb of Abuja, I paid N200 to withdraw N5000 cash using my Debit Card on a PoS and N200 to make a deposit in my account (or one’s account).

This is good business as POS terminals are free with a fee per transaction typically 0.25% with a cap or N1,200. On the deposit service, which is actually the business person transferring money from his own account to mine using a bank mobile app, it costs him as low as N52.50 if he uses a First Bank account.

Comparing this PoS transaction to an ATM transaction which attract a fee of ₦65/withdrawal Banks charge after three withdrawals in a month on other banks’ ATM cards and ₦100 charge per interbank transfers; remoteness of ATMs and long queues at ATMs galleries (mostly under the sun) on a daily basis due to the insufficient number of ATM in the country; dispensation of mostly large currency denominations and failure to dispense cash when they are most needed — on public holidays and weekends; and other factors like trust issues; most low-income and rural dwellers in Nigerians would agree with me that it is more convenient and most times cheaper to deal with a Roadside PoS Terminal person.

Since its 1989 debut in Nigeria, ATM penetration has grown, although obviously nowhere near where it should be. According to the Nigeria Interbank Systems (NIBSS), as of March 2017, there were 17,594 ATMs across Nigeria servicing a population of about 30 million people. This small number would have increased considerably if there were more independent ATM deployers in the country.

Note: The total number of bank accounts was 95 million as at November 2016. But the total active bank accounts were 64.13 million as at November so I assumed an individual has an average of 3 accounts.

Nigerians as usual are being innovative taking advantage of the inability of CBN and Nigerian banks to satisfy the financial needs of a large population of Nigerians but what is the security implication especially as this Roadside Banks are not registered with, and the model not approved by CBN?

According to a Punch News article, there is already concern among stakeholders that the amount lost to fraud in the country increased as the adoption of e-payment rose in Nigeria.

While acknowledging the significant growth of the PoS payment system in Nigeria, the Director, Banking and Payments System, Central Bank of Nigeria, Mr. Dipo Fatokun, urged banks to carry out risk ratings on prospective merchants.

He said, “It is essential that we continue to conduct necessary due diligence on any merchant to be extended a PoS terminal. Banks must know the businesses of their respective merchants and carry out proper risk ratings, while acquirers and issuers must add fraud monitoring tools on both issuing and acquiring sites of their businesses.”