Africa remains the world’s poorest inhabited continent despite the abundance of minerals scattered across the continent. Despite marginal gains over the last few years, many African nations are underdeveloped. War, corruption and tribalism remain major factors that undermine Africa’s progress. Nonetheless, before the recent global economic meltdown, Africa has recorded decent growth proving that there is a prospect for change. New reforms driven by private sector lead capitalism is shaping the continent. However, the continent still depends so much on minerals and extraction and there is no sight of a knowledge driven economy very soon in the continent.
A knowledge economy refers to an economy of knowledge focused on the production and management of knowledge in the frame of economic constraints where knowledge is a product. It can also be referred to as a knowledge-based economy where knowledge is considered a tool; i.e., the use of knowledge technologies such as knowledge engineering and knowledge management to produce economic benefits. This is a strongly interdisciplinary area that involves economists, engineers, scientists, sociologists, among other. Presently, Africa lags behind in the Knowledge Economy Index (KEI), a benchmark used to measure the level of knowledge infusion in an economy (worldbank.org/kam). According to World Bank data, KEI and GNI correlate and African nations need more work to catch up with developed nations. There is a high level of relationship between KEI and growth in any economy; growth tracks KEI. The higher the KEI, the higher the economic growth; in other words, a nation or continent that improves its KEI will surely eventually see increase in growth. KEI captures education, innovation, technology, among others.
Two major factors drive the knowledge economy. They are globalization, and information and communication technology. The former which enables markets and products to be available at more global level for more spectrums of producers and buyers, the latter, enables the connection and electronic interdependence of the world. It can be argued that the knowledge economy differs from the traditional economy in several key respects (Wikipedia, 2009):
- The economics are not of scarcity, but rather of abundance. Unlike most resources that deplete when used, information and knowledge can be shared, and actually grow through application. Also, it is non-rival, meaning that the consumption of information by customer A does not preclude the consumption of same information by customer B. ‘You can eat your cake and have it’ in this case.
- The effect of location is either diminished, in some economic activities: using appropriate technology and methods, virtual marketplaces and virtual organizations that offer benefits of speed, agility, round the clock operation and global reach can be created or, on the contrary, reinforced in some other economic fields, by the creation of business clusters around centers of knowledge, such as universities and research centers. However, clusters already existed in pre-knowledge economy times
- Laws, barriers, taxes and ways to measure are difficult to apply on solely a national basis. Knowledge and information “leak” to where demand is highest and the barriers are lowest
- Knowledge enhanced products or services can command price premiums over comparable products with low embedded knowledge or knowledge intensity
- Pricing and value depends heavily on context. Thus the same information or knowledge can have vastly different value to different people, or even to the same person at different times
- Knowledge when locked into systems or processes has higher inherent value than when it can “walk out of the door” in people’s heads
- Human capital — competencies — are a key component of value in a knowledge-based company, yet few companies report competency levels in annual reports. In contrast, downsizing is often seen as a positive “cost cutting” measure
- Communication is increasingly being seen as fundamental to knowledge flows. Social structures, cultural context and other factors influencing social relations are therefore of fundamental importance to knowledge economies.
These characteristics show that new ideas and approaches are required from policy makers and leaders in order to evolve and sustain a knowledge economy in Africa. It will be very fundamental for economic growth in the continent.